U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998.
[ ] TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE TRANSITION PERIOD FROM ________ TO ________.
Commission File No. 0-24490
AQUAGENIX, INC.
---------------
(Exact name of small business issuer as specified in its charter)
Delaware 65-0419263
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
6500 Northwest 15th Avenue, Fort Lauderdale,
--------------------------------------------
Florida 33309 (Address of principal executive offices)
(954) 975-7771
--------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes
[X] No [ ]
The number of shares outstanding of the issuer's Common Stock, $.01 Par Value,
as of July 31, 1998 was 5,326,058.
Transitional Small Business Disclosure Format: Yes [ ] No [X]
Page 1 of 14 Pages
<PAGE>
AQUAGENIX, INC.
FORM 10-QSB
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
--------------------- ----
<S> <C>
Item 1: Financial Statements
Consolidated Balance Sheets as of June 30, 1998
and December 31, 1997 (unaudited) 3
Consolidated Statements of Operations for the three
months and six months ended June 30, 1998 and
June 30, 1997 (unaudited) 4
Consolidated Statements of Cash Flows for the three
months and six months ended June 30, 1998 and
June 30, 1997 (unaudited) 5
Notes to Consolidated Financial Statements 6-8
Item 2: Management's Discussion and Analysis or Plan of
Operation 9-12
PART II. OTHER INFORMATION 13
-----------------
SIGNATURES 14
</TABLE>
-2-
<PAGE>
AQUAGENIX, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
-------- ------------
Assets 1998 1997
---- ----
<S> <C> <C>
Current Assets:
Cash $ 487,755 $ 799,286
Accounts Receivable, net of allowance for doubtful
accounts of $179,566 and $182,809 respectively 1,529,219 842,741
Inventories 817,575 640,225
Receivable - remediation services - 1,269,431
Prepaid expenses and other 667,806 560,082
Refundable deposit - 670,000
------------ --------------
Total Current Assets 3,502,355 4,781,765
Property and equipment, net 2,807,664 3,006,877
Intangibles, net 4,736,793 5,035,675
Other assets 397,321 326,358
------------ --------------
Total Assets $ 11,444,133 $ 13,150,675
============ ==============
Liabilities and Stocklholders' Equity
Current Liabilities:
Borrowings under credit agreement $ 640,000 $ 550,000
Current maturities of long-term debt 884,521 393,164
Accounts payable 1,593,722 1,002,375
Other current liabilities 470,612 552,554
------------- --------------
Total Current Liabilities 3,588,855 2,498,093
Long-term debt, net of current maturities 5,433,713 5,850,018
------------- --------------
9,022,568 8,348,111
------------- --------------
Commitments and contingencies - -
Stockholders' equity:
Preferred stock, par value $.01, 1,000,000 shares
authorized, no shares issued and outstanding - -
Common stock, par value $.01, 10,000,000 shares
authorized, 5,339,391 and 4,724,617 shares issued
and outstanding, respectively 53,260 47,246
Additional paid-in cpaital 19,587,241 15,539,235
Accumulated deficit (17,112,491) (10,636,268)
Unearned Compensation (106,445) (147,649)
------------ --------------
Total stockholders' equity 2,421,565 4,802,564
------------ --------------
Total liabilities and stockholders' equity $ 11,444,133 $ 13,150,675
============ ==============
</TABLE>
The accompany notes are an integral part of the Consolidated Financial
Statements.
