<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K / A-1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED):
SEPTEMBER 25, 1997
MED/WASTE, INC.
(Exact Name of registrant as specified in charter)
- --------------------------------------------------------------------------------
DELAWARE 0-22294 65-0297759
(State or other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification)
Incorporation) Number)
3890 NW 132ND STREET, SUITE K, OPA LOCKA, FLORIDA 33054
(Address of principal executive offices and Zip Code)
- --------------------------------------------------------------------------------
Registrant's telephone number, including area code: (305) 688-3931
--------------
NOT APPLICABLE
(Former Name or former address, if changed since last report)
- --------------------------------------------------------------------------------
<PAGE> 2
Item 7. Financial Statements and Exhibits:
<TABLE>
<S> <C>
(a) The following financial statements of Environmental Waste Reductions, Inc.
("EWR" or the "Company") are included herein:
Contents F-1
Report of Independent Certified Public Accountants F-2
Financial Statements:
Balance Sheets F-4
Statements of Operations F-5
Statements of Capital Deficiency F-6
Statements of Cash Flows F-7
Notes to financial statements F-8
(b) Pro forma financial information. F-14
Med/Waste, Inc.'s ("Med/Waste") pro forma condensed consolidated
balance sheet as of June 30, 1997 (unaudited). F-15
Med/Waste's pro forma condensed consolidated statement of operations
for the year ended December 31, 1996 (unaudited). F-16
Med/Waste's pro forma condensed consolidated statement of operations
for the six months ended June 30, 1997 (unaudited). F-17
</TABLE>
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned.
Med/Waste, Inc.
(Registrant)
Dated: November 6, 1997 By: /s/ DANIEL A. STAUBER
-----------------------
Daniel A. Stauber
President and Chief
Executive Officer
-2-
<PAGE> 4
ENVIRONMENTAL WASTE REDUCTIONS, INC.
FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Certified Public Accountants........................................................ F-2 - F-3
Balance Sheets as of June 30, 1997 (unaudited) and December 31, 1996...................................... F-4
Statements of Operations for the six months ended June 30, 1997 and 1996
(unaudited) and the years ended December 31, 1996 and 1995................................................ F-5
Statements of Capital Deficiency for the six months ended June 30, 1997
(unaudited) and the years ended December 31, 1996 and 1995................................................ F-6
Statements of Cash Flows for the six months ended June 30, 1997 and 1996
(unaudited) and the years ended December 31, 1996 and 1995................................................ F-7
Notes to Financial Statements............................................................................. F-8
</TABLE>
F-1
<PAGE> 5
Report of Independent Certified Public Accountants
Board of Directors
Environmental Waste Reductions, Inc.
(Debtor-in-Possession)
We have audited the accompanying balance sheet of Environmental Waste
Reductions, Inc. (Debtor-in-Possession) as of December 31, 1996, and the related
statements of operations, capital deficiency, and cash flows for the years ended
December 31, 1996 and 1995. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Environmental Waste Reductions,
Inc. (Debtor-in-Possession) at December 31, 1996, and the results of its
operations and its cash flows for the years ended December 31, 1996 and 1995 in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, on November 20, 1996, the Company filed a petition for
reorganization under Chapter 11 of the U.S. Bankruptcy Code. The Company has
continued as a Debtor-in-Possession under Chapter 11 of the U.S. Bankruptcy
Code. This event and circumstances relating to this event, including the
Company's significant losses, accumulated deficit and highly leveraged capital
structure, raise substantial doubt about its ability to continue as a going
concern. Although the Company is currently operating as Debtor-in-Possession
under
F-2
<PAGE> 6
the jurisdiction of the Bankruptcy Court, the continuation of the business
as a going concern is contingent upon, among other things, the ability to (1)
formulate a Plan of Reorganization which will gain approval of the creditors and
stockholders and confirmation by the Bankruptcy Court, (2) achieve satisfactory
levels of future operating results and cash flows and (3) obtain additional debt
and equity. The accompanying financial statements do not include any adjustments
that might result from the outcome of these uncertainties.
