-----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, TP6iGPDim15Voeb47dmHRKYHVC1mlhFmUyISh/I0/xmQjVEII6GaQ+SEOr0+G9S/ oBsQrEHjonvxZWi+YLxdGg== 0000917253-97-000005.txt : 19970528 0000917253-97-000005.hdr.sgml : 19970528 ACCESSION NUMBER: 0000917253-97-000005 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970520 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENVIROMETRICS INC /DE/ CENTRAL INDEX KEY: 0000917253 STANDARD INDUSTRIAL CLASSIFICATION: 3823 IRS NUMBER: 570941152 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-23892 FILM NUMBER: 97611643 BUSINESS ADDRESS: STREET 1: 9229 UNIVERSITY BLVD CITY: CHARLESTON STATE: SC ZIP: 29406 BUSINESS PHONE: 8035539456 MAIL ADDRESS: STREET 1: 9229 UNIVERSITY BLVD CITY: CHARLESTON STATE: SC ZIP: 29406 10QSB/A 1 ENVIROMETRICS, INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-QSB/A (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT 1934 For the quarterly period ended March 31, 1997 Commission file Number 0-23892 ENVIROMETRICS, INC. (Exact name of registrant as specified in its charter.) DELAWARE 57-0941152 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 9229 UNIVERSITY BOULEVARD CHARLESTON, SC 29406 (Address of principal executive offices) Registrant's telephone number, including area code: (803) 553-9456 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 [] NO [X] As of September 30, 1996 the Registrant had outstanding 2,471,626 shares of common Stock. Transitional small business disclosure format (check one): YES [ ] NO [X] INDEX PART I. FINANCIAL INFORMATION Page # Item 1. Financial Statements Condensed Consolidated Balance Sheets at March 31, 1997 and December 31, 1996 2-3 Condensed Statements of Operations for the First Quarter ended March 31, 1997 and 1996 4 Condensed Statements of Cash Flows for the First Quarter ended March 31, 1997 and 1996 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Conditions 7-12 PART II. OTHER INFORMATION Item 1. Legal Proceedings 13 Item 6. Exhibits and Reports 13 Signature 14 ENVIROMETRICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS March 31, 1997 and December 31, 1996
March 31, 1997 December 31, 1996 ASSETS (Unaudited) (Unaudited) CURRENT ASSETS Cash and cash equivalents $ 34,481 $ 29,604 Current portion of notes receivable 72,186 74,000 Trade receivables less allowance for doubtful accounts of 1997 $26,353; 1996 $26,353 349,745 364,458 Other receivables, including amounts due from stockholders 1997 $44,026; 1996 $33,035 85,138 52,123 Inventories 148,238 287,541 Prepaid expenses 61,494 87,867 -------- -------- TOTAL CURRENT ASSETS 751,282 895,593 -------- -------- OTHER ASSETS AND INTANGIBLES Deposits 29,116 30,737 Notes receivable 696,745 727,307 Organization and loan costs, net of accumulated amortization 1997 $5,796; 1996 $40,372 26,005 31,801 License and distribution agreements net of accumulated amortization 1997 $7,500; 1996 $6,000 20,500 22,000 Other 79,178 76,788 ------- ------- 851,544 888,633 ------- ------- PROPERTY AND EQUIPMENT Furniture and equipment 1,240,727 1,240,727 Vehicles 61,342 106,299 --------- --------- 1,302,069 1,347,026 Less accumulated depreciation and amortization (970,697) (968,247) --------- --------- 331,372 378,779 --------- --------- $1,934,198 $2,163,005
LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Notes payable $ 89,075 $ 80,762 Current maturities of long-term debt 770,061 525,506 Accounts payable 522,267 851,239 Accrued expenses 601,136 612,551 --------- --------- TOTAL CURRENT LIABILITIES 1,982,539 2,070,058 --------- --------- LONG-TERM DEBT, less current maturities 288,173 352,585 ---------- ---------- STOCKHOLDERS' EQUITY Common stock par value $.001 per share $.001; authorized 10,000,000 shares; issued 1997 - 2,471,626 shares; 1996 - 2,500,203 shares 2,472 2,472 Additional paid-in capital 5,101,417 5,101,417 Retained deficit (5,440,403) (5,363,527) ---------- ---------- ( 336,514) ( 259,638) ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQU $1,934,198 $2,163,005 ========== ========== See Notes to Condensed Financial Statements
ENVIROMETRICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE QUARTER ENDED MARCH 31, 1997 and 1996