-3-
<PAGE>
AQUAGENIX, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ---------- ------------
<S> <C> <C> <C> <C>
Revenues $ 4,576,535 $ 3,603,809 $ 7,591,263 $ 6,497,328
------------- ------------ ----------- ------------
Costs and expenses:
Costs of services 3,338,489 2,138,85 5,275,502 3,758,597
Selling, general and administrative 2,206,057 1,514,934 4,526,577 2,761,722
Termination of consultant relationship - - 932,000 -
Depreciation and amortization 271,771 234,497 526,785 461,039
------------- ------------ ----------- ------------
Total costs and expenses 5,816,317 3,888,282 11,260,864 6,981,358
Operating (loss) income (1,239,782) (284,473) (3,669,601) (484,030)
Loss on termination of business acquisition - - (2,346,191) -
Interest expense (239,388) (180,722) (460,431) (378,903)
------------- ------------ ----------- ------------
(Loss) before income tax benefit (1,479,170) (465,195) (6,476,223) (862,933)
Provision for Income Taxes - - -
------------- ------------ ----------- ------------
Net Loss $ (1,479,170) $ (465,195) $(6,476,223) $ (862,933)
============= ============ =========== ============
(Loss) per weighted average common share
Basic loss per share $ (0.28) $ (0.11) $ (1.24) $ (0.20)
============= ============ =========== ============
Weighted average common shares outstanding 5,219,651 4,270,144 5,219,651 4,270,144
============= ============ =========== ============
</TABLE>
-4-
<PAGE>
AQUAGENIX, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
---------------------------
1998 1997
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net (loss): $ (6,476,223) $ (862,933)
Adjustments to reconcile net (loss) to net cash
used in operating activities:
Compensation expense for options granted and
restructured 2,265,462 -
Provision for forfeited acquisition deposits 1,216,298 -
Depreciation and amortization 526,785 461,039
Advances to officers (592,000) -
Loss on sale of property and equipment - 46,308
Provision for losses on claims, receivables
and advances 779,500 57,502
Receivable collection, remediation services 1,214,431 -
Net change in operating assets and liabilities (265,356) (405,863)
Net cash provided by (used in) operating ------------ -----------
activities (1,331,103) (703,947)
------------ -----------
Cash flows from investing activities:
Acquisition escrow fund deposits (1,830,000) -
Refund from acquisition escrow fund 1,283,702) -
Proceeds from sale of marketable securities - 162,196
Purchase of property and equipment (133,081) (548,541)
Other, net - 11,713
------------ -----------
Net cash (used in) operating activities (679,379) (374,632)
------------ -----------
Cash flows from financing activities:
Proceeds under credit agreements 540,000 869,302
Payment of credit agreements (450,000) (1,273,717)
Proceeds from other borrowings 270,000 756,090
Payment of notes payable and long-term debt (204,607) (315,768)
Advances for financing arrangements (225,000) -
Payment of financing costs - (36,364)
Issuance of common stock 1,768,558 1,526,816
------------ -----------
Net cash provided by financing activities 1,698,951 1,526,359
------------ -----------
Cash and cash equivalents
Increase (decrease) (311,531) 447,780
Beginning balance 799,286 890,731
------------ -----------
$ 487,755 $ 1,338,511
============ ===========
Supplemental disclosures of cash flow information:
Interest Paid $ 457,835 $ 290,767
============ ===========
Income taxes refunded $ - $ -
============ ===========
</TABLE>
The accompanying notes are an integral part of the Consolidated
Financial Statements.
-5-
<PAGE>
AQUAGENIX, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Basis of Presentation
---------------------
The accompanying unaudited consolidated financial statements, which are
for interim periods, do not include all disclosures provided in the
audited annual consolidated financial statements. These unaudited
consolidated financial statements should be read in conjunction with
the consolidated financial statements and the footnotes thereto,
together with management's discussion and analysis of financial
condition and results of operations, contained in the Company's annual
Report on Form 10-KSB for the year ended December 31, 1997 of
Aquagenix, Inc. ("the Company"), as filed with the Securities and
Exchange Commission. The December 31, 1997 financial statements were
derived from audited consolidated financial statements, but do not
include all disclosures required by generally accepted accounting
principles. Certain amounts from 1997 financial statements have been
reclassified to conform to 1998 presentation.
In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments (which are of a normal
recurring nature) necessary for a fair presentation of the financial
position and results of operations. The results of operations for the
interim periods are not necessarily indicative of the results to be
expected for the full year.
2. Related Party Transactions
--------------------------
On June 2, 1998, the Board of Directors removed the Chief Executive
Officer from his executive management capacity and from his capacity as
Chairman of the Board of Directors. In a series of transactions
commencing in the fourth quarter of 1997, the Company disbursed cash
either directly to or for the benefit of the former Chief Executive
Officer totaling $682,000. Of this amount, $282,000 was disbursed at
the unilateral direction of the former CEO without approval of the
Board of Directors. Prior to the removal date, the Board did authorize
$400,000 of these disbursements with the understanding that the former
CEO would deliver a two-year promissory note bearing interest at 7%.