Miami, Florida
September 26, 1997 BDO Seidman, LLP
F-3
<PAGE> 7
ENVIRONMENTAL WASTE REDUCTIONS, INC.
(DEBTOR-IN-POSSESSION)
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
----------- -----------
(Unaudited)
<S> <C> <C>
Assets (Note 2)
Current
Cash and cash equivalent $ 39,491 $ 20,747
Accounts receivable, net of allowance for doubtful accounts of
of $25,000 and $25,000 322,388 315,999
Inventories 3,583 13,202
Prepaid expenses 2,810 82,113
----------- -----------
Total current assets 368,272 432,061
Property and equipment, net (Note 4) 578,967 639,961
Intangible assets, net 302,793 336,773
----------- -----------
$ 1,250,032 $ 1,408,795
=========== ===========
Liabilities and Capital Deficiency
Current Liabilities
Accounts payable and accrued expenses 371,865 281,433
Loan payable (Note 6) 100,000 100,000
----------- -----------
Total current liabilities 471,865 381,433
----------- -----------
Liabilities subject to compromise (Note 2) 4,469,155 4,469,155
----------- -----------
Commitments and contingencies (Notes 2, 7 and 9)
Capital deficiency
Preferred stock, $2.00 par value; 50,000
shares authorized; none issued and outstanding -- --
Common stock, $1.00 par value; 100,000 shares
authorized; 11,000 shares issued and outstanding 11,000 11,000
Additional paid-in capital 39,200 39,200
Deficit (3,741,188) (3,491,993)
----------- -----------
Total capital deficiency (3,690,988) (3,441,793)
----------- -----------
$ 1,250,032 $ 1,408,795
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
F-4
<PAGE> 8
ENVIRONMENTAL WASTE REDUCTIONS, INC.
(DEBTOR-IN-POSSESSION)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the six months ended June 30, Year ended December 31,
1997 1996 1996 1995
----------- ----------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues (Note 8) $ 1,991,566 $ 1,594,813 $ 3,508,870 $ 1,327,370
----------- ----------- ----------- -----------
Costs and expenses:
Operating (Note 6) 1,551,764 1,566,397 3,154,424 1,106,107
Selling and administrative 501,731 637,518 2,085,342 908,666
Depreciation and amortization 127,836 84,882 181,823 83,973
Other, net 59,430 115,096 419,222 119,404
----------- ----------- ----------- -----------
Total 2,240,761 2,403,893 5,840,811 2,218,150
----------- ----------- ----------- -----------
Net loss $ (249,195) $ (809,080) $(2,331,941) $ (890,780)
=========== =========== =========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
F-5
<PAGE> 9
ENVIRONMENTAL WASTE REDUCTIONS, INC.
(DEBTOR-IN-POSSESSION)
STATEMENTS OF CAPITAL DEFICIENCY
<TABLE>
<CAPTION>
Additional Stock
Common Paid-in Subscription
Shares Stock Capital Receivable (Deficit) Total
----------- -------- ---------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994 10,000 $ 10,000 -- -- $ (269,272) $ (259,272)
Issuance of common stock 600 600 $ 19,600 $ (200) -- 20,000
Net loss for the year -- -- -- -- (890,780) (890,780)
----------- -------- -------- ------ ----------- -----------
Balance at December 31, 1995 10,600 10,600 19,600 (200) (1,160,052) (1,130,052)
Issuance of common stock 400 400 19,600 200 -- 20,200
Net loss for the year -- -- -- -- (2,331,941) (2,331,941)
----------- -------- -------- ------ ----------- -----------
Balance at December 31, 1996 11,000 11,000 39,200 -- (3,491,993) (3,441,793)
Net loss for the six months ended
June 30, 1997 (unaudited) -- -- -- -- (249,195) (249,195)
----------- -------- -------- ------ ----------- -----------
Balance at June 30, 1997 (unaudited) 11,000 $ 11,000 $ 39,200 $ -- $(3,741,188) $(3,690,988)
=========== ======== ======== ====== =========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
F-6
<PAGE> 10
ENVIRONMENTAL WASTE REDUCTIONS, INC.
