<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 27, 1997
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________________ to ____________________
Commission file number - 0-25528
--------
ENVIROQ CORPORATION
(Exact name of small business issuer as specified in its charter)
Delaware 59 -3290346
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3918 Montclair Road, Suite 206
Birmingham, Alabama 35213
---------------------------------------- --------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (205)870-0588
-------------
<TABLE>
<S> <C>
N/A
- ----------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last report)
</TABLE>
Check whether the issuer: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
YES [X] NO [ ]
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date:
Common Stock, par value $0.01 1,009,377
----------------------------- -------------------
(Class) (Number of Shares)
Transitional Small Business Disclosure Format (Check one):
Yes [ ] No [X]
<PAGE> 2
ENVIROQ CORPORATION AND SUBSIDIARIES
FORM 10-QSB DECEMBER 27, 1997
<TABLE>
<CAPTION>
ITEM PAGE
---- ----
<S> <C>
CONSOLIDATED CONDENSED BALANCE SHEETS -
MARCH 29, 1997 AND
DECEMBER 27, 1997 3
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS-
THREE AND NINE MONTHS ENDED DECEMBER 27, 1997
AND DECEMBER 28, 1996 5
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS -
THREE AND NINE MONTHS ENDED DECEMBER 27, 1997
AND DECEMBER 28, 1996 6
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 10
PART II - OTHER INFORMATION 12
SIGNATURES 14
</TABLE>
2
<PAGE> 3
ENVIROQ CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Dec. 27, March 29,
1997 1997
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 2,274,628 $ 2,379,613
Accounts receivable (no allowance considered necessary) 496,365 314,772
License fees receivable 930 930
Inventories 143,149 52,830
Notes Receivable 15,254 --
Refundable Income Taxes 113,472 101,147
Prepaid expenses and other assets 11,066 23,564
----------- -----------
Total current assets 3,054,864 2,872,856
----------- -----------
OTHER ASSETS:
Employee notes receivable 11,858 13,819
Other 14,929 --
----------- -----------
Total other assets 26,787 13,819
----------- -----------
PROPERTY, PLANT AND EQUIPMENT, at cost
Land 310,135 310,135
Operating equipment 25,463 25,563
Other equipment and vehicles 57,917 40,241
----------- -----------
393,515 375,939
Less accumulated depreciation (50,747) (45,506)
=========== ===========
Property, Plant & Equipment, net 342,768 330,433
----------- -----------
TOTAL ASSETS $ 3,424,419 $ 3,217,108
=========== ===========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
3
<PAGE> 4
ENVIROQ CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Dec. 27, March 29,
1997 1997
----------- -----------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 133,659 $ 69,292
Salaries, wages and related taxes 6,488 18,824
Income taxes payable 43,520 958
----------- -----------
Total current liabilities 183,667 89,074
=========== ===========
COMMITMENTS AND CONTINGENCIES (Note 3)
STOCKHOLDERS' EQUITY
Common stock (par value $.01 per share), authorized
10,000,000 shares, issued and outstanding
1,009,377 shares 10,094 10,094
Additional paid-in capital 6,190,647 6,190,647
Accumulated deficit (2,959,989) (3,072,707)
----------- -----------
Total stockholders' equity 3,240,752 3,128,034
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,424,419 $ 3,217,108
=========== ============
</TABLE>
See accompanying notes to consolidated condensed financial statements.
