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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
Form 10-KSB
[ X ] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the year ended December 31, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to________
Commission File No. 33-68304
GREEN OASIS ENVIRONMENTAL, INC.
Florida 57-0970282
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
184 East Bay Street, Suite 302, Charleston, South Carolina 29401
(Address of principal executive offices) (Zip Code)
Issuer's Telephone Number : (803) 722-5771
Securities registered under Section 12(g) of the Exchange Act: Common
Stock
(Title of Class)
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 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 [ ]
Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B contained in this form, and no
disclosure will be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-KSB or any amendment to this
Form 10-KSB. [ X ]
Revenues for the most recent year were $37,000.
The aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the stock
was sold on March 11, 1997, was $38,779,169.
As of March 11, 1997, Registrant had 5,966,026 shares of Common
Stock outstanding.
Traditional Small Business Disclosure Format. YES [ ] NO [ X ]
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PART I
ITEM 1. BUSINESS
General
Green Oasis Environmental, Inc. ("Green Oasis" or the "Company")
was incorporated in Florida in September 1991 under the name Green
Oasis, Inc. Green Oasis changed its name to Green Oasis Environmental,
Inc. on April 24, 1992. The executive offices of Green Oasis are
located at 184 East Bay Street, Suite 302, Charleston, South Carolina
29401, and its telephone number is (803) 722-5771.
Background
Green Oasis was organized initially to acquire distribution
rights to various products within the environmental industry. In
February 1992, Green Oasis acquired from Waste Energy, Inc. ("Waste
Energy") the rights to distribute, throughout much of the United
States, as well as Australia and New Zealand, products which were
intended to process waste crankcase oil and trash into a fuel which
would power a diesel generator to produce electricity. Green Oasis
developed marketing material for this system and established a sales
network of some 30 independent contractors to represent the products
in the acquired markets. In August 1992, without ever having produced
a functioning product, Waste Energy filed a bankruptcy petition under
Chapter 11 of the U.S. Bankruptcy Code, a proceeding which was
converted to Chapter 7 in December 1992.
In August 1992, Green Oasis assembled a group of experienced
consultants to develop a process to convert waste motor oil into
useful fuels. By early 1993, the Company had developed and assembled
a machine (the "Unit") that processed approximately 7 gallons per
hour ("GPH") of waste motor oil into a fuel suitable for diesel
applications. Data from operation of the test Unit was then used by
engineering consultants with the aid of computer simulation techniques
to develop a preliminary design for mini-refining Units of commercial
scale. The Company completed construction of the first such Unit,
which had a designed input capacity of approximately 275 GPH of waste
oil and an output capacity of approximately 200 GPH of #2 diesel fuel
("number 2 diesel fuel") as specified by the American Society for
Testing and Materials ("ASTM"), with the balance of the output
consisting of #5 fuel oil and "light ends," mostly gases. The Company
then contracted with an independent testing firm (Mantek Services,
Inc.) to conduct a material balance and a process efficiency
evaluation. The material balance results revealed that the waste oil
conversion process, as then being performed, produced approximately
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74% number 2 diesel fuel, 24% #5 fuel oil with the remainder
consisting of light ends. The #2 diesel fuel tested met or exceeded
ASTM specs.
Following testing the Company began construction and delivery of
Units to customers. In 1994 one Unit with output capacity of number 2
diesel fuel of approximately 200 GPH (Model #200) and two Units with
400 GPH output capacity (Model #400) were built at Green Oasis' plant
in Mt. Pleasant, South Carolina. During the production of the Units,
the Company changed their design. This change, which involved the
development and integration of a thermal oxidizer, was made to conform
to specifications requested by the South Carolina Department of Health
and Environmental Control ("DHEC"). All three Units manufactured
were sold and shipped; however, to date, none of the Units is being
commercially operated because of installation or operational problems.
Following the shipment of the three Units the Company had
exhausted its cash and working capital resources, and production and
research and development activity ceased. In 1996, the Company
organized a South Carolina limited partnership, GOE Plant Partnership
I, L.P. and contracted to sell to it the one remaining Unit available,
together with the tanks and auxiliary equipment necessary to operate
the Unit commercially. As part of the sale, the Unit was upgraded
from a Model #200 Unit to a Model #400 Unit. The Company also agreed
to assemble the Unit and prepare it for operation. The assembly and
installation are ongoing in March 1997, and initial testing has begun.
(See Management's Discussion and Analysis of Financial Conditions and
Results of Operations, and Footnote B, Notes to Financial Statements.)
Description of Process
The Green Oasis waste oil refining process, called the
EnviroEconomics System, is designed to convert waste oils into
marketable fuels in a one-step process of thermal cracking
and distillation. Both thermal cracking and distillation are
well-known in the refining industry.
Waste oils, after removal of free water and debris, are
essentially a mix of hydrocarbons, or molecules made up of only
hydrogen and carbon. Many of the hydrocarbons in waste oil are
"heavy," so-called because they are less volatile and less combustible.
Fuels, such as gasoline, kerosene and diesel fuel, are also composed
of hydrocarbons, but these are generally lighter, more volatile and
more combustible.
In the EnviroEconomics System, conversion of waste oil into fuel
is accomplished through thermal cracking and distillation combined in
a continuous fully automated, one-step operation. Thermal cracking
involves the breaking up of larger hydrocarbon molecules into
smaller ones by applying heat in an oxygen-free environment. Higher
quality fuels, including the thermal cracking product, are then
separated out using a conventional distillation column. The heavier
products remaining after separation are quality heavy fuels.
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The distillation product is then heated to boil off any "light
ends," components which are too light and volatile, and these are used
to supply heat for the thermal cracking process. After removal of any
water which condenses out, the resulting product will be a fuel whose
specifications are determined by the system operating parameters
(e.g., temperatures) and the design of the distillation column.
The purpose of the EnviroEconomics System is the conversion of
waste oil into a fuel product suitable for most or all applications
employing diesel fuel on a commercial basis. These applications are
primarily industrial, including process heating systems, rail, marine
and farm usage, and over-the-road vehicle use(cars, buses and trucks).
Over-the-road usage involves more stringent requirements than
industrial usage. In particular, regulations of the Environmental
Protection Agency effective October 1993, severely limit the sulfur
content of diesel fuel for over-the-road use. At present, the diesel
fuel produced by the Company's Units only meets the specifications for
number 2 diesel fuel.
Markets
The primary accumulators of waste motor oil are businesses which
service the industrial manufacturing, automotive and trucking
industry. Specific accumulators include quick change oil shops,
automobile and truck repair garages, municipal garages, automobile and
truck dealerships, truck fleet terminals, bus operators, equipment
dealerships and automobile and truck leasing fleets, all of which
accumulate waste oil as the result of routine oil changes in motor
vehicles. Based on a study presented by representatives of Clayton
Environmental Consultants at the 1992 Annual Meeting of the National
Oil Recyclers Association ("NORA"), the amount of waste motor oil
generated annually in the United States is approximately 1.378 billion
gallons, and is growing at a rate of about 3% a year. Of this amount,
it is estimated, according to the study, that approximately 1.039
billion gallons are recycled or reused annually and approximately 339
million gallons are currently disposed of in landfills or other
disposal sites, illegally dumped or incinerated, and thus are
potentially available for recycling.
Since environmental regulations restrict the disposal of
petroleum products, businesses which accumulate waste motor oil
generally either give it away or contract for its transportation to a
waste oil collector. Based on information provided by NORA, there are
currently over 650 waste oil collectors in the United States. The bulk
of this waste oil is processed in a comparatively simple manner and
sold typically to asphalt plants or industrial users at a price
ranging from $.05 to $.25 per gallon. By contrast, the average rack
price for number 2 diesel fuel ranged from $.52 to $.74 per gallon
during calendar 1996, according to the Exxon daily price sheets
provided to distributors.
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It is contemplated that collectors to which the EnviroEconomics
System is available, either at their own facility or a nearby regional
location, would be able to recycle their waste oil into marketable
higher quality fuels, including number 2 diesel fuel and other
byproducts, which they can produce and sell at a price substantially
in excess of the prices currently attainable by them from the products
that they now produce and sell using their existing refining methods,
while at the same time eliminating various transportation and disposal
costs as well as potential environmental liability.
Products
The Green Oasis EnviroEconomics System converts waste motor oil
into marketable number 2 diesel fuel in a one-step process of low
temperature thermal cracking and distillation. Heavier fuels,
marketable at a lower price, are produced as a byproduct. The Company
plans to produce mini-refining units approximately the size of a
standard freight container. Green Oasis plans eventually to offer
refining units with output capacities of approximately 400 and
600 GPH of number 2 diesel fuel, although the larger 600 GPH model is
still in the design phase.
Patents and Proprietary Rights
Green Oasis filed a "process patent" application with the U.S.
Patent and Trademark Office (the "Patent Office") in November 1992,
regarding the technology for processing waste motor oil into number 2
diesel fuel. In February 1995, a wrapper continuation application was
filed which presented additional claims which are believed to
distinguish over cited prior art. The Company has also filed an
application under the Patent Cooperation Treaty, which it may elect to
pursue in 17 European countries, Mexico, Australia, Canada, Japan and
Russia.
Because the Company's technology employs well-known chemical
processes, there can be no assurance that any present or future patent
applications will mature into an issued patent. Furthermore, while
Green Oasis is strenuously pursuing its patent application, and
patents are important for protection of the Company's technology, it
does not believe that patent protection will be as important as the
expertise of the Company's management and technical personnel, early
market penetration and future improvements to the product, trade
secrets and unpatented proprietary know-how. Ultimately, the ability
of Green Oasis to market the product effectively will be more
important than the patent itself.
The Company's servicemark "EnviroEconomics" is registered on the
Principal Register of the Patent and Trademark Office.
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Testing, Research and Development
The Company is continuing its development of the thermal oxidizer
to resolve the manufacturing and operational difficulties experienced
with earlier Units. In addition, Green Oasis will continue to test
the quality of the fuels generated by the EnviroEconomics System in
order to promote efficiencies and reduce costs. The Company also
expects to continue to invest in research and development to expand
the system to other waste products for conversion into marketable or
reusable fuels or other marketable chemical compounds.
Additionally, the Company has entered into a consulting agreement
with a chemical engineering consulting firm to perform advisory and
consulting services relating to the development of Green Oasis'
products on a fee for services basis. The Company intends to continue
development of its transportable processing Unit including the
expansion of the processing Unit from the current 400 GPH size to
Units with increased capacities. During 1995 and 1996, the Company
spent $387,000 and $115,000 respectively on research and development,
none of which was borne by its customers.
Competition
At the present time, Green Oasis is not aware of any products
which compete directly with the EnviroEconomics System. However, the
refining and marketing segment of the petroleum industry is intensely
competitive, and management believes that competition will develop in
the marketplace. Many of the Company's potential competitors are
major energy service companies or integrated, multi-national oil
companies which have substantially greater financial, technical and
marketing resources than the Company. Because its products employ
well-known chemical processes, existing technologies and facilities
(such as large-scale refineries) of competitors might become a factor
in the waste oil markets upon which the Company's products depend,
possibly rendering them noncompetitive. To the extent that scale
economies apply to any such technologies or products, Green Oasis
would be at a competitive disadvantage because its equipment is
designed to operate at relatively low levels of product volume. In
addition, many of its competitors have significantly greater
experience than the Company in obtaining regulatory approvals of
products. Accordingly, they may succeed in obtaining regulatory
approval for products more rapidly than the Company.
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Production
To date, Green Oasis has constructed four Units, three of which
have been sold but are not operating and the fourth, which will be
purchased by GOE Plant Partnership I, L.P., and is being tested prior
to being placed into service by the Partnership. Green Oasis uses
standard parts and components for its Units which will be generally
available from several sources. Thus far the Company does not depend
heavily on single or limited sources of supply, and believes that it
will be able to obtain sufficient quantities of components or to
locate alternative sources of supply if and as required in the future.
