-----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, EN2A2bZ5/XzzV/fx/hayZMMDbLweyLeOatni4C7JJi2W02AzXwYrnPHTGPgNnEW5 9JXO9qWasu4mO1VXTbyzKw== 0001036050-00-000837.txt : 20000510 0001036050-00-000837.hdr.sgml : 20000510 ACCESSION NUMBER: 0001036050-00-000837 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000509 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENVIROGEN INC CENTRAL INDEX KEY: 0000863815 STANDARD INDUSTRIAL CLASSIFICATION: HAZARDOUS WASTE MANAGEMENT [4955] IRS NUMBER: 222899415 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-20404 FILM NUMBER: 622493 BUSINESS ADDRESS: STREET 1: 4100 QUAKERBRIDGE RD STREET 2: PRINCETON RESEARCH CENTER CITY: LAWRENCEVILLE STATE: NJ ZIP: 08648 BUSINESS PHONE: 6099369300 MAIL ADDRESS: STREET 1: PRINCETON RESEARCH CENTER STREET 2: 4100 QUAKERBRIDGE RD CITY: LAWRENCEVILLE STATE: NJ ZIP: 08648 10-Q 1 FORM 10Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 - -------------------------------------------------------------------------------- For Quarter Ended March 31, 2000 Commission File Number 0-20404 ENVIROGEN, INC. --------------- (Exact name of registrant as specified in its charter) Delaware 22-2899415 -------- ---------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 4100 Quakerbridge Road Princeton Research Center Lawrenceville, NJ 08648 ----------------------- (Address of principal executive offices) (609) 936-9300 -------------- (Registrant's telephone number, including area code) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [_] The number of shares outstanding of the Registrant's Common Stock, $.01 par value, as of March 31, 2000 was 3,966,670. - -------------------------------------------------------------------------------- 1 ENVIROGEN, INC. TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION PAGE ---- ITEM 1. CONDENSED FINANCIAL STATEMENTS Consolidated Balance Sheets at March 31, 2000 (Unaudited) and December 31, 1999 3 Consolidated Statements of Operations for the Three Months Ended March 31, 2000 and 1999 (Unaudited) 4 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2000 and 1999 (Unaudited) 5 Notes to Condensed Consolidated Financial Statements (Unaudited) 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General 8 Results of Operations 8 Liquidity and Capital Resources 9 Other Matters 10 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 10 SIGNATURE PAGE 11
2 PART 1 - FINANCIAL INFORMATION - ------------------------------ ITEM 1. FINANCIAL STATEMENTS ENVIROGEN, INC. CONSOLIDATED BALANCE SHEETS
March 31, December 31, 2000 1999 (Unaudited) (Audited) ------------ ------------- ASSETS Currents assets: Cash and cash equivalents $ 3,644,276 $ 4,527,979 Accounts receivable, net 4,739,755 5,906,081 Unbilled revenue 2,422,943 3,128,747 Prepaid expenses and other current assets 434,085 501,171 ------------ ------------- Total current assets 11,241,059 14,063,978 Property and equipment, net 1,107,384 1,128,562 Intangible assets, net 910,322 957,716 Other assets 213,466 220,609 ------------ ------------- Total assets $ 13,472,231 $16,370,865 ============ ============= LIABILITIES Current liabilities: Accounts payable $ 2,166,986 $ 4,192,023 Accrued expenses and other liabilities 754,258 942,263 Reserve for claim adjustments and warranties 3,492,651 3,596,136 Deferred revenue 465,205 542,409 Current portion of long-term note payable 4,856 Current portion of capital lease obligations 2,695 4,644 ------------ ------------- Total current liabilities 6,886,651 9,277,475 Long-term note payable, net of current portion 15,601 ------------ ------------- Total liabilities 6,902,252 9,277,475 ------------ ------------- Commitments and contingencies STOCKHOLDERS' EQUITY Common stock, $.01 par value (50,000,000 shares authorized; 3,976,587 and 3,975,868 issued at March 31, 2000 and December 31, 1999, respectively) 39,766 39,759 Additional paid-in capital 59,745,667 59,727,189 Accumulated deficit (53,209,504) (52,667,608) Less: Treasury stock, at cost (5,950) (5,950) ------------ ------------- Total stockholder's equity 6,569,979 7,093,390 ------------ ------------- Total liabilities and stockholder's equity $ 13,472,231 $ 16,370,865 ============ =============
