SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
(Amendment No. 1)
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) June 1, 1999
___________________________
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
_____________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 1-11596 58-1954497
________________ _________________ ___________________
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
1940 N.W. 67th Place, Suite A, Gainesville, Florida 32653
___________________________________________________ __________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (352) 373-4200
______________________
Not applicable
____________________________________________________________
(Former name or former address, if changed since last report)
<PAGE>
Item 7. Financial Statements and Exhibits.
__________________________________
(a) Financial statements of businesses acquired.
On June 16, 1999, Perma-Fix Environmental Services, Inc. (the "Company")
filed a Form 8-K to report its acquisition of all of the outstanding capital
stock of (i) Chemical Conservation Corporation, a Florida corporation
("Chemical Florida") and Chemical Conservation of Georgia, Inc., a Georgia
corporation ("Chemical Georgia") pursuant to the terms of a Stock Purchase
Agreement executed on May 27, 1999, among the Company; Chemical Florida;
Chemical Georgia; The Thomas P. Sullivan Living Trust, dated September 6,
1978 ("TPS Trust"); The Ann L. Sullivan Living Trust, dated September 6, 1978
("ALS Trust"); Thomas P. Sullivan, an individual ("TPS"); and Ann L.
Sullivan, an individual ("ALS"), and (ii) Chem-Met Services, Inc., a Michigan
corporation ("Chem-Met"), pursuant to the terms of a Stock Purchase Agreement
executed on May 27, 1999, among the Company, Chem-Met, the TPS Trust, the
ALS Trust, TPS, and ALS. Pursuant to Item 7 of Form 8-K, the Company indicated
it would file certain financial information no later than the date required
by Item 7 of Form 8-K. This Amendment No. 1 is being filed to provide such
financial information.
(I) Audited Financials
The following audited combined financial statements of Chemical Florida,
Chemical Georgia and Chem-Met are filed as required by Rule 3.05(b) of
Regulation S-X, as promulgated pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), and the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), are attached hereto as Exhibit 99.2.
Report of Independent Certified Public Accountants Bovitz & Co.,
CPA, P.C.
Audited Combined Financial Statements:
A. Combined Balance Sheets as of September 30, 1998 and 1997
B. Combined Statements of Income and Retained Earnings for
the Years Ended September 30, 1998, 1997 and 1996
C. Combined Statements of Cash Flows for the Years Ended
September 30, 1998, 1997 and 1996
D. Notes to Financial Statements
II Unaudited Interim Financials
The following unaudited interim combined financial statements
of Chemical Florida, Chemical Georgia and Chem-Met are filed as
required by Rule 3.05(b) of Regulation S-X, as promulgated pursuant
to the Securities Act and the Exchange Act are attached hereto as
Exhibit 99.3.
<PAGE>
A. Unaudited Combined Balance Sheets for the three-month
period ended March 31, 1999
B. Consolidated Statements of Operations for the three-
month period ended March 31, 1999 and 1998, and six-
month period ended March 31, 1999 and 1998
C. Combined Statement of Cash Flows for the six-month
period ended March 31, 1999 and 1998
(b) Pro forma financial information.
The following unaudited pro forma financial information is
filed as required by Article 11 of Regulation S-X, as promulgated
pursuant to the Securities Act and the Exchange Act, and is attached
hereto as Exhibit 99.4. The following information should be read in
conjunction with the Company's Annual Report on Form 10-K for the
year ended December 31, 1998 and Quarterly Report on Form 10-Q for
the quarterly period ended March 31, 1999.
Unaudited Pro Forma Combined Condensed
Financial Statements of the Company, Chem-Con and Chem-Met
A. Unaudited Pro Forma Condensed Combined Balance
Sheet as of December 31, 1998
B. Unaudited Pro Forma Condensed Combined Statement of
Operations for the year ended December 31, 1998
C. Unaudited Pro Forma Condensed Combined Balance
Sheet as of March 31, 1999
D. Unaudited Pro Forma Condensed Combined Statement
of Operations for the quarter ended March 31, 1999
E. Notes to the Unaudited Pro Forma Condensed Combined
Financial Statements
(c) Exhibits.
2.1* Stock Purchase Agreement dated as of May 27, 1999,
among Perma-Fix Environmental Services, Inc.,
Chemical Conservation Corporation, Chemical
Conservation of Georgia, Inc., the Thomas P.
Sullivan Living Trust, dated September 6, 1978, the
Ann L. Sullivan Living Trust, dated September 6,
1978, Thomas P. Sullivan, and Ann L. Sullivan.
-2-
<PAGE>
2.2* Stock Purchase Agreement dated as of May 27, 1999,
among Perma-Fix Environmental Services, Inc., Chem-
Met Services, Inc., the Thomas P. Sullivan Living
Trust, dated September 6, 1978, the Ann L. Sullivan
Living Trust, dated September 6, 1978, Thomas P.
Sullivan, and Ann L. Sullivan.
4.1* Amendment and Joinder to Loan and Security
Agreement (the "Loan Amendment") dated May 27,
1999, among Congress Financial Corporation
(Florida), Perma-Fix Environmental Services, Inc.
and the subsidiaries of Perma-Fix Environmental
Services, Inc.
4.2* Subordination Agreement dated May 27, 1999 among
Congress Financial Corporation (Florida), Perma-Fix
Environmental Services, Inc., the subsidiaries of
Perma-Fix Environmental Services, Inc., the Thomas
P. Sullivan Living Trust dated September 6, 1978
and the Ann L. Sullivan Living Trust dated
September 6, 1978
10.1* Promissory Note for $1,230,000 issued to the Ann L.
Sullivan Living Trust dated September 6, 1978
10.2* Promissory Note for $1,970,000 issued to the Ann L.
Sullivan Living Trust dated September 6, 1978
10.3* Promissory Note for $1,500,000 issued to the Thomas
P. Sullivan Living Trust dated September 6, 1978
10.4* Non-recourse Guaranty dated May 28, 1999, by and among
Chem-Met Services, Inc., the Thomas P. Sullivan Living Trust
dated September 6, 1978, and the Ann L. Sullivan Living Trust
dated September 6, 1978.
10.5* Mortgage dated May 28, 1999, by Chem-Met Services, Inc. to the
Thomas P. Sullivan Living Trust dated September 6, 1978 and the
Ann L. Sullivan Living Trust dated September 6, 1978.
23.1 Consent of Bovitz & Co., P.C.
99.1* Press release, dated June 2, 1999
-3-
<PAGE>
99.2 Audited combined financial statements of Chemical
Conservation Corporation, Chemical Conservation of
Georgia, Inc. and Chem-Met Services, Inc.
99.3 Unaudited combined interim financial statements of
Chemical Conservation Corporation, Chemical
Conservation of Georgia, Inc. and Chem-Met
Services, Inc.
99.4 Pro Forma Financial Information
___________________
* Filed as an exhibit to the Company's Current Report on Form 8-K dated
June 1, 1999.
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 hereunto duly authorized.
PERMA-FIX ENVIRONMENTAL
SERVICES, INC.
By: /s/ Richard T. Kelecy
_______________________________
Richard T. Kelecy
Chief Financial Officer
Date: August 16, 1999
B O V I T Z
________________
& CO, CPA, P. C.
CERTIFIED PUBLIC ACCOUNTANTS
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Perma-Fix Environmental Services, Inc.
Gainesville, Florida
We hereby consent to the incorporation by reference of our report
dated January 26, 1999, relating to the combined financial statements
and schedule of Chemical Conservation Corporation, Chemical Conservation
of Georgia, Inc. and Chem-Met Services, Inc. and subsidiaries
appearing in the Report on Form 8-K/A, earliest event June 2, 1999 of
Perma-Fix Environmental Services, Inc. (the "Company") into the
Company's previously filed Forms S-3 and S-8 Registration Statement,
File Nos. 33-85118 (S-3), 333-14513 (S-3), 333-43149 (S-3), 33-80580
(S-8), 333-3664 (S-8), 333-17899 (S-8) and 333-25835 (S-8).