Backlog
The Company has received orders from eight firms for a total of
19 units. However, because the Company only recently completed the
Unit being sold to GOE Plant Partnership I, L.P. it is not sure how
many firm orders exist at the present time. The Company anticipates
that potential customers will wish to conduct an inspection of the
Unit sold to the Partnership before placing a firm order. However,
based upon discussions with potential customers, and through
discussions with its marketing agents, CIC International, Enviro
Sales, Inc., and Ardmore Capital Corporation, the Company believes
that substantial interest in the Company's products exits.
Marketing
Green Oasis intends to operate certain of the EnviroEconomic
Systems on a regional basis as a regular part of its business and
may also enter into joint ventures or other business relationships
with waste oil collections and investors. It will also offer the
EnviroEconomics System for sale directly through its own sales force
in those regions of the United States and in various countries in
which it has retained distribution rights.
In addition to its direct marketing, at the end of 1996 the
Company had two active distributorships for sales of the Units. One
distributorship is with Midwest Fuel Refining Co., which covers the
states of North Dakota, South Dakota, Nebraska, Minnesota, Iowa, and
Wisconsin, and the other distributorship is with Process Technology
Investors which covers the states of Alabama, Mississippi, Florida,
Arkansas, Tennessee, Kentucky, and Missouri.
Under the terms of the distributorship agreements, in exchange
for a distributorship fee, the Company has sold to the distributors
the exclusive right to act as independent marketers, sellers,
resellers, and servicers of its machinery and equipment in the
specified territories. In exchange for the fee, the Company has also
agreed to provide as many mini-refining units as the distributor
requires at a discount of 10% from the then current list price for
those units, along with marketing materials bearing the Green Oasis
logo and trademark. In general, the distributorship agreements
provide for a term of 99 years. The distributorship fee is payable
over 15-20 years with an annual interest charge of 7%.
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The Company has agreed to terminate a letter of intent with a 2%
shareholder to enter into a distributorship agreement on terms similar
to those described above for Maryland, Delaware, West Virginia,
Pennsylvania and Washington, D.C. and to exchange $100,000 of the
distributorship fee, which the holder had paid, for 20,000 shares of
the Company's common stock.
Because the Company believes it will sell the Units to collectors
and others for whom the initial capital expense will be a substantial
investment, Green Oasis estimates that over 90% of its sales will
require lease or other financing. There can be no assurance that the
Company will be able to arrange acceptable financing for its customers
or will have sufficient capital resources to fund the leasing of
equipment to its customers directly.
Environmental Matters and Government Regulation
Operation of the Company's mini-refining units are subject to
environmental regulation by federal, state and local governmental
authorities. These laws and regulations set forth various standards
concerning environmental quality and provide penalties for the
violation thereof.
The nature of Green Oasis' business exposes it to risks of
causing or being deemed to have caused environmental and other
damages, such as the potential for harmful substances escaping into
the environment and causing damages or injuries. Changes in
environmental laws regarding chemical disposal, maximum levels of
certain chemicals and other regulations relating to the industry
could adversely affect the operations and earnings of Green Oasis.
During 1994, while the Company's environmental permits were
pending before the South Carolina Department of Health and
Environmental Control (DHEC), the Company and DHEC held a conference
to discuss outstanding allegations of various violations of the
pollution control laws resulting from the Company's construction,
operation and modification of a recycling unit prior to issuance of
state permits. This conference resulted in a Consent Order in which
certain violations were admitted and others dismissed, and the Company
was ordered to pay a $20,000 fine. This fine has been paid and the
enforcement matter concluded. In September 1994, after having written
a draft permit for the Company, DHEC inexplicably denied the necessary
permits for the Company. This decision was immediately appealed, and,
in March 1995, shortly before an administrative hearing was to be
held, DHEC entered a Consent Order which allows the Company to bring
the remaining Unit into operation for 60 days and, pending successful
completion of certain required testing, will allow all permits to
be issued. The 60-day operating period began in mid-March 1997, but
the testing has not yet been conducted.
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Customers with pending orders in the states of New Jersey,
Florida, Idaho, Illinois, Colorado, and Minnesota have received
approval from the applicable state environmental regulatory agencies
for installation and operation of the Company's products.
In May of 1995, the Environmental Protection Agency proposed the
revocation or staying of the used oil mixture rule. If this occurs,
it will have a negative effect on the used oil burner market, because
burners would be forced to certify that ash produced from burning
used oil would meet the Land Disposal Restrictions and would not be a
hazardous waste. The revocation of the rule might have a beneficial
effect upon Green Oasis by lowering the costs of used oil for the
operators of its units, as well as enhancing the marketing of the
products from the units.
Employees
The Company's employees vary, depending on orders, but it has
employed up to twenty-nine (29) people in addition to William D.
Carraway, all of whom, except Mr. Carraway, are provided by an
employment service which is responsible for taxes, payroll and
administration. These employees, who all work on a part-time basis,
include welders, machine operators, electricians and laborers hired to
provide construction, engineering, testing and maintenance for the
Green Oasis mobile processing unit. As of December 31, 1996, the
Company had 11 full-time and 2 part-time employees.
ITEM 2. PROPERTIES
The Company's executive offices are located in leased premises
in an office building in Charleston, South Carolina. On April 30,
1996, the Company relocated its manufacturing facilities to a heavy
industrial zoned site in the Charleston, South Carolina, area.
ITEM 3. LEGAL PROCEEDINGS
As of the date of this Report, the Company is the defendant in a
number of lawsuits filed by various claimants and creditors,
especially suppliers, alleging non-payment for their products or
services. Some of these lawsuits have been settled, others reduced to
judgments against the Company; some judgments have been paid. The
Company has recorded liabilities for all such amounts where it
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believes it has any liability.(See Management's Discussion and
Analysis and Note N to the Financial Statements.).
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during
the fourth quarter of fiscal year 1996.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
In March 1996, Green Oasis' common stock began trading on the
NASD Bulletin Board. Its trading symbol is GRNO. Prior to this date
there was no public trading market for the common stock.
As of March 11, 1997, there were 5,966,026 holders of the
Company's common stock. Although the Company is not subject to any
restrictions on the payment of dividends, it has paid no dividends to
date on its common stock and does not presently anticipate the
payment of cash dividends in the future. The opening bid for the
common stock was $4.50. Based upon the reports of First Union
Brokerage Services, Inc., the bid information for each quarter of
1996 was as follows:
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Quarter Low Bid High Bid
<S> <C> <C>
First Quarter 3 1/8 5 1/2
Second Quarter 1 3/8 4 1/8
Third Quarter 1 3/8 2 3/4
Fourth Quarter 1 3/8 2 5/16
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The prices presented are bid prices, which represent prices between
broker-dealers and do not include retail mark-ups and mark-downs or
any commissions to the dealer. Prices may not reflect actual
transactions.
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ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Background
The following discussion and analysis should be read in
conjunction with the Financial Statements and notes thereto appearing
elsewhere in the Report.
Results of Operations
Green Oasis is a development stage company which was organized
as a Florida corporation on September 24, 1991. Since its inception
Green Oasis has been engaged principally in product design,
development, testing, production, and patent application activities
and in the pursuit of selling distributorships for the exclusive right
to distribute its waste oil conversion equipment (the "Unit" or the
"Units") known as EnviroEconomics Systems in various geographical
areas of the United States and other countries. It has also begun
developing markets for the EnviroEconomics Systems and had shipped
three Units to customers by the end of 1994. In 1996, the Company's
sales were minimal. For the period from September 24, 1991
(inception), to December 31, 1996, Green Oasis incurred a cumulative
net loss of $5,654,000. For the year ended December 31, 1996, Green
Oasis reported a net loss of $397,000, and for the year ended December
31, 1995, Green Oasis reported net income of $952,000, primarily due
to the recognition of revenue from the sales of three of its Units.
See Note I to the Financial Statements. Green Oasis' ability to fully
utilize net operating loss carryforwards is subject to certain
limitations.
Revenues were recognized in 1996 in the amount of $37,000 from
the sale of storage tanks to GOE Plant Partnership I, L.P., a South
Carolina limited partnership, (the "Partnership") in anticipation of
the future purchase by the Partnership of a Unit. This purchase is
expected to occur in late March of 1997. During 1995, revenues of
$2,075,000 from the sale of three Units were recorded. No revenue
from the Unit sales had been recognized in any previous year.
Two lawsuits were filed in connection with the sale of the three
Units in 1995. The Company incurred legal expenses in both 1995 and
1996 to defend against the lawsuits. As of March 19, 1997, one of the
lawsuits has been dismissed. The other has settled, and releases are
being circulated to all the parties for signatures. The Company does
not anticipate any further legal actions related to the claims.
Two other customers who paid advance deposits for Units also
filed suits for return of the money paid. Green Oasis was unable to
deliver Units during 1995 and 1996 due to having exhausted its cash
resources. Settlements have been reached with both companies, and the
deposits were returned in March 1997.
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Research and Product Development. To date the Company has expensed
all the costs associated with designing and producing its Units as
research and development costs. In 1996 these costs, in the amount of
$115,000, included reconstructing a Unit, originally built in 1993,
at a new location and adding a thermal oxidizer. The reconstruction
required replacement of certain parts as well as the purchase of the
thermal oxidizer. This Unit will be sold to the Partnership for
operation and also used for demonstration purposes. Research and
product development expenses were $387,000 for the year ended December
31, 1995. The decrease in expenses for 1996 was largely caused by a
lack of funds to continue research and development. In 1994, the
Company modified the design of the Unit in order to conform with
specifications required by the South Carolina Department of Health
and Environmental Control (DHEC). The design changes depleted the
available working capital, and the plant closed in March 1995 and was
not reopened until late 1996.
In April of 1996, Green Oasis entered into a lease agreement for
two acres of land in Charleston, South Carolina. The land is being
used to reconstruct the Unit and the Company expects to sublease a
portion of the land to the Partnership. The remainder of the property
will be used for the Company's operations.
Operations and Marketing. Operations and marketing expenses were
$28,000 for the year ended December 31, 1996, and $192,000 for the
year ended December 31, 1995. Operations and marketing in 1996 were
less than prior years as the Company curtailed its activity because
of a lack of funds. The major expense was moving the plant from
Mt. Pleasant to the new location in Charleston. Marketing expenses
for 1995 include a $165,000 sales commission paid in common stock for
marketing services related to the sales recognized in 1995. A loss
in the disposal of equipment in the amount of $19,000 is also
categorized under operations in 1995.
Salaries and Benefits. The Company's officers waived the payment of
their salaries for 1996. The Chief Executive Officer was granted a
stock option in lieu of his 1996 salary. See Note M to the Financial
Statements. Salaries and benefits expenses were $223,000 for the year
ended December 31, 1995. Only that part of officers' salaries not
charged to direct labor along with payroll taxes and group medical
insurance are included in this category. Officer's salary of $25,000
was charged to Research and Development in 1995. During 1995, all
officers' salaries were applied to a note for the purchase of stock
rather than being paid in cash.
General and Administrative. Green Oasis has incurred ongoing legal
and accounting expenses for financings, regulatory filings, routine
corporate and shareholder activities, environmental disputes, and
litigation defense. Legal and accounting fees were $271,000 and
$173,000 in 1996 and 1995, respectively. The increase in 1996 was
primarily due to work related to the preparation of the Company's
required reports and stockholders' inquiries. In 1995, expenses
included fees of the Company's various counsel, accounting fees, and
charges for litigation.
General and administrative expenses other than legal and
accounting fees were $265,000 for the year ended December 31, 1996,
and $83,000 for the year ended December 31, 1995. The primary reason
for the increase in 1996 was due to payments for consulting fees and
information kits for investors; $103,000 of these costs were paid in
common stock. Decreases in office expenses, insurance, taxes and
licenses, and commissions paid for selling stock caused the reduction
for 1995.
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Liquidity and Capital Resources
Green Oasis is a development stage enterprise. Green Oasis has
funded its operations from inception through December 31, 1996,
primarily through loans and sales or exchanges of common and preferred
stock in the aggregate amount of $5,055,000 and through revenues
from the sale of three Units of $2,112,000.