Subsequent to June 30, 1998, the Board demanded immediate repayment of
the $282,000 portion of the advances and delivery of a signed note with
acceptable collateral for the authorized portion of the advances. These
demands have not been met. Based upon the facts and circumstances
available to management at this time, the ultimate recovery of these
advances remains uncertain, and, accordingly, the Company has recorded
a loss allowance of $682,000 relative to these claims. This accounting
treatment does not constitute forgiveness of the claims against the
former CEO, and the Company intends to pursue collection through
available legal channels.
3. Financing Advances
------------------
At the direction of the former CEO and without authorization of the
Board of Directors, the Company transferred funds totaling $225,000 to
two different entities to secure financing arrangements for the
Company. Such funds were transferred prior to performance by the
entities to provide the financing. When the financing never occurred,
and although there is no assurance that the deposits can be recovered,
the Company is actively attempting to secure refunds, including placing
a demand upon the former CEO for reimbursement of the $225,000 or the
delivery of adequate collateral. The accompanying financial statements
include a loss provision of
-6-
<PAGE>
$225,000 relative to these deposits, however, this accounting treatment
is not an admission that the Company is relinquishing its claim to
these deposits.
4. Termination of Business Acquisition
-----------------------------------
On November 30, 1997, the Company entered into a Stock Purchase
Agreement, (the "Agreement") with the owner of Lewis Tree Service, Inc.
("Lewis") a New York Corporation, to acquire all of the issued and
outstanding stock of Lewis. Pursuant to the Stock Purchase Agreement,
an Escrow Agreement was also entered into on November 30, 1997
requiring the Company to place $670,000 in escrow pending the closing
of the purchase of Lewis by January 31, 1998. On January 29, 1998, the
Company entered into an Amended Stock Purchase Agreement and Escrow
Agreement to extend the closing date to May 15, 1998 and to place an
additional $1,830,000 in the escrow account. The Company increased the
deposit to the escrow account to $2,500,000 on February 4, 1998. On
April 17, 1998, the Company entered into a Termination Agreement with
the owner of Lewis. The Termination Agreement provided for (i) the
termination of the original Agreement and Amended Stock Purchase
Agreement, (ii) the termination of the original and amended Escrow
Agreement and (iii) the distribution of $1,250,000 of the funds held in
escrow to the Lewis owner with the balance, including interest earned,
distributed to the Company.
In order to raise the deposit required by the Amended Stock Purchase
and Escrow Agreement, the Company restructured stock options previously
granted to certain officers, directors, employees and former employees
of the Company. Such restructuring involved the resetting of option
exercise prices to amounts below the current market at that time and
the acceleration of the date on which certain options could be
exercised. Accordingly, the Company recognized compensation expense for
options restructured based on the difference between the quoted market
price of the Company's stock at the date of grant and the amount the
grantees paid to acquire the stock. In connection with the Lewis
transaction the Company recognized $752,225 of compensation expense.
The following summary presents the nature of the loss recognized
pursuant to the Lewis termination agreement:
<TABLE>
<CAPTION>
<S> <C>
Provision for forfeited acquisition escrow deposits $ 1,216,298
Compensation expense related to the
restructuring of stock options 752,225
Professional and consulting fees 377,668
-----------
$ 2,346,191
===========
</TABLE>
5. Termination of Consulting Relationship
--------------------------------------
At December 31, 1997, an independent consultant held options to
purchase 200,000 common shares at $5.00 per share, the market price on
date of issuance, which were granted in connection with a proposed
financing. In satisfaction of the agreement with the consultant
(inclusive with the grant of stock options), on January 19, 1998 the
Company issued 100,000 shares of common stock. Subsequent to March 31,
1998, the Company disbursed $151,000 to the consultant.
6. Loss Per Share
--------------
Basic loss per common share was computed by dividing net loss by the
weighted average number of shares outstanding. Common share equivalents
resulting from options and warrants have not been included for the loss
per share computation for the three months ended March 31, 1998 and
1997 since their effect would be anti-dilutive.
-7-
<PAGE>
7. Notes Receivable
----------------
The Company has its current Chief Executive Officer $155,000 on an
unsecured basis. The notes mature in June of 2000 and bear interest at
7%.
8. Issuance of Common Stock
------------------------
In January and February of 1998, the Company issued 346,500 shares of
common stock for the exercise of options. The Company received total
cash proceeds of $1,017,976.
