-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GmfQbARJpTJvLBWdrQampTorD4fY/Ba0buUE2j946xGu0kyO9vV0PRXkVIc5TNNF 0oeEXr97Nq1JmqDw3OIjuQ== 0000950150-95-000665.txt : 19951108 0000950150-95-000665.hdr.sgml : 19951108 ACCESSION NUMBER: 0000950150-95-000665 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951107 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: 95587830 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 10-QSB 1 FORM 10-QSB SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 [ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarterly Period Ended September 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 registrant 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 Avenue Glendale, California 91201 (Address of Principal Executive Offices) (818) 247-7601 (Registrant'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 November 7, 1995 is 6,932,662. 2 Form 10-QSB September 30, 1995 POLLUTION RESEARCH AND CONTROL CORP. FORM 10-QSB FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 1995 TABLE OF CONTENTS
Page ---- Part I Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . 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 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . 11 Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . . . . 11 Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . 11
3 Form 10-QSB September 30, 1995 POLLUTION RESEARCH AND CONTROL CORP. PART 1. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEET ASSETS (UNAUDITED)
AS OF SEPTEMBER 30, 1995 ------------------ CURRENT ASSETS: Cash $ 407,680 Accounts receivable, trade, net 772,622 Inventories (Note 3) 1,711,546 Other current assets 11,906 ---------- TOTAL CURRENT ASSETS 2,903,754 PROPERTY AND LEASEHOLD IMPROVEMENTS, NET 186,884 NOTE RECEIVABLE 100,000 OTHER ASSETS 107,507 ---------- TOTAL ASSETS $3,298,145 ==========
See notes to the financial statements. 3 4 Form 10-QSB September 30, 1995 POLLUTION RESEARCH AND CONTROL CORP. CONSOLIDATED BALANCE SHEET LIABILITIES AND SHAREHOLDERS' EQUITY (UNAUDITED)
AS OF SEPTEMBER 30, 1995 ------------------ CURRENT LIABILITIES: Accounts payable $ 356,360 Note payable, bank 95,000 Current portion of deferred rent 14,532 Accrued liabilities 138,552 ----------- TOTAL CURRENT LIABILITIES 604,444 ----------- DEFERRED RENT (LESS CURRENT PORTION) 113,851 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, 6,978,815 issued and outstanding 5,431,623 Less notes receivable (86,857) Accumulated deficit (2,764,916) ----------- Total Shareholders' Equity 2,579,850 ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 3,298,145 ===========
See notes to the financial statements. 4 5 Form 10-QSB September 30, 1995 POLLUTION RESEARCH AND CONTROL CORP. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE-MONTH PERIOD ENDED SEPTEMBER 30, ------------------- 1995 1994 ---- ---- Net revenues $1,376,286 $ 913,440 Cost of goods sold 895,057 653,660 ---------- --------- Gross profit 481,229 259,780 ---------- --------- Operating expenses: Selling, general and administrative expenses 493,720 486,035 Research and development 69,370 60,865 ---------- --------- Total operating expenses 563,090 546,900 ---------- --------- Loss from operations (81,861) (287,120) Interest expense (2,008) (2,129) Other income 1,111 749 ---------- --------- Net loss $ (82,758) $(288,500) ========== ========= Earnings per share (Note 2): Net income $ (.01) $ (.04) ========== ========= Weighted average number of common and common equivalent shares 6,932,662 6,946,206 ========== =========
See notes to the financial statements. 5 6 Form 10-QSB September 30, 1995 POLLUTION RESEARCH AND CONTROL CORP. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
NINE-MONTH PERIOD ENDED SEPTEMBER 30, -------------------------------- 1995 1994 ---- ---- Net revenues $4,279,630 $3,648,270 Cost of goods sold 2,614,674 2,297,661 ---------- ---------- Gross profit 1,664,956 1,350,609 ---------- ---------- Operating expenses: Selling, general and administrative expenses 1,404,970 1,384,294 Research and development 187,353 199,092 ---------- ---------- Total operating expenses 1,592,323 1,583,386 ---------- ---------- Income from operations 72,633 (232,777) Interest expense (2,008) (4,548) Other income 2,127 2,575 ---------- ---------- Net income 72,752 $ (234,750) ========== ========== Earnings per share (Note 2): Net income $ .01 $ (.03) ========== ========== Weighted average number of common and common equivalent shares 6,932,662 6,901,526 ========== ==========
See notes to the financial statements. 6 7 Form 10-QSB September 30, 1995 POLLUTION RESEARCH AND CONTROL CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE-MONTH PERIOD ENDED SEPTEMBER 30 ------------------ 1995 1994 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income $ 72,752 $(234,750) Adjustments to reconcile net income to net cash provided by (used for) operating activities: Depreciation and amortization 74,004 66,192 Loss on disposal of assets 17,493 Changes in operating assets and liabilities: Accounts receivable, trade, net 130,192 391,870 Inventories (17,805) (339,699) Other current assets (6,739) 738 Accounts payable (70,503) (106,550) Accrued liabilities (201,933) (292,772) Deferred rent 13,323 -------- --------- Net cash (used for) operating activities (6,709) (497,478) -------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Increase of Note Receivable (100,000) Acquisition of property and leasehold improvements (38,432) (124,123) Other assets (7,000) (190,143) -------- --------- Net cash used for investing activities (145,432) (314,266) -------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of line of credit borrowings (5,000) (20,000) Bank borrowings 100,000 100,000 Proceeds from issuance of Common Stock 75,000 --------- Net cash provided by financing activities 95,000 155,000 -------- --------- NET DECREASE IN CASH (57,141) (656,744) CASH AT BEGINNING OF PERIOD 464,821 1,072,000 -------- --------- CASH AT END OF PERIOD $407,680 $415,256 ======== =========
