UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT 1934
For the quarterly period ended June 30, 1996
Commission file Number 0-23892
ENVIROMETRICS, INC.
(Exact name of registrant as specified in its charter.)
DELAWARE 57-0941152
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9229 UNIVERSITY BOULEVARD
CHARLESTON, SC 29406
(Address of principal executive offices (Zip Code)
Registrant's telephone number, including area code:
(803) 553-9456
Indicate by check mark whether the registrant(1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES [X] NO [ ]
As of July 31, 1996 the Registrant had outstanding 2,500,203 shares of common
Stock. Transitional small business disclosure format (check one):
YES [ ] NO [X]
<PAGE>
INDEX
PART I. FINANCIAL INFORMATION Page #
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at June 30, 1996
and December 31, 1995 1
Condensed Statements of Operations for the Three Months
and Six Months Ended June 30, 1996 and 1995 2
Condensed Statements of Cash Flows for the Six Months
Ended June 30, 1996 and 1995 3
Notes to Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Conditions 5-10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 6. Exhibits and Reports 11
Signature 12
<PAGE>
ENVIROMETRICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 1996 and December 31, 1995
<TABLE>
<CAPTION>
June 30, 1996 December 31, 1995
ASSETS (Unaudited) (Audited)
<S> <C> <C>
CURRENT ASSETS
Cash $ 35,694 $ 53,143
Cash restricted 26,345 125,644
Trade receivables less allowance
for doubtful accounts of
$73,130 and $86,000 989,351 1,191,910
Other receivables, including amounts
due from stockholders of
$43,055 and $57,435 96,427 81,480
Inventories 550,164 563,981
Prepaid expenses 84,474 111,437
_________ _________
TOTAL CURRENT ASSETS 1,782,455 2,127,595
OTHER ASSETS
Deposits 17,746 15,972
Organization and
loan costs 52,155 6,739
Goodwill and
acquisition costs 0 623,153
License agreements 43,001 28,000
Other 76,326 59,816
_______ _______
189,228 733,680
PROPERTY AND EQUIPMENT 2,754,082 2,724,157
Less accumulated
depreciation (1,189,123) (1,088,397)
1,564,959 1,635,760
_________ __________
TOTAL ASSETS 3,536,642 4,497,035
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities
Notes payable $ 734,445 $ 246,480
Notes payable stockholders 24,844 24,844
Current maturities of
long-term debt 325,821 914,847
Accounts payable 1,133,012 965,155
Accrued expenses 391,547 454,957
_________ _________
Total Current Liabilities 2,609,669 2,606,283
Long Term Debt 802,276 597,363
Stockholder's Equity
Common stock par value $.001 per share
Authorized 10,000,000 shares
Issued and outstanding -
2,500,203 shares 2,500 2,500
Additional paid-in
capital 5,125,442 5,117,942
Accumulated deficit (5,003,245) (3,827,053)
_________ __________
Total Stockholders' Equity 124,697 1,293,389
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $3,536,642 $4,497,035
<FN>
See Notes to Condensed Financial Statements
</TABLE>
1
<PAGE>
ENVIROMETRICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS AND SIX MONTHS
ENDED JUNE 30, 1996 AND 1995
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30 June 30
__________________ _________________
1996 1995 1996 1995
_______ ________ _______ _______
<S> <C> <C> <C> <C>
Net sales
Services $ 737,857 $ 926,462 $1,539,686 $1,892,422
Products 461,610 670,563 1,184,087 1,230,880
________ ________ _________ __________
1,199,467 1,597,025 2,723,773 3,123,302
Cost of goods sold
Services 593,712 656,658 1,176,935 1,378,572
Products 321,183 351,017 833,422 698,951
________ _______ _________ _________
914,895 1,007,675 2,010,357 2,077,523
________ _________ _________ __________
Gross profit 284,572 589,350 713,416 1,045,779
Other revenue 420 7,435 533 29,361
Operating expenses
Sales and marketing 91,311 154,462 185,574 317,766
General and
administrative 332,198 318,656 693,707 645,885
Research and
development 48,430 71,263 110,262 141,606
Shipping and
receiving 23,226 17,144 41,317 35,367
Quality control 3,798 8,605 7,540 17,644
Depreciation and
amortization 54,168 64,538 118,823 128,085
Amortization of
goodwill 614,938 0 614,938 0
_______ ________ ________ ________
Operating loss (883,077) (37,883) (1,058,212) (211,483)
Financial expense (75,131) (48,477) (117,979) (92,315)
______ ______ ________ _______
Net loss (958,208) (86,360) (1,176,191) (303,798)
