U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 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 No. 0-24490
AQUAGENIX, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 65-0419263
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
6500 Northwest 15th Avenue, Fort Lauderdale, Florida 33309
(Address of principal executive offices)
(305) 975-7771
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 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
The number of shares outstanding of the issuer's Common Stock, $.01 Par Value,
as of May 2, 1995 was 3,226,558.
Transitional Small Business Disclosure Format: Yes No X
Page 1 of 65 Pages
Exhibit Index at Page 18
AQUAGENIX, INC.
FORM 10-QSB
INDEX
PART I. FINANCIAL INFORMATION PAGE
Item 1: Financial Statements
Consolidated Balance Sheets as of December 31, 1995
and March 31, 1996 (unaudited) 3
Consolidated Statements of Operations for the three months
ended March 31, 1995 and March 31, 1996 (unaudited) 4
Consolidated Statements of Cash Flows for the three
months ended March 31, 1995 and March 31, 1996
(unaudited) 5
Notes to Consolidated Financial Statements 6
Pro Forma Condensed Consolidated Balance Sheet as of
March 31, 1996 7
Pro Forma Condensed Consolidated Statement of Operations
for three months ended March 31, 1996 8
Item 2: Management's Discussion and Analysis or Plan of
Operation 9-13
PART II. OTHER INFORMATION 14-16
SIGNATURES 17
AQUAGENIX, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, March 31,
Assets 1995 1996
(Unaudited)
Current assets:
Cash and cash equivalents $ 687,183 $ 810,280
Marketable securities 639,095 0
Accounts receivable, net of allowance for doubtful
accounts of $40,632 and $29,529, respectively 997,567 761,703
Income tax receivable 618,003 486,239
Inventories 370,497 333,386
Net assets of discontinued operations 0 1,192,720
Prepaid expenses and other 254,575 180,054
Total current assets 3,566,920 3,764,382
Property and equipment, net 1,746,016 1,844,814
Intangible assets, net 3,222,013 3,177,583
Deferred financing costs, net 146,875 188,460
Other assets 93,239 73,439
Total assets $ 8,775,063 $ 9,048,678
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of long-term debt $ 628,578 $ 575,077
Borrowings under credit agreements 522,317 404,415
Accounts payable 562,712 473,491
Net liabilities of discontinued operations 449,550 0
Other current liabilities 411,438 251,220
Total current liabilities 2,574,595 1,704,203
Long-term debt, net of current maturities 5,032,388 5,023,898
Total liabilities 7,606,983 6,728,101
Stockholders' equity:
Preferred stock, par value $.01, 1,000,000 shares
authorized, no shares issued and outstanding 0 0
Common stock, par value $.01, 10,000,000 shares
authorized, 3,210,367 and 3,215,273 shares issued
and outstanding, respectively 32,104 32,153
Additional paid-in capital 8,419,164 8,451,615
Retained earnings (deficit) (7,332,385) (6,163,191)
Unrealized gain on securities 49,197 0
Total stockholders' equity 1,168,080 2,320,577
Total liabilities and stockholders' equity $ 8,775,063 $ 9,048,678
The accompanying notes are an integral part of the Consolidated Financial Statements
3
AQUAGENIX, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31,
1995 1996
Revenues - Aquatic management operations $ 1,365,152 $ 2,252,634
Costs and expenses:
Costs of services 662,748 1,094,942
Selling, general and administrative 493,799 650,634
Depreciation and amortization 48,485 137,089
Total costs and expenses 1,205,032 1,882,665
Operating income 160,120 369,969
Interest income 69,139 41,311
Interest expenses (9,783) (160,790)
Income from continuing operations before income taxes 219,476 250,490
Income tax provision 45,600 0
Income from continuing operations 173,876 250,490
Discontinued operations:
Loss from environmental remediation business segme (9,491) 0
net of income taxes
Change in allowance for estimated phase-out and other
losses from environmental remediation 0 869,507
Net income $ 164,385 $ 1,119,997
Earnings per common and common equivalent shares:
Continuing operations - primary $ 0.05 $ 0.08
Continuing operations - assuming full dilution 0.05 0.08
Discontinued operations 0.00 0.26
