U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] Quarterly Report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 1999
[ ] Transition Report under Section 13 or 15(d) of the Exchange Act
For the transition period from to
Commission File Number 0-21946
HI-RISE RECYCLING SYSTEMS, INC.
----------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
Florida 65-0222933
----------------- ---------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
8505 NW 74TH STREET, MIAMI, FLORIDA 33166
-----------------------------------------
(Address of Principal Executive Offices)
(305) 597-0243
--------------
(Issuer's Telephone Number, Including Area Code)
(Former Address, if Changed Since Last Report)
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 Issuer's Common Stock, $.01 Par Value,
as of May 13, 1999 was 12,876,752.
Transitional small business disclosure format:
Yes [X] No [ ]
<PAGE>
INDEX
PART I FINANCIAL INFORMATION PAGE
Item 1. Consolidated Financial Statements 3
Consolidated Balance Sheets as of December 31, 3
1998 and March 31, 1999
Consolidated Statements of Operations for the three months 4
ended March 31, 1998 and 1999
Consolidated Statement of Changes in Shareholders' Equity 5
for the three months ended March 31, 1999
Consolidated Statements of Cash Flows for the three 6
months ended March 31, 1998 and 1999
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial 9
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
2
<PAGE>
HI-RISE RECYCLING SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1998 AND MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31, 1998 MARCH 31, 1999
----------------- --------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 324,422 $ 342,154
Investments 170,191 170,191
Accounts receivable, net of allowance
for doubtful accounts of $212,418 and
$170,191 in 1998 and 1999, respectively 10,191,195 12,945,639
Inventory 6,344,722 8,515,910
Other assets 836,632 1,179,303
------------ ------------
Total current assets 17,867,162 23,153,197
Property and equipment, net 3,430,230 5,174,889
Net investment in sales type leases 8,068,283 8,830,037
Prepaid Financing Costs 2,152,484 2,521,321
Deferred acquisition costs 150,454 -0-
Goodwill 22,145,585 33,809,909
------------ ------------
Total assets $ 53,814,198 $ 73,489,353
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities 3,865,473 4,804,875
Cash overdraft 743,146 1,430,625
Current portion of long-term debt 7,889,634 9,538,630
------------ ------------
Total current liabilities 12,498,253 15,774,130
Long-term debt 15,776,508 28,317,281
------------ ------------
Total liabilities 28,274,761 44,091,411
------------ ------------
Shareholders' equity:
Preferred stock, $.01 par value per share;
1,000,000 shares authorized; 200 shares issued and
outstanding at December 31, 1998 and March 31, 1999, 2 2
liquidation preference of $2,000,000
Common stock, $.01 par value; 20,000,000 shares authorized,
11,413,352 and 12,876,752 shares issued and outstanding
at December 31, 1998
and March 31, 1999, respectively 114,133 128,768
Additional paid-in capital 28,870,295 31,796,807
Accumulated deficit (3,444,993) (2,527,635)
------------ ------------
Total shareholders' equity 25,539,437 29,397,942
------------ ------------
Total liabilities and shareholders' equity $ 53,814,198 $ 73,489,353
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
HI-RISE RECYCLING SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE ENDED MARCH 31, 1998 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 1998 MARCH 31, 1999
-------------- --------------
<S> <C> <C>
Total Revenues $ 3,804,269 $ 12,267,412
Operating Expenses
Cost of equipment sold, including direct costs of service/parts 2,395,759 8,367,799
Selling and marketing 399,441 595,004
General and administrative 660,584 1,959,499
Product Development 3,164 52,703
------------- ------------
Total Operating Expenses 3,458,948 10,975,005
Operating Income (loss) 345,321 1,292,407
Other Income (expense):
Interest Income 175,957 364,921
Interest Expense (133,715) (680,882)
------------ -------------
Total other income (expense) 42,242 (315,961)
------------ -------------
Net income $ 387,563 $ 976,446
============ ============
Basic income per share $ 0.05 $ 0.08
Diluted income per share $ 0.04 $ 0.07
============= ============
Weighted average common shares outstanding used in
