-----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, DROeZih1IqYGiTraHXdY3Va0iZGOm8lM9BGmnUtRKyblhgR/q2PuSinA0zsrDoTt RmQ0J2RJa+uPYFp1fjAWtA== 0000950116-97-002051.txt : 19971113 0000950116-97-002051.hdr.sgml : 19971113 ACCESSION NUMBER: 0000950116-97-002051 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971113 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HUDSON TECHNOLOGIES INC /NY CENTRAL INDEX KEY: 0000925528 STANDARD INDUSTRIAL CLASSIFICATION: HAZARDOUS WASTE MANAGEMENT [4955] IRS NUMBER: 133641530 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 033-80270-NY FILM NUMBER: 97715420 BUSINESS ADDRESS: STREET 1: 25 TORNE VALLEY RD CITY: HILLBURN STATE: NY ZIP: 10931 BUSINESS PHONE: 9143684990 MAIL ADDRESS: STREET 1: 25 THORNE VALLEY RD CITY: HILLBURN STATE: NY ZIP: 10931 FORMER COMPANY: FORMER CONFORMED NAME: REFRIGERANT RECLAMATION INDUSTRIES INC DATE OF NAME CHANGE: 19940617 10QSB 1 ================================================================================ 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 OF 1934 For the quarterly period ended September 30, 1997 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 number 1-13412 --------------------- Hudson Technologies, Inc. --------------------- (Exact name of small business issuer as specified in its charter) New York 13-3641539 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification number) 25 Torne Valley Road Hillburn, New York 10931 (address of principal executive offices) (ZIP Code) Issuer's telephone number, including area code: (914) 368-4990 ------------ Indicate by check mark whether the issuer (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 twelve 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 last 90 days. YES X NO --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Common stock, $0.01 par value 5,065,820 shares - ----------------------------- ---------------- Class Outstanding at October 31, 1997 ================================================================================ Hudson Technologies, Inc. Index
Part I. Financial Information Page Number - ------- --------------------- ----------- Item 1 Consolidated Balance Sheets 2 Consolidated Statements of Operations 3 Consolidated Statements of Cash flows 4 Notes to the Consolidated Financial statements 5 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Part II. Other information Item 1 - Legal proceedings 11 Item 6 - Exhibits and Reports on Form 8-K 11 Signatures 12
Part I - Financial Information Hudson Technologies, Inc. and subsidiaries Consolidated Balance Sheets (Amounts in thousands, except for share amounts)
Balance as of: September 30, December 31, ------------- ------------ 1997 1996 ---- ---- (unaudited) Assets Current assets: Cash and cash equivalents $ 668 $422 Trade accounts receivable; net of allowance for doubtful accounts of $429 and $546 4,340 2,476 Inventories 4,299 9,062 Income taxes receivable 203 930 Prepaid expenses and other current assets 234 141 ------- ------- Total current assets 9,744 13,031 Property, plant and equipment, less accumulated depreciation 6,202 5,882 Goodwill and intangible assets, less accumulated amortization 7,412 7,754 Deferred income taxes 1,949 1,978 Other assets 104 130 ------- ------- Total assets $25,411 $28,775 ======= ======= Liabilities and Stockholders' Equity Current liabilities: Accounts payable and accrued expenses $3,005 $2,762 Short term debt; including loans from officers and stockholders of none and $202 2,299 5,678 Reserve for restructuring 250 377 ------- ------- Total current liabilities 5,554 8,817 Deferred income 61 71 Long-term debt, less current maturities 1,249 1,509 ------- ------- Total liabilities 6,864 10,397 ------- ------- Commitments and contingencies Stockholders' equity: Common stock, $0.01 par value; shares authorized 20,000,000; issued 5,086,820 and 4,370,495; and outstanding 5,065,820 and 4,349,495 51 44 Additional paid-in capital 22,683 18,517 Retained deficit (4,014) (10) ------- ------- 18,720 18,551 Less: Treasury stock, 21,000 shares at cost (173) (173) Total Stockholders' equity 18,547 18,378 ------- ------- Total liabilities and Stockholders' equity $25,411 $28,775 ======= ======= - --------------------------------------------------------------------------
Certain 1996 amounts have been reclassified to conform to 1997 presentation format. See accompanying Notes to the Consolidated Financial Statements. 2 Hudson Technologies, Inc. and subsidiaries Consolidated Statements of Operations (Unaudited) (In thousands, except for share and per share amounts)
