<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSBA
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 1998
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT
For the transition period from ____________ to _____________
COMMISSION FILE NUMBER: 0-22294
MED/WASTE, INC.
- --------------------------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in its Charter)
DELAWARE 65-0297759
- ------------------------------- --------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6175 NW 153 STREET, SUITE 324, MIAMI LAKES, FL 33014
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(305) 819-8877
- --------------------------------------------------------------------------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days. Yes [ ] No [X]
The number of shares outstanding of the registrant's common stock $.001 par
value as of May 13, 1998 was 5,215,653.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MED/WASTE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
March 31, 1998
As Restated
(See Notes 1 and 6) December 31, 1997
------------ -----------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents $ 510,642 $ 984,708
Accounts Receivable, Net of Allowances of $158,000
and $40,000 in 1998 and 1997, respectively 5,397,007 5,525,528
Net Assets of Discontinued Operations -- 2,632,909
Inventories 434,508 238,653
Prepaid Expenses and Other Current Assets 490,364 735,779
------------ ------------
Total Current Assets $ 6,832,521 $ 10,117,577
Property, Plant and Equipment, Net 10,873,094 10,636,803
Excess of Purchase Price over Net Assets Acquired, Net 11,973,945 11,919,106
Other Assets 3,080,206 2,095,578
Notes Receivable 1,500,770 --
------------ ------------
Total Assets $ 34,260,536 $ 34,769,064
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable and Accrued Liabilities $ 2,818,616 $ 2,511,280
Current Portion of Notes Payables 8,672,247 4,094,861
Current Portion of Capital Lease Obligations 485,509 397,371
Income Tax Payable -- 116,000
Customer Deposits 20,336 23,640
------------ ------------
Total Current Liabilities $ 11,996,708 $ 7,143,152
Capital Lease Obligations, Less Current Portion 665,296 502,239
Notes Payable and Debentures Less Current Portion 3,186,499 8,496,605
Deferred Income Tax Liability and Other Liabilities 803,769 702,000
------------ ------------
$ 16,652,272 $ 16,545,996
Shareholders' Equity:
Series A Preferred Stock, .01 par value; 60,000
shares authorized, 28,869 and 42,969 shares
outstanding at 1998 and 1997 respectively
Authorized; 28,869 Outstanding 289 430
Common Stock, $.001 par value; 10,000,000
Shares Authorized; 5,176,959 and 4,629,699 5,177
Shares Issued and Outstanding 4,630
Additional Paid-in Capital 19,265,279 18,625,685
Warrant Subscriptions Receivable (208,003) (258,003)
Retained Earnings (deficit) (1,423,821) (417,017)
------------ ------------
17,638,921 17,955,725
Less Cost of Treasury Stock: 11,824 Shares (30,657) (30,657)
------------ ------------
Total Shareholders' Equity 17,608,264 17,925,068
------------ ------------
Total Liabilities and Shareholders' Equity $ 34,260,536 $ 34,769,064
============ ============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2
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MED/WASTE, INC. SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31
As Restated
(See Notes 1 and 6)
1998 1997
----------- -----------
<S> <C> <C>
Revenues $ 6,082,786 $ 2,662,860
----------- -----------
Costs and expenses:
Operating costs 5,702,247 1,920,952
Administrative and selling expenses 1,294,217 606,309
Amortization of Intangibles 148,438 4,818
----------- -----------
Total 7,144,902 2,532,079
----------- -----------
Operating (loss) profit (1,062,116) 130,781
Other, net (359,503) (60,834)
----------- -----------
(Loss) Income from continuing before income taxes (1,421,619) 69,947
Income taxes (benefit) (478,555) --
----------- -----------
(Loss) Income from continuing operations (943,064) 69,947
Discontinued operations, net of taxes 14,102 80,090
----------- -----------
Net (Loss) Income (928,962) 150,037
Preferred stock dividend (77,842) --
----------- -----------
Net Income available to common shareholders $(1,006,804) $ 150,037
=========== ===========
(Loss) earnings per share - basic
From continuing operations $ (.21) $ .03
