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Securities and Exchange Commission
Washington, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2003
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 0-19761
OP-TECH Environmental Services, Inc.
(Exact name of registrant as specified in its charter)
Delaware 91-1528142
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6392 Deere Road, Syracuse, NY 13206
(Address of principal executive offices) (Zip Code)
(315) 463-1643
(Registrant's telephone number, including area code)
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 or No___
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act)
Yes___ or No X
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of July 31, 2003 15,417,115
OP-TECH Environmental Services, Inc. and Wholly-Owned Subsidiaries
INDEX
PART I. FINANCIAL INFORMATION Page No.
Item 1. Financial Statements
Consolidated Balance Sheets
-June 30, 2003 (Unaudited) and December 31, 2002 (Audited).........3
Consolidated Statements of Operations
-Three months ended June 30, 2003 and June 30, 2002 (Unaudited)
-Six months ended June 30, 2003 and June 30, 2002 (Unaudited)......4
Consolidated Statements of Cash Flows
-Six months ended June 30, 2003 and June 30, 2002 (Unaudited)......5
Notes to Consolidated Financial Statements (Unaudited)...........6-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................10-13
Item 3. Quantitative and Qualitative Disclosure About Market Risk .......14
Item 4. Controls and Procedures..........................................15
PART II. OTHER INFORMATION ...............................................16
SIGNATURES .....................................................17
CERTIFICATIONS...............................................18-21
ITEM #1 FINANCIAL STATEMENTS PART 1 - FINANCIAL INFORMATION
OP-TECH ENVIRONMENTAL SERVICES, INC. AND WHOLLY-OWNED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
June 30, December 31,
2003 2002
------------- -------------
ASSETS
Current Assets:
Cash $ 70,516 $ -
Accounts receivable (net of allowance for
doubtful accounts of approximately
$191,000 and $140,000, respectively) 3,728,923 4,639,731
Costs on uncompleted projects applicable
to future billings 674,975 398,888
Inventory 228,138 172,848
Prepaid expenses and other current assets, net 409,829 198,201
------------ -----------
Total Current Assets 5,112,381 5,409,668
Property and equipment, net 2,776,761 2,697,608
Other assets 17,863 22,863
------------ -----------
Total Assets $ 7,907,005 $ 8,130,139
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 1,264,238 $ 1,937,865
Billings in excess of costs and estimated
profit on uncompleted projects 548,284 567,423
Accrued expenses and other current liabilities 430,191 315,909
Current portion of long-term debt 466,825 556,610
------------ -----------
Total Current Liabilities 2,709,538 3,377,807
Long-term debt, net of current portion 1,023,344 1,116,793
Note payable to bank under line of credit 2,284,300 1,896,700
----------- -----------
Total Liabilities 6,017,182 6,391,300
----------- -----------
Shareholders' Equity:
Common stock, par value $.01 per share;
authorized 20,000,000 shares; 15,417,115 and
15,318,787 shares issued and outstanding,
respectively 197,040 197,040
Additional paid-in capital 7,710,398 7,705,482
Accumulated deficit (5,974,747) (6,119,831)
Treasury stock, par value (42,868) (43,852)
----------- -----------
Total Shareholders' Equity 1,889,823 1,738,839
----------- -----------
Total Liabilities and Shareholders' Equity $7,907,005 $8,130,139
=========== ===========
The accompanying notes are an integral part of the consolidated financial
statements.