Three month Nine month periods ended periods ended September 30, September 30, ------------- ------------- 1997 1996 1997 1996 ---- ---- ---- ---- Revenues $6,960 $5,919 $20,459 $15,126 Cost of Sales 5,365 3,843 16,785 9,982 Inventory writedown to net realizable value - - 983 - --------- --------- --------- --------- Gross Profit 1,595 2,076 2,691 5,144 Operating expenses: Selling and marketing 350 448 1,248 930 General and administrative 1,205 884 3,962 2,596 Restructuring Reserve - - - 1,333 Depreciation and amortization 380 393 1,041 876 --------- --------- --------- --------- Total operating expenses 1,935 1,725 6,251 5,735 --------- --------- --------- --------- (Loss) Income from Operations (340) 351 (3,560) (591) Other income (expense): Interest income - 3 - 42 Interest expense (166) (8) (524) (91) Other income 26 - 80 26 --------- --------- --------- --------- Total other income (expense) (140) (5) (444) (23) (Loss) Income before income taxes (480) 346 (4,004) (614) (Benefit) Provision for income taxes - 140 - (202) --------- --------- --------- --------- Net (Loss) Income $ (480) $ 206 $(4,004) $(412) --------- --------- --------- --------- - -------------------------------------------- Net (loss) income per common share $(0.09) $ .05 $(0.81) $(.09) --------- --------- --------- --------- Weighted average number of shares outstanding 5,065,820 4,477,580 4,961,677 4,611,676 --------- --------- --------- --------- Net (loss) income per common share- assuming dilution $ (0.09) $ .05 $(0.81) $(.09) --------- --------- --------- --------- Weighted average number of shares outstanding- assuming dilution 5,065,820 4,477,580 4,961,677 4,611,676 --------- --------- --------- --------- - --------------------------------------------
Certain 1996 amounts have been reclassified to conform to 1997 presentation format. See accompanying Notes to the Consolidated Financial Statements. 3 Hudson Technologies, Inc. and subsidiaries Consolidated Statements of Cash Flows (unaudited) (In thousands)
For the nine month periods ended September 30, ------------------ 1997 1996 ---- ---- Cash flows from operating activities: Net loss $(4,004) $(412) Adjustments to reconcile net loss to cash provided by (used by) operating activities: Depreciation and amortization 1,041 875 Deferred income taxes 29 (18) Allowance for doubtful accounts 87 - Decrease (increase) in trade receivables (1,951) (484) Decrease (increase) in inventories 4,764 (4,338) Decrease (increase) in income taxes receivable 727 (252) Decrease (increase) in prepaid and other current assets (131) (114) Decrease (increase) in other assets 25 (132) Increase (decrease) in accounts payable and accrued expenses 243 (198) Increase (decrease) in deferred income (10) - Increase (decrease) in reserve for restructuring (127) 1,000 ------- ------- Cash provided by (used by) operating activities 693 (4,073) ------- ------- Cash flows from investing activities: Proceeds from sale of marketable securities - 1,100 Additions to property, plant, and equipment ( 982) (2,301) Acquisitions accounted for as purchases - (2,716) ------- ------- Cash used by investing activities ( 982) (3,917) ------- ------- Cash flows from financing activities: Proceeds from redemption of warrants - 265 Proceeds from issuance of stock 4,173 - Proceeds from short-term bank borrowings - 2,686 Proceeds from convertible debt issue - 5,300 Repayment of debt (3,638) (2,057) Purchase of treasury stock - (145) ------- ------- Cash provided by financing activities 535 6,049 ------- ------- Increase (decrease) in cash and cash equivalents 246 (1,941) Cash and equivalents at beginning of period 422 2,460 ------- ------- Cash and equivalents at end of period $668 $519 ==== ==== - ------------------------------------------------------------------------------- Supplemental Disclosure of Cash Flow Information: Cash Paid for Interest $524 $ 91 Cash Paid for Taxes $ - $ 69 - -------------------------------------------------------------------------------
Certain 1996 amounts have been reclassified to conform to 1997 presentation format. See accompanying Notes to the Consolidated Financial Statements. 4 Hudson Technologies, Inc. and subsidiaries Notes to Consolidated Financial Statements General Hudson Technologies, Inc., incorporated under the laws of New York on January 11, 1991, together with its subsidiaries (collectively, "Hudson" or the "Company"), provides products and technical services related to the recovery and reclamation of refrigerants used in commercial air conditioning and refrigeration systems. The Company's services have been developed to facilitate compliance with the Federal Clean Air Act as amended in 1990, which prohibits the venting, and requires the recovery, of specified chlorofluorocarbon ("CFCs") and hydrochlorofluorocarbon ("HCFCs") refrigerants. Note 1- Summary of Significant Accounting Policies The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial statements and with the instructions of Regulation SB. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. The financial information included in the quarterly report should be read in conjunction with the Company's audited financial statements and related notes thereto for the year ended December 31, 1996. In the opinion of management, all estimates and adjustments considered necessary for a fair presentation have been included and all such adjustments were normal and recurring. Consolidation The consolidated financial statements represent all companies of which Hudson directly or indirectly has majority ownership or otherwise controls. Significant intercompany accounts and transactions have been eliminated. The Company's consolidated financial statements include the accounts of wholly owned subsidiaries Hudson Technologies Company [formerly named Refrigerant Reclamation Corporation of America, Inc. ("RRCA")] and Environmental Support Solutions, Inc. ("ESS"), together with other controlled affiliates. Reclassifications Certain 1996 amounts have been reclassified to conform with 1997 presentation format. Amounts reclassified had no impact on consolidated operating loss or net loss. Fair value of Financial Instruments The carrying values of financial instruments including trade accounts receivable, and accounts payable approximate fair value at September 30, 1997 and December 31, 1996, because of the relatively short maturity of these instruments. The carrying value of short-and long-term debt approximates fair value at September 30, 1997 and December 31, 1996, based upon quoted market rates of similar debt issues. The fair value of officer and shareholder notes cannot be determined due to the nature of the transactions. 5 Hudson Technologies, Inc. and subsidiaries Notes to Consolidated Financial Statements Credit Risk Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of temporary cash investments and trade accounts receivable. The Company maintains its temporary cash investments in highly rated financial institutions. The Company's trade accounts receivables are due from companies throughout the U.S. The Company reviews each customer's credit history before extending credit. The Company establishes an allowance for doubtful accounts based on factors associated with the credit risk of specific accounts, historical trends, and other information. Revenue and cost of sales Revenues are recorded upon completion of service, product shipment or passage of title to customers in accordance with contractual terms. Cost of sales is recorded based on the cost of products shipped or services performed and related direct operating costs of the Company's reclamation sites. Cash and cash equivalents Temporary investments with original maturities of ninety days or less are considered cash and cash equivalents. Inventories Inventories, consisting primarily of reclaimed refrigerant products available for sale, are stated at the lower of cost, on a first-in first-out basis, or market. Market value is based on net realizable value. Property, plant, and equipment Property, plant, and equipment are stated at cost; including internally manufactured equipment. Provision for depreciation is recorded (for financial reporting purposes) using the straight-line method over the useful lives of the respective assets. Leasehold improvements are amortized on a straight-line basis over the shorter of economic life or terms of the respective leases. Due to the specialized nature of the Company's business, it is possible that the Company's estimate of equipment useful life may change in the future. Goodwill and intangible assets Goodwill is amortized over 25 years using the straight-line method. Other intangible assets consisting primarily of patents or acquired contract rights are amortized on a straight-line basis over the remaining life of the asset. Income taxes Hudson utilizes the assets and liability method for recording deferred income taxes, which provides for the establishment of deferred tax asset or liability accounts based on the difference between tax and financial reporting bases of certain assets and liabilities, based upon statutory tax rates enacted for future periods. Treasury stock Common stock acquired by the Company is carried at acquisition cost (market price at acquisition date). Loss per common and equivalent shares During February 1997, the FASB issued SFAS No. 128 `Earnings Per Share', which replaces the presentation of primary earnings per share (`EPS'), with basic EPS. It also requires dual presentation of basic and diluted EPS.The Company adopted SFAS No. 128 as of January 1, 1997. The 1996 loss per share has been restated to conform to SFAS No. 128. 6 Hudson Technologies, Inc. and subsidiaries Notes to Consolidated Financial Statements Estimates and Risks The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of certain assets and liabilities, the disclosure of contingent assets and liabilities, and the results of operations during the reporting period. Actual results could differ from these estimates. The Company operates in an industry that is highly regulated, changes in which could affect operating results. The Company purchases unprocessed refrigerants from domestic suppliers and its customers. The Company's inability to obtain refrigerants on commercially reasonable terms or a decline in demand for refrigerants could cause delays in refrigerant processing, possible loss of revenues, and could materially adversely affect operating results. Note 2 - Capital Transactions During January 1997, in connection with the execution of various agreements with E.I. DuPont DeNemours and Company ("DuPont"), the Company sold 500,000 shares of common stock for $3.5 million to an affiliate of DuPont. Proceeds from the sale were primarily utilized to retire debt. During January 1997, certain then outstanding convertible debentures were converted into 133,085 shares of common stock. During 1997, certain officers and other stock option holders exercised options to purchase an aggregate of 83,240 shares of common stock. The Company received proceeds of approximately $452,000 and such proceeds were used for working capital purposes. 