Discontinued operations, net of taxes -- $ .04
----------- -----------
$ (.21) $ .07
=========== ===========
Weighted average shares outstanding 4,862,629 2,317,524
(Loss) earnings per share - diluted
From continuing operations $ (.21) $ 0.05
Discounted operations, net of taxes -- $ 0.04
----------- -----------
$ (0.21) $ 0.09
=========== ===========
Weighted shares outstanding 4,862,629 5,680,490
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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CONSOLIDATED FINANCIAL STATEMENTS
Med/Waste, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31
------------------------------
1998 1997
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net (loss) earnings $ (928,962) $ 150,037
Adjustments to reconcile net earnings to net cash (used) in operating
Depreciation and amortization 408,844 111,877
Provision for doubtful notes and accounts receivable 118,000 37,000
Other (67,091)
Changes in operating assets and liabilities net of effects of
acquisitions:
Decrease (increase) in accounts receivable 10,521 111,890
(Increase) in notes receivables (770) (216,761)
Increase in inventories (195,855) (77,959)
Decrease (Increase) in prepaid expenses 245,415 (239,882
(Increase) Decrease in other assets (891,790) (375,003)
Increase in accounts payable and accrued
liabilities and income taxes payable 191,336 (457,579)
(Decrease) increase in customer deposits (3,304) 21,251
Decrease in assets held for sale -- (80,088)
Increase in deferred income tax liability and others 101,769 0
----------- -----------
Net cash provided by (used in) operating activities (1,011,887) (1,015,217)
INVESTING ACTIVITIES:
Proceeds on sale of Kover 1,200,000 --
Purchase of operating equipment (482,812) (450,197)
----------- -----------
Net cash provided by investing activities 717,188 (450,197)
FINANCING ACTIVITIES:
Increase (decrease) in line of credit and notes payable-net (507,720) 2,209,982
Increase (decrease) in capital leases, net 251,195 (31,112)
Issuance of common stock 105,000 25,824
Preferred stock dividend (77,842) --
Payment of stock subscription receivable 50,000 39,599
----------- -----------
Net cash (used) provided by financing activities (179,367) 2,244,293
----------- -----------
Increase (decrease) in cash and cash equivalents (474,066) 778,879
Cash and cash equivalents at beginning of period 984,708 81,820
----------- -----------
Cash and cash equivalents at end of period $ 510,642 $ 860,699
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Notes received for sale of Kover $(1,500,000) $ --
Common stock issued for the acquisition of Med-Waste, Inc. 310,000 --
Cash paid during the period for interest 280,000 54,000
Conversion of preferred to common stock 1,410,000 --
Conversion of debentures to common stock 225,000 --
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4
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MED/WASTE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. OPERATIONS AND BASIS OF PRESENTATION
ORGANIZATION
Med/Waste, Inc. (the "Company") is a holding company incorporated in November
1991 under the laws of the State of Delaware. The Company and through its
subsidiaries, is engaged in the businesses of medical waste management. The
Company's commercial cleaning services operations, conducted through The Kover
Group, Inc. ("Kover") were sold on January 30, 1998.
The medical waste management operations are conducted primarily through the
following subsidiaries, collectively referred to as the "Waste Companies":
Safety Disposal System, Inc. ("SDS")
Safety Disposal System of South Carolina, Inc. ("SDSSC")
Safety Disposal System of Pennsylvania, Inc. ("SDSPA")
Safety Disposal System of Georgia, Inc. ("SDSGA")
Safety Disposal System of Virginia, Inc. ("SDSVA)
Incendere, Inc. ("Incendere")
BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions to Form 10-QSB and do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
considered necessary for a fair presentation have been included. These
statements should be read in conjunction with the consolidated financial
statements and related notes contained in the Company's Annual report on Form
10-KSB for both 1998 and 1997 (See RESTATEMENT below). These interim results of
operations are not necessarily indicative of results for the entire year.