During 1996, Green Oasis sold 216,000 shares of common stock at
$1.25 per share for cash and collected the final payments from the
exercise of a stock option by the CEO in the amount of $110,000. The
Company issued common stock with a market value of $307,000 in
exchange for legal, engineering, and consulting services. The Company
also exchanged common stock with a market value of $239,000 for vendor
payables in the amount of $571,000. In addition, $407,000 in notes
payable and a deposit of $18,000 were converted to common stock during
1996.
During 1995, Green Oasis borrowed $20,000 for operations and sold
common stock for $13,000 at $3.00 per share. The Company issued
18,324 shares for cancellation of a debenture, and 47,250 shares in
exchange for marketing and financial services at $2.00 to $4.00 per
share. Common shares totaling 5,600 were issued for conversion of
Series A preferred stock. Collection of amounts due for common stock
issued was $395,000.
Green Oasis' accounts payable and accrued expenses as of December
31, 1996, decreased by $961,000 because of the conversion of some of
the vendor payables to common stock as discussed above. Also, certain
of the vendors accepted the Company's non-interest bearing notes in
the amount of $405,000; thus, those amounts are now presented as notes
payable rather than accounts payable.
Through December 31, 1996, Green Oasis has received $198,000 in
initial payments for the sale of distribution rights, $98,000 of which
has been converted to common stock. The Company has agreed to convert
the remaining $100,000 to common stock in 1997 in exchange for the
cancellation of the distribution rights. The Company has purchased
$220,000 of property, equipment and automobiles since inception,
$37,000 of which was purchased in 1996. The 1996 purchases included
an automobile and office equipment. Green Oasis sold $53,000 of
automobiles and $9,000 of obsolete equipment since inception. Other
investment activities through December 31, 1996, included patent costs
of $51,000 and loans granted to distributors and stockholders net of
repayments of $117,000.
In June 1996 the Company formed the Partnership to own and
operate a #400 model Unit. The Partnership and Green Oasis entered
into a sales agreement stipulating the purchase price of $1,400,000
for the Unit along with site preparation, tanks, auxiliary equipment,
and installation. The Partnership was authorized to sell up to 30
partnership interests for $50,000 each. The proceeds of the sale of
the partnership interests are to be paid to Green Oasis toward the
purchase of the Unit and associated equipment as the Partnership
collects the funds. The receipt of the funds from the Partnership is
expected to provide the Company with operating capital for the first
half of 1997.
Green Oasis prepared a private placement memorandum to offer its
securities under Regulation D of the 1933 Securities Act in December
of 1996. 75 securities "packages" are being offered at $10,000 each;
a securities "package" contains 8,000 shares of common stock, an A
warrant, and a B warrant. The A warrants entitle each holder to
purchase up to 8,000 shares each of common stock at an exercise price
of $2.50 per share for three years, and the B warrants entitle each
holder to purchase up to 8,000 shares of common stock at $5.00 per
share for three years. Because the market price of the common stock
had increased, the Company ceased offering the securities for sale.
At that time the Company had sold 38 of the securities packages.
Monies raised from the offering will be used to fund operations.
<PAGE>
Although it is anticipated that the proceeds from the sale of the
Unit to the Partnership will fund operations and product development
for the immediate future, Green Oasis will continue to be dependent
upon other financing sources such as the proceeds of debt and equity
financings and customer deposits and loans to complete production of
the EnviroEconomics System, and to fund Green Oasis' working capital
requirements, including the payment of officer and other employee
salaries. As of December 31, 1996, Green Oasis had a net working
capital deficit of $1,417,000.
Although the Company's business strategy has changed and it will
seek opportunities to operate the Units itself within the United
States, it also intends to sell Units in the United States and in the
international market. It believes potential customers for the Units
exist as a result of the efforts of the Company's marketing firms.
The Company believes that any potential customer will require an
inspection of the Company's facilities and observance of the
successful operation of a Unit before placing a firm order. No
assurance can be given that Green Oasis will obtain the additional
financing to complete production and delivery of these Units or the
Units it will operate itself or that customers will obtain adequate
financing to purchase these Units.
Commercial operation of the Units continues to require additional
work to complete the integration of the thermal oxidizer. The thermal
oxidizer was added to the original design in 1994 based on
recommendations of engineering consultants and DHEC. The thermal
oxidizer's purpose is two-fold: to contain any air emissions and to
supply heat for the thermal cracking process. Green Oasis has
completed further development of the design of the system in the last
six months and is working with a chemical engineering consulting firm
to finish the design. Consequently, the Company has not yet completed
all research for its Units, and, should it be more extensive than now
believed, there can be no assurance that it will be able to
successfully obtain the financing to complete the development.
The Company has thus far been denied a final operating permit by
DHEC. The present status of the permit is that a draft permit has
been written, and the Company is allowed to operate the Unit for a
60-day period so that air emissions can be tested to determine that
DHEC's standards for air emissions are being met. The Company
initiated the 60-day period in mid-March 1997 and will shortly conduct
the tests of the equipment. The Company believes that DHEC is
requiring standards that exceed EPA regulations. The Company's
management and legal counsel are continuing negotiations with DHEC to
obtain the permit. Legal counsel expects a final permit to be issued
but that it is possible that it will not be effective until September
due to requirements for public comment periods and other complications
in issuing the permit.
The Company has settled all significant lawsuits against it. In
smaller matters it has permitted judgments against it. Most of the
judgments are by suppliers who have not been paid for their products
and services. The Company has recorded liabilities for the amounts
that it believes can settle those judgments and obligations. The
Company is continuing to negotiate with creditors to settle their
claims. In March 1997, two noteholders agreed to convert notes and
accrued interest totaling $603,000 to 170,775 shares of common stock.
Effective March 27, 1997, Green Oasis had obtained general
liability and product liability insurance coverage to limits of
$1,000,000.
The above statements are based on current expectations. These
statements are foward looking, and actual results may differ
materially.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's financial statements, together with the report of
the Company's independent auditors, are contained on pages F-1 through
F-22.
ITEM 8. CHANGES AND DISAGREEMENT WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE
EXCHANGE ACT OF THE REGISTRANT
The following table sets forth the names and ages of the
directors and executive officers of Green Oasis as of December 31,
1996, and their principal occupations during the last five years.
<TABLE>
Name Age Director Since Position
- - ---- --- -------------- --------
<S> <C> <C> <C>
William D.
Carraway 53 1991 President, CEO
and Director
Mary Ann
Anderson
Carraway 49 1991 Secretary and
Director
Larry S. King 51 1993 Director
</TABLE>
William D. Carraway was elected Chief Executive Officer and a
Director of Green Oasis, which he co-founded with his wife, Mary Ann
Anderson Carraway, in 1991. He served as Secretary/Treasurer and a
Director of Kelly Motors, Ltd. from June 1993 to February 1994. Mr.
Carraway became a director of HTC Total Home Care, Inc. in October of
1996. Mr. Carraway received a B.S. in accounting from Mississippi
State University and pursued graduate studies at the Emory University
School of Business Administration in Atlanta, Georgia.
In July 1995 Mr. Carraway, together with the Company, entered
into a Consent Order with the Secretary of State of the State of South
Carolina pursuant to which Mr. Carraway agreed personally, and on
behalf of any organization controlled by him, not to issue any
securities to persons in South Carolina until such securities are
properly registered nor to permit any offers or sales of securities in
South Carolina by means of any fraudulent sales practices.
<PAGE>
Mary Ann Anderson Carraway has served as a Director and Secretary
of Green Oasis, which she co-founded with her husband, William D.
Carraway, since 1991. Mrs. Carraway received a B.A. degree from
Memphis State University.
Larry S. King was elected a Director of Green Oasis in July 1993.
Since 1985, he has been the managing partner of the public accounting
firm of L.S. King & Associates, P.C. (formerly Mordt, Davis & Company),
in Atlanta, Georgia. Mr. King received a B.B.A. degree in 1968 from
the University of Georgia.
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth information concerning all cash
and non-cash compensation awarded to, earned by or paid to William D.
Carraway as Green Oasis' Chief Executive Officer, the only executive
officer whose total annual salary and bonus exceeded $100,000, during
each of the past three fiscal years:
<TABLE>
Summary Compensation Table
Long Term Compensation
----------------------
Annual Compensation Awards Payouts
------------------- -------------------- --------
Name Other Re- Securities All
and Annual stricted Underlying Other
Principal Compen- Stock Options/ LTIP Compen-
Position Year Salary Bonus sation Award(s) SARs Payouts sation
- - -------- ---- ------ ----- ------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William D.
Carraway, 1996 $ -(1) $ - $ 4,000(2)$125,000 548,000 - -
President, 1995 150,000 - - - - - -
CEO and 1994 175,000 - 10,000(3) - 100,000 - -
CFO
(1) See Options/SAR Grants in Last Fiscal Year.
(2) Represents compensation in the form of a company car valued at
$4,000.
(3) Represents compensation in the form of a company car valued at
$6,000 and health insurance valued at $4,000.
</TABLE>
Options/SAR Grants in Last Fiscal Year
In lieu of the payment of the Chief Executive Officer's salary for the
year ended December 31, 1996, the Company granted him a stock option
for 448,000 shares exercisable at any time until August 14, 1999, at
the stock's fair value on the date of the grant of $1.125. Also,
stock options for 100,000 shares were granted to Mr. Carraway under
the Company's 1994 Stock Employee Option Plan.
<PAGE>
<TABLE>
(A) (B) (C) (D) (E) (F)
Number of % of Total
Securities Options/
Underlying SARs Granted Market
Options/ to Employees Exercise or Price on Expira-
SARs in Fiscal Base Price Date of tion
Name Granted(#) Year ($/SH) Grant($/SH) Date
- - ---------- ------------ ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
William D.
Carraway, 448,000 78.18% $ 1.125 $ 1.125 Aug. 14, 1999
President,
CEO and 100,000 17.45% $ 1.125 $ 2.375 Sept. 10, 2002
CFO
</TABLE>
Fiscal Year-Ended Option Values
The following table shows, as to certain executive officers of the
Company, information at December 31, 1996, concerning the number and
value (aggregate fair market value less exercise price) of the stock
options held by those persons. In the fiscal year ended December
31, 1996, no options were exercised by such persons.
<TABLE> Value of
Number of Number of Unexercised Unexercised
Unexercised Unexercised Exercisable Unexercisable
Exercisable Unexercisable In-the-Money In-the-Money
Name Options Options Options Options
- - ------------------- ----------- ------------- ------------ ----------
<S> <C> <C> <C> <C>
William D. Carraway, 508,000 140,000 $ 84,000 $ 19,000
President, CEO, and
CFO
</TABLE>
Employment Agreements
In 1990 Green Oasis entered into five-year letter agreements
expiring on December 31, 1995, with Mr. and Mrs. Carraway providing
for an annual base salary of the greater of 1% of Green Oasis' gross
sales or for Mr. Carraway, an amount equal to $175,000 in 1994 and
$200,000 in 1995 and for Mrs. Carraway, an amount equal to $96,000 in
1994 and $108,000 in 1995. In December 1995, the Company's Board of
Directors extended the terms of the agreement for Mr. Carraway through
1996, setting the annual base salary at $144,000 or 2.5% of the
Company's gross sales, whichever was greater. Mr. Carraway waived the
payment of his salary for the fourth quarter of 1995 and for all of
1996. A new employment agreement with Mr. Carraway was approved by
the Board of Directors in early January 1997; the agreement is for a
term of three years from January 1, 1997, at an annual salary of
$144,000.
Director Compensation
Directors of Green Oasis receive no compensation for serving as
Directors.
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth information, as of March 11, 1997,
regarding the beneficial ownership of shares of Green Oasis common
stock, par value $.01 per share ("Green Oasis Common") by (i) each
person known by Green Oasis to own beneficially more than 5% of
outstanding Green Oasis Common, (ii) each director of Green Oasis,
(iii) each executive officer of Green Oasis and (iv) all directors
and officers of Green Oasis as a group. Except as otherwise
specified, the named beneficial owner has sole voting and investment
power.
