-----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, IH+BcqI+n5OTBL06aaGkQuNXUQy3HX4zwtDz3kmT30cP3XA/F8Xaq1P0O4DlvmEt UR8/JDqjllmDUZUa87b1dA== 0000917253-98-000011.txt : 19980817 0000917253-98-000011.hdr.sgml : 19980817 ACCESSION NUMBER: 0000917253-98-000011 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENVIROMETRICS INC /DE/ CENTRAL INDEX KEY: 0000917253 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL [3823] IRS NUMBER: 570941152 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-23892 FILM NUMBER: 98688660 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 1 ENVIROMETRICS, INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-QSB (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT 1934 For the quarterly period ended June 30, 1998 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: (843) 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 June 30, 1998 the Registrant had outstanding 2,796,671 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 Sheet at March 31, 1998 and December 31, 1997 2 Condensed Statement of Operations for the First Quarter ended March 31, 1998 and 1997 3 Condensed Statement of Cash Flows for the First Quarter ended March 31, 1998 and 1997 4 Notes to Consolidated Financial Statements 5-7 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Conditions 8-12 PART II. OTHER INFORMATION Item 1. Legal Proceedings Item 5. Other Information Item 6. Exhibits and Reports Signature 13 ENVIROMETRICS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS June 30, 1998 and December 31, 1997
June 30, 1998 December 31, 1997 ASSETS (Unaudited) (Unaudited) CURRENT ASSETS Cash and cash equivalents $ 25,015 $ 54,096 Current portion of notes receivable 308,766 100,548 Trade receivables less allowance for doubtful accounts 1998 and 1997 $18,082 93,348 117,625 Other receivables 2,166 4,367 Inventories 15,017 17,334 Prepaid expenses 23,780 53,821 -------- -------- TOTAL CURRENT ASSETS 468,092 347,791 -------- -------- OTHER ASSETS AND INTANGIBLES Deposits 929 21,093 Notes receivable, less current portion 337,712 596,197 Organization and loan costs, net of accumulated amortization 1998 $61,838; 1997 $51,958 - 9,880 Other, including amounts due amounts due from stockholders 151,319 146,148 ------- ------- 489,960 773,318 ------- ------- PROPERTY AND EQUIPMENT Furniture and equipment 1,079,738 1,079,738 Vehicles 14,421 44,033 --------- --------- 1,094,159 1,123,771 Less accumulated depreciation and amortization (969,664) (963,843) --------- --------- 124,495 159,928 --------- --------- $1,082,547 $1,281,037 ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Current maturities of long-term debt $ 247,470 $ 336,106 Accounts payable 275,464 546,605 Accrued expenses 130,318 174,037 --------- --------- TOTAL CURRENT LIABILITIES 653,252 1,056,748 --------- --------- LONG-TERM DEBT, less current maturities 108,613 544,506 ---------- ---------- STOCKHOLDERS' EQUITY Common stock par value $.001; authorized 10,000,000 shares; issued 1998 - 2,796,671 shares and 1997 - 2,669,899 shares 2,797 2,670 Preferred stock, no par value; authorized 2,500,000 shares; issued 1998 - 351,268 and 1997 - 70,000 shares 3,513 700 Additional paid-in capital 5,807,890 5,320,369 Retained earnings(deficit) (5,493,518) (5,643,956) ---------- ---------- 320,682 ( 320,217) ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,082,547 $1,281,037 ========== ========== See Notes to Condensed Financial Statements
ENVIROMETRICS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE QUARTER ENDED JUNE 30, 1998 and 1997
THREE MONTHS ENDED June 30, June 30, 1998 1997 --------- -------- NET SERVICE REVENUE $ 380,844 $ 525,318 DIRECT SERVICE COSTS 257,760 331,338 ---------- ---------- GROSS PROFIT 123,084 193,980 ---------- ---------- 32.3% 36.9% OTHER OPERATING REVENUE 20,653 6,244 ----------- ---------- OPERATING EXPENSES Sales and marketing 22,184 23,803 General and administrative 195,760 290,413 Depreciation and amortization 23,712 37,797 --------- --------- 241,656 352,013 --------- --------- OPERATING LOSS (97,919) (151,789) --------- --------- FINANCIAL INCOME (EXPENSE) Interest income 27,329 30,706 Interest expense (21,921) (46,812) Gain (loss) on disposition of property (9,121) 1,650 Gain (loss) on vendor balances negotiated 284,306 - Other 3,747 - Amortization of loan costs (9,880) (10,750) -------- --------- 274,460 (25,206) -------- ---------- INCOME (LOSS) BEFORE DISCONTINUED OPERATIONS 176,541 (176,995) DISCONTINUED OPERATIONS (26,103) (91,006) -------- -------- NET INCOME (LOSS) $ 150,438 $ (268,001) ========= ========== Weighted average number of common shares outstanding 2,670,599 2,542,516 ========== ========== Net loss per common share $ (0.056) $ (0.105) ========= ========== Dividends per common share $ - $ - ========= ========== See Notes to Condensed Consolidated Financial Statements
ENVIROMETRICS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) SECOND QUARTER ENDED JUNE 30, 1998 AND 1997
