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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 APRIL 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 0-13667
PDG ENVIRONMENTAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 22-2677298
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1386 BEULAH ROAD, BUILDING 801
PITTSBURGH, PENNSYLVANIA 15235
(Address of principal executive offices) (Zip Code)
412-243-3200
(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 No
--- ---
Indicated by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes No X
--- ---
As of June 9, 2003, there were 9,372,330 shares of the registrant's common stock
outstanding.
PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION PAGE
Item 1. Consolidated Financial Statements and Notes to Consolidated Financial Statements
(a) Condensed Consolidated Balance Sheets as of April 30, 2003 (unaudited) and
January 31, 2003 3
(b) Consolidated Statements of Operations for the Three Months Ended April 30, 2003
and 2002 (unaudited) 4
(c) Consolidated Statements of Cash Flows for the Three Months Ended April 30,
2003 and 2002 (unaudited) 5
(d) Notes to Consolidated Financial Statements (unaudited) 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 3. Defaults Upon Senior Securities 11
Item 6. Exhibits and Reports on Form 8-K 11
Item 14. Controls and Procedures 11
Signature and Certification 12
2
PART I. FINANCIAL INFORMATION
PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
APRIL 30, JANUARY 31,
2003 2003*
------------- ------------
ASSETS (UNAUDITED)
CURRENT ASSETS
Cash and short-term investments $ 54,000 $ 38,000
Accounts receivable - net 9,679,000 9,271,000
Costs and estimated earnings in excess of billings on
uncompleted contracts 2,737,000 3,412,000
Inventory 517,000 484,000
Other current assets 1,191,000 388,000
------------ ------------
TOTAL CURRENT ASSETS 14,178,000 13,593,000
PROPERTY, PLANT AND EQUIPMENT 7,497,000 7,497,000
Less: accumulated depreciation (6,402,000) (6,238,000)
------------ ------------
1,095,000 1,259,000
GOODWILL 433,000 433,000
OTHER ASSETS 383,000 325,000
------------ ------------
TOTAL ASSETS $ 16,089,000 $ 15,610,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 3,233,000 $ 3,519,000
Billings in excess of costs and estimated earnings
on uncompleted contracts 1,497,000 1,070,000
Current portion of long-term debt 440,000 467,000
Accrued liabilities 1,877,000 1,400,000
------------ ------------
TOTAL CURRENT LIABILITIES 7,047,000 6,456,000
LONG-TERM DEBT 4,579,000 4,922,000
MINORITY INTEREST (13,000) (12,000)
STOCKHOLDERS' EQUITY
Cumulative convertible 2% preferred stock 14,000 14,000
Common stock 189,000 189,000
Additional paid-in capital 8,110,000 8,110,000
Deferred compensation (21,000) (26,000)
(Deficit) retained earnings (3,778,000) (4,005,000)
Less treasury stock (38,000) (38,000)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 4,476,000 4,244,000
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 16,089,000 $ 15,610,000
============ ============
*Derived from audited financial statements.
See accompanying notes to consolidated financial statements.
3
PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS
ENDED APRIL 30,
---------------------------------
2003 2002
------------ ------------
CONTRACT REVENUE $ 8,366,000 $ 10,900,000
CONTRACT COSTS 6,697,000 9,981,000
------------ ------------
Gross margin 1,669,000 919,000
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 1,343,000 1,067,000
------------ ------------
Income (loss) from operations 326,000 (148,000)
OTHER INCOME (EXPENSE):
Interest expense (97,000) (96,000)
Interest and other income 27,000 13,000
------------ ------------
(70,000) (83,000)
------------ ------------
Income (loss) before minority interest and income taxes 256,000 (231,000)
INCOME TAX PROVISION (30,000) --
MINORITY INTEREST 1,000 4,000
------------ ------------
NET INCOME (LOSS) $ 227,000 $ (227,000)
============ ============
PER SHARE OF COMMON STOCK:
BASIC $ 0.02 $ (0.02)
============ ============
DILUTIVE $ 0.02 $ (0.02)
============ ============
AVERAGE COMMON SHARE EQUIVALENTS OUTSTANDING 9,372,000 9,370,000
AVERAGE DILUTIVE COMMON SHARE EQUIVALENTS
OUTSTANDING 35,000 --
------------ ------------
AVERAGE COMMON SHARES AND DILUTIVE COMMON EQUIVALENTS
OUTSTANDING FOR EARNINGS PER
SHARE CALCULATION 9,407,000 9,370,000
============ ============
See accompanying notes to consolidated financial statements.