<TABLE>
Name and Address of Percent
Title of Class Beneficial Owner Amount and Nature of Class
<S> <C> <C> <C>
Common Stock William D. Carraway 690,000 (2) 10.7%
President and Director (1)
Common Stock Mary Ann Anderson 1,192,000 (3) 19.9%
Carraway
Secretary and Director (1)
Brian D. Carraway (1) 400,000 6.7%
Larry S. King 40,000 (5) *
Director (4)
LifeChoice 320,000 5.4%
International, Inc. (6)
All current directors ** 2,322,000 35.6%
and officers as a group
(3 persons)
</TABLE>
_________________
*Less than 1%.
** Including the shares of Brian D. Carraway, son of William D.
Carraway and Mary Ann Anderson Carraway.
(1) The address of the shareholder is c/o Green Oasis Environmental,
Inc., 184 E. Bay Street, Suite 302, Charleston, South Carolina
29401.
(2) Includes 60,000 shares issuable upon exercise of an option granted
by the Company in May 1994, and 448,00 shares issuable upon the
exercise of an option granted by the Company in August 1996.
(3) Includes 15,000 shares issuable upon exercise of an option granted
by the Company in May 1994, and 5,000 shares issuable upon
exercise of an option granted by the Company in March of 1996.
(4) The address of Mr. King is 1868-A Independence Square, Atlanta,
GA 30338.
(5) Includes 15,000 shares issuable upon exercise of an option granted
by the Company in May 1994, and 5,000 shares issuable upon
exercise of an option granted by the Company in March of 1996.
(6) The address of LifeChoice International, Inc. is c/o Morrison &
Co., Suite 103, 10351 150th Street, Surrey B.C. V3R 4B1.
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
William D. Carraway, a director and President, Chief
Executive Officer of the Company, owns 100% of the common stock of
Fueltech, a South Carolina company which previously was the exclusive
distributor of the EnviroEconomics System and products in the states
of Georgia, Virginia, South Carolina, and North Carolina. Mr. and
Mrs. Carraway also both serve as directors of Fueltech. Fueltech
relinquished its distribution rights in 1996. Green Oasis provided a
credit facility for Fueltech in the amount of $150,000, payable at a
floating rate of interest. This loan, which was overadvanced by
$41,000, and which now has an outstanding principal balance of
$117,000, is guaranteed by William D. Carraway. The credit facility
was granted to Fueltech in order to provide Fueltech with a source of
funds to operate the remaining Unit at the Fueltech facility for
demonstration to prospective purchasers. However, the Unit has been
moved from that site, and Fueltech currently has no plans to operate a
Unit. Mr. Carraway, as guarantor, has made payments on the note and
intends to pay the balance during 1997.
Mr. Carraway borrowed $148,000 from the Company in 1994,
repaying $125,000 of this amount. He also paid personally certain
expenses of the Company for which he was owed $45,000 in
reimbursement. In 1995, Mr. Carraway collected $7,000 of the amounts
due him, and he purchased an automobile from the Company for its fair
market value of $13,000. The net amount due to Mr. Carraway from the
Company at December 31, 1995, was $2,000.
The Company was holding a note in the amount of $500,000 from
Mr. Carraway, delivered for the purchase of 1,000,000 shares of the
Company's common stock, acquired through the exercise of a stock
option granted in 1993. Mr. Carraway repaid $390,000 of this note in
1995 through the application of $245,000 in accrued salary and the
payment of $145,000 in cash.
In 1996, Mr. Carraway loaned the Company $142,000 to pay
expenses and was repaid $46,000 of this amount. He also paid the
balance of the note for the exercise of the 1993 stock option in the
amount of $110,000. He purchased 80,000 shares of common stock in
December of 1996 for $100,000 by applying a portion of the balance
owed to him. The remainder of the amount of $24,000 due him was
applied to the Fueltech credit facility balance.
<PAGE>
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this Report:
1. Financial Statements. The following Financial Statements of Green
Oasis Environmental, Inc. are included in Part II, Item 7 of this
Report:
Page
Cover Page to Financial Statements F-1
Index to Financial Statements F-2
Independent Auditor's Report F-3
Balance Sheet F-4
Statements of Operations F-5
Statements of Changes in Stockholders'
Equity (Deficiency) F-6
Statements of Cash Flows F-9
Notes to Financial Statements F-11
2. Exhibits. The Exhibits listed on the accompanying Index to Exhibits
following the financial statements are filed as part of, or
incorporated by reference into, this Report.
(b) Reports on Form 8-K - None
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT
TO SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED
SECURITIES PURSUANT TO SECTION 12 OF THE ACT
(a) (1) Annual Reports - None
(2) Proxy Soliciting Material - None
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
GREEN OASIS ENVIRONMENTAL, INC.
By /s/ William D. Carraway
------------------------
William D. Carraway
President, Chief Executive Officer,
and Director
(Principal Executive, Financial
and Accounting Officer)
March 31, 1997
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the date indicated.
Signature Title Date
/s/ William D. Carraway President, Chief Executive March 31, 1997
- - ----------------------- Officer, and Director
William D. Carraway (Principal Executive,
Financial and Accounting
Officer)
/s/ Mary Ann Carraway Secretary and Director March 31, 1997
- - ---------------------
Mary Ann Carraway
/s/ Larry S. King Director March 31, 1997
- - ---------------------
Larry S. King
<PAGE>
GREEN OASIS ENVIRONMENTAL, INC.
(A Development Stage Enterprise)
FINANCIAL STATEMENTS AND
INDEPENDENT AUDITOR'S REPORT
AS OF DECEMBER 31, 1996,
AND FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995,
AND FOR THE PERIOD FROM
SEPTEMBER 24, 1991 (INCEPTION), THROUGH DECEMBER 31, 1996
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Page
INDEPENDENT AUDITOR'S REPORT . . . . . . . . . . . . . . . . . . .F-3
FINANCIAL STATEMENTS
Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . . . .F-4
Statements of Operations . . . . . . . . . . . . . . . . . . . .F-5
Statements of Changes in
Stockholders' Equity (Deficiency) . . . . . . . . . . . .F-6 - F-8
Statements of Cash Flows . . . . . . . . . . . . . . . . F-9 - F-10
Notes to Financial Statements. . . . . . . . . . . . . .F-11 - F-22
<PAGE>
Independent Auditor's Report
To the Board of Directors and Stockholders of
Green Oasis Environmental, Inc.
We have audited the accompanying balance sheet of Green Oasis
Environmental, Inc. (a development stage enterprise) as of
December 31, 1996, and the related statements of operations,
changes in stockholders' equity (deficiency), and cash flows
for the years ended December 31, 1996 and 1995, and for the period
from September 24, 1991 (inception), through December 31, 1996.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Green
Oasis Environmental, Inc. (a development stage enterprise)as of
December 31, 1996, and the results of its operations and its cash
flows for the years ended December 31, 1996 and 1995, and for the
period from September 24, 1991 (inception), through December 31, 1996,
in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note K
to the financial statements, the Company has suffered recurring losses
from operations, has not fully completed research and development, and
has a net capital deficiency that raise substantial doubt about its
ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note K. The financial
statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ Chellis, Bryan & Associates, L.L.C.
Charleston, South Carolina
March 19, 1997
<PAGE>
<TABLE>
GREEN OASIS ENVIRONMENTAL, INC.
(A Development Stage Enterprise)
BALANCE SHEET
December 31, 1996
<CAPTION>
<S> <C>
ASSETS
CURRENT ASSETS
Cash $ 32,000
Accounts receivable -
related party (Note B) 55,000
Prepaid expenses 59,000
----------
Total current assets 146,000
PROPERTY AND EQUIPMENT, NET OF
ACCUMULATED DEPRECIATION (Note C) 86,000
OTHER ASSETS
Loans receivable - related party (Note B) 117,000
Patent costs 51,000
Deferred tax assets, net
of valuation allowance (Note F) -
----------
TOTAL ASSETS $ 400,000
==========
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIENCY)
CURRENT LIABILITIES
Notes payable (Note D) $ 650,000
Accounts payable 575,000
Accrued interest 17,000
Accrued payroll taxes 71,000
Due to stockholders (Note N) 7,000
Deposits received for
distribution fees (Note H) 100,000
Deposits received for
equipment sales (Note I) 80,000
Deposits for equipment
from related party (Notes B and I) 63,000
----------
Total current liabilities 1,563,000
----------
LONG-TERM DEBT -
----------
COMMITMENTS AND CONTINGENT
LIABILITIES (Note N) -
----------
REDEEMABLE PREFERRED STOCK (Note L) 42,000
----------
STOCKHOLDERS' EQUITY (DEFICIENCY)
Series A preferred stock (Note L) 6,000
Common stock, $.01 par value;
20,000,000 shares authorized;
5,966,026 shares issued and
outstanding (Note L) 60,000
Additional paid-in capital 4,433,000
Deficit accumulated during
the development stage (5,654,000)
Receivables for stock issued (50,000)
-----------
Total stockholders' equity
(deficiency) (1,205,000)
-----------
TOTAL LIABILITIES AND
STOCKHOLDERS'EQUITY (DEFICIENCY) $ 400,000
===========
<FN>
The accompanying notes are an integral part of these financial
statements.
F-4
</TABLE>
<PAGE>
<TABLE>
GREEN OASIS ENVIRONMENTAL, INC.
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
<CAPTION> Period
from
September 24,
1991
(inception),
Years ended December 31, through
-------------------------- December 31,
1996 1995 1996
------------ ------------ ------------
<S> <C> <C> <C>
REVENUES
Sales revenues
(Notes B and I) $ 37,000 $ 2,075,000 $ 2,112,000
Interest and other income - 12,000 18,000
------------ ------------ ------------
TOTAL REVENUES 37,000 2,087,000 2,130,000
------------ ------------ ------------
COSTS AND EXPENSES
Research and development 115,000 387,000 4,636,000
General and administrative
- legal and accounting 271,000 173,000 1,275,000
General and administrative
- other 265,000 83,000 892,000
Salaries and benefits - 223,000 807,000
Operations and marketing 28,000 192,000 486,000
Interest expense 42,000 77,000 338,000
------------ ------------ ------------
TOTAL COSTS AND EXPENSES 721,000 1,135,000 8,434,000
------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME
TAXES (BENEFIT) AND
EXTRAORDINARY GAIN (684,000) 952,000 (6,304,000)
INCOME TAXES (BENEFIT)(Note F) - - -
EXTRAORDINARY GAIN -
Extinguishment of debt
(Note J) 287,000 - 666,000
------------ ------------ ------------
NET INCOME (LOSS) $ (397,000) $ 952,000 $ (5,638,000)
============ ============ ============
NET EARNINGS (LOSS) PER
SHARE (Note L)
PRIMARY EARNINGS (LOSS)
PER COMMON SHARE
Income (loss) before
extraordinary gain $ (0.12) $ 0.18 $ (1.48)
Extraordinary gain 0.05 - 0.15
------------ ------------ ------------
EARNINGS (LOSS) PER
COMMON SHARE $ (0.07) $ 0.18 $ (1.33)
============ ============ ============
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING (Note L) 5,392,111 5,119,298 4,349,425
============ ============ ============
FULLY DILUTED EARNINGS
(LOSS)PER COMMON SHARE
Income (loss) before
extraordinary gain $ (0.12) $ 0.18 $ (1.48)
Extraordinary gain 0.05 - 0.15
------------ ------------ ------------
EARNINGS (LOSS) PER
COMMON SHARE $ (0.07) $ 0.18 $ (1.33)
============ ============ ============
WEIGHED AVERAGE
COMMON SHARES
OUTSTANDING (Note L) 5,392,111 5,399,523 4,349,425
============ ============ ============
<FN>
The accompanying notes are an integral part of these financial
statements.
F-5
</TABLE>
<PAGE>
<TABLE>
GREEN OASIS ENVIRONMENTAL, INC.