Net income per common share 0.05 0.34
Weighted average common and common equivalent shares
outstanding:
Primary 3,216,886 3,354,026
Assuming full dilution 3,231,454 3,354,026
The accompanying notes are an interal part of the Consolidated Financial Statements
4
AQUAGENIX, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
________
Three Months Ended
March 31,
1995 1996
Cash flows from operating activities:
Net income $ 164,385 $ 1,119,997
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 48,485 137,089
(Gain) loss on sale of property and equipment (500) 12,011
Gain on sale of securities (3,035) 0
Provision for doubtful accounts 0 26,368
Discontinued operations (539,016) (1,620,200)
Net change in operating assets and liabilities 127,559 175,488
Net cash used in operating activities (202,122) (149,247)
Cash flows from investing activities:
Proceeds from sale of marketable securities 446,109 624,187
Proceeds from sale of property and equipment 500 10,196
Purchase of property and equipment (44,593) (206,598)
Net cash provided by investing activities 402,016 427,785
Cash flows from financing activities:
Repayments of credit agreements 0 (117,902)
Proceeds from other borrowings 1,144 0
Payments of notes payable and long-term debt (58,666) (70,039)
Issuance of common stock 0 32,500
Net cash used in financing activities (57,522) (155,441)
Cash and cash equivalents:
Increase 142,372 123,097
Beginning balance 270,847 687,183
Ending balance $ 413,219 $ 810,280
Supplemental cash flow information:
Cash paid for interest 9,783 56,623
Cash received for income tax refund 0 131,764
The accompanying notes are an integral part of the Consolidated Financial Statements
5
AQUAGENIX, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Basis of Presentation
The accompanying unaudited consolidated financial statements, as
of and for the three month periods ended March 31, 1995 and
March 31, 1996, do not include all disclosures provided in the
audited annual consolidated financial statements. These
unaudited consolidated financial statements should be read in
conjunction with the consolidated financial statements and the
footnotes thereto, together with management's discussion and analysis
of financial condition and results of operations, contained in the
Company's Annual Report on Form 10-KSB for the year ended
December 31, 1995 of Aquagenix, Inc. (the "Company"), as filed
with the Securities and Exchange Commission. The December 31,
1995 balance sheet was derived from audited consolidated
financial statements, but does not include all disclosures required
by generally accepted accounting principles.
In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments (which are
of a normal recurring nature) necessary for a fair presentation of the
financial position and results of operations. The results of
operations for the interim periods are not necessarily indicative of
the results to be expected for the full year.
2. Subsequent Event
On April 25, 1996, the Company sold certain assets and liabilities
of Haas Environmental Services, Inc. ("HES") to Heart
Environmental Services, Inc. (the "Buyer"), a New Jersey
corporation for a total consideration of $1,907,021. The aggregate
consideration comprises (i) $681,000 in cash, (ii) a three-year
promissory note of $600,000 issued by the Buyer, bearing interest
at 9% per annum and collaterized by the pledge of 499 shares of
the Buyer's Common Stock pursuant to a Stock Pledge Agreement,
(iii) the cancellation of total obligations due to H&H Investments
Corporation, Mr. Eugene M. Haas and Mr. Robert E. Haas
(collectively known as the "Haas Shareholders") which amounted
to $626,021. The consolidated results of the Company for 1996
will be positively impacted by approximately $1.5 million as a
result of the HES sale. The pro-forma condensed consolidated
balance sheet as of March 31, 1996 and the proforma condensed
consolidated income statement for the three months ended March
31, 1996 which give the full effect of the sale of HES based on
financial information available on April 25, 1996 and as if the HES
sale occurred on March 31, 1996 have been presented in the
following pages 7-8.