RESTATEMENT
On March 8, 1999, the Company announced that it may be required to restate the
earnings reported during 1998. After a further investigation and the
recommendation of new management, the Audit Committee of the Board of Directors
appointed an independent counsel to review its accounting and reporting
practices. Such investigation has since been completed and as a result of its
findings, the Company is restating its previously issued financial statements
for the first three quarters of 1998. These statements should be read in
conjunction with the consolidated financial statements and related notes
contained in the Company's Annual report on Form 10-KSB for both 1998 and 1997.
5
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2. ACQUISITIONS.
On March 31, 1998, the Company purchased the capital stock of Med Waste, Inc, an
unrelated Pennsylvania corporation. The purchase price was payable in 41,000
shares of the Company's common stock at closing. The stock issued for the
purchase is guaranteed by the Company to have a fair market value at the end of
two years for $7.50 per share.
3. DEBENTURES AND NOTES PAYABLE
Debentures and Notes payable consist of the following at March 31, 1998:
10% Convertible Redeemable Debentures due
July 1, 2000 $ 1,124,341
Term Loan 5,916,667
Line of Credit 2,364,330
Notes payable 2,453,408
-----------
Total notes payable 11,858,746
Less: current portion 8,672,247
-----------
Total $3,186,499
===========
During the three months ended March 31, 1998 and 1997 interest expense was
approximately $280,000 and $61,000 respectively.
The Company has a line of credit with a bank for $3,000,000. The line of credit
is a demand note and bears interest at prime plus 1%. Interest is payable
monthly. At March 31, 1998, the Company had $2,364,000 in outstanding borrowings
under the line. Substantially all of the Company's assets are collateral for the
loan. In addition, the Company is a party to a $6.5 million term loan, with its
bank. The term loan bears interest at a rate of prime plus 1%, and is payable
$33,333 in principal plus interest monthly with a balloon payment on April 30,
1999.
Due to the losses incurred during the three month ended March 31, 1998 the
Company is in violation of the financial covenants pertaining to the Credit
Agreement with its bank. The Company has not obtained waivers from the bank and
as such, has classified the line of credit and term loans outstanding at March
31, 1998 as current liabilities. (See Note 7)
4. NET INCOME PER COMMON SHARE
A reconciliation of the numerator and denominator of earnings per share for the
quarters ended March 31st follows:
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<TABLE>
<CAPTION>
1998 1997
Income Shares Pre-Share Income Shares Pre-Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- ---------------- ----------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
(Loss) income before
discontinued operations $ (943,064) $69,947
Less: Preferred stock
dividends (77,842)
Basic EPS (Loss) income
available to common
shareholders (1,020,906) 4,862,628 $.21 $69,947 2,317,524 .03
---- ---
Effect of Dilutive
Securities
Warrants 60,000
Options 404,782
Reduction of Interest
Diluted EPS 15,750
Income (loss) available
to common shareholders $ (1,020,906) 4,862,129 $.21 $85,697 2,782,306 .03
------------ --------- ---- ------- --------- ---
</TABLE>
Options to purchase 100,000 and 249,310 shares of common stock from $3.375 to
$6.00 per share were outstanding during 1998 and 1997, respectively, but were
not included in the computation of diluted EPS because the options exercise
price was greater than the average market price of the common shares for those
years. The options, which expire from 1998 to 2002, were still outstanding at
the end of March 1998. Stock warrants to purchase 161,180 and 91,000 shares of
common stock from $4.25 to $8.70 per share were outstanding during 1998 and
1997, respectively, but were not included in the computation of diluted EPS
because the warrant exercise price was greater than the average market price of
the common shares for those years. The warrants, which expire from 1998 to 2002,
were still outstanding as of March 31, 1998.
5. SALE OF KOVER
On January 30, 1998, the Company sold 100% of the common stock of a wholly owned
subsidiary, the Kover Group, Inc. ("Kover") to MPK Holdings, LP ("MPK"), MPK is
owned by Phillip W. Kubec. Mr. Kubec was the president and chief executive
officer of Kover and a director of the Company. The selling price approximated
the book value of Kover. Accordingly, no material gain or loss is expected in
1998. The Company received aggregate consideration for the sale of Kover of $2.7
million, payable $1.2 million in cash at closing and the balance of $1.5 million
in promissory notes. The Company received two promissory notes, one for $960,000
from MPK (the "MPK Note") and one for $540,000 from Kover (the "Kover Note").