The accompanying notes are an integral part of these consolidated financial statements. 3 ENVIROGEN, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended March 31, --------------------------- 2000 1999 ----------- ----------- Revenues: Commerical operations $ 3,822,630 $ 4,380,514 Research and development services 608,815 686,610 ----------- ----------- Total revenues 4,431,445 5,067,124 ----------- ----------- Cost of commercial operations 3,145,802 3,777,620 Research and development costs 606,743 695,692 Marketing, general and administrative expenses 1,264,179 1,237,640 ----------- ----------- Total costs and expenses 5,016,724 5,710,952 ----------- ----------- Other income (expense): Interest income 46,580 37,026 Interest expense (3,263) (2,649) Equity in income of joint venture 1,529 Other, net 66 (8,125) ----------- ----------- Other income, net 43,383 27,781 ----------- ----------- Net loss ($541,896) ($616,047) =========== =========== Basic and diluted net loss per share ($0.14) ($0.16) =========== =========== Weighted average number of shares of Common Stock used in computing basic and diluted net loss per share 3,966,390 3,965,951 =========== ===========
The accompanying notes are an integral part of these consolidated financial statements. 4 ENVIROGEN, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended March 31, -------------------------------- 2000 1999 ------------ ------------- Cash flows from operating activities: Net loss ($541,896) ($616,047) Adjustments to reconcile net loss to cash used in operating activities: Depreciation and amortization 176,177 203,712 Provision for claim adjustments and warranties 45,388 157,301 Provision for doubtful accounts 66,024 76,708 Deferred fees 17,000 Equity in income of joint venture (1,529) Other 8,125 Changes in operating assets and liabilities: Accounts receivable 1,100,302 1,103,807 Unbilled revenue 705,804 482,576 Prepaid expenses and other current assets 67,086 196,172 Other assets 7,143 8,358 Accounts payable (2,025,037) (1,212,359) Accrued expenses and other liabilities (188,005) (528,651) Reserve for claim adjustments and warranties (148,873) (327,050) Deferred revenue (77,204) 155,952 ------------ ------------- Net cash used in operating activities (796,091) (292,925) ------------ ------------- Cash flows from investing activities: Capital expenditures (86,796) (52,107) Proceeds from sale of property and equipment 3,370 ------------ ------------- Net cash used in investing activities (86,796) (48,737) ------------ ------------- Cash flows from financing activities: Capital lease principal repayments (1,949) (1,723) Repayment of long-term debt (352) Net proceeds from excercise of stock options 1,485 ------------ ------------- Net cash used in financing activities (816) (1,723) ------------ ------------- Net decrease in cash and cash equivalents (883,703) (343,385) Cash and cash equivalents at beginning of period 4,527,979 3,407,910 ------------ ------------- Cash and cash equivalents at end of period $3,644,276 $3,064,525 ============ ============= Supplemental disclosures of cash flow information: - ------------------------------------------------ Cash paid for interest $2,710 $9,945 ============ ============= Cash paid (refunded) for income taxes $45 ($9,764) ============ =============
- -The Company entered into a note payable amounting to $20,809 in the first quarter of 2000. The accompanying notes are an integral part of these consolidated financial statements. 5 ENVIROGEN, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION --------------------- The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial reporting, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The financial information presented reflects all adjustments consisting of normal recurring accruals which are, in the opinion of management, necessary for a fair statement of the results for the interim periods. The results for the interim periods are not necessarily indicative of the results to be expected for the entire year. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Form 10-K for the fiscal year ended December 31, 1999. Since the Company incurred net losses for the three months ended March 31, 2000 and 1999, both basic and diluted per share calculations are the same. The inclusion of additional shares assuming the exercise of options, warrants and stock credits would have been antidilutive. There were options, warrants and other rights to purchase 631,175 and 516,658 shares of common stock outstanding at March 31, 2000 and 1999, respectively. 2. LITIGATION ---------- The Company is currently involved in litigation relating to services previously provided at a customer site, where remediation work was performed. This customer filed a claim against the Company for professional malpractice, breach of warranty of professional services contract and misrepresentation. No specific damages have been claimed by this customer and, at the present time, management of the Company is unable to predict the outcome of this matter or to determine whether the outcome of this matter will materially affect the Company's results of operations, cash flows or financial position. The Company is subject to claims and lawsuits in the ordinary course of its business. In the opinion of management, such claims are either adequately covered by insurance or, if not insured, will not individually or in the aggregate result in a material adverse effect on the consolidated financial condition of the Company. 6 3. SEGMENT INFORMATION ------------------- Information about reported segments for the three months ended March 31, 2000 and 1999 is as follows:
Research and Commercial Development Operations Services Other Total --------------- ------------- ----------------- ------------ Three Months Ended March 31, 2000 ---- Revenues $ 3,822,630 $ 608,815 $ - $4,431,445 Segment profit (loss) 676,828 2,072 (1,220,796) (541,896) 1999 ---- Revenues $ 4,380,514 $ 686,610 $ - $5,067,124 Segment profit (loss) 602,894 (9,082) (1,209,859) (616,047)
The following table presents the details of the "Other" segment for the three months ended March 31, 2000 and 1999:
Three Months Ended March 31 ---------------------------------------- 2000 1999 ------------- ---------------- Marketing, general and administrative expenses ($ 1,264,179) ($ 1,237,640) Interest income 46,580 37,026 Interest expense (3,263) (2,649) Equity in income of joint venture - 1,529 Other, net 66 (8,125) ------------- ---------------- ($ 1,220,796) ($ 1,209,859) ============= ================
7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following information should be read in conjunction with the Company's unaudited consolidated financial statements and notes thereto included in this Quarterly Report and the consolidated financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations contained in the Company's Form 10-K for the fiscal year ended December 31, 1999. Certain statements made herein are forward-looking and are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties which may cause results to differ materially from those set forth in these statements. In particular, unanticipated changes in the economic, competitive, governmental, technological, marketing and other factors identified herein and in the Company's other filings with the Securities and Exchange Commission could affect such results. General - ------- The Company's revenues to date have been from (i) commercial operations, consisting of revenue from remediation services, conventional treatment systems and soil vapor extraction systems and the Company's biological degradation systems (including both in situ and ex situ bioremediation), and (ii) funds received from third parties and government agencies to conduct specific research and development programs. While the Company has realized commercial revenues for several years from remediation services and from traditional remediation systems such as soil vapor extraction systems, it has only recently seen the first revenues from sales of full-scale biological degradation systems for the treatment of contaminated air and water. Although full-scale commercial systems have been installed for each current reactor type, additional expenditures will be required for continued research and development, and additional marketing activities for the further commercialization of the Company's biodegradation systems are planned. The amount and timing of such expenditures cannot be predicted and will vary depending on several factors, including the progress of development and testing, funding from third parties, the level of enforcement of environmental regulations by federal and state agencies, technological advances, changing competitive conditions and determinations with respect to the commercial potential of the Company's systems. Results of Operations - --------------------- Three Months Ended March 31, 2000 Compared to - --------------------------------------------- Three Months Ended March 31, 1999 - --------------------------------- For the three months ended March 31, 2000, the Company's total revenues decreased 13% to $4,431,445 from $5,067,124 in the same period in 1999. The net loss decreased to $541,896 from $616,047 in the same period of 1999, while the basic and diluted net loss per share was $0.14 compared to $0.16 in the same period in 1999. Commercial revenues in 2000 decreased 13% to $3,822,630 from $4,380,514 in the same period in 1999. The decreased commercial revenues are due primarily to reduced revenue under the Wisconsin Petroleum Environmental Cleanup Fund Act ("PECFA") program, which is funded by the state of Wisconsin for cleaning up underground storage tanks. 