3. Earnings Per Share
Both primary and fully diluted earnings per common and common
equivalent shares were computed by dividing net income by the
weighted average number of shares outstanding after giving effect
to dilutive stock options and warrants to purchase common stock.
4. Income taxes
No income taxes have been provided for the three month period ended
March 31, 1996 since the company is utilizing a net operating loss
carried forward of approximately $2.6 million which expires in 2010
to offset taxable income.
AQUAGENIX, INC. & SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
AS AT MARCH 31, 1996
PRO FORMA PRO FORMA
AQUAGENIX ADJUSTMENTS CONSOLIDATED
Assets
Current assets excluding net assets of discontinued
operations 2,571,662 681,000<F1> 3,252,662
Net assets of discontinued operations 1,192,720 (650,507)<F2> 542,213
Property and equipment, net 1,844,814 1,844,814
Intangible assets, net 3,177,583 3,177,583
Other assets 261,899 600,000 <F3> 861,899
Total assets $9,048,678 630,493 9,679,171
Liabilities and Stockholders' Equity
Current liabilities 1,704,203 1,704,203
Long-term debts 5,023,898 5,023,898
Stockholders' equity 2,320,577 630,493 <F4> 2,951,070
Total liabilities and stockholders' equity $9,048,678 630,493 9,679,171
<FN>
<F1> Record cash proceeds from the HES Sale.
<F2> Record the sale of certain assets and liabilities of HES.
<F3> Record the promissory note receivable from Heart Environmental Services, Inc., the Buyer.
<F4> Record remaining gain from the HES Sale. Total positive impact on earnings amounted to approximately
$1.5 million, of which approximately $870,000 relates to the change in allowance for estimated phase-out and other
losses from environmental remediation segment.
</FN>
7
AQUAGENIX, INC. & SUBSIDIARIES
PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1996
PRO FORMA PRO FORMA
AQUAGENIX ADJUSTMENTS CONSOLIDATED
Operating income 369,969 0 369,969
Income from continuing operations before income taxes 250,490 0 250,490
Income tax provision 0 0 0
Income from continuing operations 250,490 0 250,490
Discontinued operations:
Loss from environmental remediation business
segment, net of income taxes 0 0 0
Change in allowance for estimated phase-out and
other losses from environmental remediation
segment 869,507 630,4931<F1> 1,500,000
Net income $1,119,997 630,493 1,750,490
Earnings per common and common equivalent shares:
Continuing operations - primary $ 0.08 0.08
Continuing operations - assuming full dilution 0.08 0.08
Discontinued operations 0.26 0.45
Net income per common share 0.34 0.53
Weighted average common and common equivalent
shares outstanding:
Primary 3,354,026 3,354,026
Assuming full dilution 3,354,026 3,354,026
<FN>
<F1> Record remaining gain from the HES Sale.
</FN>
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
General
Aquagenix, Inc. (the "Company"), through its wholly-owned subsidiary,
Environmental Waterway Management, Inc. ("EWM"), provides aquatic
and vegetation management services to both governmental and
commercial customers in Florida, Georgia, North and South Carolina. The
Company's continued emphasis on acquisitions has taken the Company
from a small privately held operation to the current largest provider of
aquatic and vegetation management services in the Southeastern United
States. The Company's operations have grown since 1994 as a result of
internal growth and the selective acquisition of privately held waterway
and vegetation management companies in Florida.
In November 1995, the Company approved a plan to dispose of the
environmental remediation segment which comprises the Company's other
two subsidiaries, Florida Underground Petroleum Tank Contractors, Inc.
("FUPTC") and Haas Environmental Services, Inc. ("HES").
Accordingly, the operations of the environmental remediation segment
have been accounted for as discontinued operations and the operating
losses and discontinuation expenses during the phase-out period have been
provided for in 1995. The operating results for 1996 include only the
continuing operations relating to the aquatic and vegetation managment
business.