For the three months ended March 31, 1998, the net loss from Kover was $2,948
with the sale of Kover creating a gain of $17,050; both are reported as
discontinued operations.
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6. RESTATEMENT
In July of 1999 after an investigation by new management and special counsel
appointed by the Audit Committee of the Board of Directors the Company
determined that in the 1998 financial statements included in Form 10-QSB for
each of the quarters of 1998, certain revenues were improperly recognized,
certain costs and allowances were not accrued or were improperly recorded and
certain costs were improperly deferred. As a result, the accompanying
consolidated financial statements as of March 31, 1998 and for the three month
then ended, present restated results. The investigation concluded that no
restatement is necessary for the same period in 1997.
A summary of the effects of the restatement for the three months ended March 31,
1998 follows:
NEXT PAGE
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MED/WASTE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, 1998
As Previously
Reported As Restated
------------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents $ 510,462 $ 510,642
Accounts Receivable, Net of Allowances of $158,000
and $40,000 5,643,975 5,397,007
Inventories 434,508 434,508
Prepaid Expenses and Other Current Assets 903,337 490,364
------------ ------------
Total Current Assets $ 7,492,462 $ 6,832,521
Property, Plant and Equipment, Net 10,935,094 10,873,094
Excess of Purchase Price over Net Assets Acquired, Net 11,977,111 11,973,945
Other Assets 3,565,206 3,080,206
Notes Receivable 1,500,770 1,500,770
------------ ------------
Total Assets $ 35,470,643 $ 34,260,536
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable and Accrued Liabilities $ 2,045,619 $ 2,818,616
Current Portion of Notes Payables 2,755,580 8,672,247
Current Portion of Capital Lease Obligations 485,509 485,509
Income Tax Payable 116,000 --
Customer Deposits 20,336 20,336
------------ ------------
Total Current Liabilities $ 5,423,044 $ 11,996,708
Capital Lease Obligations, Less Current Portion 665,296 665,296
Notes Payable and Debentures Less Current Portion 9,103,166 3,186,499
Deferred Income Tax Liability and Other Liabilities 1,166,324 803,769
------------ ------------
$ 16,357,830 $ 16,652,272
Shareholders' Equity:
Preferred Stock, $. 10 par value; 4,000,000 and 1,000,000 --
Shares Authorized; None Outstanding
Preferred Stock, $.01 par value; 40,000 and No Shares
Authorized; 28,869 Outstanding
Common Stock, $.001 par value; 26,000,000 and 10,000,000 289 289
Shares Authorized; 5,176,959 and 6,149,154 5,177 5,177
Shares Issued and Outstanding
Additional Paid-in Capital 19,265,279 19,265,279
Warrant Subscriptions Receivable (208,003) (208,003)
Retained Earnings (deficit) 80,728 (1,423,821)
------------ ------------
19,143,470 17,638,921
Less Cost of Treasury Stock: 11,824 Shares (30,657) (30,657)
------------ ------------
Total Shareholders' Equity 19,112,813 17,608,264
------------ ------------
Total Liabilities and Shareholders' Equity $ 35,470,643 $ 34,260,536
============ ============
</TABLE>
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MED/WASTE, INC. SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
AS OF MARCH 31, 1998
As previously
Reported As Restated
----------- -----------
<S> <C> <C>
Revenues $ 6,204,444 $ 6,082,786
----------- -----------
Costs and expenses:
Operating costs 4,095,467 5,702,247
Administrative and selling expenses 1,025,666 1,294,217
Amortization of Intangibles 162,323 148,438
----------- -----------
Total 5,283,456 7,144,902
----------- -----------
Operating (loss) profit 920,988 (1,062,116)
Other, net (359,503) (359,503)
----------- -----------
(Loss) Income from continuing before income taxes 561,485 (1,421,619)
Income taxes (478,555)
----------- -----------
(Loss) Income from continuing operations 561,485 (943,064)
Discontinued operations, net of taxes 14,102 14,102
----------- -----------
Net (Loss) Income 575,587 (928,962)
Preferred stock dividend (77,842) (77,842)
----------- -----------
Net Income available to common shareholders $ 497,745 ($1,006,804)
=========== ===========
(Loss) Earnings per share - basic
From continuing operations $ .10 $ (.21)
Discontinued operations, net of taxes -- --
----------- -----------
$ .10 $ (.21)