4
PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
(UNAUDITED)
FOR THE THREE MONTHS
ENDED APRIL 30,
-------------------------------
2003 2002
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 227,000 $ (227,000)
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO CASH:
Depreciation and amortization 238,000 267,000
Contingent acquisition consideration -- (219,000)
Stock based compensation 5,000 5,000
Minority interest (1,000) (4,000)
CHANGES IN ASSETS AND LIABILITIES
OTHER THAN CASH:
Accounts receivable (408,000) 510,000
Costs and estimated earnings in excess of billings
on uncompleted contracts 675,000 658,000
Inventory (33,000) (71,000)
Other current assets 58,000 (404,000)
Accounts payable (1,147,000) (1,095,000)
Billings in excess of costs and estimated earnings
on uncompleted contracts 427,000 596,000
Accrued liabilities 510,000 (104,000)
----------- -----------
82,000 90,000
----------- -----------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 551,000 (88,000)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (40,000) (56,000)
Acquisition of businesses (133,000) --
Other venture's capitalization of joint venture -- 27,000
Decrease (Increase) in other assets 8,000 (6,000)
----------- -----------
NET CASH USED BY INVESTING ACTIVITIES (165,000) (35,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Exercise of stock options -- 2,000
Principal payments on debt (370,000) (208,000)
----------- -----------
NET CASH USED BY FINANCING ACTIVITIES (370,000) (206,000)
----------- -----------
Net Increase (Decrease) in Cash and Short-Term Investments 16,000 (329,000)
Cash and Short-Term Investments, Beginning of Period 38,000 373,000
----------- -----------
CASH AND SHORT-TERM INVESTMENTS, END OF PERIOD $ 54,000 $ 44,000
=========== ===========
See accompanying notes to consolidated financial statements.
5
PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED APRIL 30, 2003
(UNAUDITED)
NOTE 1 -- BASIS OF PRESENTATION
The consolidated financial statements include PDG Environmental, Inc. (the
"Corporation") and its wholly-owned subsidiaries. In the quarter ending April
30, 2002, the Corporation formed IAQ Training Institute ("IAQ venture") a 50/50
joint venture to provide training in mold awareness and remediation.
The accompanying consolidated financial statements of the Corporation are
unaudited. However, in the opinion of management, they include all adjustments
necessary for a fair presentation of financial position, results of operations
and cash flows. All adjustments made during the three months ended April 30,
2003 were of a normal, recurring nature. The amounts presented for the three
months ended April 30, 2003 are not necessarily indicative of results of
operations for a full year. Additional information is contained in the Annual
Report on Form 10-K of the Corporation for the year ended January 31, 2003 dated
March 28, 2003, which should be read in conjunction with this quarterly report.
NOTE 2 - FEDERAL INCOME TAXES
No federal income tax has been provided for the three months ended April 30,
2003 due to the existence of unused net operating loss carryforwards. A state
income tax provision was made in the current period due to income in the current
year. No state income taxes were provided in the prior year period due to the
loss in the prior fiscal year.
Income taxes paid by the Corporation for the three months ended April 30, 2003
and 2002 totaled approximately $25,000 and $62,000, respectively.
NOTE 3 - LINE OF CREDIT
On August 3, 2000, the Corporation closed on a $4.7 million credit facility with
Sky Bank, an Ohio banking association, consisting of a 3-year $3 million
revolving line of credit, a 5-year $1 million equipment note, a 15-year $0.4
million mortgage and a 5-year $0.3 million commitment for future equipment
financing. The financing repaid all of the Company's existing debt.
The line of credit, equipment note and commitment for future equipment financing
are at an interest rate of prime plus 1% with financial covenant incentives
which may reduce the interest rate to either prime plus 1/2% or prime. The
mortgage is at an interest rate of 9.15% fixed for three years and is then
adjusted to 2.75% above the 3-year Treasury Index every three years. The Chief
Executive Officer of the Corporation provided a limited personal guarantee for
the credit facility.
In November 2000, Sky Bank approved a $1.5 million increase in the line of
credit to $4.5 million to fund the acquisition of Tri-State Restorations, Inc.
("Tri-State"), an asbestos abatement and demolition company in California.
Additionally, Sky Bank increased the commitment for future equipment financing
by $0.3 million to $0.6 million. In April 2001 and June 2001, the Company
borrowed $273,000 and $283,000, respectively, against the commitment for future
equipment financing to fund the fixed asset portion of the Tri-State acquisition
and to fund other equipment purchases. In August 2001, the remaining $44,000 was
borrowed against the commitment for future equipment financing to fund equipment
purchases. The acquisition of Tri-State closed on June 1, 2001.