basic calculation 7,326,936 11,901,152
============= ============
Weighted average common shares outstanding used
in diluted calculation 8,448,968 14,435,080
============= ============
</TABLE>
The accompanying notes are an integral part of these financial statements
4
<PAGE>
HI-RISE RECYCLING SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
SHARES OF ADDITIONAL TOTAL
COMMON PREFERRED COMMON PAID-IN ACCUMULATED SHAREHOLDERS
STOCK STOCK STOCK CAPITAL DEFICIT EQUITY
--------- --------- ------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance of December 31, 1998 11,413,352 $2 $114,133 $28,870,295 $(3,444,993) $25,539,437
Issuance of common stock (unaudited) 1,463,400 $14,635 $ 2,867,424 $ 2,882,059
Dividend requirement on preferred stock $ 59,088 $ (59,088) $
Net income (unaudited) $ 976,446 $ 976,446
Balance at March 31, 1999 12,876,752 $2 $128,768 $31,796,807 $(2,527,635) $29,397,942
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
HI-RISE RECYCLING SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 1998 MARCH 31, 1999
---------------- --------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 387,563 $ 976,446
Adjustments to reconcile net income
to net cash (used in) provided by operating activities:
Depreciation and amortization 75,200 321,418
Changes in assets and liabilities, net of acquisitions:
Accounts receivable (192,232) (1,771,146)
Inventory 14,309 (838,532)
Other assets 90,854 (116,224)
Net investments in sales type leases 3,221 (761,754)
Accounts payable and accrued liabilities (368,882) 127,417
Deferred acquisition costs 0 (150,454)
Cash Overdraft 0 687,479
------------ ------------
Net cash (used in) provided by operating activities 10,073 (1,525,350)
INVESTING ACTIVITIES:
Purchase of business net of cash acquired (3,731,169) (568,492)
Maturity of investments -- --
Purchase of property and equipment (8,853) (138,426)
------------ ------------
Net cash (used) in investing activities (3,740,022) (706,918)
------------ ------------
FINANCING ACTIVITIES:
Restricted cash 3,022,035 --
Loan from Officer 500,000 --
Payments under credit line (2,167,974) --
Draws from line of credit 2,639,304 2,250,000
Payment of long-term debt (135,000) --
------------ ------------
Net cash provided by financing activities 3,858,365 2,250,000
------------ ------------
Net (decrease) increase in cash and cash equivalents 128,416 17,732
Cash and cash equivalents, beginning of period 1,134,131 324,422
------------ ------------
Cash and cash equivalents, end of period $ 1,262,547 $ 342,154
------------ ------------
Purchase of business, net of cash acquired
Working capital, other than cash $ (4,097,621) $ (1,830,641)
Property, plant and equipment (73,442) (1,634,681)
Cost in excess of net assets acquired, net (9,131,101) (11,636,370)
Revolving line of credit 3,000,000 --
Current portion of long term debt -- --
Long term debt -- 11,583,200
Common stock issued 6,570,995 2,950,000
------------ ------------
Net cash used to acquire business $ (3,731,169) $ (568,492)
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements
6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1999
(UNAUDITED)
1. The accompanying unaudited consolidated financial statements, which are for
interim periods, do not include all disclosures provided in the annual
consolidated financial statements. These unaudited consolidated financial
statements should be read in conjunction with the consolidated financial
statements and the footnotes thereto contained in the Annual Report on Form
10-KSB for the year ended December 31, 1998 of Hi-Rise Recycling Systems, Inc.
(the "Company"), as filed with the Securities and Exchange Commission. The
December 31, 1998 balance sheet was derived from audited consolidated financial
statements, but does not include all disclosures required by generally accepted
accounting principles.
2. In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments (which are of a normal recurring
nature) necessary for a fair presentation of the financial statements. The
results of operations for the three months ended March 31, 1999 are not
necessarily indicative of the results to be expected for the full year.
3. For financial reporting purposes, the Company reports revenues from sales
type leases as equipment sales. Revenue from sales and sales type equipment
leases is generally recognized when equipment is installed.