Weighted average
number of common
shares outstanding 2,500,203 2,451,302 2,500,203 2,348,407
Loss per share $ (.383) $ (.035) $ (.470) $ (.129)
<FN>
See Notes to Condensed Financial Statements
</TABLE>
2
<PAGE>
ENVIROMETRICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Cash Flow From Operating Activities:
Loss From Operations $ (1,176,191) $ (303,798)
__________ ________
Adjustments To Reconcile Net
Income to Net Cash Provided by
Operating Activities
Depreciation 110,608 110,462
Amortization 644,224 34,550
(Recoveries for doubtful
accounts (12,870) (10,765)
Non-cash expense paid by
issuance of warrants 7,500 0
(Gain) from equipment
disposal (5,818)
Increase (Decrease) From Changes:
Cash, restricted 99,299 611,953
Receivables 200,482 (429,441)
Inventory 13,817 (66,150)
Prepaid expenses 26,963 6,899
Accounts payable and
accrued expenses 104,447 (14,306)
_______ _______
Net Cash Provided by (Used In )
Operating Activities 12,461 (60,596)
_______ _______
Cash Flow From Investing Activities:
Purchase of property
and equipment (33,989) (52,780)
Increase in deposits, organization and
loan and acquisition costs (83,263) (413)
Increase in other assets (16,510) (77,226)
_______ _______
(133,762) (130,419)
Cash Flow From Financing Activities:
Proceeds from borrowings on
short-term notes 277,884 584,825
Principal payments on
short-term notes (18,140) (529,963)
Proceeds from borrowings on
long-term notes 0 14,952
Principal payments on
long-term notes (155,892) (78,420)
Net proceeds from sale of
stock 0 257,814
________ ________
Net Cash Provided From
Financing Activities 103,852 249,208
_______ ________
Increase (Decrease) in Cash (17,449 58,193
Cash at Beginning of Year 53,143 3,295
_______ _______
Cash at End of Period $ 35,694 $ 61,488
<FN>
See Notes to Condensed Financial Statements
</TABLE>
3
<PAGE>
Envirometrics, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(1) The unaudited condensed financial statements and related notes have
been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. Accordingly, certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been omitted pursuant to
such rules and regulations. The accompanying condensed consolidated
financial statements of the Company, and notes thereto, for the year ended
December 31, 1995.
The results of operations for the interim periods shown in this report are
not necessarily indicative of results to be expected for the fiscal year.
In the opinion of management, the information contained herein reflects all
adjustments necessary to present fairly the consolidated financial position,
results of operations and changes in cash flow for the interim periods. All
such adjustments are of a normal recurring nature.
(2) Net loss per common share is computed using the weighted average number
of common shares outstanding, after giving effect for the 1 for 2 reverse
split effective with the initial public offering.
(3) On May 13, 1996 the Company entered into a two year financing
arrangement with Reservoir Capital Corporation. Under the terms of the
agreement, the Company will offer to sell to Reservoir Capital Corporation
the eligible trade accounts receivable at an approved advance rate. On that
date Reservoir Capital Corporation advanced approximately $233,000 on behalf
of the Company. The Company immediately reduced one of its bank notes by
approximately $50,000. The Company intends to utilize the remaining funds
to reduce its trade accounts payable.
(4) The mortgage on the property of approximately $600,000 which was included
in current liabilities was refinanced in July 1996 and accordingly a portion
was reclassified to long-term debt at June 30, 1996.
(5) The Company is in the process of disposing of the civil engineering
service group during the third quarter of 1996.
4
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION.
The following discussion should be read in conjunction with the attached
condensed consolidated financial statements and with the Company's audited
financial statements, and notes thereto, for the fiscal year ended December
31, 1995.
RESULTS OF OPERATIONS
Quarter Ended June 30, 1996 Compared to Quarter Ended June 30, 1995
Sales and revenue for the second quarter of 1996 of $1,199,500 decreased
by 24.9% or $398,000 from the second quarter of 1995 which were $1,597,000.