Results of Operations
Three Months Ended March 31, 1995 Compared to Three Months Ended
March 31, 1996
Revenues. The Company's revenues increased by $887,482, or 65%,
from $1,365,152 during the three months ended March 31, 1995 to
$2,252,634 during the three months ended March 31, 1996. The increase
in revenues was primarily attributable to an increase in the number of
recurring waterway and industrial vegetation mangement contracts as well
as wetland planting contracts. Much of the growth in revenues resulted
from more intensive marketing efforts combined with an increasing trend
toward governmental outsourcing and the growing need to comply with
environmental laws and regulations. The acquisitions of AmerAquatic,
Inc. ("AmerAquatic Acquisition") and L&L Mosquito & Pest Control, Inc.
("L&L Acquisition") in last quarter of 1995 have further contributed to
this growth by enabling the Company to further expand its customer base
in Florida, northern Georgia, North Carolina and South Carolina.
Cost of services. Cost of services increased by $432,194, or 65.2%, from
$662,748 during the three months ended March 31, 1995 to $1,094,942
during the three months ended March 31, 1996. As a percentage of
revenues, cost of services has remained consistent at 49% for both the
quarters of 1995 and 1996.
Selling, general and administrative. Selling, general and administrative
expense increased by $156,835, or 31.8%, from $493,799 during the three
months ended March 31, 1995 to $650,634 during the three months ended
March 31, 1996. The increase in selling, general and administrative
expenses was due mainly to higher travel expenses, personnel and facility
costs associated with the expanding operations and expenditures to support
the Company's infrastructure. As a percentage of revenues, such expenses
have decreased from 36.2% in 1995 to 28.9% in 1996. The improved
margin was attributable to operating efficiencies and economies of scale
achieved following the AmerAquatic and L&L Acquisitions and internal
growth experienced by the Company. Factors contributing to the
improved margin from the previous period include: reduced public
relations, payroll, travel and telephone expenses as a percentage of
revenues which was also partly due to the streamlining of corporate
operations.
Depreciation and amortization. Depreciation and amortization expense
increased from $48,485 in the first quarter of 1995 to $137,089 in the
first quarter of 1996. Such expense as a percentage of revenues increased
from 3.6% for the quarter ended March 31, 1995 to 6.09% for the
corresponding quarter in 1996. This increase reflected the depreciation of
the additional equipment acquired in connection with the AmerAquatic
Acquisition including the purchase of five "spra-buggies" costing $132,500
in the first quarter of 1996. In addition, there was an increase in
amortization relating to goodwill acquired from the AmerAquatic
Acquisition.
Interest income. Interest income decreased by $27,828, from $69,139
for the first quarter of 1995 to $41,311 for the corresponding quarter of
1996. The decrease in interest income was consistent with the lower
average balance of marketable securities in 1995 as compared to 1996.
Interest expense. Interest expense increased by $151,007 from $9,783
during the three months ended March 31, 1995 to $160,790 during the
three months ended March 31, 1996 primarily as a result of the 12.5%
Senior Secured Note of $5,000,000 issued in October 1995 to finance the
AmerAquatic Acquisition.
Discontinued operations. Other income was related principally to the
change in allowance for estimated phase-out and other losses for
discontinued operations.
Quarterly results. Income from continuing operations increased by
$76,614, or 44.1%, from $173,876 during the three months ended March
31, 1995 to $250,490 during the three months ended March 31, 1996.
There was no provision for income tax for the three months ended March
31, 1996 in view of the net operating loss carryforward. The first
quarter's results is a positive indication of the Company's optimism
towards the strategic decision to focus on its aquatic and vegetation
management business which management believes will continue to show
significant growth potential.