3
ITEM #1 FINANCIAL STATEMENTS PART 1 - FINANCIAL INFORMATION
OP-TECH ENVIRONMENTAL SERVICES, INC. AND WHOLLY-OWNED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
June 30, June 30, June 30, June 30,
2003 2002 2003 2002
---------- ---------- ---------- ----------
Project billings and services $4,170,620 $3,644,734 $7,486,838 $6,725,098
Project costs 2,968,386 2,678,750 5,240,065 4,840,387
---------- ---------- ---------- ----------
Gross margin 1,202,234 965,984 2,246,773 1,884,711
---------- ---------- ---------- ----------
Operating expenses:
Payroll expense and related
payroll taxes and benefits 462,062 458,923 1,077,956 970,459
Depreciation 106,588 75,108 208,098 141,351
Occupancy 102,588 95,758 218,829 193,877
Professional Services 78,127 63,928 147,879 132,320
Office Expense 62,383 48,762 120,647 112,520
Business Insurance 58,310 39,155 111,243 71,604
Other expenses, net 53,395 8,037 119,845 50,237
---------- ---------- ---------- ----------
923,453 789,671 2,004,497 1,672,368
---------- ---------- ---------- ----------
Operating income 278,781 176,313 242,276 212,343
---------- ---------- ---------- ----------
Other income and (expense):
Interest expense (51,543) (38,589) (96,611) (74,017)
Casualty gain from insurance
proceeds, net 2,052 - 2,052 -
Other, net 561 314 (2,633) 1,845
---------- ---------- ---------- ----------
(48,930) (38,275) (97,192) (72,172)
---------- ---------- ---------- ----------
NET INCOME $ 229,851 $ 138,038 $ 145,084 $ 140,171
========== ========== ========== ==========
Earnings per common share:
Basic and diluted $0.01 $0.01 $0.01 $0.01
Weighted average shares outstanding:
Basic 15,335,175 13,286,379 15,326,936 12,499,543
Diluted 15,847,395 13,502,643 15,903,841 12,608,272
The accompanying notes are an integral part of the consolidated financial
statements.
4
ITEM #1 FINANCIAL STATEMENTS PART 1 - FINANCIAL INFORMATION
OP-TECH ENVIRONMENTAL SERVICES, INC. AND WHOLLY-OWNED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
June 30, June 30,
2003 2002
----------- -----------
Operating activities:
Net income $ 145,084 $ 140,171
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Bad debt expense 46,589 67,152
Depreciation and amortization 220,993 149,638
Loss on disposal of equipment 23,718 -
(Increase) decrease in operating assets and
increase (decrease) in operating liabilities:
Accounts receivable 864,219 (595,903)
Costs on uncompleted projects applicable to
future billings (276,087) (127,472)
Billings and estimated profit in excess of costs
on uncompleted contracts (19,139) (194,427)
Prepaid expenses, inventory and other assets (266,918) 131,167
Accounts payable and accrued expenses (559,345) 121,896
----------- -----------
Net cash provided by (used in) operating activities 179,114 (307,778)
----------- -----------
Investing activities:
Purchase of property and equipment (214,087) (226,665)
----------- -----------
Net cash used in investing activities (214,087) (226,665)
----------- -----------
Financing activities:
Proceeds from issuance of common stock 5,900 397,033
Proceeds from note payable to bank and current
and long-term borrowings, net of financing costs 4,400,574 3,893,801
Principal payments on current and long-term
borrowings (4,300,985) (3,783,483)
----------- -----------
Net cash provided by financing activities 105,489 507,351
----------- -----------
Increase (decrease) in cash 70,516 (27,092)
Cash at beginning of period - 51,818
----------- -----------
CASH AT END OF PERIOD $ 70,516 $ 24,726
=========== ===========
Non-cash item
Equipment purchased through bank and other
financing sources $104,777 $19,966
Cash paid for interest $96,611 $74,017
The accompanying notes are an integral part of the consolidated financial
statements.
5
PART I - FINANCIAL INFORMATION
SPECIAL NOTICE REGARDING FORWARD-LOOKING STATEMENTS
The Company is including the following cautionary statement in this Form 10-Q
to make applicable and take advantage of the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995 for any forward-looking
statement made by, or on behalf of, the Company. This 10-Q, press releases
issued by the Company, and certain information provided periodically in
writing and orally by the Company's designated officers and agents contain
statements which constitute forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. The words expect, believe, goal, plan, intend,
estimate, and similar expressions and variations thereof used are intended to
specifically identify forward-looking statements. Where any such forward-
looking statement includes a statement of the assumptions or basis underlying
such forward-looking statement, the Company cautions that, while it believes
such assumptions or basis to be reasonable and makes them in good faith,
assumed facts or basis almost always vary from actual results, and the
differences between assumed facts or basis and actual results can be material,
depending on the circumstances. Where, in any forward-looking statement, the
Company, or its management, expresses an expectation or belief as to future
results, such expectation or belief is expressed in good faith and believed to
have a reasonable basis, but there can be no assurance that the statement of
expectation or belief will result or be achieved or accomplished.