The Service group decreased its sales by 20.3% or $188,600 to $737,900 and the
Products group lost revenues of $209,000 (31.2%) and reported $461,600 for the
second quarter of 1996 as compared to $670,600 for the second quarter of 1995.
The Consultative Services group reported $183,800 (62.6%) less revenues; the
Laboratory reported $13,000 (9.3%) more revenues, the Air Quality Division
reported $16,200 (34.0%) less revenues; and the Environmental Consulting and
Engineering and Civil Engineering and Surveying Division experienced a slight
decrease in revenues of $1,600 compared to the same quarter in 1995.
Cost of goods sold and direct service costs decreased by 9.2% or $93,000
to $915,000 for the second quarter of 1996 as compared to $1,008,000 reported
for the second quarter of 1995. The Services Division reduced its direct service
costs by $62,900 (9.6%) and reported $593,700 for the second quarter of 1996
as compared to $656,600 for the first quarter of 1995. The Products group
decreased its cost of good sold by 8.5% or $29,800 to $321,183 for 1996 as
compared to $351,000 for the first quarter of 1995.
The gross margins for the quarter ended June 30, 1996 decreased by
$305,000, which amounted to a 51.7% decrease, to $285,000 for the second
quarter of 1996 as compared to $589,000 for the quarter ended June 30, 1995.
The Services Division recorded a significant decrease of 46.6% or $125,700 in
its gross margin for the first quarter of 1996 as compared to the first quarter
of The Products Division experienced a 56.0% or $179,100 reduction in its gross
margin for the first quarter of 1996 as compared to the first quarter of 1995.
The Products Division has experienced significant declines in the gross margins
on its air sampling cassettes products due to an agreement with a major
customer. Percentage comparisons of gross margins reported by the company are
as follows:
Period Total Products Services
1st Quarter 1996 28.1% 29.1% 27.3%
1st Quarter 1995 29.9% 40.9% 23.0%
Other operating revenue decreased by $7,000 to $400 for the second quarter
ended June 30, 1996 as compared to $7,400 for the quarter ended June 30, 1995.
This decrease is attributable to a change in the way the Company recorded
service charges for 1995. For 1996 the Company records service charges as
revenue when collected rather than when applied to customer accounts.
5
Operating expenses were $533,000 higher and amounted to $1,168,100 for
the quarter ended June 30, 1996, as compared to $634,700 reported for the
quarter ended June 30, 1995. Included in the second quarter 1996 operating
expenses is the write-off of $615,000 of goodwill related to the civil
engineering service group acquisition made on November 30, 1994. The operating
expenses for the second quarter of 1996, excluding the one time charge of
$615,000 would have been $553,000 which is $82,000 lower than the $635,000
reported for the quarter ended June 30, 1995. Sales and marketing expenses
decreased by $63,200, a 40.9% decrease over the same period in 1995. The
reduction in sales personnel and related cost savings at the Products Division,
which resulted from the agreement with Zellweger Analytics, Inc. for the
distribution of the ACT product line amounted to $63,500. General and
administrative costs increased by $13,500 to $332,200 for the quarter ended June
30, 1996, as compared to $318,700 reported for the quarter ended June 30, 1995.
Research and development costs decreased by $22,800, a 32.0% reduction over
the same period in 1995, to $48,400 for the quarter ended June 30, 1996 from
$71,300 for the quarter ended June 30, 1995.
This decrease is due to a reduction in personnel and restructuring of costs. A
reduction of $4,800 in costs related to quality control was also the result of a
reduction in personnel in the first quarter of 1996 as compared to 1995.
Shipping and receiving costs increased by $6,100 to $23,200 for the quarter
ended June 30, 1996 as compared to $17,100 for the quarter ended June 30, 1995.
Depreciation and amortization costs decreased by $10,400 to $54,200 for the
second quarter of 1996 as compared to $64,500 for the quarter ended June 30,
1995.
The Company incurred an operating loss of $883,000 for the second
quarter of 1996 as compared to an operating loss of $38,000 for the second
quarter of 1995. Included in the 1996 operating loss is the write-off of
approximately $615,000 of unamortized goodwill related to the civil
engineering service group acquisition made on November 30, 1994. The
operating loss for the second quarter of 1996, excluding the one time charge of
$615,000 would have been $268,000 which is $230,000 higher than the operating
loss recorded for the second quarter of 1995.