(A Development Stage Enterprise)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
SEPTEMBER 24, 1991 (INCEPTION), THROUGH DECEMBER 31, 1996
<CAPTION>
Deficit
accumu-
lated
Series A during
preferred the
stock Common stock Additional develop-
-------- ----------------- paid-in mental Treasury
Amount Shares Amount capital stage stock
-------- -------- -------- --------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Balances at
September 24,
1991
(inception) $ - $ - $ - $ - $ - $ -
October 22,
1991,
issuance
of common
stock for
cash; - 1,300,000 7,000 16,000 - -
issuance
of common
stock for
financial
services - 20,000 - - - -
December 18,
1991,
issuance
of common
stock for
cash - 410,600 2,000 - - -
Net loss
for period - - - - (20,000) -
--------- -------- ------- --------- --------- -------
Balances at
December 31,
1991 - 1,730,600 9,000 16,000 (20,000) -
February 29,
1992,
issuance of
common stock
for financial
services - 62,200 - - - -
July 24, 1992,
issuance of
common stock
for cash - 320,000 2,000 - - -
August 28,
1992,
warrants
exercised; - 320,000 2,000 - - -
issuance
of common
stock for
cash - 33,800 - - - -
October 4,
1992,
issuance
of common
stock for
research
and
development
costs and
financial
services - 127,000 - 31,000 - -
Issue costs - - - (9,000) - -
Net loss
for year - - - - (505,000) -
--------- --------- ------- --------- ---------- -------
Balances at
December 31,
1992 - 2,593,600 13,000 38,000 (525,000) -
March 30,
1993,
issuance
of common
stock for
financial
services - 3,200 - 2,000 - -
May 28,
1993,
issuance
of common
stock for
conversion; - 4,000 - 5,000 - -
issuance
of common
stock for
financial
and other
services - 47,000 - 59,000 - -
June 4,
1993,
exercise
of stock
option - 1,000,000 5,000 495,000 - -
August 20,
1993,
issuance
of common
stock
donated by
stockholder
for
financial
services - - - 33,000 - -
September 15,
1993,
issuance
of common
stock
donated by
stockholder
for
loan costs
and
financial
services - - - 42,000 - -
November 9,
1993,
purchase
of 30,000
shares of
treasury
stock - - - - - (24,000)
November 18,
1993,
issuance
of common
stock for
cash; - 30,000 - 45,000 - -
issuance
of common
stock for
financial
services - 17,200 - 26,000 - -
Net loss
for year - - - - (2,218,000) -
-------- --------- ------- --------- ---------- --------
Balances at
December
31, 1993,
prior to
amounts
subject to
rescission
offer - 3,695,000 18,000 745,000 (2,743,000) (24,000)
Less amounts
subject to
rescission
offer - - (18,000) (745,000) - -
-------- --------- ------- --------- ---------- --------
Balances at
December 31,
1993 - 3,695,000 - - (2,743,000) (24,000)
-------- --------- ------- --------- ---------- --------
F-6
</TABLE>
<PAGE>
<TABLE>
GREEN OASIS ENVIRONMENTAL, INC.
(A Development Stage Enterprise)
STATEMENTS OF CHANGES IN STOCKHOLDERS'
EQUITY (DEFICIENCY) (CONTINUED)
SEPTEMBER 24, 1991 (INCEPTION), THROUGH DECEMBER 31, 1996
<CAPTION>
Deficit
accumu-
lated
Series A during
preferred the
stock Common stock Additional develop-
--------- ------------------- paid-in ment Treasury
Amount Shares Amount capital stage stock
--------- --------- --------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Balances
at
December
31, 1993 $ - 3,695,000 $ - $ - $(2,743,000)$(24,000)
April 6,
1994,
issuance
of common
stock for
cash - 20,000 - 50,000 - -
June 30,
1994,
retirement
of
treasury
stock - (30,000) - (8,000) (16,000) 24,000
August 23,
1994,
issuance
of common
stock for
cash; - 24,400 - 61,000 - -
issuance
of common
stock for
legal
services; - 5,000 - 12,000 - -
issuance
of common
stock for
marketing
services - 10,000 - 25,000 - -
September 23,
1994,
issuance
of common
stock for
cash - 20,400 1,000 50,000 - -
October 7,
1994,
issuance
of common
stock
pursuant
to
agreement - 20,000 - - - -
October 25,
1994,
sale of
common
stock
reacquired
from
Woodlands
Partners; - - - 200,000 - -
issuance
of common
stock for
cash; - 1,975 - 8,000 - -
conversion
of debt
to common
stock - 7,000 - 32,000 - -
October 31,
1994,
conversion
of
debentures
to
common stock - 408,624 4,000 642,000 - -
December 7,
1994,
conversion
of
Series A
promissory
notes
to common
stock - 92,400 1,000 104,000 - -
December 20,
1994,
issuance
of common
stock for
cash - 1,250 - 5,000 - -
December 22,
1994,
issuance
of common
stock for
cash; - 6,250 - 25,000 - -
rejection
of
rescission
offer
by all
except
holders
of 20,000
shares; - - 18,000 720,000 - -
issuance
of 104,900
shares of
Series A
preferred; 105,000 - - - - -
acceptance
of
rescission
offer by
holder
of 2,000
shares of
Series A
preferred (2,000) - - - - -
December 31,
1994,
conversion
of 9%
cumulative
convertible
preferred
stock
to common
stock; - 760,440 8,000 943,000 - -
transfer
of issue
costs from
preferred
stock; - - - (41,000) - -
conversion
of
Series A
preferred
stock to
common
stock (83,000) 33,360 - 83,000 - -
Net loss
for year - - - - (3,450,000) -
--------- --------- -------- --------- ----------- --------
Balances at
December 31,
1994 20,000 5,076,099 32,000 2,911,000 (6,209,000) -
--------- --------- -------- --------- ----------- --------
F-7
</TABLE>
<PAGE>
<TABLE>
GREEN OASIS ENVIRONMENTAL, INC.
(A Development Stage Enterprise)
STATEMENTS OF CHANGES IN STOCKHOLDERS'
EQUITY (DEFICIENCY) (CONTINUED)
SEPTEMBER 24, 1991 (INCEPTION), THROUGH DECEMBER 31, 1996
<CAPTION>
Deficit
accumu-
lated
Series A during
preferred the
stock Common stock Additional develop-
--------- ------------------- paid-in ment Treasury
Amount Shares Amount capital stage stock
--------- --------- --------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Balances
at
December
31, 1994 $ 20,000 5,076,099 $ 32,000 $2,911,000 $(6,209,000) $ -
January 2,
1995,
issuance
of common
stock for
cash - 4,500 - 13,000 - -
January 23,
1995,
conversion
of
debenture
to common
stock - 11,424 - 14,000 - -
February 2,
1995,
issuance
of
common
stock
pursuant
to
agreement - 15,000 - - - -
February 13,
1995,
issuance
of common
stock for
services - 3,000 - 8,000 - -
February 20,
1995,
issuance
of common
stock for
services - 3,000 - 6,000 - -
March 6,
1995,
conversion
of
debenture
to common
stock - 2,900 - 4,000 - -
March 20,
1995,
conversion
of
debenture
to common
stock - 4,000 - 5,000 - -
December 1,
1995,
issuance
of common
stock for
sales
commissions - 41,250 1,000 164,000 - -
December 31,
1995,
conversion
of Series
A preferred
stock to
common
stock (14,000) 5,600 - 14,000 - -
December 31,
1995,
adjustment
for par
value of
common
stock - - 19,000 (19,000) - -
Net income
for year - - - - 952,000 -
-------- --------- --------- ---------- ----------- ---------
Balances
at
December
31, 1995 6,000 5,166,773 52,000 3,120,000 (5,257,000) -
-------- --------- --------- ---------- ----------- ---------
January 31,
1996,
issuance
of common
stock for
services - 2,000 - 6,000 - -
March 15,
1996,
issuance
of common
stock for
services - 25,000 - 76,000 - -
June 27,
1996,
issuance
of common
stock for
services
and in
exchange
for
debt - 276,576 3,000 529,000 - -
August 17,
1996,
issuance
of common
stock for
services
and
conversion
of
debt - 93,417 1,000 116,000 - -
August 21,
1996,
issuance
of common
stock for
services,
conversion
of
debenture - 48,260 - 60,000 - -
December 6,
1996,
issuance
of common
stock for
conversion
of debt - 50,000 1,000 124,000 - -
December 23,
1996,
issuance
of common
stock for
cash and
services - 304,000 3,000 377,000 - -
December 31,
1996,
rejection
of
rescission
offer
by holders
of 20,000
shares of
common
stock - - - 25,000 - -
Net loss
for year - - - - (397,000) -
-------- --------- --------- ---------- ----------- ---------
Balances
at
December
31,1996 $ 6,000 5,966,026 $ 60,000 $4,433,000 $(5,654,000)$ -
======== ========= ========= ========== =========== =========
The accompanying notes are an integral part of these financial
statements.
F-8
</TABLE>
<PAGE>
<TABLE>
GREEN OASIS ENVIRONMENTAL, INC.
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
<CAPTION>
Period
from
September 24,
1991
Years ended (inception),
December 31, through
--------------------- December 31,
1996 1995 1996
---------- --------- ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income (loss) $ (397,000) $ 952,000 $ (5,638,000)
Adjustments to reconcile
net income (loss) to
net cash used in operating
activities
Depreciation 6,000 14,000 69,000
Amortization of loan costs - - 21,000
Gain from restructuring debt (287,000) - (287,000)
Provision for uncollectible
accounts - - 15,000
(Gain) loss on disposal of
property - 19,000 19,000
Common stock issued for
services 332,000 179,000 692,000
Cancellation of indebtedness - - (280,000)
Conversion of accrued
interest on debt to
common stock - - 51,000
Issuance of debentures
for marketing services - - 22,000
Payment of loan in exchange
for marketing services - - 7,000
Decrease (increase) in assets
Receivable from related party (55,000) - (55,000)
Prepaid expenses (59,000) - (59,000)
Deposits paid (2,000) - (2,000)
Increase (decrease) in
liabilities
Accounts payable 165,000 178,000 1,606,000
Accrued expenses (75,000) 46,000 98,000
Deposits on equipment 63,000 (1,900,000) 143,000
--------- --------- ------------
Net cash used in operating
activities (309,000) (512,000) (3,578,000)
--------- --------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and
equipment (37,000) - (220,000)
Proceeds of sale of property
and equipment - 53,000 62,000
Loans to related parties - - (336,000)
Collection of loans to
related parties 24,000 53,000 259,000
Patent costs (4,000) (5,000) (51,000)
Loans granted to distributors - - (7,000)
Initial payments received
for distribution rights - - 198,000
Net cash provided by (used in)
investing activities (17,000) 101,000 (95,000)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds of convertible
debt securities - - 565,000
Proceeds of common stock
issues 380,000 408,000 1,256,000
Proceeds of preferred
stock issues - - 1,024,000
Proceeds of loans from
stockholders - 35,000 561,000
Issue costs - - (21,000)
Purchase of treasury
stock - - (24,000)
Payments of loans from
stockholders (27,000) (33,000) (122,000)
Proceeds of notes - 20,000 520,000
Proceeds of Series A
notes - - 105,000
Increase (decrease)
in bank overdraft - (7,000) -
Payments of notes and
debentures - (5,000) (155,000)
Payments of capital
leases - (2,000) (4,000)
---------- --------- ------------
Net cash provided by
financing activities 353,000 416,000 3,705,000
---------- --------- ------------
Net increase in cash 27,000 5,000 32,000
Cash and cash
equivalents at
beginning of period 5,000 - -
---------- --------- ------------
Cash and cash
equivalents at
end of period $ 32,000 $ 5,000 $ 32,000
========== ========= ============
F-9
</TABLE>
<PAGE>
<TABLE>
GREEN OASIS ENVIRONMENTAL, INC.