On January 16, 1998, the successor of the underwriter for the Company's
initial public offering exercised cashless warrants granted pursuant to
the underwriting agreement resulting in the issuance of 11,458 common
shares with no cash proceeds.
On February 3, 1998, the Company issued 125,000 shares of common stock
resulting from the exercise of outstanding warrants granted on that
date. The Company received total cash proceeds of $750,000 upon the
exercise of these warrants.
On January 19, 1998, the Company issued 105,000 shares of common stock
with no cash proceeds received by the Company. Of these shares, 5,000
were issued pursuant to an employment agreement with a former employee
and 100,000 were issued to a consultant (see note 3 above) for the
exercise of a cashless option. The Company `s financial statements for
the year to date period ended June 30, 1998, include a compensatory
expense totaling $781,000 relative to the issuance of these shares.
On June 24, 1998, the Company issued 13,333 shares of common stock to
its outside legal counsel in exchange for professional services valued
at $20,000.
-8-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
General
Aquagenix, Inc. (the "Company"), through its wholly-owned subsidiaries,
provides aquatic and industrial vegetation management services to both
governmental and commercial customers in Florida, the general
Southeastern region of the United States, California and Arizona. The
Company's continued emphasis on quality service, internal growth and
the selective acquisition of privately held waterway and vegetation
management companies in the Sunbelt region of the United States has
resulted in the Company becoming the largest provider of aquatic and
industrial vegetation management services in the United States with
annual revenues of approximately $13,000,000 for 1997. The Company's
services consist primarily of waterway and wetland management (the
control of aquatic weeds, algae and exotic plants), brush and noxious
tree control, roadside vegetation management, and ancillary lake
management services (installation of aeration systems, fish stocking
for plant and insect control d the stocking of fish for game, plant and
insect control.
In April 1997, the Company established a new branch office in
Birmingham, Alabama as the Company has started to provide industrial
vegetation management services in that region. In September 1997, the
Company opened a branch in San Francisco, California.
Results of Operations
Three Months Ended June 30, 1998 Compared to Three Months Ended June
--------------------------------------------------------------------
30, 1997
--------
Revenues. The Company's revenues increased by $973,000 or 27%, from
$3,603,000 during the three months ended June 30, 1997 to $4,576, 000
during the three months ended June 30, 1998. The increase in revenues
was primarily attributable to an increase in both aquatic vegetation
management and environmental construction (planting vegetation medians
and barriers and installing related irrigation systems). The California
branch, opened in September 1997, provided over 65% of the revenue
increase, all from environmental construction projects.
Cost of services. Cost of services increased by $1,158,000 or 54%, from
$2,138,000 during the three months ended June 30, 1997 to $3,338,000
during the three months ended June 30, 1998. Cost trended higher in
conjunction with the higher revenue volume and level of activity. High
material and labor costs accounted for 60% of the costs increases,
reflecting the revenue shift to environmental construction work
mentioned above. As a percentage of revenues, cost of services has
increased from 59% in the second quarter of 1997 to 73% in the second
quarter of 1998. Environmental construction revenue recognized by the
California branch accounted for 14% of the second quarter revenue in
1998 with no such revenue in 1997. Gross profit margins on this
business is significantly lower that the margins enjoyed through
aquatic management services primarily because of competitive
-9-
<PAGE>
pressures. The Company entered into these contracts to establish a
business base with the intention of gravitating into the aquatic
management market in California. The Company currently intends to
pursue only those California projects that provide profit margin
potential approximating profit margins that can be obtained from
aquatic management contracts.
Selling, general and administrative. Selling, general and
administrative expense increased by $691,000 to $2,026,000 from
$1,515,000 in the second quarter of 1997. The impact on quarterly
expense of the loss provisions relating to claims against the former
Chief Executive Officer and the loss provision relating to advances for
financing arrangements (discussed in Note 2 and 3 to the financial
statements) amounted to $730,000. Without this expense of a typically
nonrecurring nature, SG&A expense remained relatively level with the
comparable quarter of 1997, despite a significant increase in revenue.
Interest expense. Interest expense increased by $59,000 from $181,000
during the three months ended June 30, 1997 to $239,000 during the
three months ended June 30, 1998 primarily as a result of increased
bank borrowings.