No interest income was recorded for the second quarter ended June 30,
1996 as compared to $200 recorded for the quarter ended June 30, 1995.
Interest expense was $59,200 for the second quarter of 1996 as compared
to $37,700 for the second quarter of 1995. The increase of $21,500 is related
to higher interest rates and additional borrowings for the second quarter of
1996 as compared to the second quarter of 1995.
Amortization of loan costs for the quarter ended June 30, 1996 was $15,900
which was $4,900 higher than the quarter ended June 30, 1995 which was $11,000.
The increase is related to additional borrowings for the second quarter of 1996
as compared to the second quarter of 1995.
6
The Company incurred a net loss of $958,200 for the second quarter of 1996
as compared to a net loss of $86,400 for the second quarter of 1995. Included
in the second quarter 1996 net loss is the write-off of approximately $615,000
of unamortized goodwill related to the civil engineering service group
acquisition made on November 30, 1994. The net loss for the second quarter of
1996, excluding the one time charge of $615,000 would have been $343,000
which is $257,000 higher than the $86,000 reported for the second quarter
ended June 30, 1995.
Six Months Ended June 30, 1996 Compared to Six Months Ended June 30, 1995
Sales and revenues for the first six moths of 1996 of $2,723,800 were
approximately $399,500 or 12.8% less than the first six months of 1995 which
were $3,123,300. The Service group decreased its sales by 18.6% or $352,700
to $1,539,700 as compared to $1,892,400 for the first six months of 1995 and
the Products group lost revenues of 3.8% or $46,800 and reported $1,184,100
for the first six months of 1996 as compared to $1,230,900 for the first six
months of 1995. The Consultative Services group reported $327,000 (56.2%)
less revenues; the Laboratory reported $48,800 (13.0%) less revenues; the Air
Quality Division reported $32,200 (52.3%) more revenues; and the Environmental
Consulting and Engineering and Civil Engineering and Surveying Division
experienced a slight decrease in revenues of $9,100 compared to the same quarter
in 1995.
Cost of goods sold and direct service costs decreased by 3.2% or $67,100
to $2,010,400 for the first six months of 1996 as compared to $2,077,500
reported for the first six months of 1995. The Services Division reduced its
direct service costs by $201,600 (14.6%) and reported $1,176,900 for the first
six months of 1996 as compared to $1,378,600 for the first quarter of 1995. The
Products group increased its cost of good sold by $134,500 or 19.2%, to $833,400
for 1996 as compared to $699,000 for the first six months of 1995.
The gross margins for the first six months ended June 30, 1996 decreased
by $332,400, a decrease of 31.8%, to $713,400 as compared to $1,045,800 for the
six months ended June 30, 1995. The Services Division recorded a significant
decrease of 29.4% or $151,100 in its gross margin for the first six months of
1996 as compared to the first six months of 1995. The Products Division
experienced a 34.0% decrease or $181,300 reduction in its gross margin for the
first six months of 1996 as compared to the first six months of 1995. The
Products Division has experienced significant declines in the gross margins on
its air sampling cassettes products due to an agreement with a major customer.
Percentage comparisons of gross margins reported by the company are as follows:
Period Total Products Services
1st Six Months 1996 26.2% 29.6% 23.6%
1st Six Months 1995 33.5% 43.2% 27.2%
Other operating revenue decreased by $7,000 to $400 for the six months
ended June 30, 1996 as compared to $7,400 for the six month ended
June 30, 1995. This decrease is attributable to a change in the way the
Company recorded service charges for 1995. For 1996 the Company
records service charges as revenue when collected rather than when
applied to customer accounts.
7
Operating expenses were $485,800 higher and amounted to $1,772,200
for the six months ended June 30, 1996, as compared to $1,286,400 reported
for the six months ended June 30, 1995. The operating expenses for the first
six months of 1996, excluding the one time charge of $615,000 would have
been $1,157,200 which is $129,200 lower than the $1,286,400 reported for
the first six months ended June 30, 1995. Sales and marketing expenses
decreased by $132,200. The reduction in sales personnel and related cost
savings at the Products Division, which resulted from the agreement with
Zellweger Analytics, Inc. for the distribution of the ACT product line
amounted to $117,900. General and administrative costs increased by
$47,800 to $693,700 for the six months ended June 30, 1996, as compared
to $645,900 reported for the six months ended June 30, 1995. Research and
development costs decreased by $31,300 to $110,300 for the six months ended
June 30, 1996 from $141,600 for the six months ended June 30, 1995. This
decrease is due to a reduction in personnel and restructuring of costs. A
reduction of $10,100 in costs related to quality control was also the result of
a reduction in personnel in the first quarter of 1996 as compared to 1995.