4
<PAGE> 5
ENVIROQ CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (All Periods Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
---------------------- ------------------------
DEC. 27, DEC. 28, DEC. 27, DEC. 28,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
REVENUES $463,854 $ 304,289 $1,079,544 $ 939,969
COST OF REVENUES 193,820 156,145 522,777 501,430
-------- --------- ---------- ---------
GROSS PROFIT 270,034 148,144 556,767 438,539
-------- --------- ---------- ---------
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 161,782 207,993 519,720 539,044
-------- --------- ---------- ---------
INCOME (LOSS) FROM OPERATIONS 108,252 (59,849) 37,047 (100,506)
-------- --------- ---------- ---------
OTHER INCOME 29,691 36,661 106,395 108,011
-------- --------- ---------- ---------
INCOME (LOSS) BEFORE INCOME TAXES 137,943 (23,188) 143,442 7,505
-------- --------- ---------- ---------
INCOME TAX EXPENSE (BENEFIT) 29,077 (9,225) 30,724 (9,225)
-------- --------- ---------- ---------
NET INCOME (LOSS) $108,866 $ (32,413) $ 112,718 $ (1,720)
-------- --------- ---------- ---------
NET INCOME (LOSS) PER
SHARE $ 0.11 $ (0.03) $ 0.11 $ (0.00)
======== ========= ========== =========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
5
<PAGE> 6
ENVIROQ CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (All Periods Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NINE MONTHS ENDED
------------------------------------
DEC. 27, 1997 DEC. 28, 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ 112,718 ($ 1,720)
Adjustments to reconcile net Income (loss) to net
cash used in operating activities:
Depreciation 5,110 6,714
Amortization 13,492
Decrease in income taxes payable (1,040,504)
Changes in assets and liabilities which used cash: (205,133) (152,547)
----------- -----------
Net cash used in operating activities (87,305) (1,174,565)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (17,680) (4,803)
----------- -----------
Net cash used in investing activities (17,680) (4,803)
----------- -----------
NET DECREASE IN CASH AND
CASH EQUIVALENTS (104,985) (1,179,368)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 2,379,613 3,628,990
----------- -----------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 2,274,628 $ 2,449,622
=========== ===========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
6
<PAGE> 7
ENVIROQ CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 - MANAGEMENT'S REPRESENTATION
The accompanying unaudited consolidated condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions for Form 10-QSB. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. These
unaudited financial statements include all adjustments, consisting of normal
recurring accruals, which Enviroq Corporation considers necessary for a fair
presentation of the financial position and the results of operations for these
periods.
The results of operations for the three months ended December 27, 1997 are not
necessarily indicative of the results to be expected for the full year ending
March 28, 1998. For further information, refer to the financial statements and
footnotes thereto included in the Company's Form 10-KSB for the year ended March
29, 1997, as filed with the Securities and Exchange Commission.
NOTE 2 - GENERAL
A. COMPANY INFORMATION
Enviroq Corporation, a Delaware corporation (the "Company"), was
incorporated on February 9, 1995. At the time of its incorporation, the
Company was a wholly-owned subsidiary of a Delaware corporation formerly
named Enviroq Corporation ("Old Enviroq"). Prior to April 18, 1995, the
Company was named New Enviroq Corporation ("New Enviroq"). On April 18,
1995, Old Enviroq distributed all of the issued and outstanding capital
stock of New Enviroq to the holders of the common stock of Old Enviroq (the
"Distribution"). Following the Distribution, the Company changed its name
from New Enviroq Corporation to Enviroq Corporation. Also following the
Distribution, Old Enviroq merged with a subsidiary of Insituform
Mid-America, Inc. ("IMA") and changed its name to Insituform Southeast,
Inc. ("Insituform Southeast").
The Company's principal executive office is located at 3918 Montclair Road,
Suite 206, Birmingham, Alabama 35213, and its telephone number is (205)
870-0588. The Company's mailing address is P. O. Box 130062, Birmingham,
Alabama 35213.
The Company is principally engaged in the development, commercialization,
formulation and marketing of spray-applied resinous products, and in the
treatment of municipal wastewater biosolids. The Company's operations are
conducted primarily through Sprayroq(R), Inc., a Florida corporation
("Sprayroq"), of which the Company owns 50% of the outstanding capital
stock. Sprayroq is engaged in the development, commercialization,
manufacture and marketing of spray-applied resinous materials. Synox(R)
Corporation, a Delaware corporation and a wholly-owned subsidiary of the
Company ("Synox"), has been engaged in the research, development and
marketing of a process for the treatment of municipal wastewater biosolids.
To date, most of the revenue and operating income for the Company have
resulted from the operations of Sprayroq. While the Company intends to
maintain Synox as a subsidiary, management does not expect any significant
revenues or other activity for the foreseeable future, and intends to
minimize expenses*.
- --------------------------------------------------------------------------------
*See Safe Harbor Statement on Page 14.
7
<PAGE> 8
B. BASIS OF PRESENTATION
Principles of Consolidation - The consolidated financial statements include
the accounts of Enviroq Corporation, Synox and Sprayroq. All significant
intercompany transactions are eliminated. Although the Company owns 50% of
the outstanding capital stock of Sprayroq, all of the operating results of
Sprayroq have been included, without discount or reduction.
C. INCOME (LOSS) PER SHARE
Income (loss) per share was computed by dividing net income (loss) by the
1,009,377 shares of common stock outstanding as of December 27, 1997,
considering these shares to be outstanding for all periods presented.