4. Net investment in sales type leases consists of the following at March 31,
1999:
Minimum Lease Payments $9,627,336
Unearned Income (1,297,101)
Estimated Residual Value on Leased Equipment 499,802
-----------
Total $8,830,037
===========
5. In February 1999, the Company acquired all the outstanding capital stock of
DeVivo Industries, Inc. ("DeVivo") and Ecological Technologies, Inc. ("ETI").
Devivo is in the business of manufacturing and supplying waste handling and
recycling equipment while ETI owns certain patent rights relating to DeVivo's
business. The aggregate purchase price of approximately $14,600,000 consisted of
approximately $11,700,000 in cash, and 1,463,400 shares of the Company's common
stock valued at approximately $2,900,000. The Company funded the cash portion of
the purchase price through borrowings available under the Company's revolving
and term credit facilities with GECC.
6. The acquisitions made by the Company have been accounted for using the
purchase method of accounting. Accordingly, the results of operations of the
acquired company are included in the Company's consolidated results of
operations from the respective dates of acquisition.
The following information presents the unaudited pro forma condensed results of
operations for the periods January 1, 1998 through March 31, 1998 and January 1,
1999 through March 31, 1999, as if the Company's acquisition of De-Vivo and
Ecological Technologies, Bes-Pac and Hesco had occurred on January 1, 1998. The
pro forma results are presented for informational purposes only and are not
necessarily indicative of the future results of operation of the Company or the
results of operation of the Company had the acquisitions occurred on January 1,
1998.
The unaudited results of operations on a pro forma basis as if each
of the acquisitions had been made as of January 1, 1998 is as
follows:
THREE MONTHS ENDED MARCH 31,
1999 1998
------------------------------
Revenues $13,158,257 $11,158,122
Income from operations 1,157,851 968,147
Net income 1,028,635 658,196
Earnings per share of common stock
Basic 0.07 0.06
Diluted 0.06 0.05
7
<PAGE>
7. SEGMENTS OF THE BUSINESS:
The Company operates in the United States and Canada in two primary
industry segments: (1) Architectural Specified Services which involves
complete handling of waste stream in high-rise buildings and (2) Parts
and Equipment Services which involves the construction, repair and
maintenance of waste handling equipment, trucks and transfer station.
The following is a summary of selected data for these business
segments:
<TABLE>
<CAPTION>
ARCHITECTURAL PARTS AND EQUIPMENT CONSOLIDATED
SPECIFIED SERVICES SERVICES TOTAL
------------------ ------------------- -------------
<S> <C> <C> <C>
Three Months Ended
March 31, 1999
--------------
Revenues $ 9,319,044 $ 2,948,368 $12,267,412
Operating Income 81,703 1,210,704 1,292,407
Total assets 24,807,695 48,681,658 73,489,353
Three Months Ended
March 31, 1998
---------------
Revenues $ 2,176,208 $ 1,628,061 $ 3,804,269
Operating Income 72,703 272,618 345,321
Total assets 21,293,600 8,327,628 29,621,228
</TABLE>
8. Earnings per share have been computed in accordance with Statement of
Financial Accounting Standards No. 128 "Earnings Per Share" by dividing net
income (loss) by the weighted average number of common shares (basic earnings
per share) and by the weighted average number of common shares plus dilutive
common share equivalents outstanding (diluted earnings per share).
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
GENERAL
Hi-Rise Recycling Systems, Inc., a Florida corporation (the "Company"), is
primarily engaged in manufacturing, distributing, marketing and selling
recycling and solid waste handling equipment. Until February 1997, the Company
was primarily engaged in distributing, marketing and selling the Hi-Rise System,
a proprietary automated system designed to collect source-separated recyclables
and other solid waste in multi-story residential buildings. In February 1997,
the Company expanded its product lines to include sheet metal fabrication
products, consisting primarily of rubbish and laundry chutes. During the three
months period ended March 31, 1999 and 1998 sales of sheet metal fabrication
products accounted for approximately 15% and 21%, respectively, of the Company's
revenues. In February 1998, the Company acquired Hesco Sales
Inc., a Florida corporation ("Hesco"), a company engaged in the business of
manufacturing, marketing and selling solid waste handling equipment products.