=========== ===========
Weighted average shares outstanding 4,654,849 4,862,629
(Loss) earnings per share - diluted
from continuing operations .08 $ (.21)
Discounted operations, net of taxes -- --
----------- -----------
.08 $ (0.21)
=========== ===========
Weighted shares outstanding 6,840,470 4,862,629
</TABLE>
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7. SUBSEQUENT EVENTS
GENERAL
In March 1999, the Company determined that the financial information released in
their filings with the Securities and Exchange Commission (SEC) misstated actual
results of operations. At that time the Company's bank credit facility was
placed on hold. Since that time the Company has operated with no readily
available operating credit facility. The Banks have not demanded payment on the
existing loan balance, as they are allowed to do under the terms of the
agreement, due to the existing violations of financial covenants. It is not
determinable at this time if the Banks will demand payment or if the loan
agreement will be revised. In December 1998 and/or subsequent to December 31,
1998 the Company's top management was terminated and/or resigned and an
investigation of the financial reporting and control systems were conducted by
an independent counsel. The Company also voluntarily withdrew from listing its
securities in the NASDAQ Small Cap Market Stock Exchange (NASDAQ) because of the
delays in complying with the filing requirements of the SEC and because it no
longer met certain continued listing criteria of NASDAQ.
SEC INQUIRY
By letter dated July 19, 1999, the Securities and Exchange Commission ("SEC")
advised the Company that it is conducting an informal inquiry into the
accounting procedures utilized by the Company. The SEC has requested that the
Company voluntarily provide certain records and other information by August 19,
1999. The Company intends to comply fully with such request and cooperate with
the SEC in its inquiry.
LITIGATION
On June 16, 1999, a complaint was filed against the Company, and certain former
officers and directors. The Plaintiff seeks to certify a class action against
the Defendants for the purported securities violations. Specifically, the
complaint seeks relief for violations of Section 10(b) of the Securities
Exchange Act of 1934 (the "Exchange Act") and Rule 10(b)-5, promulgated
thereunder, as well a purported violations violation of Section 20(a) of the
Exchange Act. The complaint alleges that the Defendants purportedly issued false
and misleading statements as to the Company's results of operations and that,
specifically, earnings and earnings per share of the Company for each of the
quarterly reports issued for the first, second and third quarters of the 1998
fiscal year were fraudulently misstated. Plaintiff seeks to recover damages on
behalf of himself and the putative class he represents purportedly sustained as
a result of the violations of the securities law alleged in the Complaint.
Plaintiff also seeks to recover attorney's fees and costs incurred in the
litigation. No discovery has commenced and the size of the plaintiff class is
not yet determined. Accordingly, the Company and counsel are unable to predict
the outcome of this case.
In July 1998, MPK prepaid the MPK Note and Kover Note plus accrued interest. The
Company received $1,350,000 in cash and a new $150,000 promissory note from MPK
("the New Note"). The
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New Note is payable interest only monthly at the rate of 8.25% per annum, with
the principal balance due at the end of eleven years.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998 COMPARED WITH MARCH 31, 1997
REVENUES. For the three months ended March 31, 1998, the Company had revenues of
$6,082,786, an increase of 128% from the $2,662,860 for the same period in 1997.
The increase can be attributed primarily to the acquisitions of Incendere Inc.
and SDSPA in November 1997 and of SDSGA in September 1997.
OPERATING COSTS. Consolidated operating costs amounted to $5,702,247, or 93% of
revenues, in the three months ended March 31, 1998, as compared to $1,920,952,
or 72% of revenues, for the same period in 1997. Substantially no benefits were
obtained from costs synergies relating to the acquisitions made in late 1997 due
to the Company's inability to consolidate the new organizations into the
existing financial and operational structure.