(DEBTOR-IN-POSSESSION)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the six months ended June 30, Year ended December 31,
1997 1996 1996 1995
----------- ----------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Operating Activities:
Net loss $ (249,195) $ (809,080) $(2,331,941) $ (890,780)
Adjustments to reconcile net income to net cash
provided by (used in) operating activities, net
of acquisitions:
Depreciation and amortization 127,836 84,882 181,823 83,973
Bad debt provision -- -- 14,901 10,000
Loss (gain) from sale of equipment -- (10,405) 8,610 (241)
Cash provided by (used for)
Accounts receivable (6,389) (12,479) (33,061) (239,938)
Deposits (4,000) (3,787) (2,287) (2,000)
Inventory 9,619 -- 7,710 (11,932)
Prepaid expenses 83,303 (82,186) (74,742) --
Accounts payable -- 296,245 821,645 366,221
Accrued expense and other liabilities -- (52,431) 397,123 128,669
Postpetition-accounts payable and expenses 90,432 -- -- --
----------- ----------- ----------- -----------
Net cash provided by (used in) operating activities 51,606 (589,241) (1,010,219) (556,028)
----------- ----------- ----------- -----------
Investing Activities:
Purchases of property, plant and equipment, net (32,862) (223,721) (175,311) (182,060)
Purchase of customer lists and contracts -- (10,266) (53,658) (389,254)
----------- ----------- ----------- -----------
Net cash used in investing activities (32,862) (233,987) (228,969) (571,314)
----------- ----------- ----------- -----------
Financing Activities:
Bank overdraft -- 161,220 -- --
Bank borrowings, net -- 809,057 1,003,478 506,660
(Payments) borrowings from stockholders -- (115,876) 214,575 610,261
Proceeds from issuance of common stock -- -- 20,200 20,000
----------- ----------- ----------- -----------
Net cash provided by financing activities -- 854,401 1,238,253 1,136,921
----------- ----------- ----------- -----------
Increase (decrease) in cash and cash equivalents 18,744 31,173 (935) 9,579
Cash and cash equivalents at beginning of year 20,747 21,682 21,682 12,103
----------- ----------- ----------- -----------
Cash and cash equivalents at end of year $ 39,491 $ 52,855 $ 20,747 $ 21,682
=========== =========== =========== ===========
Supplemental disclosure of cash flow information
Cash paid during the year for interest $ 57,442 $ 58,706 $ 117,413 $ 50,795
=========== =========== =========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
F-7
<PAGE> 11
ENVIRONMENTAL WASTE REDUCTIONS, INC.
NOTES TO FINANCIAL STATEMENTS
(FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995 AND UNAUDITED
WITH RESPECT TO THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996)
1. PETITION FOR RELIEF UNDER CHAPTER 11
On November 20, 1996, Environmental Waste Reductions, Inc.("EWR" or the
"Company"), filed a petition in Bankruptcy Court of the Northern
District of Georgia. Under Chapter 11, certain claims against the
Company in existence prior to the filing of the petition for relief
under the federal bankruptcy laws are stayed while the Company
continues business operations as a Debtor-in-Possession. These claims
are reflected in the December 31, 1996 balance sheet as "liabilities
subject to compromise." Additional claims (liabilities subject to
compromise) may arise subsequent to the filing date resulting from
rejection of executory contracts, including leases, and from the
determination by the court (or agreed to by parties in interest) of
allowed claims for contingencies and other disputed amounts. Claims
secured against the Company's assets ("secured claims") also are
stayed, although the holders of such claims have the right to move the
court for relief from the stay. Secured claims are secured primarily by
liens on the Company's property, plant, and equipment.