Shipping and receiving costs increased by $5,900 to $41,300 for the quarter
ended June 30, 1996 as compared to $35,400 for the six months ended June 30,
1995. Depreciation and amortization costs decreased by $9,300 to $118,800 for
the first six months of 1996 as compared to $128,100 for the quarter ended June
30, 1995.
The Company incurred an operating loss of $1,058,200 for the six months
ended June 30, 1996 as compared to an operating loss of $211,200 for the six
months ended June 30, 1995. Included in the 1996 operating loss is the write
- - -off of approximately $615,000 of unamortized goodwill related to the civil
engineering service group acquisition made on November 30, 1994. The operating
loss for the six months ended June 30, 1996, excluding the one time charge of
$615,000 would have been $443,200 which is $232,000 higher than the
operating loss recorded the six months ended June 30, 1995.
Interest income decreased by $4,000 to $1,400 for 1996 as compared to
$5,400 for the six months ended June 30, 1995. This decrease is attributable to
the use of the restricted cash remaining from the initial public offering in the
first quarter of 1995 to reduce debt.
Interest expense was $98,300 for the first six months of 1996 as
compared to $80,800 for the first six months of 1995. The increase of $17,500
is related to higher interest rates and additional borrowings for the six months
ended June 30, 1996 as compared to the six moths ended June 30, 1995.
Amortization of loan costs for the six months ended June 30, 1996 was
$21,000 which was $4,100 higher than the six months ended June 30, 1995 which
was $16,900. The increase is related to additional borrowings for the first six
months of 1996 as compared to the first six months of 1995.
The Company incurred a net loss of $1,176,200 for the six
months ended June 30, 1996 as compared to a net loss of $303,500 for
the six months ended June 30, 1995. Included in the six months ended June 30,
1996 net loss is the write-off of approximately $615,000 of
unamortized goodwill related to the civil engineering service group acquisition
made on November 30, 1994. The net loss for the first six months of
1996, excluding the one time charge of $615,000 would have been $561,200
which is $257,700 higher than the $303,500 reported for the first six months
of 1995.
FINANCIAL CONDITION
The Company's financial condition continued to deteriorate during the first
six months of 1996 due principally to continued operating losses and the write-
off of the unamortized goodwill resulting from an acquisition made in 1994.
8
The Consultative Services Division experienced a significant reduction in
sales revenues and the trade receivables from that group are down to $160,000
at June 30, 1996 from $251,000 at December 31, 1995. The Engineering
Services Division experienced an improvement in the collection of its trade
receivables for the first six months of 1996.
As of June 30, 1996 the Company had a net working capital deficiency
of $827,200, including restricted cash of $26,345 which collateralized
borrowings under a loan agreement with a financial institution. This
deficiency is an improvement over the first quarter March 31, 1996
deficiency of $1,030,893, due to the reclassification of the mortgages
from a current liability to long-term upon the refinancing which was
completed by July 31, 1996.
Effective January 1, 1996 the Company, through its Products Division
subsidiary, entered into a two year Master Distribution Agreement with
Zellweger Analytics, Inc. Zellweger has become the exclusive national
and international distributor of the Company's proprietary passive air
monitoring technology, known as the ACT Monitoring Card System(tm).
Zellweger will be responsible for all sales and marketing activity of the
system. The Company has already experienced a decrease in sales and marketing
costs as a result of the agreement.
Under the Master Distribution Agreement quarterly payments totaling
$675,000 are to be made at the beginning of each calendar quarter for 1996
based on forecasted sales. A total of $236,250 has been received for the
first and second quarters of 1996. Quarterly payments for forecasted sales
for 1997 are expected to be determined during the fourth quarter of 1996.
