<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(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, 2000
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 [X] No[ ]
The number of shares outstanding of the registrant's common stock $.001 par
value as of April 30, 2000 was 6,731,956
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MED/WASTE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
------------ -----------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents $ 310,818 $ 69,225
Accounts Receivable, Net of Allowances of $615,300
and $668,000 in 2000 and 1999, respectively 5,210,499 5,457,676
Inventories 440,442 210,544
Prepaid Expenses and Other Current Assets 456,143 153,780
------------ ------------
Total Current Assets 6,417,902 5,891,225
Property, Plant and Equipment, Net 12,477,066 12,908,410
Goodwill, net 18,559,116 18,774,945
Other Intangibles, net 7,352,859 7,469,018
Other Assets 447,120 294,827
Investment in unconsolidated subsidiary 669,643 737,284
------------ ------------
Total Assets $ 45,923,706 $ 46,075,709
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable and Accrued Liabilities $ 4,737,110 $ 7,332,110
Current Portion of Notes Payables 23,464,108 23,731,306
Current Portion of Capital Lease Obligations 459,708 710,249
------------ ------------
Total Current Liabilities 28,660,926 31,773,665
Capital Lease Obligations, Less Current Portion 322,168 318,074
Notes Payable Less Current Portion 142,193 162,091
Subordinated Secured Convertible Notes Payable 3,543,200
------------ ------------
32,668,487 32,253,830
Shareholders' Equity:
Series A Preferred Stock, $.01 par value; 60,000 shares
Authorized; 31,345 Shares Outstanding 313 311
Common Stock, $.001 par value; 10,000,000 Shares Authorized;
6,731,956 Shares Issued and Outstanding in 2000 and 1999 6,732 6,732
Additional Paid-in Capital 31,251,647 30,475,847
Warrant Subscriptions Receivable (80,000) (382,113)
Deficit (17,892,816) (16,248,241)
------------ ------------
13,285,876 13,852,536
Less Cost of Treasury Stock: 11,824 Shares (30,657) (30,657)
------------ ------------
Total Shareholders' Equity 13,255,219 13,821,879
------------ ------------
Total Liabilities and Shareholders' Equity $ 45,923,706 $ 46,075,709
============ ============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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MED/WASTE, INC. SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31
-----------------------------------
2000 1999
----------- -----------
<S> <C> <C>
Revenues $ 6,413,759 $ 7,063,438
----------- -----------
Costs and Expenses:
Operating Costs 5,108,041 5,858,092
Administrative and Selling Expenses 1,605,007 2,180,108
Amortization of Intangibles 331,988 343,255
----------- -----------
Total 7,045,036 8,381,455
----------- -----------
Operating Loss (631,277) (1,318,017)
Interest Expense, net 778,481 504,903
Other, net 164,291 231,347
----------- -----------
Net Loss (1,574,049) (2,054,267)
Preferred Stock Dividend (70,526) (65,517)
----------- -----------
Net loss available to common shareholders $(1,644,575) $(2,119,784)
=========== ===========
Loss per share - basic and diluted $ (.24) $ (0.32)
Weighted average shares outstanding 6,731,956 6,650,211
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
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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
-----------------------------------
2000 1999
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $(1,574,049) $(2,054,267)
Adjustments to reconcile net loss to net cash used in operating
activities
Depreciation and amortization 860,312 823,562
Provision for doubtful notes and accounts receivable (52,700) 60,794
Equity in net income of unconsolidated subsidiary 67,641 (41,940)
Issuance of stock, options, and warrants for services 15,800 33,000
Changes in operating assets and liabilities net of effects of
acquisitions
Decrease (Increase) in accounts receivable 299,877 (2,199)
(Increase) in inventories (229,898) (3,182)
(Increase) decrease in prepaid expenses (302,363) 283,958
Other (increases) (2,891) (246,223)
(Decrease) increase in accounts payable and accrued liabilities (2,595,000) 268,768
----------- -----------
Net cash used in operating activities (3,513,271) (877,729)
INVESTING ACTIVITIES:
Purchase of operating equipment (33,780) (342,798)
----------- -----------
Net cash used in investing activities (33,780) (342,798)
FINANCING ACTIVITIES:
(Decrease) increase in line of credit and notes payable-net (287,096) 1,544,355
(Decrease) Increase in capital leases, net (246,447) (186,989)
Net proceeds from subordinated secured notes 4,090,600 --
Preferred stock dividend (70,526) (65,517)
Payment of stock subscription receivable 302,113 30,200
----------- -----------
Net cash provided (used) by financing activities 3,788,644 1,322,049
----------- -----------
Net increase in cash and cash equivalents 241,593 101,522
Cash and cash equivalents at beginning of period 69,225 113,146
----------- -----------
Cash and cash equivalents at end of period $ 310,818 $ 214,668
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest $ 721,000 $ 480,000
Cash paid during the period for dividends on preferred stock $ 135,000 $ 70,000
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4
<PAGE> 5
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, through its
subsidiaries, is engaged in the businesses of medical waste management.