Three months ended March 31, 1997 March 31, 1996 -------------- -------------- NET SALES AND SERVICE REVENUE Services $ 295,545 $ 801,829 Products 391,581 722,477 ---------- ---------- 687,126 1,524,306 COST OF GOODS SOLD AND DIRECT SERVICE COSTS Services 177,130 583,223 Products 276,704 512,239 ----------- ---------- 453,834 1,095,462 ----------- ---------- GROSS PROFIT 233,292 428,844 ----------- ---------- OTHER OPERATING REVENUE 9,753 113 ----------- ---------- OPERATING EXPENSES Sales and marketing 51,091 94,263 General and administrative 166,901 361,374 Research and development 41,683 61,832 Shipping and receiving 5,903 18,091 Quality control -- 3,742 Depreciation and amortization 32,201 64,790 --------- --------- 297,779 604,092 --------- --------- OPERATING LOSS ( 54,734) (175,135) --------- --------- FINANCIAL INCOME (EXPENSE) Interest income 15,391 1,414 Interest expense (32,158) (39,108) Amortization of loan costs (5,375) (5,154) --------- -------- (22,142) (42,848) --------- -------- NET LOSS $ (76,876) $ (217,983) ========= ========== Net loss per common share $ (0.031) $ (0.087) ========= ========== Dividends per common share $ - $ - ========= ========== Weighted average number of common shares outstanding 2,471,626 2,500,203 See Notes to Condensed Financial Statements
ENVIROMETRICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FIRST QUARTER ENDED MARCH 31, 1997 AND 1996
March 31, 1997 March 31, 1996 (Unaudited) (Unaudited) Cash Flow From Operating Activities: Net (loss) $ ( 76,876) $ (217,983) Adjustments To Reconcile net (loss) to net cash used in operating activities Depreciation and amortization 32,201 64,790 Amortization of loan costs 5,375 5,154 Provision (recoveries for doubtful accounts - (12,759) Non-cash expense paid by issuance of warrants - 3,750 (Gain) loss on disposal of equipment - - Change in assets and liabilities: Decrease in cash, restricted - 99,297 (Increase) decrease in accounts receivable 14,713 105,498 (Increase)in inventory 139,303 (39,085) (Increase)decrease in prepaid expenses 26,373 20,136 Decrease(increase)in accounts payable and accrued expenses (64,429) 44,844 -------- -------- Net cash provided by operating activities 76,660 73,642 -------- -------- Cash Flow From Investing Activities: Property and equipment 18,748 ( 3,080) (Increase) in deposits, organization and loan and acquisition costs - (41,498) Decrease in notes receivable 32,376 - (Increase) in other assets (35,405) (14,205) -------- -------- Net cash used in investing activities 15,719 (58,783) Cash Flows From Financing Activities: Net proceeds from borrowings on short-term notes 8,313 200,000 Principal payments on short-term notes (150,000) Proceeds from long-term borrowing (95,815) (111,933) --------- -------- Net cash used in financing activities (87,502) (61,933) --------- -------- Net (decrease) increase in cash and cash equivalents 4,877 (47,074) Cash and cash equivalents, beginning 29,604 53,143 --------- -------- Cash and cash equivalents, ending $ 34,481 $ 6,069 ========= ======== Supplemental Disclosure of Cash Flows Information Cash payments for interest $ $ 32,467 ========= ========= See Notes to Condensed Financial Statements
Envirometrics, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (1) The unaudited condensed financial statements and related notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. The accompanying condensed consolidated financial statements of the Company, and notes thereto, for the year ended December 31, 1995. The results of operations for the interim periods shown in this report are not necessarily indicative of results to be expected for the fiscal year. In the opinion of management, the information contained herein reflects all adjustments necessary to present fairly the consolidated financial position, results of operations and changes in cash flow for the interim periods. All such adjustments are of a normal recurring nature. (2) Net loss per common share is computed using the weighted average number of common shares outstanding, after giving effect for the 1 for 2 reverse split effective with the initial public offering. (3) On May 13, 1996 the Company entered into a two year financing arrangement with Reservoir Capital Corporation. Under the terms of the agreement, the Company will offer to sell to Reservoir Capital Corporation the eligible trade accounts receivable at an approved advance rate. On that date Reservoir Capital Corporation advanced approximately $233,000 on behalf of the Company. The Company immediately reduced one of its bank notes by approximately $50,000. The Company intends to utilize the remaining funds to reduce its trade accounts payable. (4) The Company disposed of the civil engineering service group during the third quarter of 1996. (5) All real property was disposed of as of December, 1996. The first and second mortgages were paid out and the Company took a $230,000 note from the Buyer, Dr. James Miller. Three Months Ended March 31, 1997 Compared to Three Months Ended March 31, 1996 Sales for the first Three months of 1997 amounted