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS (CONTINUED)
<CAPTION>
Period
from
September 24,
1991
Years ended (inception)
December 31, through
---------------------- December 31,
1996 1995 1996
---------- ---------- ---------------
<S> <C> <C> <C>
SUPPLEMENTAL DISCLOSURES
OF NONCASH INVESTING
AND FINANCING ACTIVITIES
Common stock issued
for services rendered,
preferred stock conversion,
debt conversion, and
loan costs $1,026,000 $ 216,000 $ 3,295,000
========== ========== ===============
Capital lease obligations
incurred to purchase
equipment $ - $ - $ 12,000
========== ========== ===============
Deposit converted to
preferred stock $ - $ - $ 80,000
========== ========== ===============
Debt issued for equipment
and services and loans
collected or exchanged
for services $ - $ - $ 56,000
========== ========== ===============
Provision for repurchase
of stock from stockholders
who accepted rescission
offer $ (50,000) $ - $ 7,000
========== ========== ===============
No interest nor income taxes were paid in any period.
The accompanying notes are an integral part of these financial
statements.
F-10
</TABLE>
<PAGE>
GREEN OASIS ENVIRONMENTAL, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
A.SIGNIFICANT ACCOUNTING POLICIES
Organization. Green Oasis Environmental, Inc. (the Company) is a
development stage enterprise which was formed to investigate,
develop, produce, market, distribute, and operate waste oil
conversion equipment. The Company was organized in 1991 as a
Florida corporation, and its activities are directed toward
developing and producing equipment to convert waste oil to diesel
fuel as well as marketing, distribution, and operation of the
products. The Company's facilities are located in Charleston, South
Carolina. The intended market for the Company's products is
worldwide.
Cash equivalents. For the purposes of the cash flows statements,
all highly liquid financial instruments with a maturity of three
months or less when purchased are considered to be cash equivalents.
Inventories. Inventories are stated at the lower of cost,
determined on a first-in, first-out basis, or market. Market is
defined as estimated selling price less the cost to complete and
dispose of the inventory.
Property and equipment. Property and equipment are stated at cost.
Additions,renewals, and betterments are capitalized whereas
expenditures for maintenance and repairs are charged to expense.
Property under capital leases is amortized over the lease term. The
cost and related accumulated depreciation of assets sold or retired
are removed from the appropriate asset and depreciation accounts,
and the resulting gain or loss is reflected in income. Depreciation
is calculated using the straight-line method.
Patent costs. Patent costs include legal fees incurred in
connection with patent applications. The costs will be amortized
over the useful life of the patents or expensed if any specific
application is unsuccessful.
Warranty costs. The Company provides, by a current charge to
income, an amount it estimates will be needed to cover future
warranty obligations for products sold during the year.
Convertible debt. Proceeds from the issuance of convertible debt
are recorded as liabilities; no portion of the proceeds is
considered attributable to the conversion feature.
Deferred income taxes. Deferred income taxes are provided for
timing differences between financial accounting and tax income and
the future tax benefit of net operating losses under the Statement
of Accounting Standards No. 109, Accounting for Income Taxes.
Revenue recognition. Revenue from the sale of equipment is
recognized when the terms of the sales agreements are completed.
Advance payments on equipment orders are recorded as deposits under
current liabilities until the sales are consummated. Receipts
from distribution agreements are recorded as deposits until such a
time as substantial operations and distribution begin.
<PAGE>
GREEN OASIS ENVIRONMENTAL, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
A.SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Research and development. The costs of developing new products and
processes and making significant improvements to existing products
are expensed as incurred. Until products are successfully completed
and installed commercially, costs of production and installation are
expensed as research and development.
Nonmonetary transactions. Common stock issued in exchange for
services rendered is recorded at the fair value of the services
received or the fair value of the stock, whichever is more clearly
evident.
Accounting estimates. The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions. These estimates and
assumptions affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ
from those estimates.
Reclassification. Certain previously reported amounts have been
reclassified to conform with the current period presentation.
B.RELATED PARTY TRANSACTIONS
During 1995 and 1996, the Chief Executive Officer (CEO) loaned funds
to the Company for working capital. The amounts loaned in 1995 were
a total of $293,000 of which $147,000 was repaid in cash or in kind;
$390,000, including accrued salary of $246,000, was applied to the
$500,000 receivable for the exercise of a 1993 stock option in the
amount of $500,000. Balances of $2,000 owed to the CEO and $110,000
note receivable remained as of December 31, 1995. During 1996, the
CEO loaned the Company $252,000 and was repaid $45,000. He paid the
$110,000 balance of the note receivable for the stock purchase in
full, and used $100,000 to purchase 80,000 shares of common stock.
A liability to a former stockholder was removed in the amount of
$25,000; most of this amount was applied to the FuelTech, Inc.
(Fueltech) note. There is no amount due from or to the CEO as of
December 31, 1996.
In 1994, the Company granted a credit facility to Fueltech in an
amount not to exceed $150,000; Fueltech is owned by the officers of
the Company and had agreed to purchase rights to distribute the
Company's products. The purpose of the credit facility is to
provide necessary funds for site preparation, including installation
of tanks and pumps and other necessary mechanical and electrical
work at the affiliate's location. The loan bears interest at 8% per
annum; however, no interest has been recorded from the note.
Advances of $41,000 over the maximum amount had been made in 1994.
Totals of $50,000 were collected in 1995 and $24,000 in 1996, and
the balance due as of December 31, 1996, is $117,000. The loan has
been personally guaranteed by the CEO of the Company, who has paid
all the note payments to date.
<PAGE>
GREEN OASIS ENVIRONMENTAL, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
B.RELATED PARTY TRANSACTIONS (CONTINUED)
Investment in Limited Partnership. The Company became the general
partner in a South Carolina limited partnership known as GOE Plant
Partnership I, L.P. (the Partnership) which was formed on June 28,
1996. The purpose of the Partnership is to purchase and operate the
Company's distillation processing equipment which was built as
the prototype in 1993 and has been upgraded to a Model 400
(the Unit). The Company plans to sell the Unit to the Partnership
as soon as the Partnership is able to sell limited partnership
interests to raise the approximately $1,200,000 purchase price.
Though much of the cost of producing the Unit has already been
expensed as research and development costs, certain improvements are
not complete, and the Company expects to incur additional costs for
the thermal oxidizer and other items prior to the completion of
the sale to the Partnership. Also, the South Carolina Department of
Health and Environmental Control ("DHEC") must approve the
installation and operation of the distillation plant. The
Partnership will sublease space from the Company on which to locate
and operate the plant.
The Company's duties as general partner are to operate and maintain
the distillation plant and to perform all duties of general
management. The Company will receive 10% of the net income from the
Partnership while the limited partners will receive a 90% allocation
of net income. The Partnership has paid $37,000 for the purchase of
storage tanks under the sales contract during 1996 and has paid the
Company $10,000 as a deposit. A receivable in the amount of $55,000
has been recorded from the Partnership as of December 31, 1996, and
a corresponding $63,000 has been recorded as a deposit for equipment
in accordance with the sales agreement.
The Company will provide warrants at no additional cost to the
purchasers of the limited partnership interests. The warrants may
be exercised to purchase up to 15,000 shares of the Company's common
stock and are exercisable for 180 days at a price of $3.00 per
share. The Company will assign no value to the warrants when they
are issued, and no warrants have been issued.
C.PROPERTY AND EQUIPMENT
Property and equipment consist of the following as of December 31,
1996:
<TABLE>
Useful
Life
Description In Years Amount
<S> <C> <C>
Equipment and computers 5 $ 64,000
Vehicle 5 35,000
Furniture and fixtures 5 - 7 9,000
-----------
Total cost 108,000
Accumulated depreciation (22,000)
-----------
Property and equipment, net $ 86,000
===========
</TABLE>
Depreciation expense is $6,000 in 1996 and $14,000 in 1995.
Depreciation expense was not recorded after March 31, 1995, on idle
equipment and machinery.
<PAGE>
GREEN OASIS ENVIRONMENTAL, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
D.NOTES PAYABLE
On April 28, 1994, the Company borrowed $500,000 at 10% interest
with a due date of June 10, 1995. The Company granted a security
interest in its inventory and accounts receivable as collateral.
Upon default on the note, the noteholder has an option agreement
which grants the noteholder the right to convert the principal and
interest amount to shares of common stock at $2.50 per share. The
option agreement expires one year from the date of default on the
note. The Company defaulted on the note during 1995. During 1996
the noteholder converted $375,000 of principal to 150,000 shares of
common stock and agreed to convert the remaining balance along with
$120,000 in accrued interest to a three-year note payable in monthly
installments. No payments were made toward the installment
agreement, and the full balance is reported as a current liability
as of December 31, 1996. The Company has extended the time for
conversion of the debt to common stock.
In August of 1995, the Company together with its Chief Executive
Officer borrowed $20,000 from some stockholders on a demand basis at
a 10% interest rate. The proceeds were paid to the Company. The
Chief Executive Officer agreed to transfer common shares owned by
him to the noteholders in the amount of one share for each $1 of
principal and interest upon request of the noteholders. During 1996
the Company issued 24,000 shares of common stock to satisfy the debt
and accrued interest thereon.
Certain of the Company's creditors holding debt aggregating $405,000
accepted offers from the Company to accept noninterest-bearing notes
payable in 36 equal monthly installments beginning on September 30,
1996, in exchange for amounts owed by the Company. The Company
executed the notes but has made no payments on the notes. Thus, the
notes are in default and, according to their terms, have become
immediately due and payable.
E.ISSUANCE OF COMMON STOCK
Debt Restructuring. During 1996, the Company negotiated with
several of its creditors who were owed trade payables and legal
fees. The Company and the creditors agreed upon a conversion price
of $2.50 to $3.15 per share and converted $496,000 in accounts
payable to common stock. The stock values agreed upon were the
approximate average of the market prices at the time of the
agreements. Upon the issuance of the stock certificates the market
price of the stock had fallen. Thus, at the time of consummation
the Company recognized an extraordinary gain on the restructuring of
the debt. Certain of the agreements contained provisions for the
issuance of additional shares of stock if market prices fall below a
floor amount for a three-month period of time.
Prepaid Expenses. The Company recorded $75,000 from the issuance of
common stock in prepaid consulting services in March 1996, of which
$60,000 has been amortized as general and administrative expense.
In addition, the Company has recorded prepaid engineering fees of
$63,000 related to the issuance of common stock in exchange for
services to be provided by an engineering firm of which $26,000 had
been expensed at year end. The Company also recorded $7,000 in
prepaid legal fees as of December 31, 1996.
<PAGE>
GREEN OASIS ENVIRONMENTAL, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
E.ISSUANCE OF COMMON STOCK (CONTINUED)
Settlement of Lawsuit. The Company settled a lawsuit for
approximately $16,000 by issuing 7,500 shares of its common stock
in full settlement of all claims of the petitioner.
Sale of Common Stock. Under a Private Placement Memorandum
prepared and distributed by the Company in December 1996, 304,000
shares of common stock were sold at $1.25 per share. Proceeds of
the sale included $100,000 from the CEO; $60,000 was in exchange
for legal services.
Warrants. The Board of Directors has authorized the issuance of
warrants having a term of two years for the purchase of 250,000
shares at the price of $1.375 per share to a consultant for services
rendered to the Company. None of the warrants had been issued
or exercised as of December 31, 1996.
F.INCOME TAXES
Deferred tax assets at December 31, 1996, are approximately
$1,232,000 using the current federal and state rates to calculate
the tax. Because the Company is in the development stage and has
no cumulative earnings, the criteria for recording deferred tax
assets are not met. Valuation allowances of like amounts have
reduced the deferred tax assets to zero.
The Company has tax loss carryforwards to offset all of its taxable
income to date; therefore, no provision for federal or state income
taxes has been made. The deficit accumulated during the development
stage is generally available to offset future taxable income.
Timing differences related to collection of distributor fees,
equipment deposits, and allowance for uncollectible accounts result
in a net operating loss carryforward of approximately $3,330,000
which will expire in the years 2007 to 2011.
G.LEASE OBLIGATIONS
On January 4, 1996, the Company entered into a lease agreement for
office space in Charleston, South Carolina. The lease term is for
one year through January 1997 at $1,000 per month; the lease was
renewed in January 1997 for three years with the same terms.
