SECURITIES & EXCHANGE COMMISSIONWASHINGTON, D.C. 20459 FORM 8K
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report: February 25, 1998
(Date of earliest event reported)
Nytest Environmental Inc.
Exact name of registrant as specified in its charter
State of other jurisdiction of Commission I.R.S Employer
incorporation or organization File No. Identification No.
60 Seaview Boulevard, Port Washington, New York11050
(Address of principal executive offices)
Registrant's telephone number, including area code: (516) 625-5500
(Former name or address if changed since last report)
ITEM 1. ACQUISITIONS
On July 17, 1995, the Company organized NEI of Pennsylvania, Inc., a Delaware
corporation (NEIPA), as a wholly owned subsidiary to acquire and operate a
testing laboratory in Norristown, Pennsylvania. Effective August 5, 1995, NEIPA
acquired from BCM Engineers, Inc., a wholly owned subsidiary of Smith Technology
Corp., certain assets comprising of an environmental testing laboratory in
Norristown, Pennsylvania. The Company has ceased operations in Norristown,
Pennsylvania on September 1, 1996. See Item 3.
Effective December 31, 1995, the Company organized NEI/GTEL Environmental
Laboratories, Inc., a Delaware corporation (NEI/GTEL), as a wholly owned
subsidiary of the Company, to acquire the business and substantially all of the
assets of GTEL Environmental Laboratories, Inc. ("GTEL"), a subsidiary of
Groundwater Technologies, Inc. In exchange for the assets acquired plus closing
costs, NEI/GTEL paid $ 3,200,000 in a combination of cash, assumption of
liabilities and the issuance of a secured convertible note in the amount of $
1,095,000. NEI/GTEL, as part of the transaction, hired all of the active
employees of GTEL. NEI/GTEL also entered into a long term lease for the use of
the GTEL Wichita, Kansas facility and assignment and assumption agreements for
the leases of GTEL facilities in Tampa, Florida and Milford, New Hampshire.
Although the Company formed a wholly owned subsidiary, NEI/GTEL Environmental
Laboratories, Inc. to purchase these laboratories; the Company guaranteed the
loans from The CIT Group with respect to NEI/GTEL. The Company was often
required to infuse funds into the subsidiary for operations. See Item 4.
The Company's subsequent financial difficulties resulted from the purchases of
these additional laboratories. These acquisitions proved unprofitable and
difficult to manage with the Company's management structure. The decrease in
environmental regulation enforcement by the government, and an over built
capacity in the analytical testing industry, also compounded the Company's
ITEM 2. LOANS PAYABLE
On April 23, 1996, the Company executed a loan and security agreement with a
finance company, for a three-year term with $ 7,000,000 maximum borrowing that
includes a $2,606,000 term loan sub limit for equipment financing. Additional
advances under agreement are limited to no more than 80% of eligible accounts
receivable, as defined.
The initial advance for equipment financing was $ 1,840,120. The agreement
provides for an additional $ 766,000 for equipment purchases during the term of
the agreement. All advances for equipment are being amortized in sixty
consecutive monthly installments until the expiration of the agreement when all
unpaid amounts will become payable.
The Company also has short term loan agreements with both Fluor Daniel GTI and
the Company's former lender for a total of $ 700,000. As of March 31, 1997, the
balance outstanding for the short term loans was $ 583,333. In April 1997, the
Company amended its agreement with its former lender such that it will pay the
balance due by the Company in eight monthly payments of $ 29,167 beginning July1, 1997.
ITEM 3. THE CLOSING OF NEI OF PENNSYLVANIA, INC. (NEIPA)
On August 6, 1996, the Company's Board of Directors approved the closing of the
Norristown, Pennsylvania laboratory. The laboratory ceased operations on
September 1, 1996. This decision was predicated on the continued losses
sustained due to the substantial slowdown in revenue and testing requirements of
the facilities principal customer.
As a result of this decision, the June 30, 1996 financial statements reflected
an accrual for estimated laboratory closing costs totaling $ 800,000. These
costs were primarily comprised of rent and related occupancy costs to the end of
the lease obligation through February 2000. The September 30, 1996 financial
statements included a reduction of $ 50,000 in the accrual for estimated
laboratory closing costs. On April 11, 1997, the Company and Smith agreed to
terminate the leases and release the Company's wholly owned subsidiary, NEIPA,
from its obligations. As a result, the Company recouped $ 609,000 of this
accrual which was reflected in the December 31, 1996 financial statements.
ITEM 4. OTHER EVENTSTHE CLOSING OF NEI/GTEL ENVIRONMENTAL LABORATORIES, INC
On September 22, 1997, the Company's Board of Directors approved the closing of
the NEI/GTEL Environmental Laboratories. The laboratory in Milford NH ceased
operations on September 26, 1997. The laboratories in Wichita, KS and Tampa, FL
ceased operations on December 8, 1997. This decision was predicated on the
continued losses sustained at these laboratories due to the substantial slowdown
in revenue and testing requirements.
On December 12, 1997, our lender The CIT Group notified the Company that it was
in default of its Financing Agreements.
On December 22, 1997, Nytest Environmental Inc. gave peaceful possession of all
the assets its wholly owned subsidiary the NEI/GTEL Environmental Laboratories
Inc to its lender The CIT Group.
THE CLOSING OF NYTEST ENVIRONMENTAL INC.
On January 8, 1998, the Company's Board of Directors decided that it was in the
best interest of the company, its employees, creditors and other interested
parties to file for relief under Chapter 11 the United States Bankruptcy Code.