See notes to the financial statements. 7 8 Form 10-QSB September 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: The Company uses 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 Common Stock obtainable upon the exercise of outstanding options and warrants exceeds 20% of the number of Common Stock outstanding at the end of the period, the modified treasury stock method is used. For the nine months ended September 30, 1995 and 1994, computations under the modified treasury stock method have been excluded as the net aggregate effect is anti-dilutive. 3. INVENTORIES: Inventories consists of:
AS OF SEPTEMBER 30, 1995 ------------------ Raw Materials $ 937,463 Work-in-Process 255,947 Finished Goods 518,136 ---------- $1,711,546 ==========
8 9 Form 10-QSB September 30, 1995 POLLUTION RESEARCH AND CONTROL CORP. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS 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 competitive price pressure on gross margins as a percentage of net sales. RESULTS OF OPERATIONS NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1995 VS. NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1994 Net revenues increased 15% from $3,648,270 during the nine-month period ended September 30, 1994 to $4,279,630 during the nine-month period ended September 30, 1995, primarily due to increased job awards resulting from the Company's program to lower prices in response to competition. Cost of sales increased 12% from $2,297,661 during the nine-month period ended September 30, 1994, to $2,614,674 during the nine-month period ended September 30, 1995, primarily due to the increase in sales discussed above. The Company's gross profit margin on its instruments remained stable on an period-to-period basis. Selling, general and administrative expenses increased 1%, from $1,384,294 during the nine-month period ended September 30, 1994 to $1,404,970 in the nine-month period ended September 30, 1995, primarily due to an increase in fixed expenses resulting from the Company's new manufacturing facility, which were not completely offset by reduced legal fees. As a result of the foregoing factors, net income increased $307,502 from a net loss of $234,750 during the nine-month period ended September 30, 1994 to a net income of $72,752 during the nine-month period ended September 30, 1995. 9 10 Form 10-QSB September 30, 1995 POLLUTION RESEARCH AND CONTROL CORP. THREE-MONTH PERIOD ENDED SEPTEMBER 30, 1995 VS. THREE-MONTH PERIOD ENDED SEPTEMBER 30, 1994 Net revenues increased 51% from $913,440 during the three-month period ended September 30, 1994 to $1,376,286 during the three-month period ended September 30, 1995, because the Company was able to adjust prices to successfully meet competitive price pressures and increase its job-awards. Cost of sales increased 37% from $653,660 during the three-month period ended September 30, 1994, to $895,057 during the three-month period ended September 30, 1995, primarily as a result of the higher level of sales discussed above. Selling, general and administrative expenses increased approximately 1%, from $486,035 during the three-month period ended September 30, 1994 to $493,720 during the three-month period ended September 30, 1995, primarily due to an increase in fixed expenses resulting from the Company's new manufacturing facility, which were not completely offset by the reduced legal fees. As a result of the foregoing factors, net income increased $205,742 from a net loss of $288,500 during the three-month period ended September 30, 1994, to a net loss of $82,758 during the three-month period ended September 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. In June 1995, the Company entered into a credit agreement with a bank, which provides for an unsecured line of credit up to $100,000 through June 1, 1996. As of September 30, 1995, the Company had borrowed $95,000 under this agreement. The line was increased to $200,000 in October 1995. Working capital increased from $2,285,000 at December 31, 1994 to $2,299,310 at September 30, 1995. The Company has no material commitments for capital expenditures as of September 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. 10 11 Form 10-QSB September 30, 1995 POLLUTION RESEARCH AND CONTROL CORP. PART II - OTHER INFORMATION ITEM 5. OTHER INFORMATION In July 1995 the Company entered into a joint venture agreement with Logan Medical Research Ltd. ("Logan") to manufacture Logan's nitric oxide monitor for U.S. Applications. A condition of the agreement was funding from any source for Logan, which is a start-up company. The Company agreed to fund Logan with working capital in exchange for a world-wide manufacturing agreement. The funding consists of $175,000 cash, a commitment for $200,000 in instrument inventory and 200,000 shares of the Atlanta Technology common stock owned by the Company. The Atlanta Technology stock was being carried on the Company's balance sheet at no value. Funding of $100,000 was advanced prior to September 30, 1995. In exchange for its contributions the Company received a two year $1,300,000 promissory note from Logan which will be assigned a carring value of $375,000. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K Exhibits (a) Not applicable. Reports on Form 8-K (b) The Company did not file any Reports on Form 8-K during the nine-month period ended September 30, 1994. 11 12 Form 10-QSB September 30, 1995 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: November 7, 1995 12 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL CONDITION AT SEPTEMBER 30, 1995 (UNAUDITED) AND THE CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 U.S. DOLLARS 9-MOS DEC-31-1995 JAN-01-1995 SEP-30-1995 1 407 0 772 0 1,711 2,903 306 119 3,298 604 0 0 0 0 0 3,298 4,279 0 2,613 2,613 1,594 0 0 72 0 0 0 0 0 72 .01 .01
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