1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2001
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 1-11097
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3CI COMPLETE COMPLIANCE CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 76-0351992
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
910 Pierremont, #312 Shreveport, LA. 71106
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(Address of principal executive offices)
(Zip Code)
(318)869-0440
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(Registrant's telephone number, including area code)
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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 [X] NO [ ]
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Indicate the number of shares outstanding of each of the issuer's
classes of Common Stock, as of the latest practicable date.
The number of shares of Common Stock outstanding as of the close of
business on May 8, 2001, was 9,198,325.
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3CI COMPLETE COMPLIANCE CORPORATION
INDEX
PAGE
NUMBER
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets as of
March 31, 2001 (unaudited) and September 30, 2000 (audited) ................................................ 3
Statements of Operations for the three and six months ended
March 31, 2001 and 2000 (unaudited) ........................................................................ 4
Statements of Cash Flows for the
six months ended March 31, 2001 and
2000 (unaudited) ........................................................................................... 5
Notes to Financial Statements (unaudited)...................................................................... 6
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 2. Changes in Securities ......................................................................................... 11
Item 3. Defaults Upon Senior Securities ............................................................................... 11
Item 4. Submission of Matters to a Vote
Of Security Holders ....................................................................................... 11
Item 5. Other Information ............................................................................................. 11
Item 6. Exhibits and Reports on Form 8-K .............................................................................. 11
SIGNATURES..................................................................................................................... 13
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ITEM 1. FINANCIAL STATEMENTS
3CI COMPLETE COMPLIANCE CORPORATION
BALANCE SHEETS
MARCH 31, SEPTEMBER 30,
2001 2000
(UNAUDITED) (AUDITED)
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ASSETS
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $ 50,036 $ 561,189
ACCOUNTS RECEIVABLE, NET ALLOWANCES OF $342,399 AND $281,051
AT MARCH 31, 2001 AND SEPTEMBER 30, 2000, RESPECTIVELY 4,099,742 2,819,920
INVENTORY 58,810 88,062
PREPAID EXPENSES 801,773 396,101
OTHER CURRENT ASSETS 15,599 65,420
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TOTAL CURRENT ASSETS 5,025,960 3,930,692
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PROPERTY, PLANT AND EQUIPMENT, AT COST 14,482,702 14,381,550
ACCUMULATED DEPRECIATION (7,549,208) (6,770,017)
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NET PROPERTY, PLANT AND EQUIPMENT 6,933,494 7,611,533
------------ ------------
EXCESS OF COST OVER NET ASSETS ACQUIRED, NET OF ACCUMULATED AMORTIZATION OF
$214,488 AND $189,988 AT MARCH 31, 2001 AND SEPTEMBER 30, 2000, RESPECTIVELY 342,743 367,243
OTHER ASSETS 15,904 15,929
------------ ------------
TOTAL ASSETS $ 12,318,101 $ 11,925,397
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
NOTES PAYABLE 655,590 227,898
CURRENT PORTION OF LONG-TERM DEBT TO UNAFFILIATED LENDERS 391,569 447,948
ACCOUNTS PAYABLE 508,408 858,524
ACCOUNTS PAYABLE AND ACCRUED INTEREST TO AFFILIATED COMPANIES 522,359 486,502
ACCRUED LIABILITIES 536,702 693,869
DIVIDENDS PAYABLE 497,550 497,550
NOTE PAYABLE MAJORITY SHAREHOLDER 5,629,379 5,629,379
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TOTAL CURRENT LIABILITIES 8,741,557 8,841,670
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LONG-TERM DEBT UNAFFILIATED LENDERS, NET OF CURRENT PORTION 510,103 702,760
------------ ------------
TOTAL LIABILITIES 9,251,660 9,544,430
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SHAREHOLDERS' EQUITY:
PREFERRED STOCK, $0 .01 PAR VALUE, AUTHORIZED 16,050,000 SHARES;
ISSUED AND OUTSTANDING 7,750,000 AT MARCH 31, 2001 AND SEPTEMBER 30, 1999, RESPECTIVELY 77,500 77,500
ADDITIONAL PAID-IN CAPITAL - PREFERRED STOCK 7,672,500 7,672,500