7 Hudson Technologies, Inc. and subsidiaries Management's Discussion and Analysis of Financial Condition And Results of Operations The statements contained in this report which are not historical facts are forward looking statements that involve risks and uncertainties, including but not limited to, changes in the markets for refrigerants (including unfavorable market conditions adversely affecting the demand for, and the price of, refrigerants), regulatory and economic factors, increased competition, the nature of supplier or customer arrangements which become available to the Company in the future, adverse weather conditions, technological obsolescence and potential environmental liability. The Company's actual results may differ materially from the results discussed in any forward looking statement. Results of Operations Three months ended September 30, 1997 Revenues totaled $6,960,000, an increase of $1,041,000 or 18% from the $5,919,000 reported during the prior comparable 1996 period. The increase was attributable to an increase in refrigerant product sales. Cost of sales totaled $5,365,000, an increase of $1,522,000 or 40% from the $3,843,000 reported during the comparable prior year period due mainly to higher refrigerant product cost. As a percentage of sales, cost of sales were 77 % of revenues for the three-month period ended September 30, 1997, an increase from the 65% reported for the comparable 1996 period. The increase in cost of sales in both dollars and percentage of revenues was attributable primarily to a change in product mix with a higher volume of lower margin refrigerant product sales occurring during the 1997 period. Operating expenses totaled $1,935,000, an increase of $210,000 or 12% from the $1,725,000 reported during the comparable 1996 period. The increase was attributable to an increase in the number of employees and related expenses. Net loss totaled $480,000, for the three months ended September 30, 1997, as compared to net income of $206,000 reported during the comparable prior year period. The loss was attributable mainly to lower gross profits on refrigerant sales and an increase in operating expenses. Nine months ended September 30, 1997 Revenues totaled $20,459,000, an increase of $5,333,000 or 35% from the $15,126,000 reported during the comparable 1996 period. The increase was attributable primarily to the increase in refrigerant product sales. Cost of sales totaled $17,768,000, an increase of $7,786,000 or 78% from the $9,982,000 reported during the comparable prior year period. As a percentage of sales, cost of sales were 87% of revenues for the nine-month period ended September 30, 1997, an increase from the 66% reported for the comparable prior year period. The increase in both dollars and percentage of revenues was attributable primarily to a higher volume of lower margin refrigerant product sales and the reduction of inventory values in the second quarter by $983,000 to net realizable value. Operating expenses totaled $6,251,000, an increase of $516,000 or 9% from the $5,735,000 during the comparable 1996 period. The increase was attributable to the Company's acquisitions (namely ESS and GRR Co., Inc.) and the increase in the number of employees and related expenses offset by the lack of a restructuring reserve in 1997. Net loss totaled $4,004,000, an increase of $3,592,000 from the $412,000 net loss reported during the 1996 period. The increase was attributable mainly to lower gross profits on refrigerant sales, the reduction of inventory values to net realizable value and an increase in operating expenses. 8 Hudson Technologies, Inc. and subsidiaries Management's Discussion and Analysis of Financial Condition And Results of Operations (continued) Liquidity and Capital Resources Net cash provided by operating activities totaled $693,000 for the nine months ended September 30, 1997 compared with a net cash usage of $4,073,000 for the prior year comparable period. Net cash provided by operating activities was attributable mainly to the reduction of inventories, partially offset by an increase in net loss and trade accounts receivable. Net cash used in investing activities was $982,000 for the nine months ended September 30, 1997, compared with net cash usage of $3,917,000 for the prior comparable period. The decrease in net cash usage of $2,935,000 was attributable to the non-recurrence of the 1996 acquisitions and a reduction in equipment additions. Net cash provided by financing activities totaled $535,000 for the nine months ended September 30, 1997 and consisted mainly of issuance of common shares to DuPont ($3.5 million) offset by retirement of debt ($3.1 million). Net cash provided by financing activities totaled $6,049,000 for the nine-month period ended September 30, 1996 and consisted mainly of proceeds of $5,300,000 from