UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB/A
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT 1934
For the quarterly period ended March 31, 1998
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)
Registrant's telephone number, including area code:
(843) 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 [] NO [X]
As of May 1, 1998 the Registrant had outstanding 2,669,899 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 Sheet at
March 31, 1998 and December 31, 1997 2
Condensed Statement of Operations for the
First Quarter ended March 31, 1998 and 1997 3
Condensed Statement of Cash Flows for the
First Quarter ended March 31, 1998 and 1997 4
Notes to Consolidated Financial Statements 5-7
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial
Conditions 8-11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 5. Other Information
Item 6. Exhibits and Reports
Signature 12
<PAGE>
ENVIROMETRICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 1998 and December 31, 1997
<TABLE>
<CAPTION>
March 31, 1998 December 31, 1997
ASSETS (Unaudited) (Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 44,155 $ 54,096
Current portion of notes
receivable 334,119 100,548
Trade receivables less allowance
for doubtful accounts
1998 and 1997 $18,082 142,403 117,625
Other receivables 19,266 4,367
Inventories 17,334 17,334
Prepaid expenses 39,795 53,821
-------- --------
TOTAL CURRENT ASSETS 597,072 347,791
-------- --------
OTHER ASSETS AND INTANGIBLES
Deposits 13,484 21,093
Notes receivable,
less current portion 337,712 596,197
Organization and loan costs,
net of accumulated amortization
1998 $57,333; 1997 $51,958 4,505 9,880
Other, including amounts due
amounts due from stockholders 132,525 146,148
------- -------
488,226 773,318
------- -------
PROPERTY AND EQUIPMENT
Furniture and equipment 1,079,738 1,079,738
Vehicles 14,421 44,033
--------- ---------
1,094,159 1,123,771
Less accumulated depreciation
and amortization (957,807) (963,843)
--------- ---------
136,352 159,928
--------- ---------
$1,221,650 $1,281,037
========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES
Current maturities of
long-term debt $ 324,775 $ 336,106
Accounts payable 545,794 546,605
Accrued expenses 181,913 174,037
--------- ---------
TOTAL CURRENT LIABILITIES 1,052,482 1,056,748
--------- ---------
LONG-TERM DEBT,
less current maturities 528,663 544,506
---------- ----------
STOCKHOLDERS' EQUITY
Common stock par value $.001;
authorized 10,000,000 shares;
issued 1998 and 1997 - 2,669,899
shares 2,670 2,670
Preferred stock, no par value;
authorized 2,500,000 shares;
issued 1998 and 1997 - 70,000
shares 700 700
Additional paid-in capital 5,320,369 5,320,369
Retained earnings(deficit) (5,683,234) (5,643,956)
---------- ----------
( 359,495) ( 320,217)
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,221,650 $1,281,037
========== ==========
<FN>
See Notes to Condensed Financial Statements
</TABLE>
<PAGE>
ENVIROMETRICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE QUARTER ENDED MARCH 31, 1998 and 1997
<TABLE>
<CAPTION>
THREE MONTHS ENDED
March 31, March 31,
1998 1997
--------- --------
<S> <C> <C>
NET SERVICE REVENUE $ 198,742 $ 276,274
DIRECT SERVICE COSTS 120,174 157,859
---------- ----------
GROSS PROFIT 78,568 118,415
---------- ----------
39.5% 42.9%
OTHER OPERATING REVENUE 11,395 9,753 --------- ---------- ---------- ----------
----------- ----------
OPERATING EXPENSES
Sales and marketing 9,949 25,560
General and administrative 98,231 134,253
Depreciation and
amortization 11,856 20,312
--------- ---------
120,036 180,125
--------- ---------
OPERATING LOSS (30,073) (51,957)
--------- ----------
FINANCIAL INCOME (EXPENSE)
Interest income 11,804 15,391
Interest expense (8,097) (32,158)
Gain (loss) on disposition
of property (11,720) -
Gain (loss) on vendor
balances negotiate d (1,167) -
Other 5,350 -
Amortization of loan costs (5,375) (5,375)
-------- ----------
(9,205) (22,142)
-------- ----------
INCOME (LOSS) BEFORE
DISCONTINUED OPERATIONS (39,278) (74,099)
DISCONTINUED OPERATIONS - (2,777)
-------- --------
NET LOSS $ (39,278) $ (76,876)
========= ==========
Weighted average number of
common shares outstanding 2,669,899 2,471,626
========== ==========
Net loss per common share $ (0.016) $ (0.031)
========= ==========
Dividends per common share $ - $ -
========= ==========
<FN>
See Notes to Condensed Consolidated Financial Statements
</TABLE>
<PAGE>
ENVIROMETRICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FIRST QUARTER ENDED MARCH 31, 1998 AND 1997
<TABLE>
<CAPTION>
<C> <C>
March 31,1998 March 31,1997
<C> <C>
Cash Flow From Operating Activities:
Net (loss) $ ( 39,278) $ ( 76,876)
Adjustments To Reconcile net
income (loss) to net cash used
in operating activities
Depreciation 7,356 27,701
Amortization 9,875 9,875
(Gain) loss on disposal of equipment 11,720 -
Change in assets and liabilities:
(Increase)decrease in accounts receivable (39,677) 14,713
Decrease in inventory - 139,303
Decrease in prepaid expenses 14,026 26,373
Increase(decrease)in accounts payable
and accrued expenses 7,065 64,429
--------- ----------
Net cash provided by
operating activities (28,913) 76,660
--------- ----------
Cash Flow From Investing Activities:
Decrease in notes receivable 24,914 32,376
Increase(decrease) in other assets 21,232 (16,657)
--------- ----------
Net cash provided by investing activities 46,146 15,719
Cash Flows From Financing Activities:
Proceeds from borrowings on
short-term notes 8,313
Principal payments on long-term
borrowing (27,174) (95,815)
--------- ----------
Net cash used in financing
(27,174) (87,502)
--------- ----------
Net (decrease) increase in cash and
cash equivalents (9,941) 4,877
Cash and cash equivalents, beginning 54,096 29,604
-------- ----------
Cash and cash equivalents, ending $ 44,155 $ 34,481
========= ==========
Supplemental Disclosure of Cash Flows
Information
Cash payments for interest $ 908 $ 13,930
========= ==========
<FN>
See Notes to Condensed Consolidated Financial Statements
</TABLE>
<PAGE>
ENVIROMETRICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1998
(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, should be read in
conjunction with the audited financial statements and related notes included
in the Company's Annual Report on Form 10-KSB for the year ended December
31, 1995. The Company has not completed its audits of the consolidated financial
statements for the years ended December 31, 1997 and 1996 and has not filed
form 10-KSB for the years ended December 31, 1997 and 1996.
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 in 1994.
(3) Shakespeare Partners, LTD, whose general partner is a stockholder of the
Company, had outstanding notes payable due from the Company amounting to
$287,686 at March 31, 1998 and December 31, 1997. No interest was paid by
the Company during 1997 or year to date 1998. In addition Shakespeare
Partners, LTD, loaned an additional $20,000 to the Company in May 1998 in
connection with negotiation and settlement of certain vendor debt.
<PAGE>
The United States Company had outstanding notes payable due from the Company
amounting to $209,157 at March 31, 1998 and December 1997. No interest was
paid during 1997 or year to date during 1998. Two Directors of the Company
are officers of the United States Company. The Treasurer is a Principal in
The United States Company.
The President and CEO had outstanding notes payable due from the Company
amounting to $15,038 at March 31, 1998 and December 1997. No interest was
paid during 1997 or year to date during 1998.
(4) The Company sold its asbestos product line (inventory and equipment) to
a large customer during May 1997 for $161,072 cash. Proceeds from the
disposition were used to reduce vendor trade amounts. The Company sold its
remaining Air Chemical Technology (ACT) product line to its exclusive
distributor for a $354,850 reduction in prepaid purchase deposits. In
addition, $10,000 cash was paid and 70,000 shares of preferred stock were
issued at a value of $140,000, which eliminated the prepaid purchase deposits
liability.
(5) The Company has a $230,000 note receivable (due no later than December
31, 1998) from the Buyer of its real property in December 1996. The buyer
pays interest only monthly at 10%. The note is secured by the real estate.
(6) On March 12, 1998 the Company announced that it had signed a letter of
intent to acquire all of the outstanding stock of Guardian Health Care, Inc.
Although the letter of intent has expired, the Company is continuing
discussions and negotiations for a definitive acquisition agreement. If
consummated, it is anticipated that the acquisition will result in current
stockholders of the Company retaining no more than 15% ownership of the
Company. The transaction is contingent upon the debt mediation of the
current Company's secured and unsecured creditors.
