<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 June 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.)
3737 Birch Street, Suite 300
Newport Beach, CA 92660
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code (714) 476-2772
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 June 30, 1997, the registrant had 29,153,244 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 June 30, 1997
(unaudited) and December 31, 1996.................................. 1
Consolidated Statements of Operations for the
six months ended June 30, 1997 (unaudited) and
May 31, 1996....................................................... 3
Consolidated Statements of Cash Flows for the
six months ended June 30, 1997 (unaudited) and
May 31, 1996....................................................... 4
Notes to Consolidated Financial Statements......................... 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations................ 7
PART II. OTHER INFORMATION........................................... 11
SIGNATURES............................................................ 13<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
METALCLAD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30, December 31,
1997 1996
---------- -----------
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 952,843 $3,074,395
Accounts receivable, including amounts
retained by customers under contract
terms of $3,460 in June 1997 and
$13,407 in December 1996, less allowance
for doubtful accounts of $111,826 in
June 1997 and $67,972 in December 1996 1,668,334 2,478,528
Costs and estimated earnings in excess
of billings on uncompleted contracts 102,520 174,768
Inventories 233,298 314,157
Prepaid expenses and other current assets 322,237 253,059
Receivables from related parties 120,267 240,379
---------- ----------
TOTAL CURRENT ASSETS 3,399,499 6,535,286
Property, plant and equipment, net 5,305,815 5,319,409
Investment and capitalized costs in
unconsolidated affiliates 1,210,442 1,516,878
Deposits and other assets 57,472 837,516
Goodwill, less accumulated amortization
of $173,872 in June 1997 and $115,390
in December 1996 857,576 697,363
Real estate held for sale 25,000 25,000
---------- ----------
$10,855,804 $14,931,452
========== ==========
See Notes to Consolidated Financial Statements
1<PAGE>
METALCLAD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
June 30, December 31,
1997 1996
---------- -----------
(Unaudited)
CURRENT LIABILITIES:
Accounts payable $ 857,814 $1,665,475
Accrued payroll, property and other taxes 295,127 493,751
Accrued expenses 520,178 1,381,972
Billings in excess of costs and estimated
earnings on uncompleted contracts 22,320 45,468
Current portion of convertible subordinated
debentures 229,533 229,533
---------- ----------
Total Current Liabilities 1,924,972 3,816,199
---------- ----------
Shareholders equity:
Preferred stock, par value $10; 1,500,000
shares authorized; none issued - -
Common stock, par value $.10; 40,000,000
shares authorized, 29,153,244 and
29,123,239 issued and outstanding in
June 1997 and December 1996,
respectively 2,915,324 2,912,324
Additional paid-in capital 55,687,813 55,582,063
Accumulated deficit (46,921,830) (44,643,578)
Officers receivable collateralized by
stock (591,559) (576,640)
Cumulative foreign currency translation
adjustment (2,158,916) (2,158,916)
---------- ----------
8,930,832 11,115,253
---------- ----------
$10,855,804 $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 Six Months Ended For Three Months Ended
June 30, May 31, June 30, May 31,
1997 1996 1997 1996
----------- ----------- ----------- -----------
INSULATION BUSINESS
Revenues
Contract revenues $ 4,461,475 $ 5,724,728 $ 2,014,678 $ 2,273,494
Material sales 132,709 162,803 46,127 87,441
Other 185,584 68,254 5,703 81,596
---------- ---------- ----------- -----------
4,779,768 5,955,785 2,066,508 2,442,531
---------- ---------- ----------- -----------
Operating costs and expenses
Contract costs and expenses 3,984,028 5,705,401 1,787,499 2,117,764
Cost of material sales 103,573 124,884 33,891 65,612
Selling, general and administrative expenses 619,370 1,077,696 286,631 493,427
---------- ---------- ----------- -----------
4,706,971 6,907,981 2,108,021 2,676,803
---------- ---------- ----------- -----------
Operating income (loss) 72,797 (952,196) (41,513) (234,272)
---------- ---------- ----------- -----------
WASTE MANAGEMENT
Revenues
Collection, recycling and destruction 149,737 1,469,881 96,879 365,958
Operating costs and expenses
Collection, recycling and destruction 425,652 2,042,700 121,352 587,098
Landfill 194,042 52,526 100,508 6,429
---------- ---------- ----------- -----------
619,694 2,095,226 221,860 593,527
Other Income 168,720 - 168,720 -
Equity in earnings of unconsolidated affiliates (742,845) (143,415) (367,500) (143,415)
---------- ---------- ----------- -----------
Operating Loss (1,044,082) (768,760) (323,761) (370,984)
---------- ---------- ----------- -----------
Corporate expense (1,272,305) (2,305,005) (645,508) (1,354,238)
---------- ---------- ----------- -----------
Operating loss (2,243,590) (4,025,961) (1,010,782) (1,959,494)
Interest expense (25,613) (218,896) (47,525) (143,980)
Gain (loss) on foreign currency translation (9,049) - 29,585 -
---------- ---------- ----------- -----------
Net Loss $(2,278,252) $(4,244,857) $(1,028,722) $(2,103,474)
========== ========== ========== ==========
Weighted average number of common shares 29,135,673 26,070,305 29,147,970 28,391,271
Per share of common stock:
Loss from continuing operations $(.08) $(.16) $(.04) $(.07)
See Notes to Consolidated Financial Statements
3<PAGE>
</TABLE>
