0000950150-95-000518.txt : 19950816 0000950150-95-000518.hdr.sgml : 19950816 ACCESSION NUMBER: 0000950150-95-000518 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: POLLUTION RESEARCH & CONTROL CORP /CA/ CENTRAL INDEX KEY: 0000763950 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL [3823] IRS NUMBER: 952746949 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-14266 FILM NUMBER: 95563894 BUSINESS ADDRESS: STREET 1: 506 PAULA AVENUE CITY: GLENDALE STATE: CA ZIP: 91201 BUSINESS PHONE: 8182477601 MAIL ADDRESS: STREET 1: 506 PAULA AVE CITY: GLENDALE STATE: CA ZIP: 91201 FORMER COMPANY: FORMER CONFORMED NAME: DASIBI ENVIRONMENTAL CORP DATE OF NAME CHANGE: 19900529 10QSB 1 FORM 10QSB FOR THE PERIOD ENDED 6/30/95 1 FORM 10-QSB SECURITIES AND EXCHANGE COMMISSION WASHINGTON 25, D.C. 20549 [ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended June 30, 1995 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition Period from ______ to ______ Commission File No. 0-14266 POLLUTION RESEARCH AND CONTROL CORP. (Exact name of Small Business Issuer as specified in its charter) California (State of or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer I.D. No.) 95-2746949 506 Paula Ave. Glendale, California 91201 (Address of Principal Executive Offices) (818) 247-7601 (Issuer's Telephone Number, Including Area Code) Not Applicable (Former Name, Former Address, and Former Fiscal Year, if changed since last report) Indicate by checkmark 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 such shorter period that the Registrant was required to file such reports), and (2) has been subject to filing requirements for the past 90 days. Yes X No ----- ----- The number of shares of Common Stock outstanding at August 14, 1995 is 6,932,662. 2 Form 10-QSB June 30, 1995 POLLUTION RESEARCH AND CONTROL CORP. FORM 10-QSB FOR THE THREE-MONTH PERIOD ENDED JUNE 30, 1995 TABLE OF CONTENTS Part I Financial Information Page Item 1. Financial Statements Consolidated Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Consolidated Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 Part II Other Information Item 4. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3 Form 10-QSB June 30, 1995 POLLUTION RESEARCH AND CONTROL CORP. PART 1. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEET ASSETS (UNAUDITED)
AS OF JUNE 30, 1995 ------------- CURRENT ASSETS: Cash $ 654,290 Accounts receivable, trade, net 706,644 Inventory (Note 3) 1,689,741 Other current assets 18,267 ------------ TOTAL CURRENT ASSETS 3,068,942 PROPERTY AND LEASEHOLD IMPROVEMENTS, NET 189,650 OTHER ASSETS 121,826 ----------- TOTAL ASSETS $3,380,418 ==========
See notes to the financial statements. 3 4 Form 10-QSB June 30, 1995 POLLUTION RESEARCH AND CONTROL CORP. CONSOLIDATED BALANCE SHEET LIABILITIES AND SHAREHOLDERS' EQUITY (UNAUDITED)
AS OF JUNE 30, 1995 ------------- CURRENT LIABILITIES: Accounts payable, trade $ 329,922 Note payble, bank 100,000 Current portion of deferred rent 14,520 Accrued liabilities 155,871 ------------ TOTAL CURRENT LIABILITIES 600,313 ------------ DEFERRED RENT (LESS CURRENT PORTION) 117,496 SHAREHOLDERS' EQUITY: Preferred Stock, no par value; 20,000,000 shares authorized, no shares issued and outstanding Common Stock, no par value; 30,000,000 shares authorized, 6,932,662 issued and 5,431,623 outstanding Less notes due from sale of stock (86,857) Accumulated deficit (2,682,157) ------------ Total shareholders' equity 2,662,609 ------------- TOTAL LIABILITIES AND $ 3,380,418 ============= SHAREHOLDERS' EQUITY
See notes to the financial statements. 4 5 Form 10-QSB June 30, 1995 POLLUTION RESEARCH AND CONTROL CORP. CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
THREE-MONTH PERIOD ENDED JUNE 30, -------------- 1995 1994 ---- ---- Net revenues $1,434,302 $1,444,859 Cost of goods sold 847,268 866,171 ---------- ---------- Gross profit 587,034 578,688 ---------- ---------- Operating expenses: Selling, general and administrative expenses 504,122 498,509 Research and development 63,887 68,769 ---------- ---------- Total operating expenses 568,009 567,278 ---------- ---------- Income from operations 19,025 11,410 Interest expense 0 (1,486) Other income 494 826 ---------- ----------- Net income $ 19,519 $ 10,750 ========== =========== Earnings per share (Note 2): $ .01 $ .01 ========== ============ Net income Weighted average number of common and common equivalent shares 6,932,662 6,878,815 =========== ============
See notes to the financial statements. 5 6 Form 10-QSB June 30, 1995 POLLUTION RESEARCH AND CONTROL CORP. CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