/s/ Robert L. Bovitz
Robert L. Bovitz
Bovitz & Co., CPA, P.C.
Trenton, Michigan
August 12, 1999
1651 Kingsway Court * P. O. Box 445/Trenton, Michigan 48183-0445
Phone: (734) 671-5300 / Fax: (734) 671-6504 /
Website: bovitzcpa.com /E-Mail: [email protected]
CHEM-MET SERVICES COMBINED ENTITIES
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO COMBINED FINANCIAL STATEMENTS
_______________________________________
PAGE
____
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
BOVITZ & CO., CPA, P.C.. . . . . . . . . . . . . . . . . 2
COMBINED FINANCIAL STATEMENTS:
______________________________
Combined Balance Sheets as of September 30, 1998
and 1997. . . . . . . . . . . . . . . . . . . . . . . 3
Combined Statements of Income and Retained Earnings
for the Years Ended September 30, 1998, 1997 and
1996. . . . . . . . . . . . . . . . . . . . . . . . . 4
Combined Statements of Cash Flows for the Years
Ended September 30, 1998, 1997 and 1996 . . . . . . . 5
Notes To Financial Statements . . . . . . . . . . .6 - 12
FINANCIAL STATEMENT SCHEDULES:
_____________________________
I Combining Balance Sheets as of September 30,
1998 . . . . . . . . . . . . . . . . . . . . . . .13 - 14
II Combining Balance Sheets as of September 30,
1997 . . . . . . . . . . . . . . . . . . . . . . .15 - 16
III Combining Statements of Income for Year End
September 30, 1998 . . . . . . . . . . . . . . . . . 17
IV Combining Statements of Income for Year End
September 30, 1997 . . . . . . . . . . . . . . . . . 18
V Combining Statements of Income for Year End
September 30, 1996 . . . . . . . . . . . . . . . . . 19
<PAGE>
B O V I T Z
_____________________
& C O. C P A, P. C.
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITOR'S REPORT
____________________________
To the Board of Directors and Stockholders of
Chem-Met Services Combined Entities
We have audited the accompanying combined balance sheets of Chem-
Met Services Combined Entities as of September 30, 1998 and 1997,
and the related combined statements of income and retained
earnings and cash flows for each of the three years in the period
ended September 30, 1998. We have also audited the schedules
listed in the accompanying index. These combined financial
statements and schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
combined financial statements and schedules 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 and schedules are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements and schedules. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the
financial statements and schedules. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to
above present fairly, in all material respects, the financial
position of Chem Met Services Combined Entities at September 30,
1998 and 1997, and the results of their operations and their cash
flows for each of the three years in the period ended
September 30, 1998, in conformity with generally accepted
accounting principles.
Also, in our opinion, the schedules present fairly, in all
material respects, the information set forth therein.
/s/ Bovitz & Co., CPA, PC
Bovitz & Co., CPA, P.C.
Trenton, Michigan 48183
January 26, 1999
1651 Kingsway Court * P.O. Box 445/Trenton, Michigan 48183-0445
Phone: (734) 671-5300/Fax: (734) 671-6504/
Website: bovitzcpa.com/E-Mail: [email protected]
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<PAGE>
<TABLE>
<CAPTION>
CHEM-MET SERVICES COMBINED ENTITIES
COMBINED BALANCE SHEETS
SEPTEMBER 30, 1998 AND 1997
ASSETS 9/30/98 9/30/97
_______ _______ _______
CURRENT ASSETS
______________
<S> <C> <C>
Cash $ 334,242 $ 599,980
Restricted Cash 494,449 539,367
Accounts Receivable 5,043,064 4,551,552
Prepaid Federal Income Tax 27,610 -0-
Notes Receivable - Other 26,042 9,606
___________ ___________
TOTAL CURRENT ASSETS 5,925,407 5,700,505
___________ ___________
PROPERTY AND EQUIPMENT
______________________
Property and Equipment,
Net of Accumulated Depreciation 6,636,079 7,205,665
___________ ___________
OTHER ASSETS
_____________
Note Receivable - Officer 1,064,939 869,032
Other Assets 36,153 46,036
___________ ___________
TOTAL OTHER ASSETS 1,101,092 915,068
___________ ___________
TOTAL ASSETS $13,662,578 $13,821,238
=========== ===========
LIABILITIES AND STOCKHOLDER EQUITY
__________________________________
CURRENT LIABILITIES
___________________
Accounts Payable $ 1,603,020 $ 1,821,378
Payroll Taxes Payable 34,121 22,753
Federal Income Tax Payable -0- 140,797
Accrued Expenses 1,078,390 801,843
Current Portion of Long-Term Debt 2,481,828 2,667,452
Current Portion of Settlements Payable 1,044,000 1,084,000
___________ ___________
TOTAL CURRENT LIABILITIES 6,241,359 6,538,223
___________ ___________
LONG-TERM LIABILITIES
Accrued Environmental Cost 4,430,421 4,430,421
Accrued Closing Cost 449,783 440,277
Long-Term Debt, Less Current Maturities 1,553,606 1,772,472
Settlements Payable, Less Current Portion 264,000 396,000
___________ ___________
NET LONG-TERM LIABILITIES 6,697,810 7,039,170
___________ ___________
STOCKHOLDER EQUITY
Common Stock 77,160 77,160
Retained Earning 646,249 166,685
___________ ___________
TOTAL STOCKHOLDER EQUITY 723,409 243,845
___________ ___________
TOTAL LIABILITIES AND STOCKHOLDER
EQUITY $13,662,578 $13,821,238
=========== ===========
</TABLE>
Bovitz & Co., CPA, P.C.
Trenton, Michigan 48183
(The Accompanying Notes Are An Integral Part
Of These Combined Financial Statements)
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<PAGE>
<TABLE>
<CAPTION>
CHEM-MET SERVICES COMBINED ENTITIES
COMBINED STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE YEARS ENDED SEPTEMBER 30, 1998, 1997, AND 1996
9/30/98 9/30/97 9/30/96
___________ ___________ _________
<S> <C> <C> <C>
NET REVENUES $21,801,179 $21,917,416 $28,030,820
COST OF GOODS SOLD 14,133,618 14,348,058 19,582,877
___________ ___________ __________
GROSS PROFIT 7,667,561 7,569,358 8,447,943
SELLING GENERAL AND ADMINISTRATIVE
EXPENSES 6,055,329 6,742,485 7,562,912
DEPRECIATION AND AMORTIZATION 798,788 755,071 920,137
___________ __________ ___________
INCOME(LOSS) FROM OPERATIONS 813,444 71,802 (35,106)
___________ __________ ___________
OTHER INCOME(EXPENSES)
Interest and Other Income 26,511 286,782 63,823
Interest Expense (360,391) (391,353) (405,401)
Other Expense (200,000)
TOTAL OTHER INCOME(EXPENSES) (333,880) (104,571) (541,578)
____________ ___________ __________
NET INCOME(LOSS) Before Federal
Income Tax 479,564 (32,769) (576,684)
FEDERAL INCOME TAX -0- (27,490) (61,312)
___________ ___________ __________
NET INCOME(LOSS) 479,564 (60,259) (637,996)
RETAINED EARNINGS - Beginning 166,685 226,944 864,940
____________ ___________ __________
RETAINED EARNINGS - Ending $ 646,249 $ 166,685 $ 226,944
=========== =========== ===========
</TABLE>
Bovitz & Co., CPA, P.C.