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")
Target Medical Waste Services, LLC ("Target")
Med-Waste, Inc. ("Decatur")
Sanford Motors, Inc. ("SMI")
BMW Medtec of West Virginia ("BMW")
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 the year ended December 31, 1999. These interim results of operations
are not necessarily indicative of results for the entire year. The December 31,
1999 balance sheet was derived from the audited financial statements as of that
date.
2. ACQUISITIONS
The Company made no acquisitions during the three months ended March 31, 2000.
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3. NOTES PAYABLE
Notes payable consist of the following at March 31, 2000:
Term Loan $16,200,000
Line of Credit 3,500,000
Notes payable 3,906,301
-----------
Total notes payable 23,606,301
Less: current portion 23,464,108
-----------
Long Term Portion $ 142,193
===========
In January 1999, the Company refinanced the line of credit and term loan with a
Credit Agreement consisting of a $10 million revolving credit loan and a $25
million Convertible Credit Loan. Borrowings under the line are restricted to 80%
of eligible accounts receivable, as defined. Provided that no default or event
of default, as defined, has occurred, the total principal balance of the
convertible credit loan would be converted to a term loan on July 31, 2000 and
would be payable monthly in an amount equal to one eighty-fourth (1/84th) of the
aggregate principal balance of the converted loan. Final payment plus accrued
interest would be due on July 31, 2004. The revolving credit loan was originally
due on July 31, 1999 but was extended by the Bank to May 30, 2000. Interest on
the revolving credit loan and convertible credit loan is payable monthly at a
rate equal to the Prime Rate or the LIBOR Rate plus or minus an applicable
margin as defined in the Credit Agreement. The Credit Agreement requires the
Company to maintain minimum levels of liquidity, profitability and net worth.
The Company is currently in violation of all of the financial covenants
pertaining to the Credit Agreement. The Company waivers from the bank for such
violations extend through May 30, 2000 and as such, has classified the line of
credit and term loans outstanding at March 31, 2000 and December 31, 1999 as
current liabilities. The Company has been negotiating with its lenders for the
purposes of restructuring the Company's debt and these lenders have not called
the outstanding balances. Because of the default condition, all borrowings under
the Credit Agreement currently bear interest at a default rate provided by the
Agreement (2 1/2% over the normal rate) which at March 31, 2000 was
approximately 11.5%. The revolving credit loan and the convertible credit loan
are collateralized by substantially all of the Company's assets.
4. SUBORDINATED SECURED CONVERTIBLE NOTES PAYABLE
In February 2000, the Company through its placement agents and certain of the
Company's officers and directors, successfully completed a private placement of
$4.4 million subordinated secured convertible promissory notes ("Notes"). The
Notes are subordinated in payment and security to the Company's lenders under
its $35 million credit facility. The Notes are also subordinate to any senior
credit facility up to $35 million, which refinances such obligations. Interest
is payable quarterly at 10% per annum. In the event of default, the interest
rate is to be
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increased to 15%. The Company has granted the note holders a second lien on the
security interest in all of its tangible personal property. The Notes are
convertible at each holders option into shares of common stock at any time prior
to redemption or maturity, at a conversion price of $.543. Each note holder was
also granted one warrant for every $2.00 of principal amount of Notes purchased.
Each warrant entitles the holder to purchase one share of Common Stock at an
exercise price of $.68.
The placement agents received a commission equal to 9% of the gross proceeds of
any Notes directly placed by the agents. In addition, the placement agents
received warrants to purchase shares of common stock equal to 10% of the shares
of common stock underlying the Notes directly placed by the agents. Each warrant
entitles the holder to purchase one share of Common Stock at an exercise price
of $.68. The value of the warrants ($700,000 valued using the Black-Scholes
method), issued to the note holders, are treated as a discount on the
securities, and amortized over the two-year term of the notes. The value of the
warrants ($60,000) and cash ($149,400), paid to the placement agents, are
treated as deferred financing costs and amortized over the two-year term of the
notes. This treatment is consistent with that prescribed by APB 14. For purposes
of balance sheet presentation, the un-amortized discount on the notes ($636,000)
and loans granted to participating key employees ($200,000), are netted against
the outstanding balance due to the note holders.