COMMON STOCK, $0.01 PAR VALUE, AUTHORIZED 40,450,000 SHARES;
ISSUED AND OUTSTANDING 9,232,825 AT MARCH 31, 2001 AND SEPTEMBER 30, 2000 92,329 92,329
LESS COST OF TREASURY STOCK 34,500 SHARES (51,595) (51,595)
ADDITIONAL PAID-IN CAPITAL - COMMON STOCK 20,471,145 20,400,778
ACCUMULATED DEFICIT (25,195,438) (25,810,545)
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TOTAL SHAREHOLDERS' EQUITY 3,066,441 2,380,967
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 12,318,101 $ 11,925,397
============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
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3CI COMPLETE COMPLIANCE CORPORATION
STATEMENTS OF OPERATION
(UNAUDITED)
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
MARCH 31, MARCH 31,
2001 2000 2001 2000
----------- ----------- ----------- -----------
REVENUES $ 5,129,220 $4,411,5360 $ 9,674,948 $ 8,626,537
EXPENSES:
COST OF SERVICES 3,051,815 3,001,820 6,315,547 5,774,072
DEPRECIATION AND AMORTIZATION 399,840 424,784 802,700 844,450
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 690,987 709,653 1,359,114 1,203,050
----------- ----------- ----------- -----------
INCOME FROM OPERATIONS 986,578 275,279 1,197,587 804,965
OTHER INCOME (EXPENSE):
INTEREST EXPENSE (201,215) (219,955) (489,331) (445,073)
OTHER INCOME (EXPENSE) (47,269) (50,339) (93,149) (95,587)
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES 738,094 4,985 615,107 264,305
INCOME TAXES -- -- -- --
----------- ----------- ----------- -----------
NET INCOME $ 738,094 $ 4,985 $ 615,107 $ 264,305
=========== =========== =========== ===========
BASIC EARNINGS PER SHARE:
BASIC NET INCOME PER SHARE $ 0.08 $ 0.01 $ 0.07 $ 0.03
=========== =========== =========== ===========
DILUTED EARNINGS PER SHARE:
DILUTED NET INCOME PER SHARE $ 0.04 $ 0.01 $ 0.04 $ 0.02
=========== =========== =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
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3CI COMPLETE COMPLIANCE CORPORATION
STATEMENT OF CASH FLOWS
UNAUDITED
FOR THE SIX MONTHS ENDED MARCH 31,
2001 2000
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CASH FLOW FROM OPERATING ACTIVITIES:
NET INCOME $ 615,107 $ 264,305
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES:
NON-CASH INTEREST EXPENSE 70,367 --
GAIN ON DISPOSAL OF FIXED ASSETS -- 10,737
DEPRECIATION AND AMORTIZATION 802,700 844,450
CHANGES IN OPERATING ASSETS AND LIABILITIES:
(INCREASE) DECREASE IN ACCOUNTS RECEIVABLE, NET (1,279,822) (480,710)
(INCREASE) DECREASE IN INVENTORY 29,252 (5,541)
(INCREASE) DECREASE IN PREPAID EXPENSES (405,672) (375,422)
(INCREASE) DECREASE IN OTHER CURRENT ASSETS AND OTHER ASSETS 50,837 83,346
INCREASE (DECREASE) IN ACCOUNTS PAYABLE (350,116) (107,808)
INCREASE (DECREASE) IN ACCOUNTS PAYABLE, AFFILIATED COMPANIES 35,857 1,701
INCREASE (DECREASE) IN ACCRUED LIABILITIES (157,167) (117,912)
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TOTAL ADJUSTMENTS TO NET INCOME (LOSS) (1,203,764) (147,159)
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NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (588,657) 117,146
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CASH FLOW FROM INVESTING ACTIVITIES:
PROCEEDS FROM SALE OF PROPERTY, PLANT AND EQUIPMENT -- 27,839
PURCHASE OF PROPERTY, PLANT AND EQUIPMENT (101,152) (209,513)
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NET CASH USED IN INVESTING ACTIVITIES (101,152) (181,674)
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CASH FLOW FROM FINANCING ACTIVITIES:
PROCEEDS FROM ISSUANCE OF NOTES PAYABLE 735,453 592,171
PRINCIPAL REDUCTION OF NOTES PAYABLE (307,761) (174,834)
PROCEEDS FROM ISSUANCE OF LONG-TERM DEBT, UNAFFILIATED LENDERS -- 22,867
REDUCTION OF LONG-TERM DEBT, UNAFFILIATED LENDERS (249,036) (424,798)
REDUCTION OF NOTE PAYABLE TO MAJORITY SHAREHOLDERS -- (144,786)
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NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 178,656 (129,380)
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NET DECREASE IN CASH AND CASH EQUIVALENTS (511,153) (193,908)
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CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 561,189 236,387
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CASH AND CASH EQUIVALENTS, END OF PERIOD $ 50,036 $ 42,479
=========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
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3CI COMPLETE COMPLIANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2001
(UNAUDITED)
(1) ORGANIZATION AND BASIS OF PRESENTATION
3CI Complete Compliance Corporation (the Company or 3CI), a
Delaware Corporation, is engaged in the collection, transportation, treatment
and disposal of biomedical waste in the southern and southeastern United States.