Trenton, Michigan 48183
(The Accompanying Notes Are An Integral Part
Of These Combined Financial Statements)
-4-
<PAGE>
<TABLE>
<CAPTION>
CHEM-MET SERVICES COMBINED ENTITIES
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, 1998, 1997 AND 1996
9/30/98 9/30/97 9/30/96
___________ ___________ __________
<S> <C> <C> <C>
Cash flows from operating activities:
Net Income(Loss) from continuing
operations $ 479,564 $ (60,259) $ (637,996)
Adjustments to reconcile net
income(loss) to cash provided by
operations:
Depreciation and amortization 798,788 755,071 920,137
Provision for bad debt reserves 606,006 (290,352) (238,319)
Changes in assets and liabilities:
Accounts receivable (1,097,518) 700,684 (33,530)
Prepaid federal income tax (168,407) 27,490 2,302
Accounts payable and accrued expenses 79,063 (1,180,716) 284,771
___________ __________ __________
Net cash provided by continuing
operations 697,496 (48,082) 297,365
___________ ___________ __________
Cash flows from investing activities:
Purchases of property and equipment,
net (304,829) (379,835) (325,604)
Proceeds from sale of property and
equipment 85,510 91,712 5,657
Change in restricted cash 44,918 451,138 -0-
___________ ___________ __________
Net cash used in investing
activities (174,401) 163,015 (319,947)
___________ ___________ __________
Cash flows from financing activities:
Long-term financing new equipment 257,557 314,872 1,014,607
Principal repayments on long-term debt (850,483) (661,800) (1,302,215)
Change in officer note receivable (195,907) 205,785 (436,446)
___________ ___________ __________
Net cash used by financing
activities (788,833) (141,143) (724,054)
___________ ___________ __________
Increase(Decrease) in cash (265,738) (26,210) (746,636)
Cash - Beginning 599,980 626,190 1,372,826
___________ ___________ __________
Cash - Ending $ 334,242 $ 599,980 $ 626,190
=========== =========== ==========
</TABLE>
Bovitz & Co., CPA, P.C.
Trenton, Michigan 48138
(The Accompanying Notes Are An Integral Part Of
These Financial Statements)
-5-
<PAGE>
CHEM-MET SERVICES COMBINED ENTITIES
NOTES TO FINANCIAL STATEMENTS
NOTE A - COMPANY OVERVIEW
Company Overview
________________
Chem-Met Services, Inc. ("Chem-Met") operates a facility near
Detroit, Michigan that processes acids, alkalis, adhesives, oils,
paints, phosphates, plastisols, resins, sludges and other
hazardous waste into inert solids that are economically
compatible with the environment for placement in approved third-
party non-hazardous landfills.
Chemical Conservation Corporation ("Chem-Con") runs a fully Part
B-permitted T.S.D.F. and transfer station in Orlando, Florida,
that processes acids, inorganic and organic waste, as well as
depacking of lab packs. The company is fully licensed and
equipped to transport hazardous waste.
Chemical Conservation of Georgia, Inc. ("Chem-Con Georgia") has a
facility just north of the Florida border in Valdosta, Georgia,
that recycles solvents and blends organic wastes to make virgin-
fuel substitutes for cement kilns.
Chem-Met, Chem-Con, Chem-Con Georgia (collectively "Environmental
Companies") have provided safe industrial waste management
services for more than 25 years. The Enviromental Companies
provide long-term, proven remedies for many types of waste
streams--remedies that insure the longevity of the companies
served and allow those companies to coexist with a healthy
environment. Hazardous waste is a natural byproduct of our vast
technological and industrial output. The assumption of
responsibility for the safe, cost-effective, long-term management
of industrial wastes is crucial not only to the health of the
environment, but to the health of the businesses and industries
that create the waste. The present objectives of the
Enviromental Companies are to maximize the profitability of their
existing business and to continue to search for new waste
opportunities.
T.A.S. Leasing, Inc. ("TAS") operates an equipment leasing
company serving only Chem-Met Services, Inc.
Quanta Corporation ("Quanta") operates an industrial maintenance
company adjacent to the Chem-Met facility located in Brownstown,
Michigan.
Principal Products and Services
_______________________________
The Environmental Companies provide off-site services for the
transportation, treatment, storage, recycling and disposal of
hazardous and non-hazardous waste. The Environmental Companies
service commercial companies and governmental agencies
nationwide.
Chem-Met is a permitted facility that provides transportation,
stabilization of liquid and solid drum residues and disposal of
non-hazardous liquid and solid waste, including characteristic
hazardous liquid and solid waste in which prior to disposal the
hazardous waste is processed in a manner designed to remove or
eliminate the hazardous characteristics.
Chem-Con is a permitted transfer station that provides
transportation of hazardous and non-hazardous waste.
Bovitz & Co., CPA, P.C.
Trenton, Michigan 48183
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<PAGE>
CHEM-MET SERVICES COMBINED ENTITIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE A - COMPANY OVERVIEW (Continued)
Chem-Con Georgia is a permitted facility that provides
transportation, storage, treatment and disposal services to
hazardous and non-hazardous waste generators throughout the
United States. Chem-Con Georgia operates a hazardous waste
storage facility that primarily blends and processes hazardous
and non-hazardous waste liquids, solids and sludges into
substitute fuel or as a raw material substitute in cement kilns
that have been specially permitted for the processing of
hazardous and non-hazardous wastes.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Combination
- -------------------------
The combined financial statements include the accounts of Chem-
Met, Chem-Con, Chem-Con Georgia, TAS, and Quanta (collectively
the "Company") after elimination of all significant intercompany
accounts and transactions.
Use of Estimates
- ----------------
In preparing financial statements in conformity with generally
accepted accounting principles, management makes estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities
at the date of the financial statements as well as the reported
amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Net Revenues
- ------------
Revenues for services and reimbursable costs are recognized at
the time services are rendered or, in the case of fixed price
contracts, under the percentage-of-completion method of
accounting. The Department of Defense with multiple locations
serviced by Chem-Met generates revenues which amount to
approximately 19.7% of combined net revenues.
Income Taxes
____________
The Company accounts for income taxes under Statement of
Financial Accounting Standards ("SFAS") No. 109, "Accounting for
Income Taxes," which requires use of the liability method. SFAS
No. 109 provides that deferred tax assets and liabilities are
recorded based on the differences between the tax bases of assets
and liabilities and their carrying amounts for financial
reporting purposes, referred to as temporary differences.
Deferred tax assets or liabilities at the end of each period are
determined using the currently enacted tax rates to apply to
taxable income in the periods in which the deferred tax assets or
liabilities are expected to be settled or realized.
Accrued Closure Costs
_____________________
Accrued closure costs represent the Company's estimated
environmental liability to clean up their facilities in the event
of closure.
Bovitz & Co., CPA, P.C.
Trenton, Michigan 48183
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<PAGE>
<PAGE>
CHEM-MET SERVICES COMBINED ENTITIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Self-Insurance
______________
The Company has adopted a self-insurance program effective
August 1, 1998, for certain health benefits. The claims for
September, 1998, for $80,496 have been accrued and are being
recognized as an expense in the period ended 9/30/98.
Operating Leases
________________
The Company leases certain equipment under operating leases.
Future minimum rental payments as of Septmber 30, 1998, required
under these leases are $40,004 in 1999 and $16,843 in 2000.
Restricted Cash
_______________
Restricted cash represented various certificates of deposit held
by the State, which equaled the estimated amount of long-term
site cleanup costs and monies held in trust to satisfy the
current debt retirement payment for the Small Business
Administration note.
9/30/98 9/30/97
________ ________
Restricted Cash - SBA Note $494,449 $467,478
Restricted Cash - Land Reclamation -0- 71,889
________ _________
$494,449 $539,367
======== ========
The company has satisfied State land reserve requirements by
purchasing insurance policies. A reserve is no longer necessary.
Accounts Receivable - Trade
___________________________
For the September 30, 1998 and 1997 balance sheets, the company
utilized an allowance for doubtful accounts. The current year
financial statements are net of the allowance for doubtful
accounts.
Accounts Receivable
-Chem-Met Services, Inc. $3,485,646 $2,651,704
-Chemical Conservation Corp. 2,547,416 2,310,875
-Quanta Corporation 158,947 131,912
__________ __________
6,192,009 5,094,491
__________ __________
Allowance for Doubtful Accounts
-Chem-Met Services, Inc. 438,396 112,501
-Chemical Conservation Corp. 685,367 430,438
-Quanta Corporation 25,182 -0-
_________ _________
1,148,945 542,939
_________ _________
NET ACCOUNTS RECEIVABLE $5,043,064 $4,551,552
========== ==========
Bovtiz & Co., CPA, P.C.