the issuance of convertible debt. At September 30, 1997, the Company reported cash and equivalents of $668,000. On May 10, 1996, the Board of Directors authorized the Company to acquire, from publicly traded markets, a maximum of 25,000 issued and outstanding shares of its own Common Stock. As of December 31, 1996, the Company had repurchased 21,000 shares at an average price of $8.25 per share. No repurchases were made during 1997. On June 18, and September 30, 1996, the Company issued Convertible Debentures with a combined face value of $5.3 million. These debentures were retired or converted to common stock during January 1997. On July 24, 1996, the Company completed the acquisition of GRR Co., Inc. in consideration of the issuance of 20,000 unregistered shares of the Company's Common stock. In connection with its bankruptcy reorganization in June 1994, prior to its acquisition by Hudson, RRCA has obligations (as modified by a settlement during April 1996) totaling $268,000 at September 30, 1997 payable in periodic payments to bankruptcy creditors through July 2000. On November 14, 1996, certain officers and stockholders of Hudson granted unsecured loans ($678,000) to the Company; repayable upon receipt of proceeds from property mortgage (see below) or on subsequent demand. On January 29, 1997, the Company repaid the officer loans and accrued interest outstanding. During 1996, the Company mortgaged its property and building located in Ft. Lauderdale with Turnberry Savings Bank, NA. The mortgage ($691,000 at September 30, 1997) bears a fixed annual interest rate of 9.25% and is repayable over 20 years commencing February 1997. 9 Hudson Technologies, Inc. and subsidiaries Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) During January 1997, in connection with the execution of various agreements with E.I. DuPont de Nemours ("DuPont"), the Company obtained additional equity funds ($3.5 million) from an affiliate of DuPont. Proceeds from this funding were utilized primarily to retire debt. During January 1997, the Company entered into an agreement to purchase a 29,000 square foot facility on 5.15 acres in Congers, New York for approximately $1.4 million; subject to approvals and ability to obtain financing. The Company is leasing the facility in the interim period. During May 1997, certain officers and stockholders of the Company granted unsecured loans in the aggregate of $585,000 to the Company. Such loans were due on demand and bore interest from 8.0% to 8.88%. On August 12, 1997, the Company repaid the officers loans and outstanding interest. The Company has a bank line of credit ($3.0 million) with MTB Bank N.A. ('MTB'), which bears interest at a rate of prime plus 2%. Advances under the MTB line ($1,952,000 at September 30, 1997) were limited to 85% of eligible trade accounts receivable and 50% of inventories not exceeding trade receivable lending limits or $1.5 million. Substantially all the Company's assets are pledged as collateral to MTB Bank. The Company was in compliance with all terms of the MTB Bank agreement at September 30, 1997. The agreement expires February 15, 1998. At September 30, 1997, the Company had working capital of approximately $4,190,000. Working capital consists principally of inventory. The Company's ability to sell its inventory and the prices at which it can be sold is subject to current market conditions. The Company has historically financed its working capital requirements through cash flows from operations, the issuance of debt and equity securities, bank borrowings and loans from officers. Presently, the Company does not have significant availability under its line of credit, which expires on February 15, 1998. The Company is seeking to implement an expanded bank credit line; however, there is no assurance that any financing will be available to the Company. Failure to obtain financing could have a material adverse affect on the Company's financial condition and results of operations. Reliance on Suppliers The Company's financial performance is in part dependent on its ability to obtain sufficient quantities of domestic virgin and reclaimable refrigerants from manufacturers, wholesalers, distributors, bulk gas brokers, and from other sources; and on corresponding demand for reclaimed refrigerants. To the extent that the Company is unable to obtain sufficient quantities of refrigerants in the future, or resell reclaimed refrigerants at a profit, the Company's financial condition and results of operations would be materially adversely affected. During January 1997, the Company entered into agreements with DuPont to market DuPont's SUVA(TM) refrigerants. Under the agreement, 95% of virgin refrigerants provided to specified market segment customers must be purchased from DuPont. Seasonality and Fluctuations in Operating Results The Company's operating results vary from period to period as a result of weather conditions, requirements of potential customers, availability and price of refrigerant products (virgin or reclaimable), changes in reclamation technology, timing in introduction and / or retrofit of CFC-based refrigeration