Liquidity and Capital Resources
Working capital. Working capital, which consists principally of cash,
accounts receivable and income tax receivable, was $1,441,875 at
December 31, 1995, compared to $867,459 at March 31, 1996. This
excluded the net assets/liabilities of discontinued operations. The
reduction in working capital was mainly attributable to the improvement
in the collection period for accounts receivable from 39 days at December
31, 1995 to 30 days at March 31, 1996, the liquidation of the marketable
securities and the refund of income tax of $131,764. Of the Company's
accounts receivable outstanding at December 31, 1995 and March 31
,1996, $140,693 (14%) and $ 115,950 (15%) were due from four
customers, respectively. At March 31, 1996, the Company's allowance for
doubtful debts was $29,529 which the Company believes is currently
adequate to cover anticipated losses based on prior experience.
At March 31, 1996, the Company has loan agreements with SunTrust
Bank, Miami, N.A. ("SunTrust") which provided for borrowings under a
revolving line of credit of up to $750,000, a 15-year loan in the principal
amount of $94,144 collaterized by certain real property and equipment
loans in the principal amounts of $90,624. At March 31, 1996, an
aggregate of $538,860 was oustanding under the loan agreeements, of
which $404,415 was outstanding under the line of credit, $90,341 was
outstanding under the 15-year loan and $44,104 was oustanding under
equipment loans. Advances under the line of credit are based on certain
borrowing formulas relating to eligible accounts receivable of EWM. The
receivables of the discontinued operations remain as pledged collateral to
this line of credit but cannot be used as part of the borrowing base under
the line. Interest accrues at 1.5% above prime for the line. This line of
credit expires in March 1997.
Cash flows from operating activities. For the three months ended
March 31, 1995, the Company's cash flows used in operations was
$202,122 as compared to $149,247 for the three months ended March 31,
1996. Of this total cash used in operating activities, $346,385 and
$601,446 were generated from continuing operations for the quarters
ended March 31, 1995 and 1996, respectively. The increase in cash flows
from continuing operations was attributable to the increased net income as
a result of internal growth and acquisitions.
Cash flows from investing activities. Cash provided by investing
activities in the first quarter of 1996 of $624,187 came from the
liquidation of marketable securities. This was partly offset by capital
expenditures of $206,598 for the three months ended March 31, 1996
which related mainly to the purchase of the "spra-buggies". In April 1996,
the Company has refinanced the capital expenditures in relation to the
"spra-buggies" with a commercial equipment financing company who has
approved an equipment financing line of $750,000, of which an initial
drawdown of $150,000 has been made. The Company is currently
negotiating a potential acquisition for the aquatic and vegetation
management business for approximately of $1.5 million which is expected
to be funded from borrowings. In line with its strategic objective of the
expansion of the aquatic and vegetation management business, the
Company will continue to evaluate potential acquisitions utilizing
primarily equity financing until the additional leverage from AmerAquatic
Acquisition is reduced.
Cash flows from financing activities. The Company repaid a total of
$187,941 of its borrowings during the first quarter of 1996.
Discontinued operations. During the three months ended March 31,
1996, the Company repaid all advances made to the discontinued
operations under the previous revolving line of credit with SunTrust which
amounted to approximately $818,000 and the long-term loan of
$1,975,000 to SunTrust which was used to finance the acquisition of HES.
The repayments were funded from the proceeds of the liquidation of
marketable securities and the loan from USL Capital Corporation. The
repayments of these liabilities combined with the other income of $869,507
taken up for the first quarter of 1996 which related principally to
the change in allowance for estimated phase-out and other losses resulted
in net assets of discontinued operations of $1,192,720 at March 31, 1996
compared to net liabilties of $449,550 at December 31, 1995.
The Company has been vigorously continuing its collection efforts in
order to improve the cash flows of its remediation segment until disposal.
Gross accounts receivable for the remediation segment, excluding a
long-term receivable of $1,048,222 at December 31, 1995 and $1,221,642 at
March 31, 1996, has decreased by $1,818,490 from $3,661,354 at
December 31, 1995 to $1,842,864 at March 31, 1996. The decrease was
mainly due to the transfer of the uncollected portion of the accounts
receivable of HES which amounted to approximately $1,188,000 back to
Mr. Eugene M. Haas and Mr. Robert E. Haas, pursuant to the Haas
Purchase Agreement dated as of February 28, 1995.
