U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB Mark One: [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended May 31, 1996 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________________ to ______________________ Commission file number 0-25702 AMWEST ENVIRONMENTAL GROUP, INC. (Name of Small Business Issuer in its charter) NEVADA 88-0289700 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 10701 LOS ALAMITOS BLVD. LOS ALAMITOS, CA 90720 (Address of principal executive offices) (Zip Code) Issuer's Telephone Number: (310) 799-1888 - - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. __________________________________ Transitional Small Business Disclosure Format (check one); Yes___ No _X_ PART I - FINANCIAL INFORMATION Item 1. Financial Statements. See Part II, Item 6. Item 2. Management's Discussion and Analysis or Plan of Operation. Analysis of Financial Condition and Results of Operation The following table sets out the financial condition of the Registrant for the last fiscal year and the period ended May 31, 1996: May 31, 1996 August 31, 1995 ------------ --------------- Statement of Earnings: Revenue .......................... $ 906,940 $ 1,500,375 Net Income (Loss) ............................ ($ 696,332) ($ 1,171,365) Per Share Net Income (Loss) .................. ($ 0.039) ($ 0.07) Number of Common Shares Outstanding .......... 18,243,963 16,599,038 Balance Sheet Data: Total Assets ..................... $ 5,228,833 $ 545,515 Total Current Liabilities .................... $ 597,934 $ 631,217 Cash Dividends Declared per Common Share ..... $ 0 $ 0 Stockholders' Equity ......................... $ 4,359,350 $ 3,285,832 Net loss for the period ended May 31, 1996 was $696,332. There was a net loss of $1,171,365 for the fiscal year ended August 31, 1995, up from a net loss of $1,092,997 recorded for the fiscal year ended August 31, 1994. The primary reasons for the loss during the fiscal year ended August 31, 1995 were heavy -2- one-time startup costs of the Registrant's subsidiaries. The factors contributing to this loss are isolated events but may possibly occur again in the next fiscal year. The Registrant has experienced growth in terms of projects finished, marketing activities, and future contracts. Continuing the activities from 1994, the major areas of activities are in engineering, consultation, and construction. The former includes property Phase I assessments, site Phase II investigations, site Phase III remediations, solid wastes and wastewater treatments. The latter includes underground storage tank (UST) removal and installation, and construction of remediation facilities. The clients of Amwest have been primarily in private industries. However, in this period, several projects have been contracted with the public sector. This trend is anticipated to continue, reaching a balance between the private and public sectors. As of the second quarter of 1994 the Registrant had an accumulated volume of contract completed or in progress of $2,909,081. During the most recent fiscal year, ending the second calendar quarter of 1995, the Registrant estimates that it procured an additional $1,643,094 in contracts bringing its estimated volume on contracts, from inception, to $4,552,175. Registrant has performed most of its engineering, consultation and construction in Southern California. All projects of the Registrant have been finished in a timely manner. The volume of work available to the Registrant and other environmental companies in Southern California and the United States is increasing. Management of the Registrant can not foresee change in this condition in the near future. As a result of the aforesaid increase in available work the Registrant should sustain its present growth for the short term (one year) and possibly on a long term basis (more than one year). The Registrant has entered into a joint venture with the city of Beijing, China. The future of this contract is questionable as the Registrant has, as of this date, been unable to locate sufficient financing. The existence of this contract should not impact the regular operation of the Registrant. During the last fiscal year the Registrant began operation of two of its subsidiaries, Amwest Bluestar Corporation and Amwest Environmental Engineering Corporation. The starting costs for these subsidiaries accounted for a substantial part of the loss incurred by the Registrant. The Registrant anticipates these subsidiaries, individually, will produce positive cash flow during the next fiscal year. In addition to Bluestar and Engineering, the Registrant incurred starting costs for three additional subsidiaries: Amwest International Corporation, Amwest Manufacturing Corporation, and Amwest Environmental Sciences Corporation. These subsidiaries are not presently operating -3- entities. Management presently cannot foresee whether these entities may become profitable. The following chart lists the estimated startup costs for each of the above named subsidiaries expended in the past fiscal year. Name Estimated Startup Cost Amwest Engineering Corporation $150,000.00 Amwest Bluestar Corporation $350,000.00 Amwest International Corporation $150,000.00 Amwest Environmental Sciences Corporation $100,000.00 Amwest Manufacturing Corporation $150,000.00 Plan of Operation Management believes that the Registrant cannot satisfy its cash requirements for the next twelve (12) months from its cash flow. In order to satisfy the need for additional funds the Registrant intends to use its real property as collateral for a line of credit. It is anticipated that this line of credit along with funds generated from new and present contracts will be sufficient to satisfy the financial needs of the Registrant during the next fiscal year. Presently the Registrant has several projects in the research and development stage. These projects include a treatment for "oily sludge", a process for the manufacturing of products from recycled rubber, and a cryogenic process for the production of ultra-fine crumb rubber. Ultra-fine crumb rubber can be used as the basis for most rubber products. As these projects are in their initial stages, management cannot state with any certainty whether any project will be completed or result in the generation of income. PART II - OTHER INFORMATION Item 1. Legal Proceedings. The Company is not a party to any litigation and is not aware of any pending or threatened litigation. -4- Item 2. Changes in Securities. None. Item 3. Defaults Upon Senior Securities. None. Item 4. Submission of Matters to a Vote of Security Holders. None. Item 5. Other Information. None. Item 6. Exhibits and Reports on Form 8-K. Financial Statements of May 31, 1996 ........................ F-1 through F-12. -5- SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AMWEST ENVIRONMENTAL GROUP, INC. Date: ______________ ______________________________________________________ (name and title) Date: ______________ ______________________________________________________ (name and title) -6-