NOTE 3 - COMMITMENTS AND CONTINGENCIES
Synox is the exclusive licensee of certain technology and know-how under a
license agreement with a company controlled by certain affiliates of the
Company. The agreement currently covers 15 states in the license territory and
granted an option to acquire additional territory on a payment of a prepaid
royalty. The option rights expired on December 31, 1997.
Under the terms of its license agreement (as amended), Synox is subject to
minimum royalty provisions and to the maintenance of a $50,000 net worth and the
performance of other material provisions of the license agreement. Minimum
annual royalties (based upon retaining the 15 states currently under the
agreement) are due each January 1, for the ensuing calendar year through the
license expiration, according to the following schedule. The license agreement
was amended on December 22, 1997 to change the expiration date of the license
and to provide that no minimum royalty payment would be due on January 1, 1998,
but that such minimum royalty payments would resume on January 1, 1999, in
accordance with the following schedule.
<TABLE>
<CAPTION>
DUE DATE AMOUNT
<S> <C>
January 1, 1999 $ 90,336
January 1, 2000 180,671
January 1, 2001 180,671
January 1, 2002 through 2009 225,839
</TABLE>
Pursuant to the merger agreement between Old Enviroq and Synox, the stockholders
of Synox at the time of the merger received Old Enviroq shares valued at
$672,000 in the aggregate plus the right to receive additional shares of Old
Enviroq, dependent on the earnings of Synox, up to a maximum value of
$2,017,000. In addition, the then existing obligations of Synox under promissory
notes to certain shareholders ($767,376 at December 30, 1991 plus additional
interest at 7.66%) shall become payable by Synox in cash only after such time as
(i) all the contingent shares have been issued and (ii) accumulated retained
earnings are available for such payment. Interest shall become payable only to
the extent of available net earnings. As a result of the Distribution of Company
shares referred to in Note 2.A above, the obligation to issue contingent shares
became an obligation of the Company to issue its shares in lieu of Old Enviroq
shares. To the extent additional, contingent shares become issuable in the
future or additional obligations become payable in the future, such
consideration will be recorded at that time at its fair value and accounted for
as additional intangible assets.
The Company and Replico Development Company, Inc. ("Replico") each own 50% of
the outstanding capital stock of Sprayroq, and pursuant to the Stockholder
Agreement dated as of March 25, 1992 between the Company (as successor to Old
Enviroq), Sprayroq and Replico, the parties agreed to vote their respective
- --------------------------------------------------------------------------------
*See Safe Harbor Statement on Page 14.
8
<PAGE> 9
shares to elect three directors designated by the Company and two directors
designated by Replico. Sprayroq has obtained its operating funds primarily from
the Company. Prior to October 15, 1996, the Company had made loans to Sprayroq
to fund the working capital and other needs of Sprayroq. On October 15, 1996,
the board of directors of Sprayroq voted to restructure and consolidate this
debt with the Company, and a Consolidated Note evidencing the restructured debt
was executed on October 21, 1996 by Sprayroq. As of December 27, 1997, the
principal amount of the debt was approximately $747,000. The rate of interest on
the debt is 7% per annum. The debt will be amortized over a 30-year period, with
the balance of the principal due, in the form of a "balloon" payment, on October
1, 2001.
*********
- --------------------------------------------------------------------------------
*See Safe Harbor Statement on Page 14.
9
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
Revenue
For the three months ended December 27, 1997, the Company generated
revenues of approximately $464,000, as compared to approximately $304,000
for the three months ended December 28, 1996, representing an increase of
approximately 53%. The increase in revenues for the three-month period is
primarily attributable to an increase in orders for materials from
Sprayroq's licensees.
For the nine months ended December 27, 1997, the Company generated revenues
of approximately $1,080,000, as compared to approximately $940,000 for the
nine months ended December 28, 1996, representing an increase of
approximately 15%. The increase in revenues for the nine-month period is
primarily attributable to an increase in orders for materials from
Sprayroq's licensees.
Cost of Revenues / Gross Profit
Cost of revenues were approximately $194,000 for the three months ended
December 27, 1997, as compared to approximately $156,000 for the three
months ended December 28, 1996, representing an increase of approximately
24%. Cost of revenues for the three-month period increased primarily as a
result of an increase in revenues resulting from orders for materials from
Sprayroq's licensees.
Cost of revenues were approximately $523,000 for the nine months ended
December 27, 1997, as compared to approximately $501,000 for the nine
months ended December 28, 1996, representing an increase of approximately
4%. Cost of revenues for the nine-month period increased primarily as a
result of an increase in revenues resulting from orders for materials from
Sprayroq's licensees.