Effective October 1, 1998, after approval by the then properly
constituted 3CI Board of Directors, Stericycle Inc., a Delaware corporation
("Stericycle") acquired 100% of the common stock of Waste Systems, Inc. ("WSI")
for $10 million. As a result of the transaction, WSI became a wholly owned
subsidiary of Stericycle. WSI owns 55.5% or 5,104,448 shares of the outstanding
common stock and 100% of the outstanding preferred stock of the Company.
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three-month and six-month period ended
March 31, 2001 are not necessarily indicative of the results that may be
expected for the year ended September 30, 2001.
The balance sheet at September 30, 2000, has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
For further information, refer to the consolidated financial statements and
footnotes thereto included in the Registrant Company's annual report on Form
10-K for the year ended September 30, 2000.
(2) NET INCOME PER COMMON SHARE
The following table sets forth the computation of net income per common share:
FOR THE THREE AND SIX MONTHS ENDED,
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2001 2000 2001 2000
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Numerator:
Net income $ 738,094 $ 4,985 $ 615,107 $ 264,305
----------- ----------- ----------- -----------
Denominator:
Denominator for basic earnings per share
--weighted average shares 9,198,325 9,198,325 9,198,325 9,198,325
----------- ----------- ----------- -----------
Effect of dilutive securities:
Preferred shares and warrants 8,038,686 7,750,000 7,971,818 7,750,000
----------- ----------- ----------- -----------
Denominator for diluted earnings per share-adjusted
Weighted average shares and assumed conversions 17,237,011 16,948,325 17,170,143 16,948,325
----------- ----------- ----------- -----------
Basics earnings per share $ 0.08 $ 0.01 $ 0.07 $ 0.03
----------- ----------- ----------- -----------
Diluted earnings per share $ 0.04 $ 0.01 $ 0.04 $ 0.02
----------- ----------- ----------- -----------
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Included in the three and six month period ended March 31, 2001, are
893,122 warrants that were issued to WSI with an exercise price between $0.10
and $0.20 were included in the computation of diluted earnings per share. Stock
options were not included in the net income per share computation because they
were antidilutive, as the exercise prices ranging from $0.594 to $1.50 were
greater than the average price of the common stock.
(3) BUSINESS CONDITIONS
The Company has historically financed its working capital needs, capital
expenditures, and acquisitions using internally generated funds as well as
borrowings from third parties and advances from its majority shareholder, WSI.
The Company's indebtedness currently consists of amounts owed to WSI which are
described below, insurance premiums that are financed over the course of each
fiscal year, debt incurred in connection with the leasing of the Chem-Clav unit,
and the indebtedness incurred in connection with the purchase of rolling stock.
On October 1, 1998, WSI and the Company amended and restated a
revolving promissory note (the Note). Amounts due under the Note totaled
$5,629,379 as of March 31, 2001 and September 30, 2000, respectively. The Note
bears interest at the prime rate, which is currently 8.0%, plus 2.5%. The
Company was required to maintain a minimum level of net worth and comply with
certain performance related covenants. Interest under the note is due and
payable in quarterly installments on the last business day of each calendar
quarter.