Trenton, Michigan 48183
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<PAGE>
<PAGE>
CHEM-MET COMBINED ENTITIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE C - PROPERTY AND EQUIPMENT
Property and equipment expenditures are capitalized and
depreciated using the straight-line method over the estimated
useful lives of the assets for financial statement purposes,
while accelerated depreciation methods are principally used for
tax purposes. Generally, annual depreciation rates range from
ten to forty years for buildings (including improvements) and
three to seven years for office furniture and equipment,
vehicles, and decontamination and processing equipment.
Maintenance and repairs are charged directly to expense as
incurred. The cost and accumulated depreciation of assets sold
or retired are removed from the respective accounts, and any gain
or loss from sale or retirement is recognized in the accompanying
combined statements of operations. Renewals and improvements
which extend the useful lives of the assets are capitalized.
9/30/98 9/30/97
_______ _______
Tank Project $ 759,751 $ 759,751
Shredding System 434,280 434,280
Office Renovation 535,719 535,719
Office Equipment 403,085 353,749
Buildings 7,391,902 7,391,902
Machinery and Equipment 5,654,839 5,626,630
Transporation Equipment 2,881,074 2,850,236
__________ _________
18,060,650 17,952,267
Accumulated Depreciation (11,885,971) (11,208,002)
__________ __________
6,174,679 6,744,265
Land 461,400 461,400
__________ __________
NET PROPERTY AND EQUIPMENT $6,636,079 $7,205,665
========== ==========
NOTE D - ACCRUED EXPENSES
9/30/98 9/30/97
_______ _______
Accrued - Disposal Expense $ 465,808 $ 400,035
- Interest 53,550 64,350
- Payroll Deductions 13,964 17,704
- Property Taxes 52,792 49,786
- State Surcharges 80,532 26,999
- Wages 331,249 242,969
- Medical Insurance Claims 80,495 -0-
_________ _________
1,078,390 801,843
========= =========
Bovitz & Co., CPA. P.C.
Trenton, Michigan 48183
-9-
<PAGE>
CHEM-MET SERVICES COMBINED ENTITIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE E - NOTES PAYABLE
Notes payable consists of the following:
9/30/98 9/30/97
_______ _______
Note payable to Charter Bank with interest
@ 1% above bank prime, secured by trade
accounts receivable. $1,990,000 $2,000,000
Note payable to Comerica Bank, payable in
monthly installments of $7,500, including
interest at 9.25%, secured by corporate
assets and personally guaranteed by
shareholder Thomas P. Sullivan. 52,500 142,500
Note payable to Michigan Strategic Fund,
payable in monthly installments of
$30,607, plus interest at 9%, secured by
corporate assets and personally guaranteed
by shareholder Thomas P. Sullivan. 1,190,000 1,430,000
Note payable to Associates Commercial Credit,
payable in monthly installments of $7,496,
including interest at 10%, secured by three
tractors. 43,755 133,707
Notes payable to Ford Motor Credit (total of
nine), payable in monthly installments of
$4,467, including interest from 2% to 9%,
secured by nine Ford automobiles. 59,645 108,708
Note payable to Cargill Leasing Corp., dated
4/4/97, payable in monthly installments of
$2,631, including interest at 2.047%, secured
by two Kenworth tractors with a cost of
$149,918. 99,182 128,396
Note payable to Associates Commercial Corp.,
dated 7/9/98, payable in monthly installments
of $1,836, including interest at 11%, secured
by a Kenworth tractor with a cost of $99,120. 89,323 -0-
Note payable to Associates Commercial Corp.,
dated 6/4/98, payable in monthly installments
of $2,015, including interest at 11%, secured
by a Kenworth tractor with a cost of $84,591. 72,492 -0-
Note payable to Allen Sibley, LLC, without
interest, unsecured. 365,000 304,179
Other Notes Payable 73,537 192,434
__________ __________
Total Debt 4,035,434 4,439,924
Less Current Maturities (2,481,828) (2,667,452)
__________ __________
Net Long-Term Debt $1,553,606 $1,772,472
========== ==========
Bovitz & Co., CPA, P.C.
Trenton, Michigan 48183
-10-
<PAGE>
CHEM-MET SERVICES COMBINED ENTITIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE F - SETTLEMENTS PAYABLE
9/30/98 9/30/97
_______ _______
Note payable to Chemfix Technologies, Inc.,
dated 2/9/93, payable in monthly installments
of $12,000, non-interest bearing, total
principal of $1,352,000 with $200,000 paid
prior to commencement of monthly payments
8/1/93. $ 408,000 $ 540,000
Settlement payable to Indiana Department
of Environmental Management (Four County
Landfill Site). 900,000 900,000
Consent judgement payable to Michigan Department
of Environmental Quality, dated June, 1996,
satisfied January, 1998. -0- 40,000
__________ __________
1,308,000 1,480,000
Less Current Portion (1,044,000) (1,084,000)
__________ __________
Long-Term Settlements Payable $ 264,000 $ 396,000
========== ==========
The approximate aggregate maturities of long-term debt and
settlements payable for the five years ending September 30 are as
follows:
LONG-TERM DEBT SETTLEMENT PAYABLE
______________ ___________________
1999 $2,481,828 $1,044,000
2000 418,872 144,000
2001 387,784 120,000
2002 381,950 -0-
2003 365,000 -0-
__________ __________
$4,035,434 $1,308,000
========== ==========
NOTE G - LEGAL
Legal counsel has advised that there are potential lawsuits
pending at balance sheet date. Formal legal action on the State
of Indiana litigation was commenced in November, 1996. During
the period since the filing of the suit, settlement negotiations
have been ongoing. As of this date a settlement appears imminent
in the amount of $900,000 and has been accrued as a settlement
payable under Note F. Said settlement, however, is dependent
upon successful completion of pending merger negotiations. If
the merger negotiations are unsuccessful and if litigation
ensues, the estimated cost could be in the range of $1,000,000 to
$5,000,000.
In addition to the above matters and in the normal course of
conducting its business, the Company is involved in various other
litigation. The Company is not a party to any litigation or
governmental proceeding which its management believes could
result in any judgments or fines against it that would have a
material adverse affect on the Company's financial position,
liquidity or results of operations.
Bovitz & Co., CPA, P.C.
Trenton, Michigan 48183
-11-
<PAGE>
<PAGE>
CHEM-MET SERVICES COMBINED ENTITIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE H - EMPLOYEE BENEFIT PLANS
The company provides a defined contribution profit sharing plan
and trust for its employees. The plan is a section 401(k)
deferred compensation plan. The company is required to
contribute annually an amount equal to 25% of each plan
participant's elective deferral, up to $250 per participant.
For the years ended September 30, 1998, 1997, and 1996 company
contributions to the trust totaled $4,683, $3,927 and $7,356
respectively.
NOTE I - NOTE RECEIVABLE OFFICER
The officer note is a demand note receivable with interest based
on the prime rate.
NOTE J - FEDERAL AND STATE INCOME TAXATION
Each entity files a corporate tax return indicating it is a
member of a controlled group. There is no federal income tax
liabilities due to current year net losses and available net
operating loss deductions. Current year estimated payments of
$27,610 along with net operating losses are available to offset
future years' liabilities. State income taxes are dealt with on
an individual reporting basis with a liability being charged to
the following year's expense.
Projected
Federal N.O.L. State Liabilities
______________ _________________
Chem-Met Services $ 31,449 $ 251
Chemical Conservation Corporation 58,206 2,090
Chemical Conservation of Georgia, Inc. 190,089 10
T.A.S. Leasing, Inc. 304 -0-
Quanta Corporation -0- -0-
__________ _______
$280,048 $2,351
========== =======
Bovitz & Co., CPA, P.C.