June 30,1998 June 30,1997 Cash Flow From Operating Activities: Net income (loss) $ 150,438 $ (268,001) Adjustments To Reconcile net income (loss) to net cash used in operating activities Depreciation 23,712 59,769 Amortization 9,880 10,750 Provision (recoveries) for doubtful accounts (Gain) on vendor debt mediation (284,306) - (Gain) loss on disposal of equipment 9,121 (1,650) Change in assets and liabilities: Decrease in accounts receivable 26,478 140,203 Decrease in inventory 2,317 181,395 Decrease in prepaid expenses 30,041 23,055 Increase(decrease)in accounts payable and accrued expenses (25,343) (126,891) -------- --------- Net cash provided by operating activities (57,662) 18,630 --------- --------- Cash Flow From Investing Activities: Collections of notes receivable 50,267 56,019 Cash received on disposition of product line 3,400 5,100 Loss on disposition of product line - 454 Book value of assets sold in connection with disposition of asbestos product line, net of cash paid to third party - (5,554) Decrease in deposits 20,164 - (Increase) in other assets (5,171) (44,920) --------- ---------- Net cash provided by investing activities 68,660 11,099 --------- ---------- Cash Flows From Financing Activities: Proceeds from borrowings on short-term notes 20,000 25,000 Principal payments on short-term notes, net - (29,624) Principal payments on long-term borrowing (60,079) - -------- --------- Net cash provided by investing activitiess (40,079) (4,624) --------- ---------- Net (decrease) increase in cash and cash equivalents (29,081) 25,105 Cash and cash equivalents, beginning 54,096 29,604 --------- ---------- Cash and cash equivalents, ending $ 25,015 $ 54,709 ========= ========== Supplemental Disclosure of Cash Flows Information Cash payments for interest $ 5,128 $ 41,258 ========= ========== Disposition of asbestos product line Book value of inventory - (65,200) Book value of equipment - (96,326) Loss on disposition of above - 454 Cash paid to third party - 155,972 ----------- ----------- Cash received $ - $ (5,100) =========== ========== Supplemental Disclosure of Non Cash Financing Activities Issuance of common stock for warrants and other $ - $ 141 ========== ========== Issuance of common stock for debt conversion $ 68,082 $ - ========== ========== Issuance of preferred stock for debt conversion $ 422,379 $ - ========== =========== See Notes to Condensed Consolidated Financial Statements
ENVIROMETRICS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 1998 (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, should be read in conjunction with the audited financial statements and related notes included in the Company's Annual Report on Form 10-KSB for the year ended December 31, 1995. The Company has not completed is audits of the consolidated financial statements for the years ended December 31, 1997 and 1996 and has not filed form 10-KSB for the years ended December 31, 1997 and 1996. 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 in 1994. (3) Shakespeare Partners, LTD, whose general partner is a stockholder of the Company, had outstanding notes payable due from the Company amounting to $200,000 at June 30, 1998 and $287,700 at December 31, 1997. No interest was paid by the Company during 1997 or year to date 1998. Shakespeare Partners, LTD, loaned an additional $20,000 to the Company in May 1998 in connection with negotiation and settlement of certain vendor debt. Approximately $149,700 of debt was converted to 74,878 preferred shares which have dividend and preference in liquidation rights. The United States Company had outstanding notes payable due from the Company amounting to $16,000 at June 30, 1998 and $209,100 at December 1997. No interest was paid during 1997 or year to date during 1998. Approximately $85,000 of debt was converted to 111,648 preferred shares which have dividend and preference in liquidation rights. $124,100 was forgiven by the United States Company. Two Directors of the Company are officers of the United States Company. The Treasurer is a Principal in The United States Company. The President and CEO had outstanding notes payable due from the Company amounting to approximately $15,000 at December 1997. No interest was paid during 1997 or year to date during 1998. Approximately $17,700 of debt was converted to 8,835 preferred shares which have dividend and preference in liquidation rights. (4) The Company sold its asbestos product line (inventory and equipment) to a large customer during May 1997 for $161,072 cash. Proceeds from the disposition were used to reduce vendor trade amounts. The Company sold its remaining Air Chemical Technology (ACT) product line to its exclusive distributor for a $354,850 reduction in prepaid purchase deposits. In addition, $10,000 cash was paid and 70,000 shares of preferred stock were issued at a value of $140,000, which eliminated the prepaid purchase deposits liability. (5) The Company has a $230,000 note receivable (due no later than December 31, 1998) from the Buyer of its real property in December 1996. The buyer pays interest only monthly at 10%. The note is secured by the real estate. (6) The Company's common stock and warrants were deleted from The Nasdaq SmallCap Market(tm) on December 3, 1996 for failure to meet the capital and surplus requirement for continued listing. The Company is listed on the OTC-Bulletin Board. (7) On April 1, 1997 the Company issued 125,000 shares of its common stock to The United States Company in exchange for 640,000 warrants to purchase its common stock. On that same date the Company issued 5,000 shares of common stock to Walter H. "Skip Elliott, III, President and CEO, 5,000 shares of common stock to Elsie L. Rose, Treasurer, 