As of June 30, 2000 the Company notified WSI that it anticipated that
it would fail to meet its net income requirement under the Note for the quarter
ended June 30, 2000. Accordingly, WSI and the Company amended and restated the
original note as of August 1, 2000. The Amended and Restated Promissory Note
(the "Amended Note") which matured October 1, 2000 called for interest to be
paid quarterly at prime rate plus 3.5%, per annum not to exceed 13%. In
connection with the Amended Note, in September 2000 3CI issued WSI warrants for
the purchase of up to 351,836 shares of 3CI Common stock at an exercise price of
$.20 per share. These warrants expire September 20, 2002. The warrants have an
estimated fair value of $70,367, which was charged to interest expense. WSI
waived all existing events of default under the existing indebtedness. As of
October 1, 2000 the Amended Note was again extended to January 1, 2001. In
connection with the Amended Note, in December 2000 3CI issued WSI warrants for
the purchase of up to 541,286 shares of 3CI Common stock at an exercise price of
$.10 per share. These warrants expire December 20, 2002. The Amended Note was
once again renewed to July 1, 2001, with an interest rate of 2.5% plus prime not
to exceed 13%. This renewal of the Promissory Note requires the Company to
achieve a minimum level of Earnings before Interest, Taxes, Depreciation and
Amortization ("EBITDA"). If the financial covenant is not met then the Company
is required to issue additional warrants. WSI intends to support the Company
through the year 2001.
In June 1999, the Company established a master lease agreement in the
amount of $3,000,000 with LaSalle National Leasing Corporation. Of the total,
$2,000,000 is to be utilized for the leasing of transportation equipment of
which $215,000 and $390,290 had been utilized at March 31, 2001, and 2000,
respectively, and $1,000,000 for the financing of equipment, of which $461,490
and $578,742 had been utilized at March 31, 2001 and 2000 respectively. This
agreement is guaranteed by Stericycle, Inc. which owns 100% of WSI.
In February 2001, 3CI transferred to Stericycle, through WSI,
approximately 70 accounts located in the Houston, Texas area in exchange for a
reduction in interest due under the Amended Promissory note of approximately
$60,000. The accounts represented approximately $200,000 in annual revenue
during 2000.
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(4) COMMITMENTS AND CONTINGENCIES
The Company is subject to certain other litigation and claims arising
in the ordinary course of business. In the opinion of management of the Company,
the amounts ultimately payable, if any, as a result of such litigation and
claims will not have a materially adverse effect on the Company's financial
position or results of operations.
The Company operates within the regulated medical waste disposal
industry which is subject to intense governmental regulation at the federal,
state and local levels. The Company believes it is currently in compliance in
all material respects with all applicable laws and regulations governing the
medical waste disposal business. However, continuing expenditures may be
required in order for the Company to remain in compliance with existing and
changing regulations. Furthermore, because the medical waste disposal industry
is predicated upon the existence of strict governmental regulation, any material
relaxation of regulatory requirements governing medical waste disposal or of
their enforcement could result in a reduced demand for the Company's services
and have a material adverse effect on the Company's revenues and financial
condition. The scope and duration of existing and future regulations affecting
the medical waste disposal industry cannot be anticipated and are subject to
changing political and economic pressures.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The Company is engaged in the business of medical waste management
services in the southern and southeastern United States. The Company's customers
include regional medical centers, major hospitals, clinics, medical and dental
offices, veterinarians, pharmaceutical companies, retirement homes, medical
testing laboratories and other medical waste generators. Services include
collection, transportation, bar code identification and destruction by
controlled, high temperature incineration and alternative treatment
technologies.
RESULTS OF OPERATIONS
The following summarizes (in thousands) the Company's operations:
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
2001 2000 2001 2000
------- ------- ------- -------
Revenues $ 5,129 $ 4,412 $ 9,675 $ 8,626
Cost of services (3,052) (3,002) (6,316) (5,774)
Depreciation and amortization (400) (425) (803) (844)
Selling, general and administrative (691) (710) (1,359) (1,203)
------- ------- ------- -------
Net income from operations 986 275 1,197 805
------- ------- ------- -------
Interest expense (201) (220) (489) (445)
Other income (expense) net (47) (50) (93) (96)
------- ------- ------- -------
Net income $ 738 $ 5 $ 615 $ 264
======= ======= ======= =======
EBITDA* $ 1,339 $ 650 $ 1,907 $ 1,554
======= ======= ======= =======
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(1) EBITDA is calculated as the sum of net income, plus interest expense, income
tax expense, depreciation expense, and amortization expense. We consider EBITDA
to be a widely accepted financial indicator of a company's ability to service
debt, fund capital expenditures and expand its business. EBITDA is not
calculated in the same way by all companies, is not a measurement required by
generally accepted accounting principles and does not represent cash flow from
operations as defined by generally accepted accounting principles. EBITDA should
not be considered as an alternative to net income, as an indicator of operating
performance or as an alternative to cash flow as a measure of liquidity.