Trenton, Michigan 48183
-12-
<PAGE>
COMBINING BALANCE SHEETS SCHEDULE I
9/30/98 __________
Chem-Met ChemCon FL ChemCon GA
09/30/98 09/30/98 09/30/98
__________ ___________ __________
ASSETS:
Current Assets:
Cash 123,442 201,317 14
Restricted Cash 494,449
Accounts Receivable, 3,047,250 1,862,049
net of allowance
for doubtful accounts
of $438,396, $685,367
$25,182, respectively
Prepaid Expenses 27,610
Other Receivables 10,788 15,254
Note Receivable - Chem-Met
Note Receivable - Chem-Con FL 1,575,910 1,939,503
Note Receivable - Chem-Con GA 1,540,068
Note Receivable - Quanta Corp. 920,336 260,000
__________ ____________ ___________
Total Current Assets 7,739,852 2,338,620 1,939,517
__________ ____________ ___________
Property and equipment:
Land 413,400 48,000
Fixed Assets 10,099,510 2,759,094 3,301,754
__________ ____________ ___________
10,512,910 2,759,094 3,301,754
Less accumulated depreciation (6,570,151) (2,079,645) (1,876,908)
__________ ____________ ___________
Net Property and equipment 3,942,759 679,449 1,424,846
__________ ____________ ___________
Other Assets:
Deposits 1,050
Note Receivable - Officer 399,814
Goodwill 34,603
__________ ____________ ___________
Total other assets 399,814 0 35,653
__________ ____________ ___________
Total Assets 12,082,426 3,018,069 3,400,016
========== ============ ===========
TAS Quanta
09/30/98 12/31/98 Elimination Total
__________ ___________ ____________ _________
3,378 6,901 334,242
494,449
133,765 5,043,064
81,561 (81,561) 0
(3,515,413) 0
(1,540,068) 0
(1,180,336) 0
__________ ____________ ___________ __________
84,939 139,856 (6,317,378) 5,925,407
__________ ____________ ___________ __________
461,400
812,853 1,135,439 18,060,650
__________ ____________ ___________ __________
812,853 1,135,439 18,522,050
(728,035) (631,232) (11,885,971)
__________ ____________ ___________ __________
84,818 504,207 6,636,079
__________ ____________ ___________ __________
1,050
726,105 (60,980) 1,064,939
500 35,103
__________ ____________ ___________ __________
0 726,605 (60,980) 1,101,092
__________ ____________ ___________ __________
169,757 1,370,668 (6,378,358) 13,662,578
========== ============ =========== ==========
-13-
COMBINING BALANCE SHEETS SCHEDULE I
9/30/98 __________
Chem-Met ChemCon FL ChemCon GA
09/30/98 09/30/98 09/30/98
__________ __________ __________
LIABILITIES AND STOCKHOLDER'S EQUITY:
Current liabilities:
Accounts Payable 663,899 418,162 373,017
Accounts Payable - Intercompany 1,067,099 325,164 549,823
Net Payable - Officer 60,980
Net Payable - Chem-Met 1,575,910 1,540,068
Accrued Expenses 363,550 281,000 439,811
Current portion 1,044,000
of settlements payable
Current portion of 2,307,167 86,405
long-term debt
___________ ___________ __________
Total current liabilities 5,445,715 2,747,621 2,902,719
___________ ___________ __________
Long-term debt, less current 931,100 25,645
portion
Long-term portion 264,000
of settlements payable
Accrued environmental costs 2,292,000 2,138,421
Accrued closure costs 233,981 28,947 186,855
___________ ___________ __________
Total long-term debt 3,721,081 54,592 2,325,276
___________ ___________ __________
Stockholder's Equity
Common Stock 860 1,000 75,000
Retained Earnings 2,914,770 214,856 (1,902,979)
___________ __________ __________
Total Stockholder's equity 2,915,630 215,856 (1,827,979)
___________ ___________ __________
Total liabilities 12,082,426 3,018,069 3,400,016
and Stockholder's Equity =========== =========== ==========
TAS Quanta
09/30/98 12/31/98 Elimination Total
__________ ___________ ____________ _________
117,678 1,572,755
109,242 (2,021,064) 30,264
(60,980) 0
1,180,336 (4,296,314) 0
28,150 1,112,511
1,044,000
15,315 72,941 2,481,828
___________ ____________ ____________ __________
15,315 1,508,347 (6,378,358) 6,241,359
___________ ____________ ____________ __________
9,262 587,599 1,553,606
264,000
4,430,421
449,783
___________ ____________ ____________ __________
9,262 587,599 6,697,810
___________ ____________ ____________ __________
200 100 77,160
144,980 (725,378) 646,249
___________ ____________ ____________ __________
145,180 (725,278) 723,409
___________ ____________ ____________ __________
169,757 1,370,668 (6,378,358) 13,662,578
=========== ============ ============ ==========
-14-
<PAGE>
COMBINING BALANCE SHEETS SCHEDULE II
9/30/97 ___________
Chem-Met ChemCon FL ChemCon GA
09/30/97 09/30/97 09/30/97
__________ ___________ __________
ASSETS:
Current Assets:
Cash 465,677 127,219 734
Restricted Cash 467,478 71,889
Accounts Receivable, 2,539,203 1,880,437
net of allowance
for doubtful accounts
of $112,501, $430,438,
$0, respectively
Other Receivables 5,599 4,007
Accounts Receivable - 33,737 1,309,561
Intercompany
Note Receivable - Chem-Con FL 1,575,910
Note Receivable - Chem-Con GA 1,540,068
Note Receivable - Quanta Corp. 727,398 225,000
__________ ___________ ___________
Total Current Assets 7,355,070 2,236,663 1,382,184
__________ ___________ ___________
Property and equipment:
Land 413,400 48,000
Fixed Assets 10,019,125 2,838,504 3,253,754
__________ ___________ ___________
10,432,525 2,838,504 3,301,754
Less accumulated depreciation (6,209,603) (1,909,400) (1,818,406)
__________ ___________ ___________
Net Property and equipment 4,222,922 929,104 1,483,348
__________ ___________ ___________
Other Assets:
Deposits 1,050
Note Receivable - Officer 399,814
Goodwill 44,486
__________ ___________ ___________
Total other assets 399,814 0 45,536
__________ ____________ ___________
Total Assets 11,977,806 3,165,767 2,911,068
========== ============ ===========
TAS Quanta
09/30/97 12/31/97 Elimination Total
__________ ___________ ____________ __________
593 5,757 599,980
539,367
131,912 4,551,552
9,606
57,924 (1,401,222) 0
(1,575,901) 0
(1,540,068) 0
(952,398) 0
__________ ___________ ____________ __________
58,517 137,669 (5,469,598) 5,700,505
__________ ___________ ____________ __________
461,400
889,155 951,729 17,952,267
__________ ___________ ____________ __________
889,155 951,729 0 18,413,667
(757,389) (513,204) (11,208,002)
__________ ___________ ____________ __________
131,766 438,525 0 7,205,665
__________ ___________ ____________ __________
1,050
565,665 (96,447) 869,012
500 44,986
__________ ___________ ____________ __________
0 565,165 (96,447) 915,068
__________ ___________ ____________ __________
190,283 1,142,359 (5,566,045) 13,821,238
========== =========== ============= ==========
-15-
<PAGE>
COMBINING BALANCE SHEETS SCHEDULE II
9/30/97 ___________
Chem-Met ChemCon FL ChemCon GA
09/30/97 09/30/97 09/30/97
__________ __________ __________
LIABILITIES AND STOCKHOLDER'S EQUITY:
Current liabilities:
Accounts Payable 781,212 359,442 601,346
Accounts Payable - Intercompany 432,952 350,378 554,250
Note Payable - Officer 60,980
Note Payable - Chem-Met 1,575,910 1,540,068
Note Payable - Quanta Corp.