Gross profit margin was approximately 58% for the three months ended
December 27, 1997, as compared to approximately 49% for the three months
ended December 28, 1996. Gross profit margin was approximately 52% for the
nine months ended December 27, 1997, as compared to approximately 47% for
the nine months ended December 28, 1996.
Selling, General and Administrative Expenses
Selling, General and Administrative Expenses ("S,G&A") for the three months
ended December 27, 1997 were approximately $162,000, as compared to
approximately $208,000 for the three months ended December 28, 1996, a
decrease of 22%. S,G&A for the nine months ended December 27, 1997 were
approximately $520,000, as compared to approximately $539,000 for the nine
months ended December 28, 1996, a decrease of 4%. The decrease in S,G&A for
the three month and the nine month period is primarily attributable to the
reduction in expenses at Enviroq.
Other Income
Other Income was approximately $30,000 in income for the three months ended
December 27, 1997, as compared to approximately $37,000 for the three
months ended December 28, 1996. Other Income was approximately $106,000 in
income for the nine months ended December 27, 1997, as compared to
approximately $108,000 for the nine months ended December 28, 1996. For the
three month period and the nine month period ended December 27, 1997, most
of the other income resulted from interest income and accrued interest
receivable by the Company from its bank cash deposits, money market
accounts, and other investments.
- --------------------------------------------------------------------------------
*See Safe Harbor Statement on Page 14.
10
<PAGE> 11
Net Income (Loss)
For the three months ended December 27, 1997, net income was approximately
$109,000, as compared to net loss of approximately $32,000 for the three
months ended December 28, 1996. For the nine months ended December 27,
1997, net income was approximately $113,000, as compared to net loss of
approximately $2,000 for the nine months ended December 28, 1996. The
increase in net income for the three months and the nine months ended
December 27, 1997 was primarily attributable to increased revenues,
improved gross profit margins and decreased S,G&A.
Financial Condition
For the three months ended December 27, 1997, stockholders' equity
increased as compared to the preceding quarter ended September 27, 1997,
primarily as a result of net income generated over the period. For the nine
months ended December 27, 1997, stockholders' equity increased as compared
to the fiscal year ended March 29, 1997, primarily as a result of net
income generated over the period.
At December 27, 1997, the Company had approximately $2,871,000 in working
capital and a current ratio of 16.6-to-1, as compared to working capital of
approximately $2,784,000 and a current ratio of 32.3-to-1 at March 29,
1997.
At December 27, 1997, the Company's cash and cash equivalents totaled
approximately $2,275,000. In addition, accounts receivable totaled
approximately $496,000. The Company used approximately $105,000 in cash
from operating and investing activities during the nine month period ended
December 27, 1997, primarily as a result of increases in accounts
receivable and inventories.
Depreciation expense was approximately $5,000 for the nine months ended
December 27, 1997. Net fixed assets increased approximately $13,000 between
March 29, 1997 and December 27, 1997. This increase is attributable to the
purchase of equipment offsetting the accumulated depreciation.
The Company does not believe that there is any appreciable seasonal impact
on the business of the Company, although extreme cold weather may impair
installation of spray-applied materials which may result in decreased resin
sales by Sprayroq*.
The Company's undeveloped property in Jacksonville, Florida (approximately
10.6 acres) is currently being offered for sale, which may result in an
increase in the Company's cash*.
Operating cash flow combined with available cash and cash equivalents are
currently expected to be sufficient in amount to provide resources to the
Company's working capital needs during fiscal year 1998*.
- --------------------------------------------------------------------------------
*See Safe Harbor Statement on Page 14.
11
<PAGE> 12
PART II - OTHER INFORMATION
ITEM 1 - Legal Proceedings
None.
ITEM 2 - Changes in Securities
None.
ITEM 3 - Defaults upon Senior Securities
None.
ITEM 4 - Submission of Matters to a Vote of Security Holders
None.
ITEM 5 - Other Information
In a letter to the shareholders contained in the annual report of Company for
the year ended March 30, 1996, the president and chief executive officer of the
Company made the following statement:
"The strong financial position of the Company, along with its status as
a public company, may offer opportunities for growth. The management of
your Company is therefore searching for opportunities to leverage the
Company's advantages to bring additional value to its shareholders.
Such opportunities may or may not involve the Company's traditional
businesses and markets."