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THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THREE MONTHS ENDED MARCH 31, 2000:
REVENUES increased by $717,684, or approximately 16.3%, to $5,129,220 during the
three months period ended March 31, 2001, from $4,411,536 for the three-month
period ended March 31, 2000. This increase is primarily due to an increase in
pricing strategy necessary to cover higher operating costs. The new pricing
which primarily affected the Company's small quantity generators was implemented
in December 2000.
COST OF SERVICES increased $49,995 or approximately 1.7%, to $3,051,815 during
the three months ended March 31, 2001, compared to $3,001,820 for the three
month period ended March 31, 2000. The reasons for the increase were primarily
attributable to an increase of external processing fees that have been incurred
as the Company was refurbishing its own treatment facilities. Also the Company
has incurred increased transportation costs related to the rise in diesel fuel
and other petroleum based products that the Company utilizes in its business.
Cost of revenues as a percentage of revenues decreased to 59.5% during the three
months ended March 31, 2001, as compared to 68% during the three months ended
March 31, 2000.
DEPRECIATION AND AMORTIZATION expense decreased to $399,840 for the three months
ended March 31, 2001, from $424,784, for the three months ended March 31, 2000.
The decrease was related to certain assets becoming fully depreciated.
SELLING, GENERAL AND ADMINISTRATIVE expenses decreased to $690,987, during the
three months ended March 31, 2001, from $709,653, during the three months ended
March 31, 2000. This decrease of $18,666, or 2.6%, is primarily attributable to
a reduction in various administrative expenses. Selling, general and
administrative expenses decreased as a percentage of revenue to 13.5% for the
three months ended March 31, 2001, as compared to 16.1% for the three months
ended March 31, 2000.
INTEREST EXPENSE decreased by $18,740, or 8.5%, to $201,215 during the three
months ended March 31, 2001, as compared to $219,955 for the months period ended
March 31, 2000.
EARNINGS BEFORE INTEREST TAXES DEPRECIATION AND AMORTIZATION ("EBITDA") totaled
$1,339,149 or 26.1% of revenue for the quarter ended March 31, 2001 compared to
$649,724 or 14.7% of revenue for the quarter ended march 31, 2000. This increase
was primarily the result of the newly implemented pricing strategy as referred
to above.
SIX MONTHS ENDED MARCH 31, 2001 COMPARED TO SIX MONTHS ENDED MARCH 31, 2000:
REVENUES increased by $1,048,411, or 12.2%, to $9,674,948 during the six months
period ended March 31 2001, from $8,626,537 for the six month period ended March
31, 2000. This increase is primarily due to an increase in pricing strategy
necessary to cover higher operating costs. The new pricing which primarily
affected the Company's small quantity generators was implemented in December
2000.
COST OF SERVICES increased $541,475, or 9.4%, to $6,314,547, during the six
months ended March 31, 2001, compared to $5,774,072 for the six month period
ended March 31, 2000. The increase in cost of services is also attributable to
the increase of the Company's packaging and container costs, transportation
costs and external processing fees. Cost of revenues as a percentage of revenues
decreased
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to 65.3% during the six months ended March 31, 2000, as compared to 66.9% during
the six months ended March 31, 2000.
DEPRECIATION AND AMORTIZATION expense decreased to $802,700 for the six months
ended March 31, 2001, from $844,450 for the six months ended March 31, 2000. The
decrease was related to certain assets becoming fully depreciated.
SELLING, GENERAL AND ADMINISTRATIVE expenses increased to $1,359,114 during the
six months ended March 31, 2001, from $1,203,050 during the six months ended
March 31, 2000. This increase of $156,064, or 13%, is primarily attributable to
a one-time benefit recorded in the six months ended March 31, 2000, from the
settlement of an insurance claim for $200,000. Exclusive of this benefit the
selling, general and administrative expenses decreased by $81,475, or 5.5%, as a
result of reduced professional and legal fees. Exclusive of the one-time
insurance benefit, selling, general and administrative expenses decreased by
$43,937 or 3.1%, which is a result in the reduction of various administrative
expenses. Selling, general and administrative expenses increased as a percentage
of revenue to 14% for the six months ended March 31, 2001, as compared to 13.9%
for the six months ended March 31, 2000.