The net proceeds of the private placement to the Company, net of placement
agents fees ($149,400) and loans ($200,000), granted to participating key
employees was $4,051,000. These funds were used by the Company to reduce
outstanding accounts payable, amounts due to former owners, for working capital,
and to repay certain obligations to related parties, including amounts owed to
members of management and a law firm in which the Chairman of the Board is a
shareholder.
5. NET INCOME PER COMMON SHARE
A reconciliation of the numerator and denominator of earnings per share for the
quarters ended March 31, 2000 and 1999 is as follows:
<TABLE>
<CAPTION>
2000 1999
Income Shares Per-Share Income Shares Per-Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- --------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net loss $(1,574,049) $(2,054,267)
Less: Preferred stock
dividends (70,526) (65,517)
Basic and diluted EPS
and loss available to
common shareholders $(1,644,575) 6,731,956 ($.24) $(2,119,784) 6,650,211 $(.32)
</TABLE>
Options to purchase 1,503,900 shares of common stock from $1.06 to $8.50 per
share were outstanding as of March 31, 2000. The options expire at various dates
through 2010. Stock warrants to purchase 3,426,726 shares of common stock from
$.68 to $8.00 were outstanding as of March 31, 2000. The warrants expire at
various dates through 2005. In both 2000 and 1999, no
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options or warrants were included in the computation of earnings per share
because their inclusion would have an anti-dilutive effect.
6. SEC INQUIRY
In 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. The Company is complying fully
with such request and will continue to cooperate with the SEC in its inquiry.
The Company cannot predict how long the investigation will last or its outcome.
In addition, the Company cannot determine what actions, if any, the SEC might
take against the Company or what effect any such action might have on the
Company's operations.
7. LITIGATION
In January 1999 the former stockholders of Med-Waste, Inc., an Alabama
corporation, filed a lawsuit against the Company. The lawsuit alleges fraud,
misrepresentations, breach of contract and failure to pay on a promissory note
given as part of the purchase price. In June 1999, the Company terminated the
employment of the former stockholders for "cause". The Company intends to
vigorously defend the lawsuit and believes it has meritorious defenses to the
claims. In addition, the Company filed a counterclaim for breach of contract,
fraud and misrepresentation in connection with the purchase of the corporation.
The second set of Plaintiff attorneys, have withdrawn from the case. One
Plaintiff is now representing himself, and two others have engaged separate
counsel. In view of these circumstances and the early stage of discovery, the
Company and counsel are unable to predict the outcome of this case at this time.
On April 9, 1999, W. Fred Bonham filed a complaint against the Company. On
January 7, 1999, the Company terminated Mr. Bonham's employment for "cause". Mr.
Bonham alleges in his complaint that the Company violated his employment
agreement by failing to pay Bonham certain compensation after his discharge from
the Company. In his complaint, Bonham seeks compensatory damages, pre-judgment
interest, costs and reasonable attorney's fees. Specifically, Bonham seeks his
base salary ($175,000) due for the remaining term of his employment agreement,
as well as various stock options. On January 11, 2000 the parties met for
mediation, but the parties were unable to reach a settlement. In March 2000,
Plaintiff's counsel withdrew from the case. Substitute counsel has been
identified by the Plaintiff. The Company and its counsel are unable to predict
the outcome of this case at this time.
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 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 as
purported 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
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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 its counsel are unable to predict the outcome of this case.
On October 8, 1999, the Company was served with a lawsuit by Richard Anthony
Dean, alleging fraud, breach of contract and misrepresentation, among other
charges, associated with the acquisition of Target Medical Waste Services, LLC,
in Mobile, Alabama. Dean is claiming unspecified compensatory damages, punitive
damages and court costs. The Company is vigorously defending itself and a
counterclaim by the Company for breach of covenants and misrepresentation has
been filed. Accordingly, the Company is unable to predict the outcome of this
case at this time
Any of the above matters, if determined adverse to the Company, may have a
material adverse effect on the Company's operations or financial condition.