During August 1996 the Company disposed of its Engineering Services
Division. This group, which was acquired during 1994, had not performed
as planned, and the refocus of the operating activities to laboratory services
and promotion of the ACT product line discussed above are the significant
potential revenue drivers identified by management
The Company is actively looking for a buyer to purchase its real property
and has executed a letter of intent to dispose of a lot located near one of its
owned locations. In addition, the Company has entered into a five year lease
with a tenant to occupy the space where the Products Division was formerly
located. The Products Division moved its manufacturing facility to another
location, outsourced its warehousing operation to a professional warehouse
shipping company and moved its sales and administrative staff into the same
location as the remaining Service and Laboratory Division during August
1996. This move is expected to reduce overall costs by $3,000 to $4,000 a
month.
The Company's corporate and financial operations were moved to vacant
office space at its laboratory facility thus making all the space previously
occupied available for immediate subletting. These moves place all
administrative and professional operations in a single location which will
reduce expenses and substantially improve efficiency.
In January 1996 the Company modified two of its loan agreements which
were due and extended the due dates to January 15, 1997. In addition, on
February 26, 1996 The United States Company loaned $150,000 to the
Company for an initial 30 day. Subsequent to its due date the note was
amended and extended to October 30, 1996. Richard H. Guilford,
Chairman of the Board of Directors of the Company, Maurizio F. Giabbai,
Ph.D., a Director of the Company, and Elsie L. Rose, CPA, Treasurer of the
Company, are Principals in The United States Company.
9
On May 13, 1996 the Company entered into a two year financing arrangement
with Reservoir Capital Corporation. Under the terms of the agreement, the
Company will offer to sell to Reservoir Capital Corporation the eligible trade
accounts receivable of two of its subsidiaries at an approved advance rate.
On that date Reservoir Capital Corporation advanced approximately $233,000
on behalf of the Company. The Company immediately reduced one of its bank
notes by approximately $50,000. The Company intends to utilize the remaining
funds to reduce its trade accounts payable. At the same time an officer of the
Company replaced $40,000 of a bank note payable by advancing funds at an
interest rate of .5% over the prime rate charged by BB&T.
On July 27, 1996 the Company refinanced its mortgages held by NationsBank.
The new mortgages are for a period of two years, based on a 15 year amortization
and carry interest at 12.5%. Cash savings from this refinancing are expected to
approximate $7,000 per month.
In March, 1996, The Company initiated a program, through its Laboratory, to
support the American Industrial Hygiene Association (AIHA) Foundation ("The
Foundation"). The Foundation is an education fund that will endow a national
scholarship for graduate students in industrial hygiene. The fundraising goal
of the Foundation is $1.5 million .
The Laboratory conducted a 12,000 piece mail solicitation to AIHA members
during the month of April 1996. The expected response from this mailing, a
follow-up campaign and exhibition efforts at the AIHA conference in May 1996
is estimated to be 1-2% of total membership which approximates a 50% increase
in the current number of laboratory clients. To date this program has generated
a 10% increase in the laboratory customer base.
In addition, the Company has initiated or is in the process of implementing
several programs and actions which it believes will result in improved
efficiency and reporting, and additional profitable operations. These include:
* Specific targeted marketing programs designed to generate quick revenue
realization have been implemented. These programs are intended to support
those areas of the business where process capacity is available without
incremental cost increases to match revenue increases.
* In the second quarter, the Company launched The PointSource Program, a
new marketing program for the industrial hygiene industry which is designed to
network Certified Industrial Hygiene firms together to provide them with
greater buying power and resulting price discounts for purchase of services
from the Company. The program also anticipates greater insurance purchasing
power and cross-client referral systems. To date, the program has generated
thirteen candidate participants representing approximately $750,000 in
purchasing power.
Management believes that with the implementation of the programs listed
above, the restructure of its debt and mortgages during the first seven months
of 1996, the addition of the credit facility in the second quarter of 1996, the
disposition of the engineering group and the Master Distribution Agreement
effective January 1, 1996 all are significant positive steps in meeting the
Company's immediate liquidity needs and stabilizing the revenues of the Company.
In addition the cost reductions implemented in the first quarter of 1996 showed
improved trends for the second quarter of 1996.
10
<PAGE>
PART III. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 6. Exhibits and Reports on Form 8-K
None
Reports on Form 8-K
None
11
<PAGE>
SIGNATURES
Pursuant to the registration requirements 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.
ENVIROMETRICS, INC.
(Registrant)
Date: August 19, 1996 By: s/Richard D. Bennett
Richard D. Bennett, MSPH, CIH
Chief Executive Officer, President
Signing on behalf of the registrant
and as principal financial officer