The Company has determined that as a result of the bankruptcy filing,
it is not required to pay the interest portion of scheduled payments on
its prepetition debt obligations. Contractual interest on those
obligations during 1996 amounted to approximately $189,000, which is
$26,000 in excess of reported interest expense; therefore, the debtor
has discontinued accruing interest on these obligations. Refer to Note
9 for a discussion of the credit arrangements entered into subsequent
to the Chapter 11 filing.
The accompanying financial statements have been prepared on a going
concern basis which assumes continuity of operations and realization of
assets and liquidation of liabilities in the ordinary course of
business. As a result of the reorganization proceedings, there are
significant uncertainties relating to the ability of the Company to
continue as a going concern. The financial statements do not include
any adjustments that might be necessary as a result of the outcome of
the uncertainties discussed herein including the effects of any plan of
reorganization.
2. ESTIMATED LIABILITIES SUBJECT TO COMPROMISE
Under Chapter 11, certain claims against the Company in existence prior
to the filing of the petition for relief under the Code are stayed
while the Company continues business operations as
Debtor-in-Possession. These pre-petition liabilities are expected to be
settled as part of the plan of reorganization and are classified in the
balance sheet as "liabilities subject to compromise." As a result of
filing for protection under Chapter 11 of the Bankruptcy Code, the
Company is in default on substantially all of its debt agreements.
F-8
<PAGE> 12
Estimated liabilities subject to compromise as of December 31, 1996 are
as follows:
Notes payable $1,841,885
Accounts payable and accrued expenses 1,689,313
Due to related parties 937,957
----------
$4,469,155
==========
These estimates have not been reduced by EWR to reflect any claims that
the Company may have against creditors under the Federal Bankruptcy
laws.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND DESCRIPTION OF BUSINESS
Environmental Waste Reductions, Inc. ("EWR" or the "Company"), was
incorporated under the laws of the State of Georgia on May 13, 1991.
PROPERTY AND EQUIPMENT
Property and equipment are carried at cost less accumulated
depreciation. Depreciation is computed over the estimated useful lives
of the assets using the straight-line method.
SUPPLIES INVENTORY
Supplies inventory consists of packaging materials and supplies and is
carried at the lower of cost or market.
INTANGIBLE ASSETS
Intangible assets are carried at cost less accumulated amortization and
relate to non-compete agreements and customer lists and contracts.
These costs are amortized over 3 to 15 years. Amortization has been
provided by the straight-line method over the useful lives of the
assets.
The Company continually evaluates the carrying value of its intangible
assets. Impairments are recognized when the expected future operating
cash flows to be derived from such intangibles are less than their
carrying values.
F-9
<PAGE> 13
INCOME TAXES
The Company, with the consent of its Stockholders, elected to be taxed
as an S Corporation. Stockholders of an S Corporation are taxed on
their proportionate share of the Company's taxable income. Accordingly,
no provision or benefit for federal or state income tax is required.
REVENUE RECOGNITION
The Company recognizes revenues as services are provided.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures about
Fair Value of Financial Instruments," requires disclosure of fair value
information about financial instruments.
The respective carrying values of certain on-balance-sheet financial
instruments approximated their fair values. These financial instruments
include cash and equivalents, trade receivables, accounts payable and
accrued expenses. Fair values were assumed to approximate carrying
values for these financial instruments since they are short term in
nature and their carrying amounts approximate fair value or they are
receivable or payable on demand.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
ACCOUNTING FOR IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO
BE DISPOSED OF
Statement of Financial Accounting Standards No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-lived Assets to be
Disposed of," issued by the Financial Accounting Standards Board
(FASB), is effective for financial statements for fiscal years
beginning after December 15, 1995.
This standard establishes new guidelines regarding when impairment
losses on long-lived assets, which include plant and equipment and
certain identifiable intangible
F-10
<PAGE> 14
assets and goodwill, should be recognized and how impairment losses
should be measured. The Company adopted this standard in 1996.
UNAUDITED INTERIM FINANCIAL STATEMENTS
The financial statements as of June 30, 1997 and for the six months
ended June 30, 1997 and 1996 are unaudited, and have been prepared on
the same basis as the audited financial statements included herein. In
the opinion of management, such unaudited financial statements include
all adjustments consisting of normal recurring accruals, necessary to
present fairly the information set forth therein. Results for interim
periods are not indicative of results to be expected for an entire
year.
4. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
YEAR ENDED DECEMBER 31, Useful lives 1996
----------------------- ------------ ----
Land 7 $ 11,445
Containers 7 276,561
Vehicles 5-7 370,555
Equipment and furniture 3 117,215
Leasehold improvements 7 3,288
---------
Total $ 779,064
Less accumulated depreciation (139,103)
---------
Property and equipment, net $ 639,961
=========
5. COMMITMENTS AND CONTINGENCIES
Due to the nature of the Company's industry, the Company may be subject
to a number of investigations, lawsuits and claims arising from the
conduct of its business, including those relating to environmental
matters. The Company is not aware of any ongoing investigations,
lawsuits or claims relating to environmental matters that would have a
significant effect on the Company's financial position.
Environmental expenditures that relate to current operations will be
expensed as incurred or capitalized as appropriate. Expenditures that
relate to an existing condition caused by past operations and that do
not contribute to current or future revenue generation will be
expensed.
F-11
<PAGE> 15
The Company leases certain transportation equipment and office space.
The transportation equipment leases provide for minimum lease payments
plus operating costs and variable per mile charges. Minimum lease
payments under noncancelable operating leases that have initial or
remaining noncancelable lease terms in excess of one year are as
follows:
1997 $ 176,000
1998 167,000
1999 138,000
2000 118,000
2001 92,000
---------
$ 691,000
=========
Rent expense incurred in 1996 and 1995 aggregated $387,000 and
$230,000, respectively.
6. MANAGEMENT SERVICES AGREEMENT AND LETTER AGREEMENT
On May 15, 1996, and pursuant to a letter agreement dated May 14, 1996,
which among other things, provided for the sale of EWR, (which never
occurred), the Company entered into an agreement to manage and operate
an incinerator in Tennessee and a transfer station in Louisiana. In
this connection and prior to the bankruptcy filing, the
owner/affiliates of the incinerator and transfer station advanced
$814,223 to EWR. In addition, the Company has a recorded $45,666
obligation to such owner/affiliate pertaining to the purchase of
customers. Such amounts aggregate $859,889 and are included in the
Liabilities Subject to Compromise. The initial term of the management
services agreement was for one year. The incinerator and transfer
station were used for the purpose of processing waste for the Company's
customers. The agreement was not renewed and subsequent thereto, the
Company vacated the premises and utilized alternative waste incinerator
and transfer facilities. No fees were earned or incurred by the Company
during 1996.
On November 22, 1996, the owner/affiliate of the incinerator and
transfer station advanced the Company $100,000. The loan has no stated
interest.
7. LITIGATION
The Company is subject to various legal proceedings, claims, and
liabilities which arise in the ordinary course of its business. In the
opinion of management, the amount of ultimate liability with respect to
these matters will not materially affect the financial statements of
the Company.
8. CONCENTRATION ON CREDIT RISK
The Company sells its services principally to customers in the
Southeastern United States. In 1996 one customer accounted for
approximately 13% of total revenues. The Company performs ongoing
credit evaluations of its customers and generally does not require
collateral for outstanding accounts receivable. Allowances are
estimated for potential credit losses.
F-12
<PAGE> 16
9. SUBSEQUENT EVENTS
On September 12, 1997, the Bankruptcy Court entered an order
authorizing the sale of all of the Company's assets free and clear of
liens, claims, interest and encumbrances pursuant to Section 363 of the
Bankruptcy Code and assumption and assignment of certain executory
contracts and unexpired leases pursuant to an Asset Purchase Agreement
dated September 9, 1997.
On September 25, 1997, EWR sold substantially all of the assets and
business to Med/Waste, Inc. pursuant to an Asset Purchase Agreement
dated September 9, 1997.