equipment by domestic users of refrigerants, the rate of expansion of the Company's operations, and by other factors. The Company's business has historically been seasonal in nature with peak sales of refrigerants occurring in the first half of each year. However, the second quarter of 1997 was adversely impacted, in part, to the unseasonably cool weather. Unforeseen events, including the delays in securing adequate supplies of refrigerants at peak demand periods, 10 PART II. OTHER INFORMATION Hudson Technologies, Inc. and subsidiaries lack of refrigerant demand, or declining refrigerant prices, regulatory and economic factors, increased competition, adverse weather conditions, technological obsolescence and potential environmental liability could result in significant fluctuations in the Company's operating results or losses. There can be no assurance that the foregoing factors will not result in material adverse affect of the Company's financial condition and results of operations. Item 1. Legal Proceedings During June 1995, United Water of New York Inc. ("United") alleged that it discovered that two of its wells within close proximity to the Company's facility showed elevated levels of refrigerant contamination. During June 1996, United notified the Company that it was seeking indemnification by the Company for costs incurred to date as well as costs expected to be incurred in connection with United taking remedial action. During July 1996, United threatened to institute legal action in the event that the Company declined to settle this matter. During August 1996, the Company received a letter from the New York State Department of Environmental Conservation ("DEC") which stated that in the opinion of DEC the Company's refrigerants were the cause of the contamination of United's wells. The DEC letter states that it is not aware of the extent of the contamination or how the refrigerants entered the groundwater. During December 1996, the Company and United Water entered into an interim settlement agreement which provided for (a) reimbursement ($84,000) of United's operating costs associated with certain wells through August 1996, (b) reimbursement, subject to a dollar cap of $12,650 per month, of United monthly operating costs for certain wells from September 1996 through April 1997, and (c) continued monitoring of refrigerant groundwater levels. Under the agreement, United agreed not to commence legal action against the Company prior to May 1, 1997. Neither party waived their rights as a result of the interim agreement. During August and September 1997, various proposals for possible further remediation were discussed with the DEC and United in light of the reduction of the levels of refrigerant in United's wells. Since August 1997 the levels of refrigerant have been nearly non-detectable. The Company is currently considering what, if any further remediation or action should be taken by the Company. There can be no assurance that United will not commence legal action seeking substantial damages and/or other relief; that any legal action or settlement will be resolved in a manner favorable to the Company; or that the ultimate outcome of any legal action or settlement will not have a material adverse effect on the Company's financial condition and results of operations. In June 1997, an action was commenced against the Company in the 19th Judicial District Court, Parish of East Baton Rouge, State of Louisiana, by a former salesperson and her spouse, who was terminated by the Company in June 1996, alleging that the Company wrongfully terminated the employee, and is seeking unspecified damages. The Company is defending the action and caused the action to be removed to the Federal District Court. The Company believes the allegations in the complaint to be without merit. There can be no assurance that the Company will be successful in the defense of this action or that the matter will ultimately be resolved in a manner favorable to the Company. Item 6. Exhibits and Reports on Form 8-K Exhibits a) The following exhibits are attached to this report. Exhibit 27: Financial Data Schedule (for SEC use only) b) No report on Form 8-K was filed during the quarter ended September 30, 1997. 11 Hudson Technologies, Inc. and subsidiaries Form 10-QSB of September 30, 1997 SIGNATURES Pursuant to the requirements of the Exchange Act, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. HUDSON TECHNOLOGIES, INC. By: /s/ Kevin J. Zugibe November 12, 1997 --------------------------------------- Kevin J. Zugibe Date President/CEO By: /s/ Brian F. Coleman November 12, 1997 --------------------------------------- Brian F. Coleman Date Vice President and Chief Financial Officer 12 EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-QSB AT SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS, 9-MOS DEC-31-1997 SEP-30-1997 668,000 0 4,769,000 429,000 4,299,000 9,744,000 6,202,000 0 25,411,000 5,554,000 0 0 0 51 18,496,000 25,411,000 20,459,000 20,459,000 17,768,000 17,768,000 1,041,000 0 524,000 (4,004,000) 0 (4,004,000) 0 0 0 (4,004,000) $(0.81) $(0.81)
-----END PRIVACY-ENHANCED MESSAGE-----