5,000 shares of common stock to Robin A. Bowers, Secretary at that date, and 1,000 shares of common stock to another employee. The Company issued 125,000 shares to Shakespeare Partners Ltd. in connection with a prior loan. On June 29, 1998 the Company granted 700,000 options to purchase common stock to its Directors and Officers. (8) During October 1997 the Company settled employment agreements with two employees at termination of their employment by agreeing to grant warrants for each to purchase 50,000 shares of Company common stock. No amounts have been recorded in the financial statements. Three Months Ended June 30, 1998 Compared to Three Months Ended June 30, 1997 The following financial information reports operating trends taking into account the discontinued operations of the Products Group for 1997. Net service revenue for the Service group, which is comprised of the industrial hygiene laboratory and health and safety consulting, for the second quarter of 1998 amounted to $182,100 which was $47,700 (20.8%)lower than the $229,800 reported for the second quarter of 1997. Additional sales that would have been reported without the discontinued Products line amounted to $222,300 for the second quarter of 1997. Direct service costs decreased by 10.8% or $16,600 to $137,600 for the second quarter of 1998 as compared to $154,200 reported for the second quarter of 1997. Additional cost of sales that would have been reported without the discontinued Products line amounted to $176,300 for the second quarter of 1997. The gross profit for the second quarter ended June 30, 1998 decreased by $31,000, a decrease of 41.1%, to $44,500 as compared to $75,500 for the three months ended June 30, 1997. Additional gross profit that would have been reported without the discontinued Products line amounted to $46,000 for the second quarter of 1997. The Company reported a 24.4% gross margin for the second quarter of 1998 as compared to a 32.9% margin for the second quarter in 1997. The reason for the deterioration in gross margin in the Services Division and the $31,000 decrease in the amount of gross profit reported by that division is due to reduced sample analysis during the second quarter of 1998 and a large consultative project that was performed during the second quarter of 1997. Other operating revenue was $9,200 for the quarter ended June 30, 1998 as compared to a $3,500 loss for 1997. Operating expenses were $50,300 lower and amounted to $121,600 for the Three months ended June 30, 1998, as compared to $171,900 reported for the Three months ended June 30, 1997. Sales and marketing expenses increased by $14,000, which were mostly attributable to an increase in staff for 1998. General and administrative costs decreased by $49,600 to $97,500 for the Three months ended June 30, 1998, as compared to $147,100 reported for the Three months ended June 30, 1997. Depreciation and amortization costs decreased overall by $14,600 due to the reduction in vehicles of the Service Group for the second quarter of 1998. The Company incurred an operating loss of $67,800 for the three months ended June 30, 1998 as compared to an operating loss of $99,800 for the three months ended June 30, 1997. Additional operating loss that would have been reported without the discontinued Products line amounted to $88,200 for the second quarter of 1997. Interest income for the quarter ended June 30, 1998 was $15,500 compared to $15,300 of interest income recorded for the quarter ended June 30, 1997. Interest expense of $12,200 for the three months ended June 30, 1998 was $2,400 lower than the amount reported for the second quarter of 1997 which was $14,600. The decrease in interest expense is attributable to elimination of borrowing under the Company's asset based lending arrangement for the Products Group which was disposed during the fourth quarter of 1997. The Company recorded a net gain of $284,800 in 1998 on vendor trade payables and notes payable that were negotiated. Amortization of loan costs for the second quarter of 1998 was $4,500 as compared to %5,400 for 1997. The Company reported income before discontinued operations of $215,800 for the three months ended June 30, 1998 as compared to a net loss before discontinued operations of $102,900 for the Three months ended June 30, 1997. Discontinued operations for the second quarter ended June 30, 1998 was $26,100 and 1997 was $88,200 related to the Products line. Net income for the second quarter ended June 30, 1998 was $189,700 which is $380,800 higher than the net loss of $191,100 reported for the second quarter ended June 30, 1997. Six Months Ended June 30, 1998 Compared to Six Months Ended June 30, 1997 The following financial information reports operating trends taking into account the discontinued operations of the Products Group for 1997. Net service revenue for the Service group, which is comprised of the industrial hygiene laboratory and the health and safety consulting, for the first six months of 1998 amounted to $380,800 which was $144,500 (27.5%) lower than the $525,300 reported for the first six months of 1997. Additional sales that would have been reported without the discontinued Products line amounted to $613,900 for the first six months of 1997. Direct service costs decreased by 22.2% or $73,600 to $257,700 for the first six months