The Company is or may become involved in various lawsuits, claims and
proceedings in the normal course of its business, including those pertaining to
product liability, environmental, safety and health, and employment matters. The
Company records liabilities when loss amounts are determined to be probable and
reasonably estimatable. Insurance recoveries are recorded only when claims for
recovery are settled. Although generally the outcome of litigation cannot be
predicted with certainty and some lawsuits, claims or proceedings may be
disposed of unfavorably to the Company, management believes, based on facts
presently known, that the outcome of such legal proceedings and claims, other
than those previously disclosed, will not have a material adverse effect on the
Company's financial position, liquidity, or future results of operations.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000 COMPARED WITH MARCH 31, 1999
REVENUES. For the three months ended March 31, 2000, the Company had revenues of
$6,413,759, a decrease from the $7,063,438 for the same period in 1999. During
1999 the Company discontinued providing autoclave services at it's Marcus Hook
facility to certain low margin customers resulting in approximately $165,000 of
the decrease in revenues in the quarter ended March 31, 2000 compared to March
31, 1999. Also, 1999 included approximately $110,000 in sterilization equipment
revenues. As part of the Company's new marketing strategy, the sale of such
equipment was discontinued during the second half of 1999. The remaining loss of
revenues is attributed to customers lost during 1999 when the Company was
attempting to reorganize under new management. During this time unprofitable
accounts were identified and discontinued and internal growth was limited due to
significant working capital constraints.
OPERATING COSTS. Consolidated operating costs amounted to $5,108,041 or 80% of
revenues, in the three months ended March 31, 2000, as compared to $5,858,092,
or 83% of revenues for the same period in 1999. This improvement was evident
throughout 1999 but was slowed during the quarter ended March 31, 2000 primarily
due to 39% higher fuel costs representing approximately $75,000.
ADMINISTRATIVE AND SELLING EXPENSES. Administrative and selling expenses
decreased to $1,605,007 in the three months ended March 31, 2000 from $2,180,108
for the same period in 1999. These costs represent 25% of revenues in 2000
compared to 31% in 1999. The many changes implemented by new management during
1999 have helped reduce these costs for the three-month ended March 31, 2000 as
compared to 1999. These cost reduction initiatives continue and several large
support operations not yet centralized will be moved to the Miami Lakes,
Florida, Service Center during 2000.
OPERATING LOSS. The Company reported an operating loss of $631, 277 for the
three-month period ended March 31, 2000 compared to an operating loss of
$1,318,017 in 1999. The changes in operations implemented by new management
caused the improvement over the result of 1999. Cost reduction initiatives are
expected to continue to improve the results of operations in future periods.
INTEREST EXPENSE, NET. Interest costs increased to $778,481 for the three month
period ended March 31, 2000 from $504,903 for the same period in 1999 because of
higher interest rates charged by the Banks in 2000 due to the non-compliance
condition of the loans. Also, during 2000 all other notes payable of the Company
are accruing interest at default rates. The Company also had significantly more
debt accruing interest during the three month period March 31, 2000 than it did
during the same period in 1999 including the $4.4 million of 10% Subordinated
Convertible Secured Notes issued in a private placement on February 1, 2000.
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OTHER, NET. Other, net decreased to an expense of $164,291 in the three months
ended March 31, 2000 as compared to $231,347 for the same period in 1999. During
the three-month ended March 31, 1999 approximately $280,000 in loan fees
incurred in the refinancing of the loan agreement with its banks in January 1999
were expensed due to the non-compliance condition of the agreement. The expense
for the three-month period ended March 31, 2000 includes approximately $63,200
in amortization of discount related to the private placement of the subordinated
notes completed in February 2000. Also included in the results for 2000 is
approximately $67,000 of losses from a 49% owned unconsolidated subsidiary.
During the same period in 1999 this subsidiary provided $41,940 in equity
earnings.
NET LOSS. The net loss of $1,574,049 for the three-month period ended March 31,
2000 compares to a net loss of $2,054,267 during the same period in 1999. The
loss is significantly reduced from the loss over the same period in 1999 due to
the many changes implemented by new management in 1999 and 2000 which have had a
positive effect on the performance of the Company.
LIQUIDITY AND CAPITAL RESOURCES
The Company's bank borrowings during 1999 were restricted to $1,500,000 during
the first quarter of 1999. At that time, due to the reporting and operational
deficiencies uncovered by new management, all lines of credit were frozen and
the Company's only principal source of cash was from its own operations. During
1999, approximately $297,000 was borrowed from the Chairman of the Board and the
Chief Executive Officer to meet certain financial obligations that could no
longer be delayed. Payments to vendors were routinely delayed and payments on
long term debt were not made on time. All bank loans and other significant debt
are currently in default and the due date of the line of credit from the bank
was extended to May 30, 2000.