ADMINISTRATIVE AND SELLING EXPENSES. Administrative and selling expenses
increased to $1,294,217 in the three months ended March 31, 1998 from $606,309
for the same period for 1997. These costs represent 22% of revenues in both
years as substantially no benefits were obtained from costs synergies relating
to the acquisitions made in late 1997 principally due to the Company's inability
to consolidate the acquisitions into the existing organizational structure. In
addition, as a result of rapid expansion and administrative inaccuracies,
substantial expenses were incurred in administrative expenses relating to
professional services, financial consulting and auditing fees. Other
administrative costs were allowed to increase due to delays in billing, computer
problems, duplicative employee positions and other administrative inadequacies
(i.e. collection of receivables).
OPERATING (LOSS) PROFIT. The Company reported an operating loss of $1,062,116
for the three month period ended March 31, 1998 compared to a profit of $130,781
in 1997. This is attributable to the Company's inability to obtain costs
synergies from the acquisitions made in late 1997. In addition, substantial
increases in administrative costs were incurred at the Corporate Office location
for professional services, financial consulting and auditing fees.
OTHER, NET. Other, net increased to an expense of $359,503 in the three months
ended March 31, 1998 as compared to an expense of $60,834 for the same period in
1997, primarily due to the interest expense on the term loan used in the
purchase of Incendere.
NET (LOSS) INCOME. The net loss for 1998 resulted primarily from the Company's
inability to consolidate the acquisitions made in late 1997 and during 1998 into
the existing organizational structure.
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LIQUIDITY AND CAPITAL RESOURCES
On January 30, 1998, the Company sold 100% of the common stock of Kover to MPK
holdings, LP ("MPK") MPK is owned by Phillip W. Kubec. The selling price
approximated the book value of Kover. Accordingly there was no material gain or
loss. The Company received aggregate consideration for the sale of Kover of $2.7
million, payable $1.2 million in cash at closing and the balance of $1.5 million
in promissory notes
Due to the classification of the bank loan as a current liability to reflect the
Company's noncompliance with existing loan covenants, working capital was
negative at March 31, 1998 compared to $2,974,425 at December 31, 1997. Cash
balances were reduced by $474,066, mainly due to operating activities utilizing
$1,087,729. Investing activity provided the cash, principally from the proceeds
from the sale of Kover of $1,200,000 reduced by $482,812 in capital expenditures
during the period.
On March 31, 1998, the Company purchased the capital stock of Med Waste, Inc.,
an unrelated Pennsylvania corporation. The purchase price was $310,000 payable
in 41,000 shares of the Company's common stock at closing. The stock issued in
connection with the purchase is guaranteed by the Company to be $7.50 per share
at the end of two years.
IMPORTANT FACTORS RELATING TO FORWARD LOOKING STATEMENTS
This Form 10-QSBA contains certain forward looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995 with respect to the
financial condition, results of operations and business of Med/Waste, Inc., and
its subsidiaries, including statements made under Management's Discussion and
Analysis of Financial Condition and Results of Operations. These forward looking
statements involve certain risks and uncertainties. No assurance can be given
that any of such matters will be realized. Factors that may cause actual results
differ materially from those contemplated by such forward looking statements
include, among others, the following: the competitive pressure in the industry;
general economic and business conditions; the ability to implement and the
effectiveness of business strategy and development plans; quality of management;
business abilities and judgement of personnel; and availability of qualified
personnel; labor and employee benefit costs.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
SEE NOTE 7 TO THE FINANCIAL STATEMENTS
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.
NONE
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 27: Restatement of Financial Data Schedules for earnings per
share calculated under SFAS 128 for March 31, 1997 and
September 30, 1997.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, hereunto duly
authorized.
Med/Waste, Inc.
Date: August 17, 1999 /s/ CARLOS CAMPOS
------------------- --------------------------
President
and Chief Executive Officer
Date: August 17, 1999 /s/ GEORGE MAS
------------------- -----------------------------
George Mas,
Vice President and Chief
Financial Officer
15
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
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