6.
OP-TECH ENVIRONMENTAL SERVICES, INC.
AND WHOLLY-OWNED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by accounting
principles generally accepted in the United States of America for complete
financial statements. In the opinion of management, quarterly results
include all adjustments (consisting of only normal recurring adjustments) that
the Company considers necessary for a fair presentation of such information
for interim periods.
The unaudited financial statements include the accounts of the Company and its
two wholly-owned subsidiaries; OP-TECH Environmental Services, Ltd, an
inactive Canadian company, and OP-TECH AVIX, Inc., a company formed in
January 2002 for purposes of pursuing and engaging in diversified lines of
business including asset management services. All material intercompany
transactions and balances have been eliminated in consolidation.
2. Revenue Recognition
The timing of revenues is dependent on the Company's backlog, contract awards,
and the performance requirements of each contract. The Company's revenues are
also affected by the timing of its clients planned remediation work as well as
the timing of unplanned emergency spills. Historically, planned remediation
work generally increases during the third and fourth quarters. Although the
Company believes that the historical trend in quarterly revenues for the third
and fourth quarters of each year are generally higher than the first and
second quarters, there can be no assurance that this will occur in future
periods. Accordingly, quarterly or other interim results should not be
considered indicative of results to be expected for any quarter or for the
full year.
3. Related Party Transactions
The Company utilizes subcontract labor purchased from St. Lawrence Industrial
Services, Inc., which is owned by a director of the Company. The costs for
these services amounted to approximately $798,000 and $376,000 for the six
months ended June 30, 2003 and 2002, respectively.
4. Earnings per Share
Basic earnings per share is computed by dividing net income by the weighted
average shares outstanding. Diluted earnings per share includes the
potentially dilutive effect of common stock equivalents, which include
outstanding options under the Company's Stock Option Plan and warrants that
were issued to a financial advisor in May 2002 to purchase 480,000 shares
of common stock at $0.066 per share, expiring in May 2007.
7
5. Stock Based Compensation
The Company applies APB Opinion 25 and related interpretations in accounting
for its stock option plan. Accordingly no compensation cost was recognized
for non-qualified stock options issued in 2002. Had compensation cost for
these options been determined based on their fair value at the grant date
consistent with the method proscribed under Financial Accounting Standards
Board ("FASB") Statement No. 123 "Accounting For Stock-Based Compensation",
the Company's net income (loss) and per share amounts reported for the periods
ended June 30, 2003 and 2002 would not be materially different. The Company
does not intend to adopt the fair value accounting for stock based
compensation in accordance with FASB Statement No. 148 "Accounting for Stock-
Based Compensation - Transition and Disclosure, an Amendment of FASB Statement
No. 123".
In June 2003 holders of options to purchase common stock at $.06 per share
exercised those options resulting in the issuance of 98,328 shares of common
stock from treasury.
6. Financial Information Concerning Segment Reporting
The Company reports its operations principally in two business segments, as
follows:
(1) OP-TECH Environmental Services, Inc. ("OP-TECH") engages in diversified
and comprehensive environmental remediation services for customers located
primarily in the north eastern United States.
(2) OP-TECH AVIX, Inc. ("AVIX"), a subsidiary of OP-TECH, was formed in
January 2002 to pursue and engage in diversified lines of business including
asset management services.
OP-TECH AVIX Total
Project billings and services
to external customers $7,441,519 $45,319 $7,486,838
Intersegment project billings and services - - -
---------- ------- ----------
Total Project billings and services $7,441,519 $45,319 $7,486,838
---------- ------- ----------
Operating earnings (loss) $281,783 $(39,507) $242,276
Interest expense (90,096) (6,515) (96,611)
Other income, net (581) - (581)
---------- ------- -----------
Earnings (loss) before income taxes $191,106 $(46,022) $145,084
---------- ------- -----------
Total assets $7,883,667 $23,338 $7,907,005
Depreciation and amortization 220,372 619 220,991
Capital expenditures 318,864 - 318,864
8
7. Subsequent Event
On July 18, 2003 the revolving loan agreement was revised to provide for
borrowings of $2,000,000 and became due and payable on May 31, 2005. Because
of the extended maturity date the revolving loan is classified as non-current
in the accompanying financial statements. In addition, other outstanding
equipment financing was consolidated into one loan with a maturity date of
May, 2007.