In March 1996, the Company entered into an agreement with SunTrust for
a one-year extension to February 10, 1997 of the loan of $760,000 (the
"FUPTC Loan") advanced under a revolving line of credit for FUPTC
relating to a specific remediation project. The new terms include a
monthly principal repayment of $5,000 and interest at 1-1/2% above prime.
The new maturity date of the loan will be the earlier of the receipt
of payments from the customer for the specific remediation project or
February 10, 1997. In addition, a principal repayment of $100,000 has
been negotiated to be made in May 1996 in order to release the pledge on
the accounts receivable of HES by SunTrust.
On April 25, 1996, the Company sold substantially all of the assets and
liabilities of HES to Heart Environmental Services, Inc. (the "Buyer"), a
New Jersey corporation for a total consideration of $1,907,021. The total
consideration comprises (i) $681,000 in cash, (ii) a three-year promissory
note of $600,000 issued by the Buyer, bearing interest at 9% per annum
and collaterized by the pledge of 499 shares of the Buyer's Common
Stock pursuant to a Stock Pledge Agreement, (iii) the cancellation of total
obligations due to H&H Investments Corporation, Mr. Eugene M. Haas
and Mr. Robert E. Haas (collectively known as the "Haas Shareholders")
which amounted to $626,021. In connection with the HES Sale, the
Company and the Haas Shareholders entered into a lock-up agreement
relating to the 219,000 shares of the Company's common stock (the
"Shares") owned by the Haas Shareholders. The lock-up agreement
provides that any sale or transfer of the Shares by the Haas Shareholders
will be restricted to an amount of not greater than 20,000 Shares for every
three-month period. As a result of the HES sale, the Company has agreed
not to pursue any claims against the Haas Shareholders in connection with
the Haas acquisition in February 1995. The consolidated results of the
Company for 1996 may be positively impacted by approximately $1.5
million as a result of the HES sale. The pro-forma condensed consolidated
balance sheet as of March 31, 1996 and the proforma condensed
consolidated income statement for the three months ended March 31, 1996
which give the full effect the sale of HES based on financial information
available on April 25, 1996 and as if the HES sale occurred on March 31,
1996 have been presented in the notes to the Consolidated Financial
Statements.
The proceeds from the HES sale have been used to repay a portion of the
loan from USL Capital which amounted to $405,722 which includes
$391,044 principal and $14,678 interest payments. The proceeds will also
be used for a principal repayment of the FUPTC Loan in the amount of
$100,000 in May 1996 as mentioned above and to settle certain remaining
liabilities of HES.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
On April 25, 1996, the Company sold substantially all of the assets and
liabilities of HES to Heart Environmental Services, Inc. (the "Buyer"),
a New Jersey corporation for a total consideration of $1,907,021. The
total consideration comprises (i) $681,000 in cash,
(ii) a three-year promissory note of $600,000 issued by the Buyer,
bearing interest at 9% per annum and collaterized by the pledge of 499
shares of the Buyer's Common Stock pursuant to a Stock Pledge Agreement,
(iii) the cancellation of the promissory note obligation of the Company
of $436,921 by H&H Investment Corporation, Mr. Eugene M. Haas and
Mr. Robert E. Haas (collectively known as the "Haas Shareholders"), also
the shareholders of the Buyer, (iv) the cancellation of the obligations
amounting to $100,000 by the Haas Shareholders pursuant to their
employment termination agreement, (v) the cancellation of the lease
obligations to the Haas Shareholders
amounting to $62,700 in connection to a office lease agreement,
(vi) the cancellation of an equipment note payable of $26,400 by the
Haas Shareholders. In connection with the HES sale, the Company and the
Haas Shareholders entered into a lock-up agreement relating to the
219,000 shares of the Company's common stock (the "Shares") owned by the
Haas Shareholders. The lock-up agreement provides that any sale or
transfer of the Shares by the Haas Shareholders will be restricted to an
amount of not greater than 20,000 Shares for every three-month period.