Accrued Expenses 375,565 147,081 421,093
Current portion 1,084,000
of settlements payable
Current portion of 2,337,408 251,073
long-term debt
___________ __________ __________
Total current liabilities 5,011,137 2,744,864 3,116,757
___________ __________ __________
Long-term debt, less current 1,248,502 96,384
portion
Long-term portion 396,000
of settlements payable
Accrued environmental costs 2,292,000 2,138,421
Accrued closure costs 228,707 28,379 183,191
___________ __________ __________
Total long-term debt 4,165,209 124,763 2,321,612
___________ __________ __________
Stockholder's Equity
Common Stock 860 1,000 75,000
Retained Earnings 2,800,600 295,140 (2,602,301)
___________ __________ __________
Total Stockholder's equity 2,801,460 296,140 (2,527,301)
___________ __________ __________
Total liabilities 11,977,806 3,165,767 2,911,068
and Stockholder's Equity =========== ========== ==========
TAS Quanta
09/30/97 12/31/97 Elimination Total
__________ ___________ ____________ ___________
79,378 1,821,378
99,109 (1,436,689) 0
(60,980) 0
(3,115,978) 0
952,398 (952,398) 0
21,654 965,393
1,084,000
26,487 52,484 2,667,452
__________ ___________ ____________ ___________
26,487 1,205,022 (5,566,045) 6,538,223
__________ ___________ ____________ ___________
1,542 426,044 1,772,472
396,000
4,430,421
440,277
__________ ___________ ____________ ___________
1,542 426,044 0 7,039,170
__________ ___________ ____________ ___________
200 100 77,160
162,054 (488,808) 166,685
__________ ___________ ____________ ___________
162,254 (488,708) 243,845
__________ ___________ ____________ ___________
190,283 1,142,359 (5,566,045) 13,821,238
========== =========== ============ ===========
<PAGE>
-16-
COMBINING INCOME STATEMENTS SCHEDULE III
FOR YEAR END 9/30/98 ____________
Chem-Met ChemCon FL ChemCon GA
09/30/98 09/30/98 09/30/98
__________ ___________ __________
NET REVENUES 11,542,619 12,929,369 4,302,718
COST OF GOODS SOLD 7,562,546 10,827,456 3,009,681
GROSS PROFIT 3,980,073 2,101,913 1,293,037
SELLING, GENERAL AND ADMINISTRATIVE 3,226,831 1,948,408 525,330
DEPRECIATION AND AMORTIZATION 360,548 212,515 68,385
__________ ____________ __________
INCOME(LOSS) FROM OPERATIONS 392,694 (59,010) 669,322
OTHER INCOME (EXPENSE):
INTEREST INCOME 26,160
INTEREST EXPENSE (304,684) (21,274)
__________ ____________ __________
NET INCOME(LOSS) 114,170 (80,284) 669,322
FROM CONTINUING OPERATIONS
NET INCOME(LOSS) 114,170 (80,284) 699,322
========== ============ ==========
TAS Quanta
09/30/98 12/31/98 Elimination Total
__________ ___________ ____________ ___________
44,075 1,324,513 (8,342,115) 21,801,179
17,959 1,058,091 (8,342,115) 14,133,618
26,116 266,422 0 7,667,561
150 354,610 6,055,329
39,312 118,028 798,788
__________ ___________ ___________ ___________
(13,346) (206,216) 0 813,444
351 26,511
(3,728) (30,705) (360,391)
__________ ___________ ___________ ___________
(17,074) (236,570) 0 479,564
(17,074) (236,570) 0 479,564
========== =========== =========== ===========
-17-
<PAGE>
COMBINING INCOME STATEMENTS SCHEDULE IV
FOR YEAR END 9/30/97 ___________
Chem-Met ChemCon FL ChemCon GA
09/30/97 09/30/97 09/30/97
__________ ___________ __________
NET REVENUES 12,257,286 12,469,875 4,195,098
COST OF GOODS SOLD 8,315,481 9,746,335 3,597,820
GROSS PROFIT 3,941,805 2,723,540 597,278
SELLING, GENERAL AND ADMINISTRATIVE 3,322,431 2,358,660 531,703
DEPRECIATION AND AMORTIZATION 258,975 180,724 129,932
__________ ____________ __________
INCOME(LOSS) FROM OPERATIONS 333,399 184,156 (64,357)
OTHER INCOME (EXPENSE):
INTEREST INCOME 37,758
INTEREST EXPENSE (320,930) (43,253)
OTHER 230,475
__________ ____________ __________
NET INCOME(LOSS) 280,702 140,903 (64,357)
FROM CONTINUING OPERATIONS
FEDERAL INCOME TAX (27,490)
NET INCOME(LOSS) 253,212 140,903 (64,357)
========== ============ ==========
TAS Quanta
09/30/97 12/31/97 Elimination Total
__________ ___________ ____________ ___________
58,894 1,301,343 (8,365,080) 21,917,416
21,352 1,026,648 (8,359,578) 14,348,058
37,542 274,695 (5,502) 7,569,358
159 535,034 (5,502) 6,742,485
66,553 91,887 755,071
__________ ___________ ____________ ___________
(29,170) (352,226) 0 71,802
18,549 56,307
(6,246) (20,924) (391,353)
230,475
__________ ___________ ____________ ___________
(35,416) (354,601) 0 (32,769)
(27,490)
(35,416) (354,601) 0 (60,259)
========== ========== ============ ============
-18-
<PAGE>
COMBINING INCOME STATEMENTS SCHEDULE V
FOR YEAR END 9/30/96 __________
Chem-Met ChemCon FL ChemCon GA
09/30/96 09/30/96 09/30/96
__________ ___________ __________
NET REVENUES 12,337,655 15,479,803 5,926,326
COST OF GOODS SOLD 8,316,029 12,787,956 5,410,541
GROSS PROFIT 4,021,626 2,691,874 515,785
SELLING, GENERAL AND ADMINISTRATIVE 3,253,292 2,475,797 565,638
DEPRECIATION AND AMORTIZATION 368,236 247,844 139,845
__________ ____________ __________
INCOME(LOSS) FROM OPERATIONS 400,098 (31,767) (189,698)
OTHER INCOME (EXPENSE):
INTEREST INCOME 52,046
INTEREST EXPENSE (314,325) (60,788)
OTHER (200,000)
__________ ____________ __________
NET INCOME(LOSS) 137,819 (92,555) (389,698)
FROM CONTINUING OPERATIONS
FEDERAL INCOME TAX (61,312)
NET INCOME(LOSS) 76,507 (92,555) (389,698)
========== ============ ==========
TAS Quanta
09/30/96 12/31/96 Elimination Total
__________ ___________ ____________ ___________
76,089 3,232,667 (9,021,747) 28,030,820
16,549 2,050,867 (8,999,065) 19,582,877
59,540 1,181,800 (22,682) 8,447,943
21 1,290,846 (22,682) 7,562,912
88,910 75,302 920,137
__________ ___________ ____________ ___________
(29,391) (184,348) 0 (35,106)
11,777 63,823
(6,689) (23,599) (405,401)
200,000
__________ ___________ ____________ ___________
(36,080) (196,170) 0 (576,684)
(61,312)
(36,080) (196,170) 0 (637,996)
========== ========== ============ ============
-19-
<TABLE>
<CAPTION>
CHEM MET SERVICES COMBINED ENTITIES
UNAUDITED COMBINED BALANCE SHEET
March 31, 1999
(Amounts In Thousands)
March 31, Sept. 30,
1999 1998
____________________________________________________________________________
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $184 $334
Restricted Cash equivalents and investments 471 495
Accounts Receivable, net of allowance
for doubtful accounts 4,937 5,043
Inventories
Prepaid Expenses 28 28
Other Receivables 20 26
_____ _____
Total Current Assets 5,640 5,926
_____ _____
Property and equipment,
Net of accumulated depreciation 6,508 6,636
_____ _____
Intangibles and other assets:
Permits, net of accumulated amortization
Note Receivable - Officer 1,065 1,065
Goodwill, net of accumulated amortization 30 30
Other assets 1 6
______ ______
Total other assets 1,096 1,101
______ ______
Total Assets $13,244 $13,663
====== ======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CHEM MET SERVICES COMBINED ENTITIES
UNAUDITED COMBINED BALANCE SHEET
March 31, 1999
(Amounts In Thousands)
March 31, Sept. 30,
1999 1998
____________________________________________________________________________
<S> <C> <C>
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts Payable $1,515 $1,638
Accounts Payable-Intercompany 0 0
Accrued Expenses 1,203 1,078
Current portion of settlements payable 1,044 1,044