to $687,100 which were $837,200 (54.9%)lower than the $1,524,300 reported for the first Three months of 1996. The Service group decreased its sales by 63.1% or $506,300 to $295,500 and the Products group lost revenues of $330,900 (45.8%)and reported $391,600 for the Three months ended March 31, 1997 as compared to $722,500 for the Three months ended March 31, 1996. Included in the Service group revenue reduction of $506,300 is a decrease of $433,200 related to the Environmental consulting and Engineering and Civil Engineering and Surveying Division which was disposed at July 31, 1996. The Consultative Services and Air Quality groups reported $73,100 less revenues for the first Three months of 1997 as compared to the first Three months of 1996. The reason for the reduction in the Products group revenue is related to the decrease in activity in asbestos air monitoring in the industry. Cost of goods sold and direct service costs decreased by 45.6% or $641,600 to $453,800 for the first Three months of 1997 as compared to $1,095,600 reported for the first Three months of 1996. The Services Division reduced its direct service costs by $406,100 (69.6%) and reported $177,100 for the first Three months of 1997 as compared to $583,200 for the first Three months of 1996. Included in the Service group direct service costs reduction of $406,100 is a decrease of $284,500 related to the Environmental Consulting and Engineering and Civil Engineering and Surveying Division which was disposed at July 31, 1996. The Products group decreased its cost of good sold by $235,500 or 46.0%, to $276,700 for 1997 as compared to $512,200 for the first Three months of 1996 due to the non stockpiling of air monitoring cassettes by one large customer. The gross profit for the first Three months ended March 31, 1997 decreased by $195,600, a decrease of 45.6%, to $233,300 as compared to $428,800 for the Three months ended March 31, 1996. The Services Division recorded a significant decrease of 45.8% or $100,200 in its gross profit for the first Three months of 1997 as compared to the first Three months of 1996. Included in the Service group gross profit reduction of $100,200 is a decrease of $148,600 related to the Environmental Consulting and Engineering and Civil Engineering and Surveying Division which was disposed at July 31, 1996. Excluding the decrease from the disposition of the Engineering and Civil Engineering and Surveying Division, the gross profit for the remaining services increased by $48,400. The Products Division experienced a significant decrease of 45.4% or a $95,400 reduction in its gross profit for the first Three months of 1997 as compared to the first Three months of 1996. The Services Division reported a 40.1% gross margin for the first quarter of 1997 as compared to a 27.3% margin for the same quarter in 1996. The reason for the significantly improved gross margin in the Services Division and the $100,200 decrease in the amount of gross profit reported by that division is related to the Environmental Consulting and Engineering and Civil Engineering and Surveying Division, which was disposed at July 31, 1996, and the efficiency gained from downsizing of personnel and reduction of nonbillable expenses, including compensation. The Products Division reported a 29.3% gross margin for the first quarter of 1997 as compared to a 29.1% margin for the same quarter in 1996. Percentage comparisons of gross margins reported by the company are as follows: Period Total Products Services 1st Three Months 1997 33.9% 29.3% 40.1% 1st Three Months 1996 28.1% 29.1% 27.3% Percentage comparisons of gross margins reported by the company excluding the Environmental Consulting and Engineering and Civil Engineering and Surveying Division, which was disposed at July 31, 1996, are as follows: Period Total Products Services 1st Three Months 1997 33.9% 29.3% 40.1% 1st Three Months 1996 28.1% 29.1% 19.0% Other operating revenue increased by $9,700 to $9,800 for the first Three months ended March 31, 1997 as compared to $100 for the first Three months ended March 31, 1996. Operating expenses were $306,300 lower and amounted to $297,800 for the Three months ended March 31, 1997, as compared to $604,100 reported for the Three months ended March 31, 1996. The operating expenses for the first Three months of 1996 included $104,500 of expenses related the Environmental Consulting and Engineering and Civil Engineering and Surveying Division, which was disposed on July 31, 1996. Sales and marketing expenses decreased by $43,200, which savings were mostly attributable to the agreement with Zellweger Analytics, Inc. for