<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
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 0-2000
METALCLAD CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 95-2368719
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2 Corporate Plaza, Suite 125
Newport Beach, CA 92660
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code (714) 719-1234
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 [ ]
As of September 30, 1997, the registrant had 29,937,923 shares
outstanding of its Common Stock, $.10 par value.<PAGE>
METALCLAD CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements:
Consolidated Balance Sheets at September 30, 1997
(unaudited) and December 31, 1996.................................. 1
Consolidated Statements of Operations (unaudited) for the
nine months ended September 30, 1997 and August 31, 1996........... 3
Consolidated Statements of Cash Flows (unaudited) for the
nine months ended September 30, 1997 and August 31, 1996........... 4
Notes to Consolidated Financial Statements......................... 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations................ 8
PART II. OTHER INFORMATION........................................... 12
SIGNATURES............................................................ 13<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
METALCLAD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
September 30, December 31,
1997 1996
------------ ------------
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $1,202,561 $3,074,395
Accounts receivable, including amounts
retained by customers under contract
terms of $15,834 in September 1997 and
$13,407 in December 1996, less allowance
for doubtful accounts of $89,973 in
September 1997 and $67,972 in December
1996 2,120,461 2,478,528
Costs and estimated earnings in excess
of billings on uncompleted contracts 192,438 174,768
Inventories 199,892 314,157
Prepaid expenses and other current assets 465,671 253,059
Receivables from related parties 122,426 240,379
---------- ----------
TOTAL CURRENT ASSETS 4,303,449 6,535,286
Property, plant and equipment, net 6,313,459 5,319,409
Investment and capitalized costs in
unconsolidated affiliates 3,838 1,516,878
Deposits and other assets 601,118 837,516
Goodwill, less accumulated amortization
of $203,113 in September 1997 and
$115,390 in December 1996 828,335 697,363
Real estate held for sale 25,000 25,000
---------- ----------
$12,075,199 $14,931,452
========== ==========
See Notes to Consolidated Financial Statements
1<PAGE>
METALCLAD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
September 30, December 31,
1997 1996
---------- -----------
(Unaudited)
CURRENT LIABILITIES:
Accounts payable $1,571,538 $1,665,475
Accrued payroll, property and other taxes 402,406 493,751
Accrued expenses 808,498 1,381,972
Billings in excess of costs and estimated
earnings on uncompleted contracts 37,687 45,468
Current portion of convertible subordinated
debentures 229,533 229,533
---------- ----------
Total Current Liabilities 3,049,662 3,816,199
---------- ----------
Shareholders equity:
Preferred stock, par value $10; 1,500,000
shares authorized; none issued - -
Common stock, par value $.10; 80,000,000
shares authorized, 29,937,923 and
29,123,239 issued and outstanding in
September 1997 and December 1996,
respectively 2,993,792 2,912,324
Additional paid-in capital 56,712,799 55,582,063
Accumulated deficit (47,941,665) (44,643,578)
Officers receivable collateralized by
stock (599,279) (576,640)
Cumulative foreign currency translation
adjustment (2,140,110) (2,158,916)
---------- ----------
9,025,537 11,115,253
---------- ----------
$12,075,199 $14,931,452
========== ==========
See Notes to Consolidated Financial Statements
2<PAGE>
METALCLAD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE><S> <C> <C> <C> <C>
For Nine Months Ended For Three Months Ended
September 30, August 31, September 30, August 31,
1997 1996 1997 1996
----------- ----------- ------------ -----------
INSULATION BUSINESS
Revenues
Contract revenues $6,046,266 $7,044,442 $1,584,791 $1,319,714
Material sales 159,876 217,726 27,167 54,923
Other 202,097 84,117 16,513 15,863
---------- ---------- ----------- -----------
6,408,239 7,346,285 1,628,471 1,390,500
---------- ---------- ----------- -----------