Current portion of long-term debt 2,355 2,482
______ _____
Total current liability 6,117 6,242
______ _____
Long-term Liabilities:
Environmental accruals 4,430 4,430
Accrued closure costs 450 450
Long-term debt, less current portion 1,425 1,554
Long-term portion of settlements payable 192 264
______ _____
Total long-term liabilities 6,497 6,698
______ _____
Stockholder's Equity
Preferred Stock
Common Stock 77 77
Redeemable warrants
Additional paid-in capital
Accumulated Deficit 553 646
______ ______
Total stockholder's equity 630 723
______ ______
Total liabilities and stockholder's equity $13,244 $13,663
====== ======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CHEM MET SERVICES COMBINED ENTITIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Six Months Ended
March 31 March 31
(Amounts in Thousands, __________________ __________________
Except for Share Amounts) 1999 1998 1999 1998
_____________________________________________________________________________
<S> <C> <C> <C> <C>
Net Revenues $5,079 $5,503 $10,966 $10,755
Cost of Goods Sold 3,607 3,359 7,124 6,501
______ ______ ______ ______
Gross Profit 1,472 2,144 3,842 4,254
Selling, General and
Administration 1,756 1,653 3,481 3,124
Depreciation and Amortization 138 150 288 285
______ ______ ______ ______
Income (Loss) from Operations (422) 341 73 845
Other Income (Expense):
Interest Income 50 (6) 54 21
Interest Expense (63) (86) (167) (163)
Other (21) 0 (4) 0
______ ______ ______ ______
Net Income (456) 249 (44) 703
====== ====== ====== ======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CHEM MET SERVICES COMBINED ENTITIES
STATEMENT OF CASH FLOWS
Six Months Ended
March 31,
(Amounts in Thousands, _________________
Except for Share Amounts) 1999 1998
_____________________________________________________________________________
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) from continuing operations (44) 703
Adjustments to reconcile net income (loss) to
cash provided by continuing operations:
Depreciation and amortization 288 285
Provision for bad debt and other re -- --
Gain on sale of plant, property and -- --
Changes in assets and liabilities
Accounts receivable 106 (1,084)
Prepaid expenses, inventories and o 6 30
Accounts payable and accrued expenses 2 (487)
____ ____
Net cash provided by continuing operations 358 (553)
____ ____
Cash flows from investing activities:
Purchases of property and equipment, net (160) --
Proceeds from sale of property and equipment -- --
Change in restricted cash, net (24) (63)
____ ____
Net cash used in investing activities (184) (63)
____ ____
Cash flow as from financing activities:
Long-term financing new equipment 160 --
Principal repayments on long-term debt (3) --
Proceeds from issuance of stock -- --
____ ____
Net cash used in financing activities 157 0
____ ____
Increase (Decrease) in cash 331 (616)
Cash Beginning 334 600
____ ____
Cash Ending $665 ($16)
==== ====
</TABLE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
December 31, 1998
(Amounts In Thousands)
Perma-Fix Chem-Con
Environment Combined Pro
12/31/98 9/30/98 Adjustment Forma
___________ ________ _____________ ________
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $776 $334 ($1,000)(c) $110
Restricted Cash equivalents
and investment 111 494 605
Accounts Receivable, net of
allowance for doubtful
accounts 5,950 5,043 10,993
Inventories 145 145
Prepaid Expenses 471 28 499
Other Receivables 11 26 37
Assets of discontinued
operations 489 489
_____ _____ ______ ______
Total Current Assets 7,953 5,925 (1,000) 12,878
Property and equipment: 17,741 18,522 2,533(a),(b), 38,796
(c)
Less accumulated depreciation (5,836) (11,886) (17,722)
_____ _____ ______ ______
Net property and equipment 11,905 6,636 2,533 21,074
Intangibles and other assets:
Permits, net of accumulated
amortization 3,661 3,661
Note Receivable - Officer 1,065 (1,065)(b) 0
Goodwill, net of accumulated
amortization 4,698 35 9,204(a),(c) 13,937
Other assets 531 1 532
Total other assets 8,890 1,101 8,139 18,130
_____ _____ ______ ______
Total Assets $28,748 $13,662 $9,672 $52,082
====== ====== ====== ======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
December 31, 1998
(Amounts In Thousands)
Perma-Fix Chem-Con
Environment Combined Pro
12/31/98 9/30/98 Adjustment Forma
___________ ________ _____________ ________
<S> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts Payable $2,422 $1,573 $3,995
Accounts Payable-Intercompany 30 ($30)(c) 0
Accrued Expenses 3,369 1,113 433 (c) 4,915
Revolving loan and term note
facility 625 500 (d) 1,125
Current portion of settlements
payable 1,044 1,044
Current portion of long-term
debt 302 2,482 (1,298)(c),(d) 1,486
Current liabilities of discon-
tinued operations 863 863
______ ______ ______ ______
Total current liabilities 7,581 6,242 (395) 13,428
Long-term Liabilities:
Environmental accruals 520 4,430 4,950
Accrued closure costs 715 450 1,165
Long-term debt, less current
portion 2,087 1,554 7,789 (a),(b), 11,430
Long-term portion of settlements
payable 264 (c),(d) 264
Long-term liabilities of dis-
continued operations 1,892 1,892
______ ______ ______ ______
Total long-term liabilities 5,214 6,698 7,789 19,701
Stockholder's Equity
Preferred Stock
Common Stock 13 77 (76)(c) 14
Redeemable warrants 140 140
Additional paid-in capital 39,769 2,999 (c) 42,768
Accumulated Deficit (22,157) 645 (645)(c) (22,157)
______ ______ ______ ______
17,765 722 2,278 20,765
Less Common Stock in
treasury at cost; 943,000
shares issued and out-
standing (1,812) (1,812)
______ ______ ______ ______
Total stockholder's equity 15,953 722 2,278 18,953
______ ______ ______ ______
Total liabilities and stock-
holder's equity $28,748 $13,662 $9,672 $52,082
======= ====== ====== =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENT OF OPERATIONS
For the year ended December 31, 1998
Perma-Fix Chem-Con
(Amounts in Thousands, Environmental Combined Pro
Except for Per Share Data) 12/31/98 9/30/98 Adjustment Forma
_____________________________________________________________________________
<S> <C> <C> <C> <C>
REVENUES $30,551 $21,801 $52,352
COST OF GOODS SOLD 21,064 14,134 35,198
_______ _______ _______
GROSS PROFIT 9,487 7,667 17,154
SELLING, GENERAL AND ADMINI-
STRATIVE 6,847 6,055 12,902
DEPRECIATION AND AMORTIZATION 2,109 799 $462(1) 3,370
_______ _______ ______ ______
INCOME (LOSS) FROM
OPERATIONS 531 813 (462) 882
OTHER INCOME (EXPENSE):
INTEREST INCOME 35 27 62
INTEREST EXPENSE (294) (360) (366)(2) (1,020)
OTHER INCOME (EXPENSE) 190 190
_______ ______ _______ ______
NET INCOME (LOSS) 462 480 (828) 114
PREFERRED STOCK DIVIDENDS (1,160) (1,160)
NET INCOME (LOSS) APPLIC-
ABLE TO COMMON STOCK ($698) $480 ($828) ($1,046)
======= ====== ======= =======
Basic and diluted loss per
common share: ($0.06) ($0.08)
======= ====== ======= =======
Weighted average number of
common shares outstanding 12,028 1,500 * 13,528
======= ====== ======= =======
<FN>
*Assumes $2.00 share price
(1) Adjusted for amortization of Goodwill for one year due to acquisition.
(2) Adjusted for Interest Expense on additional Note Payable for acquisition.