(7) The Company's common stock and warrants were deleted from The Nasdaq
SmallCap Market(tm) on December 3, 1996 for failure to meet the capital and
surplus requirement for continued listing. The Company is listed on the
OTC-Bulletin Board.
<PAGE>
(8) On April 1, 1997 the Company issued 125,000 shares of its common stock
to The United States Company in exchange for 640,000 warrants to purchase
its common stock. On that same date the Company issued 5,000 shares of
common stock to Walter H. "Skip" Elliott, III, President and CEO, 5,000
shares of common stock to Elsie L. Rose, Treasurer, 5,000 shares of common
stock to Robin A. Bowers, Secretary at that date, and 1,000 shares of common
stock to another employee. During September 1997 The United States Company
tendered 125,000 shares back to the Company.
(9) During October 1997 the Company settled employment agreements with two
employees at termination of their employment by agreeing to grant warrants
for each to purchase 50,000 shares of Company common stock. No amounts
have been recorded in the financial statements.
<PAGE>
Three Months Ended March 31, 1998 Compared to Three Months Ended March 31, 1997
The following financial information reports operating trends taking into
account the discontinued operations of the Products Group for 1997. Net
service revenue for the Service group, which is comprised of the industrial
hygiene laboratory and the health and safety consulting, for the First
Quarter of 1998 amounted to $198,800 which were $77,500 (28.1%)lower than
the $276,300 reported for the First Quarter of 1997. Additional sales that
would have been reported without the discontinued Products line amounted to
$410,900 for the First Quarter of 1997.
Direct service costs decreased by 23.9% or $37,700 to $120,200 for the First
Quarter of 1998 as compared to $157,900 reported for the First Quarter of
1997. Additional cost of sales that would have been reported without the
discontinued Products line amounted to $296,000 for the First Quarter of 1997.
The gross profit for the First Quarter ended March 31, 1998 decreased by
$39,800, a decrease of 33.7%, to $78,600 as compared to $118,400 for the
three months ended March 31, 1997. Additional gross profit that would have
been reported without the discontinued Products line amounted to $114,900
for the First Quarter of 1997.
The Company reported a 39.5% gross margin for the First Quarter of 1998 as
compared to a 42.9% margin for the same Quarter in 1997. The reason for the
deterioration in gross margin in the Services Division and the $39,800
decrease in the amount of gross profit reported by that division is due to
reduced sample analysis during the First Quarter of 1998 and a large
consultative project that was performed during the first three months of 1997.
Other operating revenue was $11,400 for the Quarter ended March 31, 1998 as
compared to $9,800 of revenue for the Quarter ended March 31, 1997.
<PAGE>
Operating expenses were $60,100 lower and amounted to $120,000 for the Three
months ended March 31, 1998, as compared to $180,100 reported for the Three
months ended March 31, 1997. Sales and marketing expenses decreased by
$15,600, which savings were mostly attributable to a reduction in staff for
1998. General and administrative costs decreased by $36,000 to $98,200 for
the Three months ended March 31, 1998, as compared to $134,200 reported for
the Three months ended March 31, 1997. Depreciation and amortization costs
decreased overall by $8.500 due to the reduction in vehicles of the Service
Group for the first Quarter of 1998.
The Company incurred an operating loss of $30,100 for the Three months ended
March 31, 1998 as compared to an operating loss of $52,000 for the Three
months ended March 31, 1997. Additional operating loss that would have been
reported without the discontinued Products line amounted to $2,700 for the
First Quarter of 1997.
Interest income for the Quarter ended March 31, 1998 was $11,800 compared to
$15,400 of interest income recorded for the Quarter ended March 31, 1997.
The decrease is due to the reduction in the principal balance outstanding
for a note receivable that was executed during 1996 in connection with the
disposition of the Environmental Consulting and Engineering and Civil
Engineering and Surveying Division. Interest expense of $8,100 for the Three
months ended March 31, 1998 was $24,100 lower than the amount reported for
the First Quarter of 1997 which was $32,200. The decrease in interest expense
is attributable to elimination of borrowing under the Company's asset based
lending arangement for the Products Group which was disposed during the Fourth
Quarter of 1997. Amortization of loan costs for the First Quarter of 1998 and
1997 was $5,400.