Operating costs and expenses
Contract costs and expenses 5,351,956 6,847,246 1,367,928 1,141,845
Cost of material sales 120,056 170,133 16,483 45,249
Selling, general and administrative expenses 894,198 1,342,238 1,659,239 247,163
---------- ---------- ----------- -----------
6,366,210 8,342,238 1,659,239 1,434,257
---------- ---------- ----------- -----------
Operating income (loss) 42,029 (995,953) (30,768) (43,757)
---------- ---------- ----------- -----------
WASTE MANAGEMENT
Revenues
Collection, recycling and destruction 1,443,822 1,997,379 1,294,085 527,498
Operating costs and expenses
Collection, recycling and destruction 2,037,184 2,658,874 1,611,532 616,174
Landfill 325,598 178,633 131,556 126,107
---------- ---------- ----------- -----------
2,362,782 2,837,507 1,743,088 742,281
Other Income 168,720 - - -
Equity in earnings of unconsolidated affiliates (742,845) (311,706) - (168,291)
---------- ---------- ----------- -----------
Operating Loss (1,493,085) (1,151,834) (449,003) (383,074)
---------- ---------- ----------- -----------
Corporate expense (1,918,251) (2,936,925) (645,946) (631,920)
---------- ---------- ----------- -----------
Operating loss (3,369,307) (5,084,712) (1,125,717) (1,058,751)
Interest Income (Expense) (58,885) (152,495) (33,272) 66,401
Gain (loss) on foreign currency translation 5,771 - 14,820 -
---------- ---------- ----------- -----------
Net Loss $(3,422,421) $(5,237,207) $(1,144,169) $ (992,350)
========== ========== ========== ==========
Weighted average number of common shares 29,234,647 26,962,894 29,429,368 28,738,370
Per share of common stock:
Loss from continuing operations $(.12) $(.19) $(.04) $(.03)
See Notes to Consolidated Financial Statements
</TABLE>
3<PAGE>
METALCLAD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For Nine Months Ended
--------------------------
September 30, August 31,
1997 1996
----------- -----------
OPERATING ACTIVITIES
Net loss $(3,422,421) $(5,237,207)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 360,160 361,100
Loss in earnings of unconsolidated
affiliates 742,845 311,706
Other - 41,211
Provision for losses on accounts
receivable (7,600) 19,757
Issuance of stock for services and
interest on convertible subordinated
debentures 108,750 324,008
Write down of real estate held for sale - 130,415
Earnings in excess of distributions
from Curtom-Metalclad 12,588 27,794
Changes in operating assets and
liabilities:
Decrease in accounts receivable 1,392,258 1,256,603
(Increase) decrease in unbilled
receivables (17,670) 105,859
Decrease in inventories 133,395 42,812
(Increase) decrease in prepaid
expenses and other assets (41,564) (206,843)
Decrease in receivables from related
parties 95,314 79,028
(Decrease) in accounts payable and
accrued expenses (2,334,546) (1,428,289)
(Decrease) in billings over costs (7,781) (280,458)
--------- ----------
NET CASH USED IN OPERATING ACTIVITIES (2,986,272) (4,452,504)
--------- ----------
INVESTING ACTIVITIES
Purchase of equipment (210,809) (759,877)
Investments and capitalized costs in
unconsolidated affiliates (712,971) (2,290,498)
Other investments - (67,229)
Restricted cash 769,500 -
Cash increase from ARI consolidation 175,546 -
--------- ----------
NET CASH USED IN INVESTING ACTIVITIES 21,266 (3,117,604)
--------- ----------
4<PAGE>
For Nine Months Ended
--------------------------
September 30, August 31,
1997 1996
----------- -----------
FINANCING ACTIVITIES
Payments on long-term borrowings - (24,959)
Proceeds from long-term borrowings - 11,154
Payments on Officers receivables
collateralized by stock - 180,808
Proceeds from sale of common stock
under stock option plan 1,103,454 6,702,794
Proceeds from sale of common stock - 5,226,199
--------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,103,454 12,095,996
--------- ----------
Effect of exchange rates on cash (10,282) (258,887)
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (1,871,834) 4,267,001
Cash and cash equivalents at beginning
of period 3,074,395 709,730
--------- ----------
Cash and cash equivalents at end
of period $1,202,561 $4,976,731
========= =========
Supplemental disclosures of cash
flow information:
Cash paid for interest $ 62,137 $ 244,785
========= =========
See Notes to Consolidated Financial Statement.