the distribution of the ACT product line. General and administrative costs decreased by $194,500 to $166,900 for the Three months ended March 31, 1997, as compared to $361,400 reported for the Three months ended March 31, 1996. Included in the first quarter 1996 general and administrative expenses is approximately $25,000 of consulting fees that were related to a contract that was terminated in August 1996 and $81,700 of amounts attributable to the Environmental Consulting and Engineering and Civil Engineering and Surveying Division, which was disposed on July 31, 1996. A portion of the decrease is due to a reduction in personnel and restructuring of costs. Research and development costs decreased by $20,100 to $41,700. Shipping and receiving costs decreased by $12,200 to $5,900 for the Three months ended March 31, 1997 as compared to $18,100 for the Three months ended March 31, 1996. This decline is related to the decrease in sales reported above. A reduction of $3,700 in costs related to quality control was the result of a reduction in personnel in the first quarter of 1996. Depreciation and amortization costs decreased by $32,600 for the first quarter ended March 31, 1997 as compared to 1996 of which $22,800 was attributable the Environmental Consulting and Engineering and Civil Engineering and Surveying Division, which was disposed on July 31, 1996. The Company incurred an operating loss of $54,700 for the Three months ended March 31, 1997 as compared to an operating loss of $175,100 for the Three months ended March 31, 1996. The operating loss for the Three months ended March 31, 1996 would have been $218,700, excluding the Environmental Consulting and Engineering and Civil Engineering and Surveying Division, which was disposed on July 31, 1996. Interest income for the Three months ended March 31, 1997 was $14,000 higher than the amount recorded for 1996. Interest earned in 1997 resulted from interest earned on a note that was exchanged in connection with the disposition of the Environmental Consulting and Engineering and Civil Engineering and Surveying Division completed on July 31,1996 and a mortgage note that was recorded as a result of the sale of the real property in December 1996. Interest expense of $32,100 for the Three months ended March 31, 1997 was $6,900 lower than the amount reported for the first Three months of 1996 which was $39,100. Amortization of loan costs for the first Three months of 1997 was $5,400 and was $200 higher than the $5,200 reported for the first Three months ended March 31, 1996. The Company incurred a net loss of $76,900 for the first Three months ended March 31, 1997 as compared to a net loss of $218,000 for the Three months ended March 31, 1996. The net loss for the first Three months of 1996, excluding the Environmental Consulting and Engineering and Civil Engineering and Surveying Division, which was disposed on July 31, 1996 would have been $255,500 which is $37,500 higher than the $218,000 reported for the first Three months of 1996. FINANCIAL CONDITION The Company's financial condition continued to deteriorate during the first Three months of 1997 due principally to continued operating losses, and the Company is experiencing severe cash flow problems. The working capital deficiency has increased from $1,174,500 at December 31, 1996 to $1,231,300 at March 31, 1997. The Company has been negotiating with several vendors to restructure accounts payable and certain lenders appear willing to restructure debt since the Company has not been able to meet its obligations timely. In January 1997, the Company entered into agreements with several lenders that ties payment of debts to actual collections from notes receivable and related interest payments received. The Consultative Services Division experienced a reduction in sales revenues and the trade receivables from that group are down to $161,700 at March 31, 1997 from $207,400 at December 31, 1996. The Products Division reduced inventories by $139,300 to $148,200 from $287,500 at December 31, 1996 as a result of cash flow problems which resulted in less products available for sale. During January 1997 the Company, through its Products Division subsidiary, terminated its two year Master Distribution Agreement with Zellweger Analytics, Inc. (Zellweger) for non performance. The Company is currently in discussions with Zellweger to reach agreement on the prepaid purchase deposit in excess of $500,000 which is recorded as deferred revenue and included in accrued liabilities at March 31, 1997 and December 31, 1996. In April 1997, the Company was successful in subleasing its office