9
PART I - FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2003, the Company had cash of $70,516 as compared to $0 at
December 31, 2002. The Company voluntarily applies all available cash in
excess of $75,000 in the Company's operating account to pay down the Company's
note payable to bank under line of credit.
At June 30, 2003, the Company had working capital of $2,402,843 compared to
$2,031,861 at December 31, 2002, with a current ratio of 1.89 to 1 at June
30, 2003 and 1.60 to 1 at December 31, 2002.
For the six months ended June 30, 2003, the Company's net cash provided by
operations was $179,112 compared to net cash used in operations of $307,778
during the six months ended June 30, 2002. The cash provided by operations
for the six months ended June 30, 2003 was primarily a result of a net
collection of accounts receivable, partially offset by a pay down of accounts
payable.
The Company's net cash used in investing activities of $214,087 during the
first six months of 2003 was attributable to the purchase of various field
equipment.
Cash provided by financing activities for the six months ended June 30, 2003
was $105,491, which was primarily due to the net proceeds from the Company's
long-term debt used to finance the Company's investing activities.
As of June 30, 2003, the Company had a loan agreement that provided for
borrowings up to $2,600,000 on a revolving basis, collateralized by all
accounts receivable, inventory and equipment now owned or acquired later. The
loan is payable on May 31, 2004, bears interest at a rate of prime plus 1.25
percent, is subject to certain restrictive financial covenants, and is subject
to default if there is a material adverse change in the financial or economic
condition of the Company. As of June 30, 2003, borrowing against the
revolving loan aggregated $2,284,300.
On July 18, 2003 the revolving loan agreement was revised to provide for
borrowings up to $2,000,000 and payable on May 31, 2005 with all other
provisions, including restrictive financial covenants, remaining in effect.
On July 18, 2003, approximately $445,000 of the borrowing against the
revolving loan was separated into a promissory note payable in 48 monthly
payments of principal plus interest at a rate of prime plus 1.25%.
During the first six months of 2003, all principal payments on the Company's
debt were made within payment terms.
The Company expects, based on its operating results and the continued
availability of its line of credit, that it will be able to meet obligations
as they come due.
10
RESULTS OF OPERATIONS
BILLINGS
The Company's project billings for the second quarter of 2003 increased 14% to
$4,170,620 from $3,644,734 for the second quarter of 2002. For the six-month
period ended June 30, 2003 the Company's billings have increased 11% to
$7,486,838 from $6,725,098 for the same period in 2002.
When comparing the first six months of 2003 to the same period in 2002, the
overall increase in billings is due primarily to one large remediation project
in the Buffalo, NY area partially offset by a reduction in project billings
for New York State Department of Environmental Conservation remediation
projects.
PROJECT COSTS AND GROSS MARGIN
Project costs for the second quarter of 2003 increased 11% to $2,968,386 from
$2,678,750 for the same period in 2002. Project costs as a percentage of
revenues were 71% and 74% for the three months ended June 30, 2003 and 2002,
respectively. Gross margin for the second quarter of 2003 increased to 29%
from 26% for the same period in 2002.
For the six-month period ended June 30, 2003, project costs increased 8% to
$5,240,065 from $4,840,387 for the six months ended June 30, 2002. Project
costs as a percentage of revenues were 70% and 72% for the six months ended
June 30, 2003 and 2002, respectively. Gross margin for the six months ended
June 30, 2003 increased to 30% from 28% for the same period in 2002.
As a result of increased billings, project costs also increased. The increase
in the gross margin is due to a lower volume of projects that involve pass
through costs such as transportation and disposal. Projects that involve pass
through costs of this nature typically produce a lower gross margin than
projects that involve internal labor and equipment.
11
OPERATING EXPENSES
Operating expenses for the quarter ended June 30, 2003 increased 17% to
$923,453 from $789,671 for the same period in 2002. For the six-month period
ended June 30, 2003, operating expenses increased 20% to $2,004,497 from
$1,672,368 for the same period in 2002. Operating expenses as a percentage of
revenues was 27% and 25% for the six months ended June 30, 2003 and 2002,
respectively.