On April 15, 1996, the Company leased land for an assembly, storage,
and processing facility from Allied Terminals, Inc. in Charleston,
South Carolina. The lease is for an area of two acres for ten
years. The annual rent is $24,000 beginning six months from the
date of signing. Rent increases are based on the consumer price
index each year. A lease fee of $6,000 was paid upon signing the
lease, and no additional rents were due for the first six months.
<PAGE>
GREEN OASIS ENVIRONMENTAL, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
G.LEASE OBLIGATIONS (CONTINUED)
Following is a schedule of future minimum lease payments required
under noncancellable operating leases having remaining terms in
excess of one year.
<TABLE>
<S> <C>
Year ending December 31, Amount
------------------------- ---------
1997 $ 40,000
1998 40,000
1999 41,000
2000 27,000
2001 and thereafter 155,000
---------
$ 303,000
=========
</TABLE>
H.DISTRIBUTION AGREEMENTS
The Company has entered into agreements to sell the distribution
rights for specific states in the United States. The agreements
grant to the distributors exclusive rights to sell the Company's
products to customers in their territories. However, the
collectibility of the distribution fees as provided by the
agreements is contingent upon developing the product to meet design
specifications and regulatory requirements. Consequently, the fees
receivable under the agreements are not recorded as assets, and
monies collected to date of $100,000 have been recorded as current
liabilities as of December 31, 1996.
I.DEPOSITS RECEIVED FOR EQUIPMENT SALES AND REVENUE RECOGNITION
Deposits in the amount of $1,980,000 were received from customers
during 1994. Substantially all of these deposits were from two
customers who ordered three units of waste oil conversion equipment.
The three units had been shipped as of December 31, 1994. One of
the units was undergoing further development and testing at year
end; the other two were in transit to their destinations in Europe.
Installation and acceptance by the customers were a condition of the
sales agreements. Because research and development were ongoing at
December 31, 1994, all the costs associated with producing these
units were expensed as incurred.
During 1995, two of the three units arrived at their designated site
in Bulgaria. The Company's personnel were sent to Bulgaria to
install the units at the site. However, the customer did not
provide environmental safety assurances about the site where the
units were to be installed, nor did the customer provide other
necessary support and management assistance to complete the
installation of the unit.
<PAGE>
GREEN OASIS ENVIRONMENTAL, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
I.DEPOSITS RECEIVED FOR EQUIPMENT SALES AND REVENUE RECOGNITION
(CONTINUED)
The Company's position on the recognition of revenue is that its
obligations under the sales contract were completed, and the
$1,555,000 paid by the customer should be recognized as revenue in
1995. The Company believes that it has fulfilled its obligations
to construct, ship, and deliver the two units, and that
circumstances beyond its control prevented the installation, and
that it has no further obligations to the customer to complete
the installation (Note N).
Also in 1995, the Company recognized as revenue $525,000 deposited
during 1994 by the customer who purchased the third waste oil
conversion unit manufactured by the Company. Although installation
was not completed, the Company received a notice from the customer
that it had decided to proceed with installation and testing of the
equipment without further assistance of the Company. The customer
hired an engineering consulting firm and disassembled the unit. The
Company believes that its obligations under its sales contracts were
terminated when the customer undertook installation and testing
without further assistance from the Company and dismantled the
equipment. The Company also believes that the customer has
terminated any warranty rights it may have held because of the
dismantling process (Note N).
During 1995, $75,000 in deposits for equipment sales were received
from two additional customers. Both customers have filed lawsuits
seeking return of their deposits (Note N). Deposits were recorded
in 1996 from the Partnership in the amount of $63,000. The
liability recorded as of December 31, 1996, for deposits for
equipment sales is $143,000.
J.EXTRAORDINARY GAIN
A gain in the amount of $287,000 was recognized during 1996 from
the restructing of debt. On June 27, 1996, 176,576 shares of common
stock were issued to settle $549,000 in trade payables, professional
fees, and a lawsuit. On August 21, 1996, trade payables in the
amount of $40,000 were settled by issuing 15,917 shares of common
stock. The difference between the negotiated settlements and the
stock values on the dates of the transfers of the equity interests
to the creditors is the amount recorded as gain. No tax effect was
recorded because the Company has tax loss carryforwards which offset
the impact of the gains.
K.UNCERTAINTY - GOING CONCERN
The Company's continued existence is dependent upon its ability to
complete development of its products to meet design specifications
and regulatory requirements as well as to continue production.
Without fully operational products, adequate working capital, and
regulatory approvals, there is substantial doubt about the Company's
ability to continue as a going concern.
<PAGE>
GREEN OASIS ENVIRONMENTAL, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
K.UNCERTAINTY - GOING CONCERN (CONTINUED)
Management continues to modify and develop its products and to
pursue regulatory approval. However, there is no exact date
determinable when either will be achieved.
L.CAPITAL STOCK AND NET EARNINGS (LOSS) PER COMMON SHARE
Authorized capital stock consists of 25,000,000 shares designated
as 20,000,000 shares of $.01 par value common stock and 5,000,000
shares of $1 par value preferred stock.
Redeemable preferred stock is 9% cumulative with no voting rights.
It is redeemable at $1.01 per share in 1997 and at par of $1.00
thereafter. The stock must be redeemed during the next ten years.
Series A preferred stock is 9% cumulative and redeemable with
no voting rights. Dividends are payable semi-annually in June and
December. To date no dividends have been paid to preferred
stockholders, and cumulative preferred dividends are $143,000 at
December 31, 1995, and $148,000 at December 31, 1996.
Earnings or loss per common and common equivalent share is based on
the weighted average number of common and common equivalent shares
outstanding during each period. In accordance with a Staff
Accounting Bulletin of the Securities and Exchange Commission, the
weighted average shares for the period since inception includes all
shares issued twelve months prior to the November 1993 initial
public offering as outstanding since inception if the sales price of
the stock or the exercise of the options was less than the proposed
initial offering price.
The computations of fully diluted net loss for the year ended
December 31, 1996, and for the period from inception through
December 31, 1996, are antidilutive; therefore, the amounts
presented for primary and fully diluted loss are the same. Net
loss per common share was determined by dividing net loss, as
adjusted, by applicable shares outstanding. The net loss was
adjusted by the aggregate amount of dividends on the Company's
preferred stock.
For the year ended December 31, 1995, primary earnings per common
share are computed by dividing net income less preferred dividends
by the weighted average number of common shares outstanding during
the period. On a fully diluted basis, both net earnings and shares
outstanding are adjusted to assume the exercise of stock options and
the conversion of convertible preferred stock and convertible debt.
M.STOCK OPTION PLANS
In May of 1994, the Board of Directors adopted two nonqualified
stock option plans, one for key employees and one for directors.
Common stock in the amount of 300,000 and 200,000 shares,
respectively, has been reserved for issuance under the plans.
Separate committees appointed by the Board are authorized to
administer the plans.
<PAGE>
GREEN OASIS ENVIRONMENTAL, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
M.STOCK OPTION PLANS (CONTINUED)
As of December 31, 1994, stock options had been granted to key
employees for 125,000 shares of stock at a price of $2.50 per share.
Stock options to directors in the amount of 25,000 shares at $2.50
per share had also been granted. The option terms are for five
years until May 10, 2000; the options are exercisable as follows:
20% on the first anniversary of the date the option is granted, and
20% on each of the following anniversaries for four subsequent
years. An option which is exercisable in a year that is not
exercised may be exercised in a subsequent year during the period
ending August 30, 2000. Payments in cash at the time of the
exercise of the options are required.
In addition, in 1996 the Company granted stock options for 125,000
shares to employees under its Employee Stock Option Plan and 100,000
shares to directors under its Director Stock Option Plan. These
options are exercisable at the fair value on the date of the grant,
or $1.125 per share. The stock options are subject to all the terms
and conditions set forth in the Plans, and the terms are for five
years until September 9, 2002.
The Company has granted a stock option to its CEO as compensation
for waiving payment of his salary for the last quarter of 1995 and
all of 1996. The option grants the right to purchase up to 448,000
shares of common stock at $1.125 until the earlier of August 14,
1999, or the date of termination of employment. The fair value of
$1.125 per share on the date of the agreement is the exercise price.
Statement of Financial Accounting Standards No. 123, Accounting for
Stock-Based Compensation (SFAS 123), was issued by the Financial
Accounting Standards Board in October 1995. SFAS 123 establishes
financial accounting and reporting standards for stock-based
employee compensation plans as well as transactions in which an
entity issues its equity instruments to acquire goods and services
from non-employees. This statement defines a fair value based
method of accounting for employee stock option or similar equity
instruments. However, it also allows an entity to continue to
measure compensation cost for those plans using the intrinsic value
based method of accounting prescribed by APB Opinion No. 25,
Accounting for Stock Issued to Employees. Entities electing to
remain with the accounting in Opinion 25 must make pro forma
disclosures on net income and earnings per share, as if the fair
value based method of accounting defined by SFAS 123 had been
applied. SFAS 123 is applicable to fiscal years beginning after
December 15, 1995. The Company currently accounts for its equity
instruments using the accounting prescribed by Opinion 25. The
Company does not currently expect to adopt the accounting prescribed
in SFAS 123 but will include the disclosures required by SFAS 123
in its financial statements.
Stock options granted in 1996 do not require the recording of
compensation expense under SFAS 123 using the Black-Scholes
option-pricing model and assuming that the options are exercised in
one to six years, the risk free rate is 6.7%, and no future
dividends are paid. Thus, pro forma disclosures of net loss and
earnings (loss) per share are not required for the year ended
December 31, 1996.
<PAGE>
GREEN OASIS ENVIRONMENTAL, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
N.COMMITMENTS AND CONTINGENT LIABILITIES
At the end of March 1995, the Company ceased its research and
development activities and dismissed its production employees due to
the lack of money to continue its operations. The plant reopened in
late 1996 and is reconstructing and developing improvements to its
prototype unit.
The Company is subject to a number of lawsuits and claims arising
out of the ordinary conduct of its business, including those related
to commercial transactions. Various suppliers have obtained
judgments against the Company for amounts owed to them for products
and services sold to the Company; the Company has recorded as
liabilities the amounts that it believes are due at settlement of
these obligations but has not yet paid such obligations.
In connection with a rescission offer that the Company extended to
its stockholders during 1994, approximately $7,000, plus accrued
interest at 12% from the date of purchase of the stock, is due to
two preferred stockholders. The Company has recorded liabilities
in the amounts that are necessary to settle the claims. In
connection with the sale of unregistered securities, the South
Carolina Secretary of State and the Company executed a Consent Order
on July 25, 1995, in which the Company agreed to discontinue
issuing, offering, and selling securities in South Carolina until
such securities are registered and also to make a good faith effort
to honor the rescission offer made to the South Carolina investors.
During 1994, the Company was involved in discussions with the South
Carolina Department of Health and Environmental Control (DHEC)
regarding environmental issues in order to obtain an operating
permit in the State of South Carolina for its waste oil processing
equipment. DHEC had suspended the Company's normal operation of the
equipment in November 1993 until an operating permit was obtained.
The Company completed an on-site operational test for purposes of
obtaining an operating permit and met with DHEC officials in March
1994.
On July 27, 1994, the Company and DHEC signed a Consent Order
imposing a civil penalty in the amount of $20,000 for operation of
the unit without the necessary permits; the Company has paid the
penalty. DHEC subsequently denied an air construction permit
after having written a draft permit, and the Company was unable to
operate its equipment. On March 23, 1995, the Company and DHEC
signed a Consent Order following the Company's appeal of the denial
of the permit. The Consent Order allows the Company to test its
waste oil conversion equipment to demonstrate that air pollutant
emissions meet DHEC's standards. Successful demonstration of
compliance would result in the issuance of a final permit.
Continuous monitoring and other requirements regarding the operation
of the equipment as well as storage and disposal of fuel are imposed
by the Consent Order.