Quarterly results. The net loss of $1,429,000 incurred by the Company
for the three months ended June 30, 1998 was to the mainly attributable
to the nonrecurring loss provisions pertaining to the claims against
the former CEO and the financing advances discussed in Notes 2 and 3 to
the financial statements and to lower gross profit margins recognized
on environmental contract business.
Six Months Ended June 30, 1998 Compared to Six Months Ended June 30,
-------------------------------------------------------------------
1997
----
Revenues. The Company's revenues increased by $1,094,000, 17%, to
$7,591,000 from $6,497,000 for the first six months of 1997. The
increase in revenues was primarily attributable to an increase in
environmental construction contracts and to a lesser extent aquatic
vegetation management contracts. The California branch, nonexistent in
the first six months of 1997, generated this revenue. The remaining
revenue increases resulted from the aggressive bidding for nonrecurring
aquatic and land vegetation contracts, and the efforts of a fully
operational sales staff.
Cost of services. Cost of services increased by $1,517,000, or 40%,
from $3,758,000 during the six months ended June 30, 1997 to $5,275,000
during the six months ended June 30, 1998. As a percentage of revenue,
cost of services, approximated 69% in the first half of 1998 compared
to 58% in the first half of last year. Lower profit margins on the
environmental construction projects discussed in the quarterly
presentation also made a major impact on the year to date results.
Aggressive bidding also resulted in aquatic and industrial vegetation
contracts with lower profit margins. The first three months of the year
were hampered by unfavorable weather conditions, primarily in
California and Alabama, delaying the commencement of several projects
while the branches were fully staffed and operational. The Company also
recognized a gross loss on a problem industrial vegetation contract
caused by abnormal terrain characteristics and stringent environmental
requirements regarding the removal of vegetation.
-10-
<PAGE>
Selling, general and administrative. Selling, general and
administrative expense increased by $1,765,000, or 64% to $4,526,000
for the six-month period ended June 30, 1998 from $2,761,722 during the
six months ended June 30, 1997. The impact on expense during the first
six months of 1998 of the loss provisions relating the Related Party
Transactions and Financing Advances (discussed in Notes 2 and 3 to the
financial statements) amounted to $807,000. Current year to date
expense also includes a charge of $608,000 of compensatory expense
related to the granting and exercise of employee stock options. The
remainder of the increase resulted from higher sales salaries because
of a fully staffed sales force, consulting expenses primarily incurred
to assist the Company market its services to governmental agencies and
legal and professional fees.
Interest expense. Interest expense increased by $81,000 from $379,000
during the six months ended June 30, 1997 to $460,000 during the six
months ended June 30, 1997 primarily as a result of increased bank
borrowings.
Liquidity and Capital Resources
Working capital. At June 30, 1998, the Company is in a working capital
deficit position. Three factors can be identified as primary causes.
Net operating losses for the six-month period have caused cash balances
to decrease and account payable balances to increase. The actual cash
outlay during the six-month period related to the Related Party
Transactions and the Financing Advances discussed in Notes 2 and 3 to
the financial statements approximated $678,000, resulting in a further
decrease in working capital. As discussed under Funding Requirements
below, all term debt due to Union Planters has been reclassified to the
current liability section of the balance sheet, resulting in a negative
impact on working capital of $430,000. Additionally, the Company
advanced $140,000 to its current CEO, resulting in a further
utilization of working capital.
The Company's accounts receivable have increased by $686,000 since
December 31, 1997. The increase was primarily due to the higher volume
of revenues in the second quarter compared to the fourth quarter of
1997. Of the Company's accounts receivable outstanding at December 31,
1997 and June 30, 1998, approximately $311,000 (30%) and $351,000 (21%)
were due from five customers, respectively At June 30, 1998, the
Company's allowance for doubtful receivables was $179,000, which the
Company believes is currently adequate to cover anticipated losses. The
average collection period for account receivable was approximately 34
days as of June 30, 1998 as compared to 28 days at December 31, 1997.
Funding Requirements As of June 30, 1998, the Company had outstanding
loans to Union Planters Bank (the "Bank') aggregating $1,204,000,
consisting of outstanding borrowings under a $1,000,000 revolving line
of credit totaling $640,000 and three term loans totaling $604,000.