METALCLAD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For Six Months Ended
-------------------------
June 30, May 31,
1997 1996
---------- ----------
OPERATING ACTIVITIES
Net loss $(2,278,252) $(4,244,857)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 237,489 274,554
Loss in earnings of unconsolidated
affiliates 742,845 143,415
Other - 41,211
Provision for losses on accounts
receivable 44,621 11,640
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 6,218 (5,158)
Changes in operating assets and
liabilities:
Decrease in accounts receivable 762,572 474,778
(Increase) decrease in unbilled
receivables 72,248 126,465
Decrease in inventories 80,859 23,619
(Increase) decrease in prepaid
expenses and other assets (61,959) (56,329)
Decrease in receivables from related
parties 105,193 89,382
(Decrease) in accounts payable and
accrued expenses (1,863,179) (165,377)
(Decrease) in billings over costs (23,148) (236,524)
--------- ----------
NET CASH USED IN OPERATING ACTIVITIES (2,065,743) (3,068,758)
--------- ----------
INVESTING ACTIVITIES
Purchase of equipment (111,466) (702,530)
Investments and capitalized costs in
unconsolidated affiliates (712,971) (1,497,387)
Restricted cash 769,500 -
--------- ----------
NET CASH USED IN INVESTING ACTIVITIES (54,937) (2,199,917)
--------- ----------
4<PAGE>
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 - 6,685,445
Proceeds from sale of common stock - 5,226,199
--------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES - 12,078,647
--------- ----------
Effect of exchange rates on cash (872) (175,345)
--------- ----------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (2,121,552) 6,634,627
Cash and cash equivalents at beginning
of period 3,074,395 709,730
--------- ----------
Cash and cash equivalents at end
of period $ 952,843 $ 7,344,357
========= ==========
Supplemental disclosures of cash
flow information:
Cash paid for interest $ 18,115 $ 210,644
========= ==========
See Notes to Consolidated Financial Statements
5<PAGE>
METALCLAD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Period Ended June 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 six months ended June 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
periods 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 joint venture was subsequently renamed Administracion de
Residuos Industriales ( ARI ). The financial statements for the quarter
ended June 30, 1997 maintain the equity method of accounting for ARI as it
is the Company s intent to identify a new strategic partner for these
operations going forward. The Company s 100% ownership and control of
6<PAGE>
operations should, therefore, be viewed as temporary as the Company
identifies potential new partners for these operations.
6. During fiscal 1995, the Company granted loans to two of its
executive officers. The term of the loans called for repayment by May 31,
1997. The Company has agreed to extend the repayment period of the loans
for a period of six months, with an amended due date of November 30, 1997.
7. 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.
8. Certain reclassifications have been made to prior period
consolidated financial statements to conform with the current year
presentation.
9. The loss per share amounts for the six months ended June 30, 1997
and the six months ended May 31, 1996 were computed by dividing the net
loss by the weighted average shares outstanding during the applicable
period.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
All statements, other than statements of historical fact, included in
this Form 10-Q, including without limitation the statements under
7<PAGE>
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
differ 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 six months ended June 30, 1997 were $4,780,000 as compared to
$5,956,000 for the comparable period ended May 31, 1996, a decrease of
20%.
Contract revenues for the six months ended June 30, 1997 were
$4,461,000 as compared to $5,725,000 for the six months ended May 31,
1996, a decrease of 22%. This decline is partly attributed to the closure
of two offices which had accounted for $662,000 in revenues in the period
ended May 31, 1996.
Although revenues have declined over the past several years, this
trend is not anticipated to continue nor is it anticipated that the
8<PAGE>
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 and has also reduced its cost structure
in response to lesser revenues. These actions are anticipated to enhance
the Company s ability to be profitable.
Material sales were $133,000 for the six months as compared to
$163,000 for the comparable period in 1996, a decline of 18%.
Other revenues were $186,000 for the six months versus $68,000 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 six months ended June 30, 1997 were $4,707,000
versus $6,908,000 for the six months ended May 31, 1996, a decline of 32%.
Contract costs and expenses were $3,984,000 for the six months as
versus $5,705,000 for the comparable period in 1996, a decrease of 30%.
This decrease is attributed to a) a lesser volume of work and b) the six
months ended May 31, 1996 contained a provision for losses on two fixed-
priced contracts.
Cost of material sales was $104,000 for the six months versus
$125,000 for the comparable period in 1996. This decline is attributed to
the lower sales volume.
Selling, general and administrative costs for the six months ended
June 30, 1997 were $619,000 versus $1,078,000 for the comparable period in
1996. This decline reflects the Company s decision to close two offices
and implement a cost reduction program in its remaining operations.