The Company incurred a net loss before discontinued operations of $39,300
for the Three months ended March 31, 1998 as compared to a net loss before
discontinued operations of $74,100 for the Three months ended March 31,
1997. Discontinued operations for the First Quarter ended March 31, 1997
was $2,800 related to the Products line. Net loss for the First Quarter
ended March 31, 1998 was 39,300 which is $37,600 lower than the net loss of
$76,900 reported for the First Quarter ended March 31, 1997.
<PAGE>
FINANCIAL CONDITION
The Company's financial condition continued to deteriorate during the first
Three months of 1998 due principally to continued operating losses, and the
Company is experiencing severe cash flow problems.
The working capital deficiency has decreased from $709,000 at December 31,
1997 to $455,400 at March 31, 1998. Included in the working capital
deficiency is approximately $512,000 in related party debt which terms have
informally been extended.
The Company has been negotiating with several vendors to restructure accounts
payable and certain lenders appear willing to restructure debt since the
Company has not been able to meet its obligations timely. In January 1997,
the Company entered into agreements with several lenders that ties payment
of debts to actual collections from notes receivable and related interest
payments received. These payments are in arrears.
Trade accounts receivable from the Services group are up approximately
$24,800 to $142,400 at March 31, 1998 from $117,600 at December 31, 1997.
The Products Division still has $10,200 included in trade accounts receivable.
In April 1997, the Company was successful in subleasing its office space at
Faber Place to another Company through January 1999. This will continue to
result in savings of approximately $3,000 per month in rent. The Company
has been experiencing a reduction in facility costs since it disposed of its
real estate in December 1996. The Company executed a five year lease on its
University Boulevard location after the sale of the real estate, and has
reduced its monthly cash outlay by approximately $7,000.
The Company receives interest income in 1997 of approximately $5,000 per
month from two notes receivable executed during 1996, related to the
disposition of the Environmental Consulting and Engineering and Civil
Engineering and Surveying Division on July 31, 1996 and sale of the real
estate in December 1996. The $230,000 note receivable from the sale of the
real estate is due no later than December 1998.
<PAGE>
The Company sold its air sampling cassettes products line, including
equipment and inventory, for $161,072, to a major customer during May 1997.
The total amount of cash received by the Company was $161,072 and $155,972
was paid to a vendor. The Company also sold its remaining Air Chemical
Technology (ACT) product line to its exclusive distributor for a $354,850
reduction in prepaid purchase deposits. In addition, $10,000 cash was paid
and 70,000 shares of preferred stock were issued at a value of $140,000,
which eliminated the prepaid purchase deposits liability. These transactions
were part of management's strategy to eliminate the unprofitable product group.
The Company is looking to grow its laboratory services base through
aggressive marketing, identifying potential merger partners (other
industrial hygiene laboratories) to increase revenues and streamline or
reduce costs.
The Company is in discussions with certain lenders regarding the refinancing
of certain loans, amounting to approximately $512,000 from stockholders, a
portion of which is included in current maturities of long-term debt.
<PAGE>
Item 1. Legal Proceedings
Item 5. Other Information
Item 6. Exhibits and Reports
Exhibit
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
ENVIROMETRICS, INC.
<TABLE>
<S> <C>
Date: August 07, 1998 Walter H. Elliott, III
--------------------------------
Walter H. Elliott, III
President and CEO
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 44,155
<SECURITIES> 0
<RECEIVABLES> 495,788
<ALLOWANCES> 18,081
<INVENTORY> 17,334
<CURRENT-ASSETS> 597,072
<PP&E> 1,094,159
<DEPRECIATION> 957,807
<TOTAL-ASSETS> 1,221,650
<CURRENT-LIABILITIES> 1,052,482
<BONDS> 528,663
0
700
<COMMON> 2,670
<OTHER-SE> (362,865)
<TOTAL-LIABILITY-AND-EQUITY> 1,221,650
<SALES> 198,742
<TOTAL-REVENUES> 227,291
<CGS> 120,174
<TOTAL-COSTS> 120,174
<OTHER-EXPENSES> 138,298
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,097
<INCOME-PRETAX> (39,278)
<INCOME-TAX> 0
<INCOME-CONTINUING> (39,278)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (39,278)
<EPS-PRIMARY> (.015)
<EPS-DILUTED> (.015)
</TABLE>