5<PAGE>
METALCLAD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Period Ended September 30, 1997
(Unaudited)
1. The accompanying unaudited financial statements of Metalclad
Corporation and its subsidiaries (the "Company") have been prepared in
accordance with the instructions to Form 10-Q and 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 (which consist only of normal recurring
adjustments) necessary for a fair presentation have been included.
Operating results for the nine months ended September 30, 1997 are not
necessarily indicative of what results will be for the fiscal year ending
December 31, 1997. These statements should be read in conjunction with
the consolidated financial statements and notes thereto included in the
Company's Form 10-K for the year ended December 31, 1996.
2. In December 1996, the Company changed its fiscal year end to
December 31 from its previous May 31. This 10-Q reflects the Company s
new quarterly reporting period and compares it to the most comparable
period from its previous filings.
3. The Company, because of its operations in Mexico, is required to
account for all foreign currency translations in accordance with Financial
Accounting Standards Board Statement No. 52. In part, FASB 52 requires
the Company to account for translation gains or losses in its Income
Statement, as opposed to being a direct charge against equity, if its
foreign operations are in a country that is determined to be highly
inflationary. In accordance with the most recent statistics published by
the International Monetary Fund, the SEC has determined that Mexico must
be considered highly inflationary, requiring a change in the Company s
accounting for its foreign currency translation adjustment effective
January 1, 1997. Management believes that this change in accounting will
not result in any material impact to the Company.
4. In May 1997, the Company completed the settlement of its litigation
against the California State Compensation Fund for $385,000, which has
been paid by the Company. A provision for potential settlement of
$325,000 was previously recorded in December 1996.
5. In late March 1997, QUIMICA OMEGA and BFI-MEXICO completed QUIMICA
OMEGA s previously announced acquisition of BFI s interest in BFI-OMEGA,
the Mexican joint venture company established in April 1996. Effective
January 1, 1997, the Company controlled 100% of the outstanding stock of
BFI-OMEGA and assumed management control of its operations. The BFI-OMEGA
j o int venture was subsequently renamed Administracion de Residuos
Industriales ( ARI ). For the first six months of 1997, the Company
pursued a strategy of identifying a new partner to acquire 50% of ARI.
Because of this strategy, the Company maintained the equity method of
6<PAGE>
accounting for ARI. In August 1997, the Board of Directors decided to
maintain ARI as a 100% owned subsidiary and not continue the pursuit of a
partner. This decision was based upon the increasing value of ARI
relative to the Company s on-going development activities. Consequently,
the Company is now consolidating ARI into its financials, effective July
1, 1997 for its quarterly reporting.
6. Newly Issued Accounting Pronouncements. The Financial Accounting
Standards Board ( FASB ) has issued Statement of Financial Accounting
Standards ( SFAS ) No. 128 Earnings Per Share which is effective for
reporting periods ending after December 15, 1997. SFAS No. 128 replaces
fully diluted EPS with diluted EPS and replaces primary EPS with basic
EPS. The Company will adopt the new standard in its reporting for the
quarter and the year ended December 31, 1997. Management does not believe
that adoption of this standard will have a significant impact on earnings
per share.
The FASB has also issued SFAS No. 130, Reporting Comprehensive
Income which is effective for fiscal years beginning after December 15,
1997. SFAS No. 130 requires that items meeting the criteria of a
component of comprehensive income, including foreign currency items and
unrealized gains and losses on certain investments in debt and equity
securities be shown in the financial statements. Management has not yet
determined the effect of SFAS No. 130 on the consolidated financial
statements.
The FASB has also issued SFAS No. 131, Disclosures about Segments
of an Enterprise and Related Information . This standard requires that a
public business enterprise report financial and descriptive information
about its reportable operating segments. This statement is effective for
financial statements for periods beginning after December 15, 1997. In
the initial year of application, comparative information for earlier years
is required to be restated. Comparative information for interim periods
is not required until the second year of application. Management has not
yet determined the effect, if any, of SFAS No. 131 on the consolidated
financial statements.