When comparing the first six months of 2003 to 2002, the overall increase in
operating expenses is due to several factors:
1. Payroll expense and related payroll taxes and benefits increased 11% to
$1,077,956 when comparing the first six months of 2003 to the same period in
2002. As a percentage of sales, payroll expense and related payroll taxes and
benefits remained at 14%. During the fourth quarter of 2002 and the first
quarter of 2003, new employees were added in the Albany, Rochester, and
Buffalo NY branch offices. Each of these offices added new employees as a
result of increased sales volume and long-term growth plans. As is customary
in adding new employees, it takes approximately six months for a new employee
to meet the company's chargeability goals as set forth in the operating budget.
2. Depreciation expense increased 47% to $208,098 when comparing the first six
months of 2003 to the same period in 2002. This increase in depreciation
expense is due to field equipment additions totaling approximately $1,085,000
from July 1, 2002 through June 30, 2003.
3. Occupancy expense increased 12% to $218,829 when comparing the first six
months of 2003 to the same period in 2002. This increase in occupancy expense
is primarily due to new, larger branch office and shop space leases in Albany,
NY, Plattsburgh, NY and Edison, NJ that have been entered into since July 1,
2002.
4. Business insurance increased 55% to $111,243 when comparing the first six
months of 2003 to the same period in 2002. This increase in insurance expense
is due to the extreme tightening of the insurance market in the United States
that has resulted in large premium increases.
INTEREST EXPENSE
Interest expense for the six months ended June 30, 2003 increased 30% to
$96,611 from $74,017 for the same period in 2002. The increase in interest
expense was primarily due to an increase in the average outstanding balance
on the revolving loan and long-term debt when comparing the six months ended
June 30, 2003 with the same period in 2002.
NET INCOME
The net income for the six months ended June 30, 2003 and 2002 was $145,084, or
$0.01 per share basic and diluted, and $140,171, or $0.01 per share basic and
diluted, respectively.
12
IMPACT OF RECENTLY ISSUED STATEMENTS
In May 2003 the Financial Accounting Standards Board issued Statement No. 150
"Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity". The statement requires classification from an equity
presentation to a liability presentation in the balance sheet of certain
equity and financial instruments, including common stock, if certain
criteria are met. The statement is effective for the quarter beginning
July 1, 2003. The Company has not yet made a determination of the impact of
this statement on its consolidated financial statements, if any.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Management has identified the following critical accounting policies that
affect the Company's more significant judgments and estimates used in the
preparation of the Company's consolidated financial statements. The
preparation of the Company's financial statements in conformity with
accounting principles generally accepted in the United States of America
requires the Company's management to make estimates and judgments that affect
the reported amounts of assets and liabilities, revenues and expenses, and
related disclosures of contingent assets and liabilities. On an on-going
basis, management evaluates those estimates, including those related to assets
held for sale, revenue recognition, allowance for doubtful accounts and
contingencies and litigation. The Company states these accounting policies in
the notes to the consolidated financial statements and in relevant sections in
this discussion and analysis. These estimates are based on the information
that is currently available to the Company and on various other assumptions
that management believes to be reasonable under the circumstances. Actual
results could vary from those estimates.
The Company believes that the following critical accounting policies affect
significant judgments and estimates used in the preparation of its
consolidated financial statements:
Contracts are predominately short-term in nature (less than three months) and
revenue is recognized as costs are incurred and billed. Income on long-term
fixed-priced contracts greater than three months is recognized on the
percentage-of-completion method. Project costs are generally billed in the
month they are incurred and are shown as current assets. Revenues recognized
in excess of amounts billed are recorded as an asset. In the event interim
billings exceed costs and estimated profit, the net amount of deferred revenue
is shown as a current liability. Estimated losses are recorded in full when
identified.
The Company maintains an allowance for doubtful accounts for estimated losses
resulting from the inability of its customers to make required payments, which
results in bad debt expense. Management determines the adequacy of this
allowance by continually evaluating individual customer receivables,
considering the customer's financial condition, credit history and current
economic conditions. If the financial condition of customers were to
deteriorate, resulting in an impairment of their ability to make payments,
additional allowances may be required.
13
Item 3. Quantitative and Qualitative Disclosure About Market Risk.
There were no material changes in the Company's market risk or market risk
strategies during the quarter ended June 30, 2003.