Hesco's product lines include waste containers and trash compaction systems. In
October 1998 the Company acquired BesPac, Inc., a South Carolina corporation
engaged, the business of manufacturing, marketing and selling solid waste
equipment products. In February 1999 the Company acquired Devivo Industries,
Inc. a Connecticut corporation engaged in the business of manufacturing,
marketing and selling solid waste equipment products. During the three months
ended March 31, 1999, Hesco's BesPac's and DeVivos product lines accounted for
approximately 52% of the Company's revenues. The Company anticipates that in the
future non-mobile waste equipment will continue to be the Company's single
largest source of revenue. In addition, the Company expects that its other
principal sources of revenue will be sales of rubbish and linen chutes, trash
compaction systems and the Hi-Rise System and sales-types leases of the Hi-Rise
System.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998.
Total revenue during the three months ended March 31, 1999 was $12,267,412, an
increase of $8,463,143 compared to total revenue of $3,804,269 during the prior
comparable three-month period. The primary sources of the increase is the
inclusion of Hesco, Bes-Pac and De Vivo in this quarter in the aggregate amount
of $9,442,201 compared to only $1,628,061 for one month of Hesco sales in 1998.
In addition sales of the Hi-rise systems were $251,159 more than last year and
Wilkinson sales increased by $322,658 for the quarter versus last year.
During the three months ended March 31, 1999, the Company had interest income of
$364,921, an increase of $188,964 compared to $175,957 during the prior
comparable three-month period. The increase in interest income is primarily
attributable to increased interest realized from investments and additional
leases in 1999 as compared to 1998.
Total operating expenses during the three months ended March 31, 1999 were
$10,975,005, an increase of $7,516,057 compared to total operating expenses of
$3,458,978 during the prior comparable three-month period. A primary reason for
the increase was the inclusion in the three months ended March 31, 1999 of
additional cost of sales for Hesco, Bes-Pac and De Vivo (waste equipment
division) of $6,462,222. Cost of equipment sold increased by $5,972,040 from
$2,395,759 during the three months ended March 31, 1998 to $8,367,799 during the
three months ended March 31, 1999. As a percentage of revenue cost of equipment
sold increased to 68% during the three months ended March 31, 1999 compared to
63% during the prior comparable three-month period. Selling and marketing
expenses during the three months ended March 31, 1999 were $595,004, an increase
of $195,563 compared to selling and marketing expenses of $399,441 during the
prior comparable three-month period. General and administrative expenses during
the three months ended March 31, 1999 were $1,959,499 an increase of $1,298,915
compared to general and administrative expenses of $660,584 during the prior
comparable three-month period. General and administrative expenses for the three
months ended March 31, 1999 include approximately $629,441 of such expenses for
Hesco, Bes-Pac and De Vivo (waste equipment division). Interest expense
increased by $547,167 to $680,882 as compared to the prior comparable
three-month period, as a result of increased borrowings under the Company's
lines of credit to finance the acquisitions.
As a result, the Company realized net income of $976,446 during the three months
ended March 31, 1999, compared to net income of $387,563 during the three months
ended March 31, 1998.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1999, the Company had working capital of $7,379,067 and cash and
cash equivalents aggregating $342,154, compared to working capital of $6,368,909
and cash and cash equivalents of $324,422 at March 31, 1998.