7. Certain reclassifications have been made to prior period
consolidated financial statements to conform with the current year
presentation.
8. The loss per share amounts for the nine months ended September 30,
1997 and the nine months ended August 31, 1996 were computed by dividing
the net loss by the weighted average shares outstanding during the
applicable period.
7<PAGE>
ITEM 2. DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
All statements, other than statements of historical fact, included in
this Form 10-Q, including without limitation the statements under
Management s Discussion and Analysis of Financial Condition and Results
of Operations are, or may be deemed to be, forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934. Such
forward-looking statements involve assumptions, known and unknown risks,
uncertainties, and other factors which may cause the actual results,
performance or achievements of Metalclad Corporation (the Company ) to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements contained in this
Form 10-Q. Such potential risks and uncertainties include, without
limitation, the ability to commence operations at the Company s hazardous
waste treatment sites under development, competitive pricing and other
pressures from other businesses in the Company s markets, economic
conditions generally and in the Company s primary markets, availability of
capital, cost of labor, and other risk factors detailed herein and in
other of the Company s filings with the Securities and Exchange
Commission. The forward-looking statements are made as of the date of
this Form 10-Q and the Company assumes no obligation to update the
forward-looking statements or to update the reasons actual results could
d i f f er from those projected in such forward-looking statements.
Therefore, readers are cautioned not to place undue reliance on these
forward-looking statements.
Results of Operations
General. The Company s revenues were generated primarily by (i)
revenues in the United States from insulation and remediation services;
and (ii) revenues in Mexico from the collection of waste oils and solvents
for recycling, rental of parts washing machines, brokering the disposal of
waste and remediation services.
Since November 1991, the Company has pursued the development of
integrated waste treatment and disposal facilities in several Mexican
states. The Company has completed construction of a hazardous waste
landfill in San Luis Potosi which is not yet open; all other contemplated
projects are in the early stages of development. The Company s results of
operations include the costs of development of all such waste treatment
facilities in Mexico.
Insulation Business. Total revenues from the insulation business for
the nine months ended September 30, 1997 were $6,408,000 as compared to
$7,346,000 for the comparable period ended August 31, 1996, a decrease of
13%.
Contract revenues for the nine months ended September 30, 1997 were
$6,046,000 as compared to $7,044,000 for the nine months ended August 31,
8<PAGE>
1996, a decrease of 14%. This decline is primarily attributed to the
closure of two unprofitable offices that accounted for $921,000 in
revenues for the nine months ended August 31, 1996.
Although revenues have declined over the past several years, this
trend is not anticipated to continue nor is it anticipated that the
decline in revenues will lead to substantial losses from operations. The
Company has taken steps to increase revenues by its recent re-entry into
the commercial insulation market. For the three months ended September
30, 1997, contract revenues increased 20% as compared to the three months
ended August 1996.
The Company has also reduced its cost structure, closed unprofitable
offices and restructured the senior management of the insulation company.
All of these actions are anticipated to enhance the Company s ability to
be profitable.
Material sales were $160,000 for the nine months as compared to
$218,000 for the comparable period in 1996, a decline of 27%.
Other revenues were $202,000 for the nine months versus $84,000 for
the comparable period in 1996. This increase is attributed to the
settlement of a collection claim against a previous customer and insurance
refunds from prior years premiums.
Total expenses for the nine months ended September 30, 1997 were
$6,366,000 versus $8,342,000 for the nine months ended August 31, 1996, a
decline of 24%.
Contract costs and expenses were $5,352,000 for the nine months
versus $6,847,000 for the comparable period in 1996, a decrease of 22%.
This decrease is attributed to a) a lesser volume of work and b) the nine
months ended August 31, 1996 contained a provision for losses on two
fixed-priced contracts.
Cost of material sales was $120,000 for the nine months versus
$170,000 for the comparable period in 1996. This decline is attributed to
the lower sales volume.