As a result of the HES sale, the Company has agreed not to pursue any
claims against the Haas Shareholders in connection with the Haas
acquisition in February 1995. Reference is made to the Asset Purchase
Agreement, dated as of April 25, 1996, among the Company, HES, the
Buyer, the Haas Shareholders and Haas Sand and Gravel, Inc., filed as
exhibit 10.76 to the Current Report on Form 8-K dated April 25 1996, for
further information concerning the terms and conditions of the HES sale.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit Description
10.77 First Amendment to Credit Agreement, Revolving Credit Note and
Re-affirmation and Ratification of Guaranty Agreements, dated
March 29, 1996 between SunTrust Bank, Miami, N.A. and the
Company
10.78 Amendment to Loan Agreement, Amended Promissory Note and Re-
affirmation and Ratification of Guaranty Agreements, dated as
of March 29, 1996 between SunTrust Bank, Miami, N.A. and FUPTC
10.79 Contract Between The South Florida Water Management District and
EWM, dated as of February 6, 1996
10.80 Amendment to Senior Secured Note and Warrant Purchase Agreement
between the Company and The Equitable Life Assurance Society of
the United States, dated as of December 15, 1995
27.1 Financial Data Schedule
(b) Reports on Form 8-K
During the quarter ended March 31, 1996, the registrant filed the
following report on Form 8-K:
(i) Current Report on Form 8-K dated March 8, 1996
(filed March 20, 1996) which reported the following events:
(a) the resignations of Mr. Alan Chesler and Mr.Robert Radler as
officers and directors of the Company,
(b) the election of Mr. Andrew Chesler as Chief Executive
Officer, President, Treasurer and Chairman of the Board of
the Company,
(c) election of Mr. Allen H. Stern as director of the Company,
(d) the anticipated consolidated net loss of approximately
$8,000,000 for the year ended December 31, 1995 which related
principally to losses associated with the discontinued
operations of the Company's environmental remediation
segment, and
(e) the award of a new contract with South Florida Water
Management District who has a budget of
$7,000,000 for aquatic and vegetation management services
relating to flood control, water supply and environmental
restoration.
The Company also filed a Current Report on Form 8-K dated April 25,
1996 on May 10 ,1996 which reported the sale of Haas Environmental
Services, Inc. to Heart Environmental Services, Inc. for a total
consideration of $1,907,021, to which reference has been made in this
Form 10-QSB.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
AQUAGENIX, INC.
Date: May 13, 1996 By: /s/ Andrew P. Chesler
Andrew P. Chesler,
Chairman of the Board,
Chief Executive Officer,
President and Treasurer
(Principal Executive Officer)
Date: May 13, 1996 By: /s/ Helen Chia
Helen Chia,
Chief Financial Officer
(Principal Financial and
Accounting Officer)
Exhibit Index
Sequentially
Exhibit Number Description Numbered Page
10.77 First Amendment to Credit Agreement, 19-31
Revolving Credit Note and Re-affirmation
and Ratification of Guaranty Agreements,
dated March 29, 1996 between SunTrust
Bank, Miami, N.A. and the Company
10.78 Amendment to Loan Agreement, Amended 32-45
Promissory Note and Re-affirmation and
Ratification of Guaranty Agreements, dated
dated as of March 29, 1996 between SunTrust
Bank, Miami, N.A. and FUPTC
10.79 Contract Between The South Florida Water 46-60
Management District and EWM, dated as of
February 6, 1996
10.80 Amendment to Senior Secured Note and 61-64
Warrant Purchase Agreement between the
Company and The Equitable Life Assurance
Society of the United States, dated as of
December 15, 1995
27.1 Financial Data Schedule 65