8 Revenues from corporate research and development contracts decreased in the three-month period ended March 31, 2000 by 11% to $608,815 from $686,610 in 1999. Revenues decreased primarily due to the timing and composition of work associated with government projects. Total costs and expenses decreased 12% to $5,016,724 in the three-month period ended March 31, 2000 from $5,710,952 in the same period in 1999. The cost of commercial operations decreased 17% to $3,145,802 during the first three months of 2000 from $3,777,620 in the same period in 1999 due primarily to decreased revenue levels. Research and development expenses decreased 13% to $606,743 during the first three months of 2000 from $695,692 in the same period in 1999 due primarily to the decreased revenues under various corporate and government research and development contracts and to less spending on internal research projects. Marketing, general and administrative expenses increased 2% to $1,264,179 from $1,237,640 due primarily to increased sales and marketing efforts, which were offset somewhat by a reduction in administrative costs due to ongoing cost reduction programs. Interest income increased 26% to $46,580 in the three-month period ended March 31, 2000 from $37,026 in 1999, due primarily to the combination of increased average cash available for investment and higher interest rates. Liquidity and Capital Resources - ------------------------------- The Company has funded its operations to date primarily through revenues from commercial services, sales of biodegradation systems, public offerings and private placements of equity securities, research and development agreements with major industrial companies and research grants from government agencies. At March 31, 2000, the Company had cash and cash equivalents of $3,644,276 and working capital of $4,354,408. Cash and cash equivalents decreased $883,703 from December 31, 1999 to March 31, 2000 due primarily to cash used in operations of $796,091 and capital expenditures of $86,796. From December 31, 1999 to March 31, 2000, accounts receivable decreased by $1,166,326 primarily as a result of reduced revenue levels. In the same period, accounts payable decreased by $2,025,037 due to reduced expense levels on lower revenues as well as shifts in the timing of project expenses. Accrued expenses and other liabilities decreased by $188,005 from December 31, 1999 to March 31, 2000 primarily due to fluctuations in accrued salaries and wages and the payment in the first quarter of 2000 of deferred compensation related to the prior year. At March 31, 2000, the Company had $3,492,651 in reserve for claim adjustments and warranties, $3,244,549 of which is available with respect to potential PECFA claim adjustments related to approximately $54 million in unsettled PECFA submittals and $248,102 of which is available with respect to potential warranty claims and other contract issues. It is anticipated that the Company's currently available cash, cash equivalents and cash expected to be generated from operations will provide sufficient operating capital for at least the next 18 to 24 months. The Company may seek additional funds through equity or debt financing. However, there can be no assurance that such additional funds will be available on terms favorable to the Company, if at all. 9 Other Matters - ------------- As of December 31, 1999, the Company had a net operating loss carry forward of approximately $25 million for federal income tax reporting purposes available to offset future taxable income, if any, through 2019. The timing and manner in which these losses may be utilized are limited under Section 382 of the Internal Revenue Code of 1986 to approximately $1,700,000 per year based on preliminary calculations of certain ownership changes to date and may be further limited in the event of additional ownership changes. PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 27 Financial Data Schedule (b) Reports on Form 8-K None 10 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. ENVIROGEN, INC. (Registrant) Date: May 9, 2000 By: /s/ Robert S. Hillas --------------------------------------- Robert S. Hillas President and Chief Executive Officer By: /s/ Mark J. Maten --------------------------------------- Mark J. Maten Vice President of Finance and Chief Financial Officer 11 EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 3,644,276 0 5,513,058 (773,303) 42,516 13,472,231 5,787,058 (4,679,674) 13,472,231 6,886,651 0 0 0 39,766 6,530,213 13,472,231 0 4,431,445 0 5,016,724 0 0 3,263 (541,896) 0 (541,896) 0 0 0 (541,896) ($0.14) ($0.14)
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