During 1998, the Company obtained a $40 million credit facility from GECC and
other participating lenders. This facility consists of two revolving lines of
credit totaling $17 million, a $9 million term loan funded at closing, a $6
million term loan which was funded in connection with the Company's acquisition
of the DeVivo Companies and an $8 million acquisition line. Accounts receivable
and
9
<PAGE>
inventory of the Company and its subsidiaries collateralize one revolving line
of credit in the amount of up to $8 million. The borrowing base is calculated by
taking 80% of the value of eligible receivables and 50% of the value of eligible
inventory. Approximately $7,683,000 was outstanding under this line of credit as
of March 31, 1999. The other revolving line of credit in the amount of up to $9
million is collateralized by leases entered into by the Company for Hi-Rise
systems and other products manufactured by the Company and its subsidiaries. The
borrowing base is calculated by taking 90% of the value of eligible leases
issued by the Company for its equipment. Approximately $6,250,000 was
outstanding under this line of credit as of March 31, 1999. Both lines of credit
bear interest at a rate per annum equal to the prime rate as announced by THE
WALL STREET JOURNAL plus .5% and are due in October 2003. The term loan funded
at closing is for $9 million and bears interest at a fixed rate of 11% for five
years. Interest only on the term loan is payable quarterly for four and one half
years with principal payable for two quarters in the amount of $1.5 million and
a $6 million dollar payment due at October 30, 2003. The $6 million dollar term
loan has a six-month period of interest only and principal payments to be paid
on a quarterly basis until October 30, 2003. The acquisition facility also has a
six-month interest only period and quarterly principal payments due five years
from the funding of the loan. Both the $6 million term loan and the acquisition
facility bear interest at a rate of prime, as announced by THE WALL STREET
JOURNAL, plus .5%. As part of the credit facility provided by GECC and other
lenders, the Company issued warrants to the lenders to purchase an aggregate of
1,476,259 shares of the Company's Common Stock.
10
<PAGE>
In June 1998, the Company had entered into a lease financing arrangement with
Western Finance and Lease, Inc., formerly known as First Sierra, Inc. ("Western
Finance"), pursuant to which Western Finance has agreed to purchase, from time
to time, eligible leases of Hi-Rise Systems from the Company for a purchase
price equal to the discounted present value of the leases purchased. During
1998, the Company sold the anticipated cash flow relating to twelve (12) Hi-Rise
System leases to Western Finance for an aggregate of $1,710,588.
During the three months ended March 31, 1999, net cash used by operating
activities was $1,525,350, compared to net cash provided in operating activities
of $10,073 during the three months ended March 31, 1998. Accounts receivable
increased by $1,771,146 as a result of increased sales by Wilkinson, Hesco and
Bes-Pac during the first quarter. In addition, inventory increased by $838,523
primarily as a result of purchases of inventory for equipment and material to
support the Company's $10 million backlog. Also net investment in sales type
leaves increased by $761,754 as a result of 15 other leases added to the lease
portfolio.
Net cash used by investing activities was $706,918 during the three months ended
March 31, 1999. This is primarily the result of cash used for expenses as part
of the DeVivo acquistion. Net cash provided by financing activities was
$2,250,000 during 1998. This increase was primarily the result of proceeds on
draws from the lines of credit from the GECC credit facility.
The Company currently has no outstanding material commitments for capital
expenditures. The Company's primary requirements for capital will be the cost of
equipment sold, leased and rented, strategic acquisitions, marketing and sales
costs associated with the Company's national and international expansion into
new target markets, efforts to establish a nationwide distribution network and
general and administrative expenses associated with the Company's business plan.
The Company anticipates, based on currently proposed plans and assumptions
relating to operations (including the anticipated costs associated with, and
timetable for, its proposed expansion), that cash flow from operations and funds
available under the Company's existing credit facilities will be sufficient to
satisfy the Company's contemplated cash requirements for at least 12 months. In
the event that the Company's plans change, its assumptions to change or prove to
be inaccurate or if its existing capital and cash flow otherwise prove to be
insufficient (due to unanticipated expenses, delays, problems, difficulties or
otherwise), the Company could be required to seek additional financing or may be
required to curtail its expansion or other activities. In the event that the
Company requires additional financing, the Company may seek to raise capital
through the sale of its equity securities, including at prices, which may
represent significant discounts from the market price of the Common Stock.
11
<PAGE>
CAUTIONARY STATEMENT RELATING TO FORWARD-LOOKING STATEMENTS
The foregoing Management's Discussion and Analysis or Plan of Operation contains
various "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended, which represent the Company's expectations and beliefs
concerning future events. The Company cautions that these statements are further
qualified by important factors that could cause actual results to differ
materially from those in the forward-looking statements, including, without
limitation, the following: decline in demand for the Company's products;
increases in costs of sales and the effect of general economic conditions
generally and factors affecting the waste hauling and construction industries.