INTEREST EXPENSE increased by $44,258 or 9.9% to $489,331 during the six months
ended March 31, 2001 as compared to $445,073 during the six months ended March
31, 2000. This increase was primarily due to higher loan commitment fees and an
increase in the interest rate for the WSI promissory note, which is variable and
tied to the prime interest rate.
EARNINGS BEFORE INTEREST TAXES DEPRECIATION AND AMORTIZATION ("EBITDA") totaled
$1,907,137 or 19.7% of revenue for the six months ended March 31, 2001 compared
to $1,553,828 or 18% of revenue for the six months ended March 31, 2000. This
increase was primarily the result of the newly implemented pricing strategy as
referred to above. Adjusted for a one-time benefit of an insurance settlement
totaling $200,000 received in the six month period ended March 31, 2000, EBITDA
increased $553,310, or 40.9%.
LIQUIDITY AND CAPITAL RESOURCES
On June 1, 2000 the Company declared a $0.0705 dividend on the series B
preferred stock which totaled $493,500 and represented the undeclared dividends
accrued for the period from June 24, 1999 through April 30, 2000. The resolution
called for the payment in cash from funds of the Corporation legally available
for the payment of dividends, as and when the Board of Directors may direct by
further resolution of the Board. In addition to the dividends declared,
undeclared dividends in arrears for the preferred stock as of March 31, 2001
totaled $586,824.
At March 31, 2001, the Company had net working capital, exclusive of
the note payable to its majority shareholder, of $1,913,782 compared to a net
working capital exclusive of the note payable to its majority shareholder of
$718,401 at September 30, 2000. This increase in net working capital of
$1,195,381 is related to increase in accounts receivable and prepaid assets.
Net cash used in operating activities was $588,657 during the six-month
period ended March 31, 2001, compared to net cash provided by operating
activities of $117,146 for the six-month period ended March 31, 2000. This
decrease of $705,803 was due to the increase in current assets, primarily
accounts receivable, and repayment of current liabilities.
Net cash used in investing activities for the six months ended March
31, 2001, was $101,152, principally for machinery and equipment. During the
first two quarters of the fiscal year ending
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September 30, 2000, the Company invested $209,513 for purchases of
transportation equipment, computer equipment and software.
Net cash provided by financing activities was $178,656 during the six
month period ended March 31, 2001, as compared to net cash used in financing
activities of $129,380 during the six month period ended March 31, 2000. The
difference is primarily the result of the proceeds form the financing of notes
payable.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings -
The Company is subject to certain other litigation and claims arising
in the ordinary course of business. Management believes the amounts ultimately
payable, if any, as a result of such claims and assessments will not have a
materially adverse effect on the Company's financial position, results of
operations or net cash flows.
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 -
EXHIBIT
NUMBER DESCRIPTION
3.1. Certificate of Incorporation as amended (incorporated by
reference to Exhibit 3(a) of 3CI's registration statement on
Form S-1 (No. 33-45632) effective April 14, 1992).
3.2. Amendment to 3CI's Certificate of Incorporation, as amended
effective June 13, 1995 (incorporated by reference to Exhibit
3.1 of 3CI's Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 1995).
3.3. Amendment to 3CI's Certificate of Incorporation, as amended
effective March 23, 1998 (incorporated by reference to Exhibit
3.3 of 3CI's registration statement on Form S-1 (No.
333-48499), filed March 24, 1998).
3.4 Bylaws, effective May 14, 1995 (incorporated by reference to
Exhibit 3.2 of 3CI's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 1995).
3.5 Amendment of Bylaws effective October 1, 1998.(incorporated by
reference to Exhibit 3.5 of 3CI's report on Form 10-K filed
January 12, 1999)
3.6. Certificate of Designations of 3CI's Series A Preferred Stock
without par value (incorporated by reference to Exhibit 3.6 of
3CI's registration statement on Form S-1 (No. 333-48499),
filed March 24, 1998).