Management has continued to search for opportunities for growth or other
strategic alliances. Their can be no assurances, however, that the Company will
be successful in locating or capitalizing on any such opportunities for growth
or for other strategic alliances*.
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*See Safe Harbor Statement on Page 14.
12
<PAGE> 13
ITEM 6 - Exhibits and Reports on Form 8-K
(a) The following exhibits are included or are incorporated by reference into
this Form 10-QSB:
Description of Exhibits
<TABLE>
<CAPTION>
Item
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<S> <C>
3.01 Certificate of Incorporation of New Enviroq Corporation. Exhibit 3.01 to the Company's
Registration Statement on Form 10-SB/A2 dated April 12, 1995, is incorporated herein by
reference (Commission File No. 0-25528).
3.02 Certificate of Amendment to Certificate of Incorporation of New Enviroq Corporation. Exhibit
3.02 to the Company's Registration Statement on Form 10-SB/A2 dated April 12, 1995, is
incorporated herein by reference (Commission File No. 0-25528).
3.03 Bylaws of New Enviroq Corporation. Exhibit 3.03 to the Company's Registration Statement on
Form 10-SB/A2 dated April 12, 1995, is incorporated herein by reference (Commission File No.
0-25528).
4.01 Certificate of Designation of Rights and Preferences of Series A Preferred Stock. Exhibit 4.01
to the Company's Registration Statement on Form 10-SB/A2 dated April 12, 1995 , is incorporated
herein by reference (Commission File No. 0-25528).
4.02 Form of Certificate of Common Stock. Exhibit 4.02 to the Company's Registration Statement on
Form 10-SB/A2 dated April 12, 1995, is incorporated herein by reference (Commission File No.
0-25528).
4.03 Form of Certificate of Series A Preferred Stock. Exhibit 4.03 to the Company's Registration
Statement on Form 10-SB/A2 dated April 12, 1995, is incorporated herein by reference
(Commission File No. 0-25528).
10.01 Further Amended Agreement as of December 22, 1997 by and between Long Enterprises, Inc. and
Synox Corporation.
27 Financial Data Schedule (for S.E.C. Use Only)
</TABLE>
(b) Reports on Form 8K filed during the period:
None.
13
<PAGE> 14
"Safe Harbor" Statement under the Private Securities Litigation Reform
Act of 1995:
With the exception of historical factual information, the matters and statements
discussed, made or incorporated by reference in this Quarterly Report on Form
10-QSB (including statements regarding trends in the industry and the business
and growth and financing strategies of the Company), as well as those statements
specifically designated with an asterisk (*), constitute forward-looking
statements, contain the words "estimates," "projects," "intends," "believes,"
"anticipates," "expects," and words of similar import, are based upon current
expectations and are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements and
words involve known and unknown assumptions, risks, uncertainties and other
factors which may cause the actual results, performance or achievements of the
Company to be materially different from any future results, performance, or
achievements expressed or implied by such forward-looking statements or words.
Such assumptions, risks, uncertainties and factors include those associated with
general economic and business conditions; industry trends, cyclicality and
seasonality; litigation arising in the course of the Company's business;
dependence on key personnel and favorable relationships with employees;
relationships with and dependence on customers, and suppliers; changes in the
business strategy or development plans of the Company; the availability, terms
and deployment of capital; changes in or the failure to comply with government
regulations; and the inability or failure to identify or consummate successful
acquisitions or to assimilate the operations of any acquired businesses with
those of the Company; and other assumptions, risks, uncertainties and factors
reflected from time to time in the Company's filings with the Securities and
Exchange Commission. The Company expressly disclaims any obligation to update
any forward-looking statements as a result of developments occurring after the
filing of this report.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ENVIROQ CORPORATION
Date: February 10, 1998 By: /s/ William J. Long
------------------------------
William J. Long, President
and Chief Executive Officer
(Principal Financial and
Accounting Officer)
14
<PAGE> 1
EXHIBIT 10.01
FURTHER AMENDED AGREEMENT AS OF DECEMBER 22, 1997
FURTHER AMENDMENT dated December 22, 1996 to that certain License
Agreement made and entered into as of the 27th day of May, 1986, as amended by
that dated October 4, 1994, and as amended by that certain Further Amended
Agreement dated December 20, 1996 (together hereinafter referred to as the
"License Agreement") by and between Long Enterprises, Inc., a corporation
organized and existing under the laws of the State of Alabama, hereinafter
referred to as "Long," and Synox Corporation, a Delaware corporation, having its
principal place of business at 3918 Montclair Road, Suite 206, Birmingham,
Alabama 35213, hereinafter referred to as "Synox."