Selling, general and administrative costs for the nine months ended
September 30, 1997 were $894,000 versus $1,325,000 for the comparable
period in 1996. This decline reflects the Company s decision to close two
o f fices and implement a cost reduction program in its remaining
operations.
Waste Management Services. Revenues for the nine months ended
September 30, 1997 were $1,444,000 as compared to revenues of $1,997,000
for the comparable period ended August 31, 1996, indicating a decline of
28%. However, because of the differing accounting methods between the
periods, comparisons cannot be accurately reflected (see Note 5). If the
Company had consolidated the revenues of ARI for the nine month periods
9<PAGE>
ended September 30, 1997 and August 31, 1996, revenues would have been
$3,503,000 and $2,335,000, respectively, an increase of 50%.
Operating costs and expenses were $2,363,000 for the nine months
ended September 30, 1997 versus $2,838,000 for the comparable period in
1996. Again, comparisons are difficult due to the differing accounting
methods for the collection, recycling and destruction businesses. The
landfill costs have increased and reflect the costs of maintaining the
Company s completed, but not yet opened, landfill facility as well as
costs associated with the continuing development activities of additional
industrial waste landfill facilities in Mexico.
Other income of $169,000 represents the reduction in back taxes and
interest due as a result of the Company qualifying for a discount under a
new Mexican tax payment program.
Equity in earnings of unconsolidated affiliates was ($743,000) for the
nine months versus ($311,000) for the comparable period in 1996. Because
of the change in accounting, the ($743,000) loss only represents 100% of
the losses for the first six months of 1997 and 50% of the losses in 1996
and includes ($192,000) in losses associated with 1996 operations,
recorded in the current year, as identified during the Company s
assumption of control of the joint venture in 1997. The losses from the
joint venture s operations in 1997 are declining and the Company
anticipates that the joint venture will become profitable in the fourth
quarter of 1997. (See Note 5.)
Corporate Expense. Corporate expenses were $1,918,000 for the nine
months ended September 30, 1997 as compared to $2,937,000 for the nine
months ended August 31, 1996, a decline of 35%. This decline in expenses
was achieved while the Company a) absorbed certain settlement costs
associated with the State Fund litigation, b) funded pursuit of its claim
under the NAFTA related to its San Luis Potosi facility and c) continued
its development activities in Mexico.
Interest Expense. Interest expense was $59,000 for the nine months
as compared to $152,000 for the comparable period, as the Company has
virtually eliminated most of its interest bearing obligations.
Gain on Foreign Currency Translation. This gain of $6,000 is due to
the accounting treatment associated with Mexico s highly inflationary
economy. (See Note 3.) During the comparable period, this adjustment was
made directly to the Company s equity section of its balance sheet. It is
not anticipated that this accounting change will have a material effect on
the Company going forward.
Consolidated Results
The Company experienced a net loss of ($3,422,000) for the nine
months ended September 30, 1997 as compared to a net loss of ($5,237,000)
for the comparable period ended August 31, 1996, an improvement of 35%,
10<PAGE>
while reflecting 100% of the losses of ARI in 1997 versus 50% of ARI s
losses during 1996.
Liquidity and Capital Resources
Working capital at September 30, 1997 was $1,254,000 as compared to
$2,719,000 as of December 31, 1996. The Company had cash and cash
equivalents of $1,203,000 at September 30, 1997 as compared to $3,074,000
at December 31, 1996. Cash used in operations was ($2,986,000) as
compared to ($4,453,000) for the comparable period ending August 31, 1996.
During the three months ended September 30, 1997 the company raised
$1,100,000 from the exercise of 735,636 of its outstanding warrants at
$1.50. Under the anti-dilution provisions of certain of the Company s
outstanding warrants, the adjusted exercise price is now $1.50 per share
for approximately 5,635,000 which previously were exercisable at prices
ranging from $1.51 to $5.00. Additionally, the Company issued new
warrants exercisable at $1.50 to those persons who exercised their
warrants during this period.