14
Item 4. - Controls and Procedures
(a) Disclosure Controls and Procedures.
Within the 90 days before the date of this Form 10-Q, we evaluated the
effectiveness of the design and operation of our "disclosure controls and
procedures". OP-TECH conducted this evaluation under the supervision and with
the participation of management, including our Chief Executive Officer and
Chief Financial Officer.
(i) Definition of Disclosure Controls and Procedures.
Disclosure controls and procedures are controls and other procedures that are
designed with the objective of ensuring that information required to be
disclosed in our periodic reports filed under the Exchange Act, such as this
report, is recorded, processed, summarized and reported within the time
periods specified in the SEC's rules and forms. As defined by the SEC, such
disclosure controls and procedures are also designed with the objective of
ensuring that such information is accumulated and communicated to our
management, including the Chief Executive Officer and Chief Financial Officer,
in such a manner as to allow timely disclosure decisions.
(ii) Limitations on the Effectiveness of Disclosure Controls and Procedures
and Internal Controls. OP-TECH recognizes that a system of disclosure controls
and procedures (as well as a system of internal controls), no matter how well
conceived and operated, cannot provide absolute assurance that the objectives
of the system are met. Further, the design of such a system must reflect the
fact that there are resource constraints, and the benefits of controls must be
considered relative to their costs. Because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute assurance that
all control issues have been detected. These inherent limitations include the
realities that judgments in decision-making can be faulty, and that breakdowns
can occur because of simple error or mistake. Additionally, controls can be
circumvented in a number of ways. Because of the inherent limitations in a
cost-effective control system, system failures may occur and not be detected.
(iii) Conclusions with Respect to Our Evaluation of Disclosure Controls and
Procedures. Subject to the limitations described above, our Chief Executive
Officer and Chief Financial Officer have concluded that our disclosure
controls and procedures are effective in timely alerting them to material
information relating to OP-TECH required to be included in OP-TECH's periodic
SEC filings.
(b) Changes in Internal Controls.
There have been no significant changes in OP-TECH's internal controls or in
other factors that could significantly affect these controls subsequent to the
date of their evaluation.
15
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None
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.
None
16
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.
OP-TECH Environmental Services, Inc.
(Registrant)
Date: August 11, 2003 /s/ Christopher J. Polimino
Christopher J. Polimino
President and Chief Executive Officer
/s/ Douglas R. Lee
Douglas R. Lee
Treasurer and Chief Financial Officer
17
CERTIFICATIONS
Certification of Chief Executive Officer
I, Christopher J. Polimino, certify that:
1.I have reviewed this quarterly report on Form 10-Q of OP-TECH Environmental
Services, Inc.;
2.Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3.Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4.The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5.The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and
6.The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: August 11, 2003
/s/ Christopher J. Polimino
Christopher J. Polimino
President and Chief Executive Officer
18
Certification of Chief Financial Officer
I, Douglas R. Lee, certify that:
1.I have reviewed this quarterly report on Form 10-Q of OP-TECH Environmental
Services, Inc.;
2.Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3.Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4.The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5.The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and
6.The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: August 11, 2003
/s/ Douglas R. Lee
Douglas R. Lee
Chief Financial Officer
19
Certification Pursuant to 18 U.S.C. Section 1350 As Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
I, Christopher J. Polimino, President and Chief Executive Officer of OP-TECH
Environmental Services, Inc. (the "Company"), certify, pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
(1)the Quarterly Report on Form 10-Q of the Company for the quarter ended
June 30, 2003 (the "Report") fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (15 U.S.C.
78m or 78o(d)); and
(2)the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
Date: August 11, 2003
/s/ Christopher J. Polimino
Christopher J. Polimino
President and Chief Executive Officer
20
Certification Pursuant to 18 U.S.C. Section 1350 As Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
I, Douglas R. Lee, Chief Financial Officer and Treasurer of OP-TECH
Environmental Services, Inc. (the "Company"), certify, pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
(1)the Quarterly Report on Form 10-Q of the Company for the quarter ended
June 30, 2003 (the "Report") fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (15 U.S.C.
78m or 78o(d)); and
(2)the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
Date: August 11, 2003
/s/ Douglas R. Lee
Douglas R. Lee
Chief Financial Officer and Treasure
21