WITNESSETH
WHEREAS Synox and Long have entered into the aforesaid License
Agreement; and
WHEREAS the parties desire to extend and restate the option terms in
this Amendment, superseding all conflicting provisions of the License Agreement;
and
WHEREAS Long has acquired or developed improved know-how, trade secrets
and has acquired United States Patent Number 4,487,699, Sewage Sludge Treatment
with Gas Injection, expiring September 28, 2010, which along with the know-how,
trade secrets, and the patents and patent application listed in the License
Agreement is collectively referred to herein as the "Improvements," and desires
to conform the licensing of same to Synox pursuant to the License Agreement as
hereby amended and to confirm that the aforesaid option terms also relates to
the Improvements; and
WHEREAS the parties mutually desire to amend certain other information
and grant certain waivers on account of changed circumstances.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and undertakings set forth herein and for other good and valuable
consideration, the receipt and sufficiency whereof is acknowledged, the parties
hereto agree as follows:
1. Subparagraph I of Section I of the License Agreement is hereby amended to
read as follows:
I. "LONG LICENSE EXPIRATION" shall mean September 28, 2011 or the
later date of termination of the last to expire of any patent
issued pursuant to the patent applications and
continuations-in-part in existence on May 16, 1991 and thereafter
prosecuted by Long or its assignor, Charles A. Long, Jr.
2. Long confirms that its grant to Synox of license and rights set forth in
Section II of the License Agreement shall extend to the Improvements
defined above and the Patent Rights, as used in the License Agreement,
shall be deemed to include the Improvements.
3. The provisions of Section XIV of the License Agreement are retained,
except that the addresses for Long and for Synox, respectively, are amended
as follows:
For Long:
<PAGE> 2
Charles A. Long, Jr.
P.O. Box 130062
Birmingham, Alabama 35213
For Synox:
Synox Corporation
Attn: William J. Long
3918 Montclair Road, Suite 203
Birmingham, Alabama 35213
4. With respect to Schedule D to the License Agreement, all provisions are
retained except that the section titled Minimum Royalty is amended as
follows:
<TABLE>
<CAPTION>
PER
TERRITORY CAPITA ANNUAL
PERIOD POPULATION RATE ROYALTY
------ ---------- ----- -------
<S> <C> <C> <C>
January 1, 1998 - December 31, 1998 90,335,511 .001 $ 0.00
January 1, 1999 - December 31, 1999 90,335,511 .001 $ 90,335.51
January 1, 2000 - December 31, 2000 90,335,511 .002 $180,671.02
January 1, 2001 - December 31, 2001 90,335,511 .002 $180,671.02
January 1, 2001 - Long License Expiration 90,335,511 .0025 $225,838.77
</TABLE>
IN WITNESS WHEREOF, the parties hereto have executed and sealed this Agreement
as of December 20, 1997.
ATTEST: LONG ENTERPRISES, INC.
By:
- --------------------------------- -----------------------------------
Its President
ATTEST: SYNOX CORPORATION
By:
- --------------------------------- -------------------------------------
Its President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE DECEMBER
27, 1997 UNAUDITED FINANCIAL STATEMENTS OF ENVIROQ CORPORATION, AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000937256
<NAME> ENVIROQ CORP
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-28-1998
<PERIOD-START> MAR-29-1997
<PERIOD-END> DEC-27-1997
<EXCHANGE-RATE> 1
<CASH> 2,774,628
<SECURITIES> 0
<RECEIVABLES> 496,365
<ALLOWANCES> 0
<INVENTORY> 143,149
<CURRENT-ASSETS> 3,054,864
<PP&E> 393,515
<DEPRECIATION> 50,747
<TOTAL-ASSETS> 3,424,419
<CURRENT-LIABILITIES> 183,667
<BONDS> 0
0
0
<COMMON> 10,094
<OTHER-SE> 3,230,658
<TOTAL-LIABILITY-AND-EQUITY> 3,424,419
<SALES> 1,079,544
<TOTAL-REVENUES> 1,079,544
<CGS> 522,777
<TOTAL-COSTS> 519,720
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (106,395)
<INCOME-PRETAX> 143,442
<INCOME-TAX> 30,724
<INCOME-CONTINUING> 112,718
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 112,718
<EPS-PRIMARY> 0.11
<EPS-DILUTED> 0.11
</TABLE>