On May 6, 2002 Sky Bank increased the line of credit by $750,000 to $5.25
million for a ninety-day period. In July 2002, the Corporation and Sky Bank
reached an agreement whereby the Corporation's availability on the line of
credit was reduced by $50,000 on August 6, 2002, by $100,000 for each of the
seven successive months thereby eliminating the $750,000 increase by March 5,
2003. Additionally in August 2002, the Corporation agreed to pay $100,000 to
reduce the balance outstanding on the equipment notes with Sky Bank.
On February 28, 2003 Sky Bank increased the line of credit by $600,000 to $5.1
million for a four-month period. The availability on the line of credit will be
reduced to $4.5 million on July 1, 2003.
6
In December 2002 Sky Bank extended the maturity date of the Company's line of
credit until June 1, 2004.
On April 30, 2003, the balance on the line of credit was $3,700,000 with an
unused availability of $900,000.
The Corporation paid interest costs totaling approximately $123,000 and $99,000
during the three months ended April 30, 2003 and 2002, respectively.
NOTE 4 - PREFERRED STOCK
Cumulative dividends in arrears on the Corporation's 2% Series A Preferred Stock
were approximately $12,000 at April 30, 2003. At April 30, 2003, there were
6,000 shares of Series A Preferred Stock outstanding. Each share of Series A
Preferred Stock is convertible into four shares of the Corporation's common
stock at the option of the preferred stockholder in addition to common shares
for accrued but unpaid interest.
The conversion rate on the Series A Preferred Stock is also subject to
adjustment as a result of certain changes in the Corporation's capital structure
or distributions to common stockholders (except for cash dividends permissible
under law).
NOTE 5 - NET EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per
share:
FOR THE THREE MONTHS
ENDED APRIL 30,
-------------------------------
2003 2002
----------- -----------
NUMERATOR:
Net Income (loss) $ 227,000 $ (227,000)
Preferred stock dividends (1,000) (1,000)
----------- -----------
Numerator for basic earnings per share--income available
to common stockholders 226,000 (228,000)
Effect of dilutive securities:
Preferred stock dividends 1,000 1,000
----------- -----------
Numerator for diluted earnings per share--income available to
common stock after assumed conversions $ 227,000 $ (227,000)
=========== ===========
DENOMINATOR:
Denominator for basic earnings per share--weighted average
shares 9,372,000 9,370,000
Effect of dilutive securities:
Convertible Preferred Stock 29,000 --
Employee Stock Options 6,000 --
----------- -----------
35,000 --
----------- -----------
Denominator for diluted earnings per share--adjusted
weighted-average shares and assumed conversions 9,407,000 9,370,000
=========== ===========
BASIC EARNINGS PER SHARE $ 0.02 $ (0.02)
=========== ===========
DILUTED EARNINGS PER SHARE $ 0.02 $ (0.02)
=========== ===========
7
NOTE 6 - STOCK OPTIONS
The Company accounts for its stock-based compensation plans under the
recognition and measurement principles of APB Opinion No. 25, "Accounting for
Stock Issued to Employees" and related Interpretations. No stock-based employee
compensation cost is reflected in net income, as all options granted under those
plans had an exercise price equal to the market value of the underlying common
stock on the date of grant. The following table illustrates the effect on net
income and earnings per share if the Company had applied the fair value
recognition provisions of FASB Statement No. 123, "Accounting for Stock-Based
Compensation", to stock-based employee compensation. For purposes of pro forma
disclosures, the estimated fair value of the options is amortized to expense
over the options' vesting period.
FOR THE THREE MONTHS
ENDED APRIL 30,
--------------------------------
2003 2002
--------- -----------
Net income (loss), as reported $ 227,000 $ (227,000)
Deduct: Total stock-based employee compensation expense
determined under fair value method for all awards net of
related tax effects (13,000) (28,000)
--------- -----------
Pro forma net income (loss) $ 214,000 $ (255,000)
========= ===========
Earnings per share:
Basic-as reported $ 0.02 $ (0.02)
========= ===========
Basic-pro forma $ 0.02 $ (0.03)
========= ===========
Diluted-as reported $ 0.02 $ (0.02)
========= ===========
Diluted-pro forma $ 0.02 $ (0.03)
========= ===========
8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The previous discussion and other sections of this Form 10-Q contain
forward-looking statements that have been made pursuant to the provisions of the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements are based on current expectations, estimates and projections about
our industry, management's beliefs and certain assumptions made by management.