Waste Management Services. Revenues for the six months ended June
30, 1997 were $150,000 as compared to revenues of $1,470,000 for the
comparable period ended May 31, 1996. This decline is the result of the
completed transition of the Company s principal revenue producing
activities of its QUIMICA OMEGA subsidiary to the BFI-OMEGA joint venture.
Revenues for the joint venture, although not reflected in the
Company s financial statements, continue to grow at a rate of 12% per
quarter on a peso basis.
Operating costs and expenses were $620,000 for the six months as
compared to $2,095,000 for the comparable period in 1996. This decline is
directly associated with the shifting of revenue producing activities, and
their associated costs, to the BFI-OMEGA joint venture. The Company s
remaining operating costs and expenses, although declining, are associated
with the management of its Mexican business, maintenance of its completed,
but not yet opened, landfill facility and the continuing development
activities of additional industrial waste landfill facilities in Mexico.
Other income of $169,000 represents the reduction in back taxes and
9<PAGE>
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 six months versus ($143,000) for the comparable period in 1996. This
loss represents 100% of the loss from ARI for 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 second
half of 1997. (See Note 5.)
Corporate Expense. Corporate expenses were $1,272,000 for the six
months ended June 30, 1997 as compared to $2,305,000 for the six months
ended May 31, 1996, a decline of 45%. 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 $26,000 for the six months as
compared to $219,000 for the comparable period, as the Company has
virtually eliminated most of its interest bearing obligations.
Loss on Foreign Currency Translation. This loss of ($9,000) 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 ($2,278,000) for the six months
ended June 30, 1997 as compared to a net loss of ($4,245,000) for the
comparable period ended May 31, 1996, an improvement of 46%.
Liquidity and Capital Resources
Working capital at June 30, 1997 was $1,474,000 as compared to
$2,719,000 as of December 31, 1996. The Company had cash and cash
equivalents of $953,000 at June 30, 1997 as compared to $3,074,000 at
December 31, 1996. Cash used in operations was ($2,066,000) as compared
to ($3,069,000) for the comparable period ending May 31, 1996.
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
substantial additional financing to construct and operate additional waste
treatment facilities in Mexico as well as to support the continuing
expansion of BFI-OMEGA s operations. Furthermore, the Company will incur
10<PAGE>
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 and its investment bankers are also evaluating various long-term
financing options. Additionally, the Company is in discussions with a
major federal developmental bank in Mexico related to financing the
Company s new projects.
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 Company s claim estimates damages in
excess of $50 million based upon the fair market value of the facility.
The three member panel which will hear the case has been formed and the
initial hearing was held on July 15, 1997. 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
will submit its memorial no later than October 13, 1997, after which
Mexico has 90 calendar days to submit its response. Further steps, if
required, will be announced by the judges within 15 calendar days from
Mexico s submission.
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
11<PAGE>
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
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
The Company held its Annual Meeting of Shareholders on May 15, 1997 in
Newport Beach, California. At the meeting, either in person or by proxy,
the following matters were voted upon:
(A) The election of the Company s Board of Directors
For: 20,185,392 Against: 189,160 Abstain: -
Elected: Yes
Mr. Herbert C. Oakes, a nominee listed in the Company s Proxy
Statement, declined to stand for election due to the press of other
business. At the annual meeting of the Company s Board of Directors
following the shareholders meeting, Juan B. Morales, a Monterrey, Mexico
businessman and consultant, was elected to fill a vacancy on the Board.
(B) To increase the number of authorized shares of Common Stock of
the Company to 80,000,000:
For: 19,478,656 Against: 838,870 Abstain: 57,026
Passed: Yes
(C) To ratify the adoption of the Metalclad Corporation 1997 Omnibus
Stock Option and Incentive Plan:
For: 18,682,378 Against: 1,571,908 Abstain: 120,266
Passed: Yes
(D) To grant non-statutory stock options to T. Daniel Neveau, the
former Chairman of the Board of the Company to purchase 1,300,000 shares
of common stock exercisable at $3.625 per share:
12<PAGE>
For: 5,480,105 Against: 849,048 Abstain: 86,301
Passed: No, required a majority of the outstanding shares to
vote for this item.
(E) To ratify the appointment of Arthur Andersen LLP as the
independent public accountants of the Company for the year ending December
31, 1997:
For: 20,220,906 Against: 98,760 Abstain: 54,886
Passed: Yes
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: August 14, 1997 By: /s/ Anthony C. Dabbene
-------------------------------
Anthony C. Dabbene
Chief Financial Officer
(Principal Accounting Officer)
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<PERIOD-TYPE) 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 953
<SECURITIES> 0
<RECEIVABLES> 1668
<ALLOWANCES> 0
<INVENTORY> 233
<CURRENT-ASSETS> 3399
<PP&E> 5306
<DEPRECIATION> 0
<TOTAL-ASSETS> 10856
<CURRENT-LIABILITIES> 1925
<BONDS> 0
<COMMON> 2915
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 10856
<SALES> 4744
<TOTAL-REVENUES> 4930
<CGS> 4704
<TOTAL-COSTS> 7342
<OTHER-EXPENSES> (160)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26
<INCOME-PRETAX> (2278)
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</TABLE>