3.7. Certificate of Designations of 3CI's Series B Preferred Stock
without par value (incorporated by reference to Exhibit 3.7 of
3CI's registration statement on Form S-1 (No. 333-48499),
filed March 24, 1998).
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3.8. Certificate of Designations of 3CI's Series C Preferred Stock
without par value (incorporated by reference to Exhibit 3.8 of
3CI's registration statement on Form S-1 (No. 333-48499),
filed March 24, 1998).
4.1 Amended and Restated Secured Promissory Note dated October 1,
1998, in the principal amount of $5,487,307.13 between 3CI and
Waste Systems, Inc. (incorporated by reference to Exhibit 4.4
of 3CI's report on Form 10-K filed January 12, 1999).
4.2 Loan Agreement and Note Amendment dated December 18, 1998, by
3CI and Waste Systems, Inc. (incorporated by reference to
Exhibit 4.5 of 3CI's report on Form 10-K filed January 12,
1999).
4.3 Letter Agreement and Note Amendment dated August 10, 2000 by
3CI and Waste Systems, Inc. (incorporated by reference to
Exhibit 4.3 of 3CI's report on Form 10-K filed December 29,
2000).
4.4 Letter Agreement and Note Amendment dated December 20, 2000 by
3CI and Waste Systems, Inc. (incorporated by reference to
Exhibit 4.4 of 3CI's report on Form 10-K filed December 29,
2000).
10.1 1992 Stock Option Plan of 3CI (incorporated by reference to
Exhibit 10(m) of 3CI's registration statement on Form S-1 (No.
33-45632) effective April 14, 1992).
10.2 Settlement Agreement dated January 1996 between James
Shepherd, Michael Shepherd and Richard T. McElhannon as
Releassors, and the Company, Georg Rethmann, Dr. Herrmann
Niehues, Jurgen Thomas, Charles Crochet and Waste Systems,
Inc., as Releasees (incorporated by reference to Exhibit 10.23
of 3CI's report on Form 10-K filed January 14, 1997).
10.3 Exchange Agreement between 3CI and Waste Systems, Inc. dated
as of June 24, 1997 (incorporated by reference to Exhibit
10.12 of 3CI's registration statement on Form S-1 (No.
333-48499), filed March 24, 1998).
10.4 Stock Purchase and Note Modification Agreement between 3CI and
Waste Systems, Inc. dated as of February 19, 1998
(incorporated by reference to Exhibit 10.13 of 3CI's
registration statement on Form S-1 (No. 333-48499), filed
March 24, 1998).
10.5 Employment Agreement dated May 30, 1998, between 3CI and
Charles D. Crochet (incorporated by reference to Exhibit 10.9
of 3CI's registration statement on Form S-1 (No. 333-48499),
filed March 24, 1998).
10.6 Agreement dated September 30, 1998 among 3CI, Waste Systems,
Inc. and Stericycle, Inc. regarding Section 203 of the
Delaware General Corporation Law (incorporated by reference to
Exhibit 10.14 of 3CI's report on Form 10-K filed January 12,
1999).
10.7 Form of Indemnification Agreement dated August 26, 1998
entered into between 3CI and Valerie Banner, David
Schoonmaker, Charles Crochet, Juergen Thomas, Dr. Werner Kook
and Dr. Clemens Pues (incorporated by reference to Exhibit
10.15 of 3CI's report on Form 10-K filed January 12, 1999).
10.8 Form of Indemnification Agreement dated June 3, 1999 entered
into between 3CI and Robert Waller (incorporated by reference
to Exhibit 10.11 of 3CI's report on Form 10-K filed January
12, 2000).
10.9 LaSalle National Leasing master lease agreement dated June 18,
1999 between LaSalle National Leasing as lessor and the
Company as lessee (incorporated by reference to Exhibit 10.12
of 3CI's report on Form 10-K filed January 12, 2000).
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REPORTS ON FORM 8-K - NONE
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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.
3CI COMPLETE COMPLIANCE
CORPORATION
(Registrant)
Dated: May 8, 2001
By: /s/ Curtis W. Crane
-------------------------------------
Curtis W. Crane, CPA
Chief Financial Officer,
Secretary and Treasurer
(Principal Financial Officer and
Principal Accounting Officer)
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