During the three months ended March 31, 2000 the Company successfully completed
a private placement of $4,400,000 of convertible secured notes which netted the
Company approximately $4,050,000 in additional capital. These funds were used
primarily to reduce the amount of accounts payable to vendors and suppliers and
bring past due lease payments up to date. In addition $720,000 was used to
retire a past due debt to a former owner of business acquired in 1998.
The Company must make improvements at the SDSSC incinerator during 2000-2002 to
meet new air emission standard requirements. Although expected expenditures were
deferred in 1999 and required State of South Carolina Tests were successfully
completed, management still expects to incur approximately $6,000,000 in
improvements to this facility in order to maximize its waste throughput and
obtain significant economies of scale and meet the 2002 Federal air emission
standards. The Company expects to obtain those funds from additional bank
borrowings and/or equity capital. There can be no assurances that the Company
will be able to obtain such funds. In such event, the Company may be required to
reduce the amount of waste processed or close the facility until the funds to
make the renovations become available. During 2000, the Company anticipates
incurring approximately $1 million in company wide improvements as well as
significant legal costs to defend its on going litigation.
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The Company is presently not in compliance with minimum tangible net worth and
other financial covenants set forth in its bank credit facility and certain
other notes payable. The Lenders have not declared the Company in formal default
or accelerated payment of the Company's indebtedness thereunder. There can be no
assurance that they will not do so in the future. The Company is engaged in
discussions with prospective sources of additional working capital and with its
current lenders. There can be no assurance that the Company will successfully
negotiate a new credit facility or obtain additional working capital. The
Company's current credit facility, which would have provided a maximum of $35
million in financing, has been placed on hold by the lenders. The revolving
portion of the credit facility expires on May 30, 2000. During 1999, the
Company's new management team implemented a series of cost reduction and
performance enhancing measures which reduced considerably the operating expenses
of the Company. These cost reduction efforts are continuing and management
expects continued improved results during 2000 and beyond.
The Company's consolidated financial statements are presented on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. During 1997 and 1998, the Company
purchased several companies in the medical waste business in contemplation of
integrating the acquisitions into the Company's core business. Unfortunately in
1997 and 1998, the Company was unable to successfully integrate and achieve
profitability from these acquisitions. In addition, internal growth was limited
due to the Company's inability to formulate an effective marketing plan,
integrate its acquisitions, and manage the Company's growth. In early 1999, with
new management the Company began its plan to aggressively control costs, control
expansion efforts, and focus on the Company's core business.
The Company's continued existence is dependent upon its ability to resolve its
liquidity problems principally by implementing cost reduction strategies and
obtaining positive results from increased marketing efforts. The financial
statements do not include any adjustments to reflect the possible future effect
on the recoverability and classification of assets for the amount of
classification of liabilities that may result from the possible inability of the
Company to continue as a going concern. There is no assurance that the Company
will be able to achieve its recovery plan as described above. (See Independent
Auditor's report in its Annual Report on Form 10-KSB for the year ended December
31, 1999 which contains an explanatory paragraph regarding the Company's ability
to continue as a going concern.)
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IMPORTANT FACTORS RELATING TO FORWARD LOOKING STATEMENTS
This Form 10-QSB 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 judgment of personnel; and availability of qualified
personnel; labor and employee benefit costs.
INFLATION
The Company has not been materially affected by the impact of inflation.
YEAR 2000 COMPLIANCE
The potential for software failure due to the Year 2000 calculations is a known
risk. The Company recognizes the need to ensure that its operations, products
and services are not adversely impacted by the Year 2000 risks. The Company has
been advised by its' major vendors that they are Year 2000 compliant. The
Company does not anticipate any significant future costs relating to Year 2000,
but continues to monitor the situation for any disruptions, due to Year 2000
related issues. The Company has not had its operations, products or services
disrupted with any Year 2000 issues and does not expect any material disruptions
related to Year 2000 issues, for the year 2000.
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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
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
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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: May 17, 2000 /s/ Carlos Campos
------------ ---------------------------------------
President and Chief Executive Officer
Date: May 17, 2000 /s/ George Mas
------------ ---------------------------------------
George Mas,
Vice President and Chief
Financial Officer
15
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
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0
313
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</TABLE>