of 1998 as compared to $331,300 reported for the first six months of 1997. Additional cost of sales that would have been reported without the discontinued Products line amounted to $453,000 for the first six months of 1997. The gross profit for the six months ended June 30, 1998 decreased by $70,900, a decrease of 36.6%, to $123,100 as compared to $194,000 for the six months ended June 30, 1997. Additional gross profit that would have been reported without the discontinued Products line amounted to $160,900 for the first six months of 1997. The Company reported a 32.3% gross margin for the first six months of 1998 as compared to a 36.9% margin for the same quarter in 1997. The reason for the deterioration in gross margin in the Services Division and the $70,900 decrease in the amount of gross profit reported by that division is due to reduced sample analysis during the first six months of 1998 and a large consultative project that was performed during the same period of 1997. Other operating revenue was $20,600 for the six months ended June 30, 1998 as compared to $6,200 of revenue for the six months ended June 30, 1997. Operating expenses were $110,300 lower and amounted to $241,600 for the six months ended June 30, 1998, as compared to $352,000 reported for the six months ended June 30, 1997. Sales and marketing expenses decreased by $1,600 for 1998. General and administrative costs decreased by $94,600 to $195,800 for the six months ended June 30, 1998, as compared to $290,400 reported for the six months ended June 30, 1997. Depreciation and amortization costs decreased overall by $14,100 due to the reduction in vehicles of the Service Group for the first six months of 1998. The Company incurred an operating loss of $97,900 for the six months ended June 30, 1998 as compared to an operating loss of $151,800 for the six months ended June 30, 1997. Additional operating loss that would have been reported without the discontinued Products line amounted to $91,000 for the first six months of 1997. Interest income for the six months ended June 30, 1998 was $27,300 compared to $30,700 of interest income recorded for the six months ended June 30, 1997. The decrease is due to the reduction in the principal balance outstanding for a note receivable that was executed during 1996 in connection with the disposition of the Environmental Consulting and Engineering and Civil Engineering and Surveying Division. Interest expense of $21,900 for the six months ended June 30, 1998 was $24,900 lower than the amount reported for the first six months of 1997 which was $46,800. The decrease in interest expense is attributable to elimination of borrowing under the Company's asset based lending arrangement for the Products Group which was disposed during the fourth quarter of 1997. The Company recorded a net gain of $284,300 in 1998 on vendor trade payables and notes payable that were negotiated. Amortization of loan costs for the first six months of 1998 was $9,900 and 1997 was $10,700. The Company incurred net operating income before discontinued operations of $176,600 for the six months ended June 30, 1998 as compared to a net loss before discontinued operations of $177,000 for the six months ended June 30, 1997. Discontinued operations for the first six months ended June 30, 1997 was $91,000 related to the Products line. Net income for the six months ended June 30, 1998 was $150,500 which is $418,500 higher than the net loss of $268,000 reported for the six months ended June 30, 1997. FINANCIAL CONDITION The Company's financial condition improved significantly during the Second Three months of 1998 due principally to conversion of debt of secured creditors to preferred shares, however, the Company is continuing to experience cash flow problems. The working capital deficiency has decreased from $709,000 at December 31, 1997 to $185,200 at June 30, 1998. This is due to the conversion of debt owed to related party secured creditors to equity of $422,400 and forgiveness of debt by a secured creditor of $124,100. Vendor trade payables were reduced by a net amount of $160,700 which was recorded as a gain and $68,100 which was converted to common stock at June 30, 1998. Trade accounts receivable are down approximately $14,300 to $93,300 at June 30, 1998 from $117,600 at December 31, 1997. The Company receives interest income in 1998 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 $230,000 note receivable from the sale of the real estate is due no later than December 1998. The Company is looking to grow its laboratory services base and industrial hygiene and health and safety consulting services through aggressive marketing, identifying potential merger partners to increase revenues and streamline or reduce costs. Item 1. Legal Proceedings Item 5. Other Information Item 6. Exhibits and Reports Exhibit 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: August 14, 1998 Walter H. Elliott, III -------------------------------- Walter H. Elliott, III President and CEO
EX-27 2 ART 5 FDS FOR 2ND QTR 10-QSB 1998
5 6-MOS DEC-31-1998 JUN-30-1998 25,015 0 409,198 (4,918) 15,017 468,092 1,094,159 969,664 1,082,547 653,252 0 0 3,513 2,797 314,372 1,082,547 380,844 716,879 257,760 257,760 286,760 0 21,921 150,438 0 150,438 0 0 0 150,438 (.056) (.056)
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