The Company believes that the insulation business will generate
adequate cash flows from operations to meet its future obligations and
expenses relating to such operations. The Company will require
additional financing to construct and operate additional waste treatment
facilities in Mexico as well as to support the continuing expansion of
ARI s operations. Furthermore, the Company will continue to incur
additional general, administrative and legal expenses associated with the
pursuit of its claim under the NAFTA. The Company is aware of its ongoing
cash requirements and has implemented a cash flow plan, including
continued reduction in its general and administrative expenses. The
Company continues to evaluate the timing and substance of various
financing structures. Additionally, the Company has secured preliminary
approval with a federal developmental bank in Mexico for its next project
and expects to secure said financing in the near future.
11<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
The Company has filed a claim against the Mexican government under the
North American Free Trade Agreement ( NAFTA ) related to the Company s
inability to open and operate its completed hazardous waste treatment
facility in San Luis Potosi. The claim was filed with the International
Centre for Settlement of Investment Disputes ( ICSID ) in Washington, D.C.
on January 13, 1997. The Company s claim is one under the category of
Like unto Expropriation wherein the Company claims, having been denied
the right to operate its constructed and permitted facility, its property
has therefore been expropriated. The three-member panel which will hear
the case has been formed and the initial hearing was held on July 15,
1997. On October 14, 1997 the Company filed its Memorial with the panel
which includes its claim plus all evidence supportive of its case.
Included is a damage study indicating that the fair market value of the
facility is $90,000,000. No assurance can be given that the efforts of
the Company will be fruitful and there is always the possibility of a
negotiated settlement between the parties.
The Company has contested an assessment by the State Compensation
Insurance Fund ("SCIF"), which provided the Company's workers compensation
insurance, of approximately $400,000 of workers compensation insurance
premium for the 1990 policy year. In December 1996, the Company received
an unfavorable court ruling on its position relative to certain rights of
defense in its litigation against the California State Compensation Fund
for the policy year ended September 30, 1990. In May 1997, the Company
completed a settlement with SCIF for $385,000 which ended the litigation.
A provision for potential settlement of $325,000 was previously recorded
in December 1996.
In May 1997 a jury found Texaco oil refinery, a client of the Company
55% liable for injuries and damages sustained by a Metalclad Insulation
employee while working at the Wilmington, California refinery. The jury
determined that Texaco s portion of the damages amounted to $5.5 million.
Under terms of the Company s contract with Texaco, certain indemnities may
be applied. The Company had project specific, as well as other insurance
policies, in effect at the time of the injury.
It is believed that this award will be appealed and the ultimate
outcome cannot be predicted, however, the Company believes its insurance
programs are adequate to address any potential exposure.
Given the Company s long history in the insulation business and in
the sale of insulation materials, it is subject to various claims related
to prior asbestos related business as well as its current business. The
number of these claims is over 100, the Company believes it has adequate
insurance in place and had adequate insurance in prior years and is
12<PAGE>
vigorously defending all claims. The Company does not believe that these
claims, individually or in the aggregate, will have a material adverse
effect on its financial condition.
Item 2. Changes in Securities
Not Applicable
Item 3. Defaults Upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
Not Applicable
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.
METALCLAD CORPORATION
Date: November 14, 1997 By: /s/Anthony C. Dabbene
-------------------------------
Anthony C. Dabbene
Chief Financial Officer
(Principal Accounting Officer)
13<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<PERIOD-TYPE) 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,203
<SECURITIES> 0
<RECEIVABLES> 2,120
<ALLOWANCES> 0
<INVENTORY> 200
<CURRENT-ASSETS> 4,303
<PP&E> 6,313
<DEPRECIATION> 0
<TOTAL-ASSETS> 12,075
<CURRENT-LIABILITIES> 3,050
<BONDS> 0
<COMMON> 2,994
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 12,075
<SALES> 7,650
<TOTAL-REVENUES> 7,852
<CGS> 7,835
<TOTAL-COSTS> 11,390
<OTHER-EXPENSES> (169)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 59
<INCOME-PRETAX> (3,422)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,422)
<EPS-PRIMARY> 0
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</TABLE>