Subsequent to June 30, the Bank informed the Company of its
unwillingness to remain as a creditor and requested the Company to
liquidate its debt. All amounts due to this institution have been
reflected as current liabilities in the June 30, 1998
-11-
<PAGE>
balance sheet. The Company will be required to raise significant
additional funds to liquidate these debt and fund potential losses from
continuing operations. The vehicles used to raise funds may take a
variety of forms, including public or private placement of its equity
securities, credit agreements with other financial institutions, or
inducements given to current warrant and option holders encouraging
exercise. There can be no assurance that the Company will be successful
in its attempts to raise additional funds.
Cash flows from operating activities. For the six months ended June 30,
1998, the Company's cash flows used in operations was ($1,313,000)
compared to ($704,000) used in operations for the six months ended June
30, 1997. The decrease in cash flows generated from continuing
operations was primarily attributable to the net loss incurred for the
six months ended June 30, 1998.
Cash flows from investing activities. For the six months ended June 30,
1998, cash used in investing activities totaled ($679,000) resulting
from deposits to and refunds back from escrow fund in connection with
the attempted acquisition of Lewis Tree.
Cash flows from financing activities. Net cash provided by financing
activities for the six months ended June 30, 1998 of $1,698,000
compared to $1,526,000 for the six-month period of 1997. The cash flow
was derived primarily from the issuance of common stock resulting from
exercise of options and warrants.
-12-
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
In 1997, the Company entered into an agreement with
Wharton Capital Partners, Ltd. (Wharton) whereby Wharton
agreed to arrange $3,000,000 of financing for the Company
in return for a 6% fee at the closing of such financing
transaction. No closing occured, however, Wharton
initiated litigation against the Company in August of 1997
claiming $180,000 on the basis that it performed it's
obligations under the terms of the agreement. The Company
feels that the action is without merit and is currently
and will continue to vigorously defend itself in this
matter.
Item 2. Changes in Securities
---------------------
Not applicable.
Item 3. Defaults Upon Senior Securities
-------------------------------
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
Not applicable.
Item 5. Other Information
-----------------
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits:
Exhibit Description
------- -----------
27.1 Financial Data Schedule
(b) Reports on Form 8-K
During the quarter ended June 30, 1998, the registrant
filed the following reports on Form 8-K:
(i) Current Report on Form 8-K dated April 17, 1998
(filed on May 4, 1998) which reported the
Company's termination of its agreement to
purchase the outstanding stock of Lewis Tree
Service, Inc.
(ii) Current Report on Form 8-K dated June 2, 1998
(filed on June 11, 1998) announcing replacement
of Andrew Chesler as Chairman of the Board of
Directors by Abraham Fischler and replacement of
Andrew Chesler as Chief Executive Officer by John
Hart.
-13-
<PAGE>
SIGNATURES
----------
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AQUAGENIX, INC.
Date: August 14, 1998 By: /s/ John P. Hart
----------------------------
John P. Hart,
Chief Executive Officer,
President
(Principal Executive Officer)
Date: August 14 , 1998 By: /s/ Frederick E. Barone
----------------------------
Frederick E. Barone,
Chief Financial Officer
(Principal Financial and
Accounting Officer)
-14-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE UNAUDITED FINANCIAL STATEMENTS AS OF MARCH 31, 1998 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1998
<CASH> 487,775
<SECURITIES> 0
<RECEIVABLES> 1,708,785
<ALLOWANCES> (179,566)
<INVENTORY> 817,575
<CURRENT-ASSETS> 3,502,355
<PP&E> 4,762,527
<DEPRECIATION> (1,954,863)
<TOTAL-ASSETS> 11,444,133
<CURRENT-LIABILITIES> 3,608,855
<BONDS> 0
0
0
<COMMON> 53,127
<OTHER-SE> 2,348,438
<TOTAL-LIABILITY-AND-EQUITY> 11,444,133
<SALES> 0
<TOTAL-REVENUES> 7,591,263
<CGS> 0
<TOTAL-COSTS> 5,275,502
<OTHER-EXPENSES> 5,773,725
<LOSS-PROVISION> 904,039
<INTEREST-EXPENSE> 460,431
<INCOME-PRETAX> (6,476,223)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,476,223)
<DISCONTINUED> 0
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</TABLE>