These statements by their nature involve substantial risks and uncertainties and
actual events or results may differ as a result of these and other factors.
YEAR 2000
The Company has evaluated its computer software and databases to determine
whether or not modifications will be required to prevent problems related to the
Year 2000. At this time, the Company has determined the cost of evaluating its
computer software or databases or of making any modifications required
correcting any Year 2000 problems is immaterial. The Company has determined that
its current operating and accounting systems are Year 2000 compliant and has
received letter supporting this issue from it's software vendor. The Year 2000
issue may also effect the systems and applications of the Company's customers or
suppliers. The Company has initiated formal communications with a number of its
significant suppliers to determine the extent to which the Company's interface
systems are vulnerable to those third parties' failure to remediate their own
Year 2000 issues. The Company will continue similar communication with major
customers, and the balance of its major suppliers during 1999 to receive
appropriate warranties and assurances that those parties are, or will be, Year
2000 compliant. Although the Company currently does not anticipate any material
impact on its operations as a result of Year 2000 issues of its customers or
suppliers, at this stage of its review, no assurance can be given that the
failure by one or more of its major suppliers or customers to become Year 2000
compliant will not have a material adverse impact on its operations.
12
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORT ON FORM 8-K
(A) EXHIBITS:
EXHIBITS DESCRIPTION
-------- -----------
11 Statement Re: Computation of Per Share Earnings
27 Financial Data Schedule
(B) REPORT ON FORM 8-K:
During the quarter ended March 31, 1999, the Company
filed a Current Report on Form 8-K dated March 6, 1999 with respect to item 5
reporting the acquisition (the "Devivo Acquisition") by the Company of Devivo
Industries, Inc. and Ecological Technologies, Inc.. Filed with or incorporated
by reference in the Current Report on Form 8-K, as amended, were (i) the audited
financial statements of Devivo Industries, Inc. as of and for the year ended
December 31, 1997 and 1998 and (ii) the unaudited pro forma condensed
consolidated balance sheet of the Company as of December 31, 1998 reflecting the
consolidated financial position of the Company after giving effect to the Devivo
Acquisition as if it had been consummated as of December 31, 1998 and the
unaudited pro forma condensed consolidated statement of operations of the
Company reflecting the Devivo Acquisition as if it had been consummated at
January 1, 1998.
13
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
HI-RISE RECYCLING SYSTEMS, INC.
Date: May 12, 1999 BY: /s/ DONALD ENGEL
----------------------------------------
Donald Engel, Chairman of the Board and
Chief Executive Officer
(principal executive officer)
Date: May 12, 1999 /s/ BRADLEY HACKER
------------------------------------
Bradley Hacker, Chief Financial Officer
(Principal Financial and Accounting Officer)
14
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
11 Statement Re: Computation of Per Share Earnings
27 Financial Data Schedule
EXHIBIT 11
HI-RISE RECYCLING SYSTEMS, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND MARCH 31, 1999
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 1998 MARCH 31, 1999
-------------- --------------
BASIC CALCULATION:
Net income (loss) $ 387,563 $ 976,466
Dividend Requirement on Preferred Stock $ (57,851) $ (59,088)
------------ ------------
Net Income for EPS Calculation $ 329,712 $ 917,378
============ ============
Weighted average shares outstanding 7,326,936 11,901,152
Basic income (loss) per shares $ 0.05 $ 0.08
============ ============
DILUTED CALCULATION:
Net income (loss) $ 387,563 $ 976,466
Dividend Requirement on Preferred Stock (50,000) --
------------ ------------
Net Income 337,563 976,466
============ ============
Weighted average shares outstanding 7,326,936 11,901,152
Diluted effect of common stock equivalents 1,122,032 2,533,928
------------ ------------
Diluted weighted average shares outstanding
and common stock equivalents 8,448,968 14,435,080
============ ============
Diluted income (loss) per shares $ 0.04 $ 0.07
============ ============
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
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0
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