</FN>
</TABLE>
See accompanying notes to unaudited
pro forma condensed combined financial statements.
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
March 31, 1999
(Amounts In Thousands)
Perma-Fix ChemCon
Environmental Combined Pro
03/31/99 03/31/99 Adjustment Forma
___________ ________ _____________ ________
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $84 $184 ($1,000)(c) ($732)
Restricted Cash equivalents
and investment 112 471 583
Accounts Receivable, net of
allowance for doubtful
accounts 6,047 4,937 10,984
Inventories 163 163
Prepaid Expenses 1,262 28 1,290
Other Receivables 26 20 46
Assets of discontinued
operations 456 456
______ ______ _______ ______
Total Current Assets 8,150 5,640 (1,000) 12,790
Property and equipment: 18,138 17,911 2,644 (a),(b), 38,693
(c)
Less accumulated depreci-
ation (6,180) (11,403) (17,583)
______ ______ _______ ______
Net property and equipment 11,958 6,508 2,644 21,110
Intangibles and other assets:
Permits, net of accumulated
amortization 3,611 3,611
Note Receivable - Officer 1,065 (1,065)(b) 0
Goodwill, net of accumulated
amortization 4,653 30 9,204 (a),(c) 13,887
Other assets 551 1 552
______ ______ _______ ______
Total other assets 8,815 1,096 8,139 18,050
______ ______ _______ ______
Total Assets $28,923 $13,244 $9,783 $51,950
======= ====== ======= =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
March 31, 1999
(Amounts In Thousands)
Perma-Fix ChemCon
Environmental Combined Pro
03/31/99 03/31/99 Adjustment Forma
___________ ________ _____________ ________
<S> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts Payable $2,909 $1,515 $4,424
Accounts Payable-Intercompany 11 (11)(c) 0
Accrued Expenses 3,521 1,192 433(c) 5,146
Current portion of settle-
ments payable 1,044 1,044
Current portion of long-term
debt 931 2,355 (798)(c),(d) 2,488
Current liabilities of dis-
continued operations 496 496
______ ______ ______ ______
Total current liabilities 7,857 6,117 (376) 13,598
Long-term Liabilities:
Environmental accruals 484 4,430 4,914
Accrued closure costs 722 450 1,172
Long-term debt, less current
portion 1,839 1,425 7,789(a),(b), 11,053
Long-term portion of settle-
ments payable 192 (c),(d) 192
Long-term liabilities of dis-
continued operations 1,884 1,884
______ ______ ______ ______
Total long-term liabilities 4,929 6,497 7,789 19,215
Stockholder's Equity
Preferred Stock
Common Stock 14 77 (76)(c) 15
Redeemable warrants 140 140
Additional paid-in capital 39,938 2,999(c) 42,937
Accumulated Deficit (22,143) 553 (553)(c) (22,143)
______ ______ ______ ______
17,949 630 2,370 20,949
Less Common Stock in treasury
at cost; 943 shares issued
and outstanding (1,812) (1,812)
______ ______ ______ ______
Total stockholder's equity 16,137 630 2,370 19,137
______ ______ ______ ______
Total liabilities and stock-
holder's equity $28,923 $13,244 $9,783 $51,950
====== ====== ====== ======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENT OF OPERATIONS
For the quarter ended March 31, 1999
Perma-Fix ChemCon
(Amounts in Thousands, Environmental Combined Pro
Except for Per Share Data) 03/31/99 03/31/99 Adjustment Forma
_____________________________________________________________________________
<S> <C> <C> <C> <C>
REVENUES 7,812 5,079 12,891
COST OF GOODS SOLD 5,290 3,607 8,897
______ ______ ______ ______
GROSS PROFIT 2,522 1,472 0 3,994
SELLING, GENERAL AND ADMINI-
STRATIVE 1,838 1,756 3,594
DEPRECIATION AND AMORTIZATION 519 138 115(1) 772
______ ______ ______ ______
INCOME (LOSS) FROM
OPERATIONS 165 (422) (115) (372)
OTHER INCOME (EXPENSE):
INTEREST INCOME 7 50 57
INTEREST EXPENSE (27) (63) (92)(2) (182)
OTHER INCOME (EXPENSE) (14) (21) (35)
______ ______ ______ ______
NET INCOME (LOSS) 131 (456) (207) (532)
PREFERRED STOCK DIVIDENDS (117) (117)
______ ______ ______ ______
NET INCOME (LOSS) APPLICABLE
TO COMMON STOCK 14 (456) (207) (649)
===== ===== ====== =====
Basic and diluted loss per
common share: 0.00 (0.05)
Weighted average number of
common shares out 12,372 1,500 * 13,872
<FN>
*Assumes $2.00 share price
(1) Adjusted for amortization of Goodwill for one quarter due to acquisition.
(2) Adjusted for Interest Expense on additional Note Payable for acquisition.
</FN>
</TABLE>
See accompanying notes to unaudited
pro forma condensed combined financial statements.
<PAGE>
Notes to Unaudited Pro Forma Condensed Combined Financial
Statements
Note I - Basis of Presentation
The unaudited pro forma balance sheet combines the historical
consolidated balance sheet of Perma-Fix Environmental Services,
Inc. at March 31, 1999, with the historical combined balance sheet
of Chem-Con at March 31, 1999. The unaudited pro forma statements
of income combine the historical consolidated statements of
operations of Perma-Fix Environmental Services, Inc. for the
quarter ended March 31, 1999, with the historical combined
statements of income for Chem-Con for the quarter ended March 31,
1999. Certain amounts reflected in the historical financial
statement presentations of both companies have been reclassified to
conform to the unaudited pro forma condensed combined presentation.
The unaudited pro forma financial statements exclude the effect of
any operating income improvements which may be achieved upon
combining the resources of the companies and exclude costs
associated with the integration and consolidation of the companies
which are not presently estimable.
Note 2 - Significant Accounting Policies
Beginning January 1, 1999, Chem-Con's income, which had previously
been reported with a fiscal year end September 30, are now included
based on fiscal year end December 31. December 1998 results from
these operations are included in retained earnings.
The unaudited pro forma income statements for the quarter ended
March 31, 1999 does not reflect the three months ended December 31,
1998, for Chem-Con. For the quarter ended December 31, 1998,
Chem-Con reported unaudited revenues of $5,887,000 and unaudited
net income of $412,000.
Note 3 - Pro Forma Adjustments
Perma-Fix Environmental Services, Inc. anticipates the acquisition
of Chem-Con during the second quarter of 1999, in a transaction
accounted for as a purchase. The pro forma adjustments are
comprised of the following:
(a) Land located in Orlando, Florida with a fair market value
of $1,230,000 and related mortgages of $222,000 were
contributed by the Chem-Con stockholder in connection
with the acquisition.
(b) The officer note receivable was forgiven in exchange for
certain land and buildings of $700.000 and payoff of
certain debt related to the land of $365,000.
(c) This transaction is accounted for as a purchase
transaction and therefore, goodwill is recorded for the
difference between assets acquired and liabilities
assumed according to the terms and conditions of the
purchase contract.
* All prior goodwill was written off Chem-Con's
books
* Goodwill was recorded at $9,239,000 with a
life of 20 years
* Debt was recorded in the amount of $4,700,000
pursuant to the merger agreement, the
additional draw on the revolving line of
credit of $2,231,000 was recognized, and
unrecorded debt in the amount of $172,000 was
booked.
* All stockholder's equity accounts of Chem-Con
were eliminated
* Stockholder's equity was recorded for the
$3,000,000 of common stock to be issued in the
purchase at a guaranteed stock price of $2.00
per share
* Closing costs are estimated at $500,000
* Chem-Met land and building was wriiten up by
$1,505,000 to fair market value of $1,918,000.
(d) It is assumed that the current Charter National Bank
and the SBA debt of Chem-Con will be replaced by
Congress Financial and reclassified between current and
long-term.
Note 4 - Federal Income Tax Consequences of the Merger
The unaudited pro forma financial statements assume that the
merger qualifies as a taxable transaction for federal income tax
purposes.