Words such as "anticipates," "expects," "intends," "plans," "believes," "seeks,"
"estimates," "may," and similar expressions are intended to identify
forward-looking statements. These statements are not guarantees of future
performance and actual actions or results may differ materially. These
statements are subject to certain risks, uncertainties and assumptions that are
difficult to predict. The Company undertakes no obligation to update publicly
any forward-looking statements as a result of new information, future events or
otherwise, unless required by law. Readers should, however, carefully review the
risk factors included in other reports or documents filed by the Company from
time to time with the Securities and Exchange Commission.
RESULTS OF OPERATIONS
THREE MONTHS ENDED APRIL 30, 2003 AND 2002
During the three months ended April 30, 2003 ("Fiscal 2004"), the Corporation's
contract revenues decreased to $8.4 million compared to $10.9 million in the
three months ended April 30, 2002 ("Fiscal 2003") The decrease in revenue was
attributable in part to a large project in New York City that had Phase I
completed in the first quarter of the prior fiscal quarter and to the exclusion
of the St. Louis operation which was sold in the prior fiscal year.
The Corporation's gross margin increased to $1.7 million in the first quarter of
fiscal 2004 compared to $0.9 million in the first quarter of fiscal 2003. The
increase in gross margin is due to the significantly higher margins in the
current fiscal quarter and $0.6 million of contract adjustments in the first
quarter of fiscal 2003.
Selling, general and administrative expenses increased to $1.3 million in the
current fiscal quarter as compared to $1.1 million in the three months ended
April 30, 2002. This increase was due to reversal of $0.2 million of contingent
purchase consideration related to the Los Angeles office in the prior fiscal
quarter partially offset by the exclusion of costs associated with the St. Louis
operation which was sold later in the prior fiscal year.
The Corporation reported income from operations of $0.33 million for the three
months ended April 30, 2003 compared to a loss from operations of $0.15 million
for the three months ended April 30, 2002 as a direct result of the factors
discussed above.
Interest expense remained constant at $0.1 million in the current quarter as
compared the same quarter of a year ago as borrowings remained relatively
constant.
During the quarters ended April 30, 2003 and 2002, the Corporation made no
provision for federal income taxes due to the utilization of net operating loss
carryforwards for financial reporting purposes and the loss in the prior year
fiscal quarter. A state income tax provision of $0.03 million was made in the
current quarter. No state income tax provision was made in the prior fiscal
quarter due to the loss.
LIQUIDITY AND CAPITAL RESOURCES
During the three months ended April 30, 2003, the Corporation's cash increased
by $0.02 million to $0.05 million.
Cash provided by operating activities totaled $0.55 million in the three months
ended April 30, 2003. Cash inflows including $0.23 million of net income in the
current fiscal period, a $0.68 million decrease in costs and estimated earnings
in excess of billings on uncompleted contracts, a $0.43 million increase in
billings in excess of costs and estimated earnings on uncompleted contracts,
a $0.51 million increase in accrued liabilities related to the timing of
payments and $0.24 million of depreciation and amortization. These cash inflows
were partially offset by cash outflows including a $0.4 million increase in
accounts receivables and a $1.15 million decrease in accounts payable.
9
The increase in cash and short-term investments during the first quarter of
fiscal 2004 is attributable to the aforementioned cash inflows from operations
of $0.55 million which were partially offset by cash outflows of $0.17 million
associated with investing activities and $0.37 million of cash outflows
associated with finance activities. Investing activities cash outflows included
$0.04 million for the purchase of property, plant and equipment and a $0.13
million of payments related primarily to an acquisition completed in a prior
fiscal year. Financing activities cash outflows consisted of $0.37 million for
the repayment of debt.
At April 30, 2003, the Corporation's backlog totaled $29.0 million ($19.7
million on fixed fee contracts and $9.3 million on time and materials or unit
price contracts).
During the three months ended April 30, 2002, the Corporation's cash decreased
by $0.33 million to $0.04 million.