SIX-MONTH PERIOD ENDED JUNE 30, 1994 ------------------- 1995 1994 ---- ---- Net revenues $2,903,344 $2,734,830 Cost of goods sold 1,719,618 1,644,001 ---------- ---------- Gross profit 1,183,726 1,090,829 ---------- ---------- Operating expenses: Selling, general and administrative expenses 911,249 898,259 Research and development 117,983 138,227 ---------- ---------- Total operating expenses 1,029,232 1,036,486 ---------- ---------- Income from operations 154,494 54,343 Interest expense 0 (2,419) Other income 1,016 1,826 ---------- ---------- Net income $ 155,510 $ 53,750 ========== ========== Earnings per share (Note 2): .02 $ .01 ========== ========== Net income Weighted average number of common and common equivalent shares 6,932,662 6,878,815 ========== ==========
See notes to the financial statements. 6 7 Form 10-QSB June 30, 1995 POLLUTION RESEARCH AND CONTROL CORP. CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
SIX-MONTH PERIOD ENDED JUNE 30 ------------- 1995 1994 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 155,510 $ 53,750 Adjustments to reconcile net income to net cash provided by (used for) operating activities: Depreciation and amortization 48,804 42,681 Changes in operating assets and liabilities: Accounts receivable 196,170 56,317 Inventories 4,000 (248,978) Other current assets (13,100) (8,262) Accounts payable (96,941) (21,893) Accrued liabilities (184,614) (302,900) Deferred Rent 16,956 -------------- ------------- Net cash provided by (used for) operating activities 126,785 (429,285) ------------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of property and leasehold improvements (30,317) (88,453) Other assets (6,999) (194,144) --------- ---------- Net cash used for investing activities (37,316) (282,597) ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Bank borrowings 100,000 100,000 --------------- --------------- Net cash provided by financing activities 100,000 100,000 ---------- --------- NET INCREASE (DECREASE) IN CASH 189,469 (611,882) CASH AT BEGINNING OF PERIOD 464,821 1,072,000 ---------- --------- CASH AT END OF PERIOD $ 654,290 $ 460,118 ============ ===========
See notes to the financial statements. 7 8 Form 10-QSB June 30, 1995 POLLUTION RESEARCH AND CONTROL CORP. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION: The information furnished herein reflects all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary to a fair presentation of the results of operations for the periods presented. Interim results are not necessarily indicative of results for a full year. The financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's annual report on Form 10-KSB for the year ended December 31,1994. 2. NET INCOME PER SHARE: During the six-month period ended June 30, 1995 and 1994, the Company used the modified treasury stock method of computing earnings per share. Under generally accepted accounting principles, there is a computational difference between the treasury stock method and the modified treasury stock method which is based on the number of shares obtainable upon the exercise of options and warrants. If the number of shares of Common Stock obtainable upon the exercise of outstanding options and warrants exceeds 20% of the number of shares of Common Stock outstanding at the end of the period, the modified treasury stock method is used. For the six-month period ended June 30, 1995 and 1994, all computations under the modified treasury stock method have been omitted as the net aggregate effect is anti-dilutive. 3. INVENTORY: Inventory consists of:
AS OF JUNE 30, 1995 ------------- Raw Materials $ 733,218 Work-in-Process 342,085 Finished Goods 614,438 ----------- $ 1,689,741 ===========
4. BANK DEBT: In June 1995, the Company entered into an extension of its line of credit agreement with a bank, which provides for borrowings of up to $100,000 through June 3, 1996. Borrowings under this agreement bear interest at 2% above the bank's prime rate and are collateralized by substantially all of the Company's assets. See notes to the financial statements. 8 9 Form 10-QSB June 30, 1995 POLLUTION RESEARCH AND CONTROL CORP. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION GENERAL The Company designs, manufactures and markets automated continuous monitoring instruments used to detect and measure various types of air pollution through its wholly-owned subsidiary, Dasibi Environmental Corp. The Company currently derives essentially all of its revenue from sales of its instruments and their replacement parts. The Company's future operating results may be affected by a number of factors, including: uncertainties relative to global economic conditions; industry factors; the availability and cost of components; the Company's ability to develop, manufacture and sell its products profitably; the Company's ability to successfully increase its market share in its core business while expanding its product base into other markets; the strength of its distribution channels; and the Company's