The assets sold consisted primarily of accounts receivables, inventory
and supplies, equipment, vehicles, machinery, furniture, fixtures,
leasehold improvements, real property, all intellectual property and
all permits and licenses used in Georgia, North Carolina, South
Carolina and Tennessee.
The selling price amounted to $2,669,644, payable $1,825,000 in cash,
$754,634 of assumed liabilities and $90,010 credit against amounts due
by the Company to a consolidated subsidiary of Med/Waste.
F-13
<PAGE> 17
MED/WASTE, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The pro forma condensed consolidated financial statements illustrate the effect
of the acquisition of certain assets of Environmental Waste Reductions, Inc.,
(Debtor-in-Possession) ("EWR" or the "Company") on Med/Waste, Inc.'s and
subsidiaries' ("Med/Waste") consolidated financial position and results of
operations. On September 25, 1997, Med/Waste purchased assets of the Company.
The assets purchased consisted primarily of accounts and notes receivables,
supplies inventory, equipment, vehicles, machinery, furniture and fixtures,
leasehold improvements real property, all intellectual property and all permits
and licenses. The Company operated as a medical waste disposal service provider
prior to the closing. Med/Waste intends to operate the Company in a similar
manner. The purchase price amounted to $2,669,644, payable $1,825,000 in cash,
$754,634 of assumed liabilities and $90,010 credit against amounts due by the
Company to a consolidated subsidiary of Med/Waste. The cash portion of the
purchase price was paid out of available borrowings under Med/Waste's working
capital line of credit and later reduced by funds raised in a private placement
offering.
The proforma condensed consolidated balance sheet as of June 30, 1997 is based
on the historical balance sheets of the Company and Med/Waste as of that date
and assumes the acquisition took place on that date. The condensed consolidated
statements of operations for the six months ended June 30, 1997 and for the year
ended December 31, 1996 are based on the historical statements of operations of
the Company and Med/Waste for those periods. The pro forma condensed
consolidated statements of operations assumes the acquisition took place on
January 1, 1996.
The pro forma condensed consolidated financial statements may not be indicative
of the actual results of the acquisition. In particular, the pro forma condensed
consolidated financial statements are based on management's current estimate of
the allocation of the purchase price, the actual allocation of which may differ.
The pro forma condensed consolidated financial statements should be read in
connection with the historical financial statements of Med/Waste, Inc., and
Environmental Waste Reductions, Inc.
F-14
<PAGE> 18
MED/WASTE, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
MED/WASTE EWR ADJUSTMENTS PRO FORMA
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 526,492 39,49l -- $ 565,983
Accounts receivable, net 2,080,254 322,388 (90,010)(1) 2,312,632
Notes receivable from autoclaves--current 152,306 -- -- 152,306
Notes receivables from franchises--current portion 1,096,604 -- -- 1,096,604
Inventories 321,102 3,583 -- 324,685
Prepaid expenses 419,088 2,810 -- 421,898
Other - current assets 214,309 -- -- 214,309
----------- ----------- -----------
Total current assets 4,810,155 368,272 5,088,417
Notes receivable from franchises--less current 1,181,837 -- -- 1,181,837
Notes receivable from autoclaves--less current 693,837 -- -- 693,837
Operating and office equipment, net of
accumulated depreciation 5,605,209 578,967 -- 6,184,176
Intangible assets--net of accumulated amortization 403,981 302,793 -- 706,774
Other assets 881,195 -- -- 881,195
Cost in excess of net assets acquired -- -- 1,419,612(1) 1,419,612
----------- ----------- -----------
Total assets $13,576,214 $ 1,250,032 $16,155,848
=========== =========== ===========
Liabilities and Stockholders' Equity
Current Liabilities
Bank loan $ -- -- 1,825,000(1) 1,825,000
Accounts payable and accrued expenses 2,308,982 -- 441,616(1) 2,750,598
Current portion of capital lease obligations 191,989 -- -- 191,989