<PAGE>
GREEN OASIS ENVIRONMENTAL, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
N.COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)
A 60-day period of operation for the purpose of testing air
emissions to meet DHEC's standards began in mid-March 1997. If air
quality standards are met, a public notice period will be required,
and a final permit could be issued in 45 days. If DHEC's standards
are not met, the Company will be required to either further modify
the Unit or to resubmit an application for a draft permit and
justify lower standards.
On July 19, 1995, a lawsuit was filed by LifeChoice International,
SA, a Greek company, which purchased two units of waste oil
conversion equipment manufactured by the Company. The suit alleged
breach of contract arising from the sale of the two units and asked
for unspecified damages. In addition, a related Antiguan company
filed suit on July 19, 1995, claiming that the Company defaulted on
payment of a $100,000 promissory note which the Company
recognized as sales revenue. The Company answered both
complaints on September 27, 1995, and has filed a counterclaim
alleging a breach of the plaintiff's agreement to purchase the
European distribution rights from the Company. On October 15, 1996,
the Company entered into two separate Court Orders with LifeChoice,
S A and LifeChoice International, Inc., whereby such companies
agreed to withdraw their claims against the Company, with leave to
move, within one year from the date of the Order, for restoration of
the case. If, at the end of the one-year period, either LifeChoice,
S A or LifeChoice International, Inc. has not filed a motion
requesting that the case be restored to the docket, the cases will
be dismissed with prejudice in favor of the Company. The Company's
counterclaims in these cases have also been removed with the same
permission to refile.
A settlement was reached in a lawsuit with a supplier who claimed
that the Company owed $123,000. A Confession of Judgment was signed
on October 5, 1995, in which the Company agreed to pay $85,000 to
the supplier in four equal payments beginning 90 days from the date
of execution of the judgment. Said amount has been recorded as a
liability; however, no payments have been made as of March 19, 1997.
On November 9, 1995, Environmental Oil Services, LLC, which
purchased one of the units manufactured by the Company, filed suit
in state court in Idaho, alleging breach of contract for failure to
manufacture and install equipment that conformed to the terms and
conditions of its purchase contract. The suit sought a refund of
$525,000 paid to the Company and $1,475,000 in lost profits. On
December 14, 1995, the Company filed a notice of removal in U.S.
District Court to remove the case from the jurisdiction of the state
court to the federal court system. The case was removed to the
District Court of South Carolina in Charleston on February 1, 1996.
An answer was filed on March 4, 1996, which asserted general denials
as well as other defenses including the destruction of the equipment
by the plaintiff. In addition, the Company asserted a counterclaim
against the plaintiff for misrepresentation of facts to potential
customers of the Company which interfered with its ability to sell
its equipment to these customers. The plaintiff filed an answer to
the counterclaim on March 28, 1996. This case was dismissed in
early 1997.
<PAGE>
GREEN OASIS ENVIRONMENTAL, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
N.COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)
Through December 31, 1996, the Company operated without liability
insurance coverage.
On December 4, 1995, Caribe Environmental, Inc., and Caribbean Sales
Group filed suit alleging breach of contract, demanding that $50,000
paid as a deposit on equipment to be furnished by the Company be
returned. The parties have mutually agreed to cancel the contract,
and the Company has paid the claim as of March 19, 1997.
On December 28, 1995, Pensacola Pollution Control, Inc. filed suit
against the Company seeking return of a $25,000 deposit paid toward
the purchase of a waste oil recycling unit. Prior to answering the
complaint, the parties entered a Confession of Judgment for the
amount of the debt and accrued interest and attorneys' fees of 10%. The
amount is recorded as a liability. A settlement of this claim has been
paid as of March 19, 1997, but the satisfaction of judgment has not been
recorded.
The Company was obligated to purchase equipment in the amount of
$40,000 on December 31, 1996.
O.SUBSEQUENT EVENTS
The Company has continued to negotiate with creditors and to settle
claims against it. Judgments in the amount of $45,000 were settled
in March for $24,000. Also, the individual who paid a deposit of
$100,000 for distribution rights agreed in March 1997 to convert
the deposit to common stock at the Company's request and to cancel
her distribution rights.
The Board of Directors granted a stock option to the CEO for 48,000
shares at $1.50 per share exercisable for a period of two years in
January 1997. The option was granted because the CEO waived payment
of his salary for the first quarter of 1997.
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description Page
3.1 Articles of Incorporation of Green Oasis
Environmental, Inc. *
3.1.1 Amendment to Articles of Incorporation of *
Green Oasis Environmental, Inc.
3.2 Bylaws of Green Oasis Environmental, Inc. *
10.1 Distribution Agreement, Promissory Note and
Security Agreement with T.L.O. Oil Recovery
Systems, Inc. *
10.2 Distribution Agreement, Promissory Note and
Security Agreement with Fueltech, Inc. *
10.3 Distribution Agreement, Promissory Note and
Security Agreement with Rocky Mountain Waste
Energy, Inc. *
10.4 Distribution Agreement, Promissory Note and
Security Agreement with Process Technology
Investors. *
10.5 Distribution Agreement, Promissory Note and
Security Agreement with Midwest Fuel Refining
Company. *
10.6 Distribution Agreement, Promissory Note and
Security Agreement with Recoil, Inc. *
10.7 Distribution Agreement, Promissory Note and
Security Agreement with IGOE Enterprises. *
10.8 Distribution Agreement, Promissory Note and
Security Agreement with C. Ravenel Group. *
10.9 Distribution Agreement, Promissory Note and
Security Agreement with Pacific Fuels, Inc. *
10.10 Agreement of Participation with University of
South Carolina. *
10.11 Consulting Agreement with Dr. Thomas G. Stanford. *
10.12 Letter Employment Agreement with William D.
Carraway. *
10.13 Letter Employment Agreement with Mary Ann Anderson
Carraway. *
10.14 Letter of Intent re: Japanese Distribution. *
10.15 Letter of Intent with Loretta Nickel *
10.16 Letter of Intent with Woodlands Partners, L.P. *
<PAGE>
10.17 Distribution Agreement with MN Oasis, Inc. **
10.18 Option Agreement and Promissory Note between **
Green Oasis Environmental, Inc. and Ardell Rhude
10.19 Settlement Agreement between Green Oasis **
Environmental,Inc. and Woodlands Partners, L.P.
10.20 Green Oasis Environmental, Inc. 1994 Employee **
Stock Option Plan
10.21 Green Oasis Environmental, Inc. 1994 Director **
Stock Option Plan
10.22 Agreement of Limited Partnership ***
of GOE Plant Partnership I, L.P.
10.23 Warrant to purchase up to 15,000 shares of ***
common stock of Green Oasis Environmental, Inc.
10.24 Certificate of Limited Partnership ***
of GOE Plant Partnership I, L.P.
10.25 Sale of equipment and installation agreement ***
between Green Oasis Environmental, Inc. and
Goe Plant Partnership I, L.P.
10.26 Nonqualified Stock Option Agreement ****
Pursuant to 1994 Employee Stock Option Plan
10.27 Stock Option Agreement between William D. ****
Carraway and Green Oasis Environmental, Inc.
11 Statement re computation of per share earnings. ____
23.1 Consent of Chellis, Bryan & Associates, L.L.C. ____
___________________
* Previously filed with the Commission as an exhibit of the same
number to the Company's Registration Statement No. 33-68304 on Form
S-1, which was filed with the Commission on September 2, 1993.
** Previously filed with the Commission as an exhibit of the same
number to the Company's Report on Form 10-KSB, which was filed
with the Commission on January 19, 1996.
*** Previously filed with the Commission as an exhibit of the same
number to the Company's Report on Form 10-QSB, which was filed
with the Commission on July 23, 1996.
**** Previously filed with the Commission as an exhibit of the same
number to the Company's Report on Form 10-QSB, which was filed
with the Commission on November 14, 1996.
<PAGE>
<TABLE>
GREEN OASIS ENVIRONMENTAL, INC.
(A Development Stage Company)
EXHIBIT 11
COMPUTATION OF EARNINGS PER SHARE
Period from
September 24,
1991
Primary (inception),
Year ended Year ended through
December 31, December 31, December 31,
1996 1995 (3) 1996
------------ ------------ ---------------
<S> <C> <C> <C>
Net loss (gain) before
extraordinary gain $ (683,705) $ 951,392 $ (6,303,539)
Preferred dividends (4,901) (6,161) (148,199)
------------ ------------ ---------------
(688,606) 945,231 (6,451,738)
Extraordinary gain 286,614 - 665,534
------------ ------------ ---------------
Net income (loss) $ (401,992) $ 945,231 $ (5,786,204)
============ ============ ===============
Weighted average
number of shares (1) 5,392,111 5,119,298 4,349,425
============ ============ ===============
Net income (loss) before
extraordinary gain $ (0.12) $ 0.18 $ (1.48)
Extraordinary gain 0.05 - 0.15
------------ ------------ ---------------
Net income (loss) $ (0.07) $ 0.18 $ (1.33)
============ ============ ===============
Fully diluted
Net loss (gain) before
extraordinary gain (2) $ 979,526 (2)
Preferred dividends (4,226)
------------
975,300
Extraordinary gain -
------------
Net income (loss) $ 975,300
============
Weighted average
number of shares (1) 5,399,523
============
Net income (loss) before
extraordinary gain $ 0.18
Extraordinary gain -
------------
Net income (loss) $ 0.18
============
(1) Weighted average number of shares is calculated under SAB rule;
therefore, any shares issued from July of 1992 through November
of 1993 (approximate date of filing of registration statement)
are considered outstanding since inception.
(2) Computation of fully diluted earnings per share is antidilutive
and, therefore, omitted in financial statements.
(3) Computation of year ended December 31, 1995, is as follows:
Fully
Primary diluted
---------- ----------
Numerator:
Net income (loss) $ 951,392 $ 951,392
Less preferred dividends (6,161) (6,161)
---------- ----------
945,231 945,231
Interest expense adjustment
for convertible debentures 189
Adjustment for dividends
on convertible preferred 1,935
Interest expense adjustments
for convertible debt 27,945
---------- ----------
$ 945,231 $ 975,300
========== ==========
Denominator
Weighted average common shares
outstanding 5,119,298 5,119,298
150,000 shares in stock options
(94 average market price of
$2.33<$2.50 option price) - -
150,000 shares in stock options
(94 ending market price of
$4.00>$2.50 option price) 56,250
Assume conversion at 1/1/95
of debenture 1,676
Assume conversion at 1/1/95
-convertible preferred shares 2,200
Assume conversion at 6/10/95
of convertible debt 200,000
Assume conversion of interest
accrued through 6/30/95 20,099
---------- ----------
5,119,298 5,399,523
========== ==========
$ 0.18 $ 0.18
========== ==========
Exhibit 11
</TABLE>
<PAGE>
CONSENT OF CERTIFIED PUBLIC ACCOUNTANTS
As certified public accountants, we hereby consent to the
incorporation of our report dated March 31, 1997, on the financial
statements of Green Oasis Environmental, Inc. as of December 31, 1996,
and for the years ended December 31, 1996 and 1995, and for the period
from September 24, 1991 (inception), through December 31, 1996, to be
included in the Form 10-KSB dated December 31, 1996, and to all
references to our firm included therein.
/s/ Chellis, Bryan & Associates, L.L.C.
Charleston, South Carolina
March 31, 1997
Exhibit 23.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Dec-31-1996
<CASH> 32
<SECURITIES> 0
<RECEIVABLES> 114
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 146
<PP&E> 108
<DEPRECIATION> (22)
<TOTAL-ASSETS> 400
<CURRENT-LIABILITIES> 1563
<BONDS> 0
<COMMON> 60
42
6
<OTHER-SE> (1271)
<TOTAL-LIABILITY-AND-EQUITY> 400
<SALES> 37
<TOTAL-REVENUES> 37
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 679
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 42
<INCOME-PRETAX> (684)
<INCOME-TAX> 0
<INCOME-CONTINUING> (684)
<DISCONTINUED> 0
<EXTRAORDINARY> 287
<CHANGES> 0
<NET-INCOME> (397)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> (.07)
</TABLE>