ability to effectively manage expense growth relative to revenue growth in anticipation of continued pressure on gross margins. RESULTS OF OPERATIONS SIX-MONTH PERIOD ENDED JUNE 30, 1995 VS. SIX-MONTH PERIOD ENDED JUNE 30, 1994 Net revenue increased 6% from $2,734,830 during the six-month period ended June 30, 1994, to $2,903,344 during the six-month period ended June 30, 1995, due to the Company's ability to adjust the prices for its core instruments to respond to competitive price pressures which began in May 1994. Cost of sales increased 5% from $1,644,001 during the six-month period ended June 30, 1994, to $1,719,618 during the six- month period ended June 30, 1995, primarily due to the increase in sales discussed above. The Company's gross profit margin on its instruments increased slightly from 40% to 41%. Selling, general and administrative expenses increased 2% from $898,259 during the six month period ended June 30, 1994 to $911,249 during the six month period ended June 30, 1995. As a result of the foregoing factors, net income increased 189% from $53,750 during the six-month period ended June 30, 1994 to $155,510 during the six-month period ended June 30, 1995. See notes to the financial statements. 9 10 Form 10-QSB June 30, 1995 POLLUTION RESEARCH AND CONTROL CORP. THREE-MONTH PERIOD ENDED JUNE 30, 1995 VS. THREE-MONTH PERIOD ENDED JUNE 30, 1994 Net revenues decreased an insignificant 1% from $1,444,859 during the three-month period ended June 30, 1994 to $1,434,302 during the three-month period ended June 30, 1995. Cost of sales decreased 2% from $866,171 during the three-month period ended June 30, 1994 to $847,268 during the three-month period ended June 30, 1995 due to favorable product mix. The Company's gross profit margin increased slightly to 41% in the quarter ended June 30, 1995 as compared to 40% in the quarter ended June 30, 1994. Selling, general and administrative expenses increased slighty from $498,509 during the three-month period ended June 30, 1994 to $504,122 during the three-month period ended June 30, 1995. LIQUIDITY AND CAPITAL RESOURCES. The Company has historically financed its growth and cash needs primarily through borrowings and the public and private sales of its securities. Net cash provided by operating activities in the three months ended June 30, 1995 amounted to $126,785. In February 1994, the Company entered into a line of credit agreement with a bank, which provides for borrowings up to $100,000 through June 3, 1996. As of June 30, 1995, the Company had borrowed $100,000 under this agreement. Working capital increased from $2,285,000 at December 31, 1994 to $2,469,000 at June 30, 1995. The Company has no material commitments for capital expenditures as of June 30, 1995. The Company believes it will be able to meet its current obligations with funds generated from its own operations. INFLATION The Company believes that inflation has not had a material impact on its business. SEASONALITY The Company does not believe that its business is seasonal. See notes to the financial statements. 10 11 Form 10-QSB POLLUTION RESEARCH AND CONTROL CORP. PART II - OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (a) On June 29, 1995 the Company's Annual Meeting of Shareholders was held. The following members of the Board of Directors were re-elected with the following vote:
Name Vote For Withheld ---- -------- -------- Albert E. Gosselin 5,472,226 138,339 Barbara L. Gosselin 5,469,339 141,226 Craig E. Gosselin 5,460,609 149,956 Marcia Smith 5,472,426 138,139 Gary L. Dudley 5,474,426 136,139 Non Votes: 1,322,097
Additionally, the firm of Greenberg & Jackson was elected as the Company's auditors for fiscal 1995 with the following vote: For: 5,418,974 Against: 121,552 Abstain: 70,039 Non Votes: 1,322,097 ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits. Not Applicable. (b) The Company filed no reports on Form 8-K during the period ended June 30, 1995. See notes to the financial statements. 11 12 Form 10-QSB POLLUTION RESEARCH AND CONTROL CORP. 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. POLLUTION RESEARCH AND CONTROL CORP. (Registrant) By: /s/ Albert E. Gosselin Jr. ----------------------------------------------------------- Albert E. Gosselin, Jr., President and Chief Executive Officer By: /s/ Cynthia L. Gosselin ----------------------------------------------------------- Cynthia L. Gosselin, Chief Financial Officer (Principal Accounting and Financial Officer) Dated: August 14, 1995 See notes to the financial statements. 12 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL CONDITION AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 1,000 6-MOS DEC-31-1995 JAN-01-1995 JUN-30-1995 654 0 706 0 1,689 3,068 298 108 3,380 600 0 0 0 0 0 3,380 2,903 0 1,719 1,719 1,029 0 0 155 0 0 0 0 0 155 2.0 2.0