Notes payable 428,436 -- 133,018(1) 561,454
Deferred revenue 61,853 -- -- 61,853
Customer deposits 59,815 -- -- 59,815
----------- -----------
Total current liabilities 3,051,075 -- 5,450,709
Notes payable and long-term debt 2,454,312 -- 180,000(1) 2,634,312
10% convertible redeemable debentures due July 1, 2000 3,000,000 -- -- 3,000,000
Stockholders' equity 5,070,827 1,250,032 (1,250,032)(1) 5,070,827
----------- ----------- -----------
Total liabilities and stockholders' equity $13,576,214 $ 1,250,032 $16,155,848
=========== =========== ===========
</TABLE>
See notes to pro forma consolidated financial statements (unaudited)
F-15
<PAGE> 19
MED/WASTE, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Med/Waste EWR Adjustments Pro Forma
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenue $10,675,320 $ 1,991,566 $12,666,886
---------- ----------- -----------
Operating costs and expenses:
Operating costs 7,733,090 1,551,764 9,284,854
Selling and administrative 2,495,216 501,731 2,996,947
Amortization of intangibles 31,880 35,490 (2) 67,370
Depreciation and amortization 127,836 127,836
---------- ----------- -----------
Total Expenses 10,260,186 2,181,331 12,477,007
---------- ----------- -----------
Operating Income (loss) 415,134 (189,765) 189,879
Other, net (66,912) (59,430) (20,346)(2) (146,688)
---------- ----------- ----------
Net Income (loss) 348,222 (249,195) 43,191
========== =========== ==========
Net income per share $ 0.15 $ .02
========== ==========
Weighted average shares outstanding 2,317,674 2,317,674
========== ==========
</TABLE>
See notes to pro forma consolidated financial statements (unaudited)
F-16
<PAGE> 20
MED/WASTE, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Med/Waste EWR Adjustments Pro Forma
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenue $17,435,287 $ 3,508,870 $20,944,157
---------- ----------- ----------
Operating costs and expenses:
Operating costs 12,880,793 3,154,424 16,035,217
Selling and administrative 4,365,884 2,085,342 6,451,226
Amortization of intangibles 43,819 70,980(2) 114,799
Depreciation and amortization 181,823 181,823
---------- ----------- ----------
Total Expenses 17,290,496 5,421,589 22,783,065
---------- ----------- ----------
Operating Income (loss) 144,791 (1,912,719) (1,838,908)
Other, net 70,535 (419,222) (40,692)(2) (389,379)
---------- ----------- ----------
Net Income (loss) 215,326 (2,331,941) (2,228,287)
========== =========== ===========
Net income per share $ 0.11 $ (1.09)
========== ===========
Weighted average shares outstanding 2,043,065 2,043,065
========== ===========
</TABLE>
See notes to pro forma consolidated financial statements (unaudited)
F-17
<PAGE> 21
MED/WASTE, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1
The pro forma adjustments to the condensed consolidated balance sheet are as
follows:
To reflect the acquisition of certain assets of Environmental Waste
Services, Inc. (Debtor-in-Possession) ("EWR" or the "Company") and the
allocation of the purchase price on the basis of the fair values of the
assets acquired. The components of the purchase price and its
allocation to the assets of the Company are as follows:
Components of purchase price:
Cash - due from buyer at closing $1,665,000
Cash advanced prior to closing 160,000
Accounts payable assumed 441,616
Notes payable assumed 313,018
Accounts payable to SDS South Carolina
(a consolidated subsidiary of Med/Waste) 90,010
-----------
Purchase price 2,669,644
Allocation of purchase price:
Fair value of net assets acquired (1,250,032)
-----------
Cost in excess of net assets acquired $ 1,419,612
===========
Note 2
The pro forma adjustments to the condensed consolidated statements of operations
are as follows:
Adjustments to operating costs and expenses:
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED JUNE 30, DECEMBER 31,
1997 1996
-------------- ------------
<S> <C> <C>
Amortization of excess of cost over fair value of net assets
acquired over twenty years $35,490 $70,980
============== =============
Interest on notes payable at average rate of 13% $20,346 $40,692
============== =============
</TABLE>
F-18