space at Faber Place to another Company for one year. This will result in savings of approximately $3,000 per month in rent. The Company has been experiencing a reduction in facility costs since it disposed of its real estate in December 1996. The Company executed a five year lease on its University Boulevard location after the sale of the real estate, and has reduced its monthly cash outlay by approximately $7,000. The Company receives interest income in 1997 of approximately $5,000 per month from two notes receivable executed during 1996, related to the disposition of the Environmental Consulting and Engineering and Civil Engineering and Surveying Division on July 31, 1996 and sale of the real estate in December 1996. The Company entered into an agreement to sell its air sampling cassettes products line, including equipment and inventory, for cash, to a major customer during May 1997. The total amount of cash to be received by the Company is dependent on sales of inventory acquired by the Seller, to third parties after the transaction is complete. This transaction is in keeping with management's decision to eliminate unprofitable or marginally profitable services and products. The cash collected from this transaction will be used to pay down certain vendors. The Company has a factoring agreement with Reservoir Capital Corporation (Reservoir) which advances funds based on invoicing for sales of the Products Division. The Company intends to pursue a release of the first lien on accounts receivable, held by the Small Business Administration (SBA) as collateral against debt on invoicing of the laboratory and consultative division, which are not currently factored, and to continue its factoring arrangement with Reservoir. There is no assurance that the Company can be successful in obtaining a release of the accounts receivable by the SBA, and the Company will realize a cash flow reduction if it is unable to negotiate such an arrangement. The Company believes there is adequate collateral to secure the SBA loans, considering other assets that also secure the SBA debt. The Company intends to expand its consultative services, including outsourcing, and is in discussions with another company to jointly market a broad base of services including health and safety services beginning in the second quarter of 1997. In addition, the Company is looking to grow its laboratory services base through aggressive marketing, identifying potential merger partners (other industrial hygiene laboratories) to increase revenues and streamline or reduce costs. PART II. OTHER INFORMATION Item 1. Legal Proceedings Item 6. Exhibits and Reports Exhibit 10.1 Stock Purchase Agreement by and between Envirometrics, Inc., Andrew C. Gillette and Trico Envirometrics, Inc. 10.2 Promissory Note and related documents by and between Trico Envirometrics, Inc. (Andrew C. Gillette) and Envirometrics, Inc. 10.3 Real Estate Sales Agreement between Envirometrics Commercial Inc. and James W. Miller, M.D. for the parcel of real property known as Unit F-2, 9229 University Boulevard, Charleston, SC 10.4 Real Estate Sales Agreement between Envirometrics Commercial Inc. and James W. Miller, M.D. for the parcel of real property known as 1019 Bankton Drive, Charleston, SC 10.5 Lease Agreement by and between Envirometrics, Inc. and James W. Miller, M.D. 10.6 Promissory Note dated December 19, 1996 by James W. Miller, M.D. to Envirometrics, Inc. 10.7 Memorandum of Agreement and Promissory Notes by and between Envirometrics, Inc. and The United States Company dated December 24, 1996 10.8 Promissory Note and Conversion Agreement between Envirometrics, Inc. and Walter H. Elliott, III dated December 31, 1996 10.9 Collateral Assignment of Proceeds dated January 1, 1997 10.10 Security Agreement by and between Envirometrics, Inc. and Charles B. Stoyle dated March 20, 1997 10.11 Asset Purchase Agreement between Envirometrics, Inc. and Multi-metrics, Inc., dated April 28, 1997 10.12 Preferred Stock Subscription and Conversion Agreement and Investment Representations by Precision Southeast Inc. dated April 29, 1997 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. ENVIROMETRICS, INC. Date: May 20, 1997 Walter H. Elliott, III -------------------------------- Walter H. Elliott, III President and CEO
EX-27 2 ART 5 FDS FOR 1ST QTR 10-QSB/A 1997
5 3-MOS DEC-31-1997 MAR-31-1997 34,481 0 507,069 70,379 148,238 751,282 1,302,069 970,697 331,372 1,982,539 288,173 0 0 2,472 (338,986) 1,934,198 687,126 687,126 453,834 751,613 0 0 22,142 (76,876) 0 (76,876) 0 0 0 (76,876) (.031) (.031)
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