Cash used by operating activities totaled $0.09 million in the three months
ended April 30, 2002. Cash outflows included the $0.23 million net loss incurred
during the current three months, a $0.22 million decrease in contingent
acquisition consideration to reflect current period losses at the former
Tri-State (Los Angeles) office, a $0.07 million increase in inventories, $0.4
million due to a increase in other current assets, a $1.1 million decrease in
accounts payable and a $0.1 million decrease in accrued liabilities related to
the timing of payments. These cash outflows were partially offset by cash
inflows including a $0.51 million decrease in accounts receivables, a $0.66
million decrease in costs and estimated earnings in excess of billings on
uncompleted contracts and a $0.60 million increase in billings in excess of
costs and estimated earnings on uncompleted contracts and $0.27 million of
depreciation and amortization.
The decrease in cash and short term investments during the first quarter of
fiscal 2003 is attributable to the aforementioned cash outflows from operations
of $0.09 million, cash outflows for investing activities of $0.035 million,
which included $0.06 million for the purchase of property, plant and equipment
partially offset by the other venturee's capital contribution of $0.03 million
to the IAQ joint venture and $0.21 million of cash outflows associated with
finance activities due to the repayment of debt.
MARKET RISK
The only market risk, as defined, that the Company is exposed to is interest
rate sensitivity. The interest rate on the equipment note and revolving line of
credit fluctuate based upon changes in the prime rate. Each 1% change in the
prime rate will result in a $50,000 change in borrowing costs based upon the
balance outstanding at April 30, 2003. The interest rate on the term debt is
readjusted in August 2003 and if the current interest rate environment exists in
August 2003, the interest rate on the term debt would decrease.
10
PART II-- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Registrant is subject to dispute and litigation in the ordinary course of
business. None of these matters, in the opinion of management, is likely to
result in a material effect on the Registrant based upon information available
at this time.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
The Registrant is currently in arrears with respect to the payment of dividends
on its Series A Preferred Stock. At April 30, 2003, the cumulative dividends in
arrears on the Series A Preferred Stock were approximately $12,000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
EXHIBIT INDEX PAGES OF SEQUENTIAL
EXHIBIT NO. AND DESCRIPTION NUMBERING SYSTEM
Exhibit 99.1 Certification Pursuant To 18 U.S.C.
Section 1350, As Amended Pursuant To
Section 906 Of The Sarbanes-Oxley
Act of 2002
(b) Reports on Form 8-K
The registrant did not file any current reports on Form 8-K during the three
months ended April 30, 2003 except for the Form 8-K filed April 25, 2003
containing an Item 12 - Results of Operation and Financial Condition discussing
the Company's earnings for the quarter and year ending January 31, 2003.
ITEM 14. CONTROLS AND PROCEDURES
As of April 30, 2003, an evaluation was performed under the supervision and with
the participation of the Company's management, including the Chief Executive
Officer, of the effectiveness of the design and operation of the Company's
disclosure controls and procedures. Based on that evaluation, the Company's
management, including the Chief Executive Officer, concluded that the Company's
disclosure controls and procedures were effective as April 30, 2003. There have
been no significant changes in the Company's internal controls or in other
factors that could significantly affect internal controls subsequent to April
30, 2003.
11
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.
PDG ENVIRONMENTAL, INC.
By /s/John C. Regan
------------------------------------------
John C. Regan
Chairman, Chief Executive Officer and Chief
Financial Officer
Date: June 12, 2003
12
CERTIFICATION
I, John C. Regan, certify that:
1. I have reviewed this quarterly report on Form 10-Q of PDG Environmental,
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. I am responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for PDG
Environmental,, Inc. and have:
(i) Designed such disclosure controls and procedures to ensure that
material information relating to PDG Environmental,, Inc. is made
known to me by others within the Company, particularly during the
period in which the periodic reports are being prepared;
(ii) Evaluated the effectiveness of PDG Environmental, Inc's.
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this report ("Evaluation Date"); and
(iii) Presented in the report their conclusions about the effectiveness
of the disclosure controls and procedures based on their
evaluation as of the Evaluation Date;
5. I have disclosed, based upon their most recent evaluation, to PDG
Environmental, Inc's. auditors and the audit committee of the Company's
Board of Directors:
(i) All significant deficiencies in the design or operation of
internal controls which could adversely affect PDG Environmental,
Inc's. ability to record, process, summarize and report financial
data and have identified for PDG Environmental, Inc's. auditors
any material weaknesses in internal control, and
(ii) Any fraud, whether or not material, that involves management or
other employees who have a significant role in PDG Environmental,
Inc's. internal controls, and
6. I have indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of their most
recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
By /s/John C. Regan
---------------------------------
John C. Regan
Chief Executive Officer and
Chief Financial Officer
Date: June 12, 2003
13