UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1998
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 0-12293
CANISCO RESOURCES, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 54-0952207
(State of Incorporation) (IRS Employer Identification No.)
300 Delaware Avenue, Suite 714, Wilmington, Delaware 19801
(Address of Principal Executive Offices) (Zip Code)
302-777-5050
(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 ( )
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act subsequent to the distribution of securities under a plan
confirmed by the court. Yes (X) No ( )
Common Stock, par value $.0025 per share 2,526,565 shares outstanding as of
September 30, 1998.
CANISCO RESOURCES, INC.
(formerly Nuclear Support Services, Inc.)
PART I ITEM 1
FINANCIAL STATEMENTS
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets as of September 30, 1998 and March 31, 1998
Consolidated Statements of Operations for the Three Month Periods Ended
September 30, 1998 and 1997
Consolidated Statements of Operations for the Six Month Periods Ended
September 30, 1998 and 1997
Consolidated Statements of Cash Flows for the Six Month Periods Ended
September 30, 1998 and 1997
Notes to Consolidated Financial Statements
PART I ITEM 2
Management's Discussion and Analysis of Financial Condition and Results of
Operations
PART II Item 2
Changes in Securities and Use of Proceeds
PART II Item 4
Submission of Matters to a Vote of Security Holders
PART II ITEM 6
Exhibits and Reports on Form 8-K
PART I ITEM 1 FINANCIAL STATEMENTS
CANISCO RESOURCES, INC.
(formerly Nuclear Support Services, Inc.)
Consolidated Balance Sheets
Assets
Assets September 30, March 31,
1998 1998
(Unaudited) (Audited)
Current assets:
Cash $ 1,763,306 $1,188,393
Accounts receivable, net
Billed 14,088,289 7,749,599
Unbilled 435,901 242,930
Other 324,440 283,491
Total accounts receivable 14,848,630 8,276,020
Inventory 382,144 419,697
Deferred income taxes 278,000 289,000
Other prepaid expenses and current assets 1,496,283 1,961,818
Costs and estimated earnings in excess
of billings on uncompleted contracts 2,540,902 1,377,433
Total current assets 21,309,265 13,512,361
Property and equipment:
Land 1,125,100 954,100
Buildings and improvements 1,130,812 1,085,812
Machinery and equipment 5,717,914 2,545,281
Furniture and fixtures 471,156 404,811
Vehicles 1,037,727 389,516
Total property and equipment 9,482,709 5,379,520
Less accumulated depreciation (2,304,092) (1,886,289)
Property and equipment, net 7,178,617 3,493,231
Intangible pension asset 854,170 905,938
Deferred income taxes 1,638,000 2,116,000
Other assets 429,101 605,779
Goodwill 2,902,751 0
Total assets $34,311,904 $20,633,309
CANISCO RESOURCES, INC.
(formerly Nuclear Support Services, Inc.)
Consolidated Balance Sheets
Liabilities and Shareholders' Equity
September 30, March 31,
1998 1998
(Unaudited) (Audited)
Current liabilities:
Current portion of long-term debt $ 1,978,504 $ 1,974,993
Accounts payable 3,426,468 3,301,171
Other accrued expenses 2,506,485 2,563,489
Billings in excess of costs and estimated
earnings on uncompleted contracts 708,643 379,462
Total current liabilities 8,620,100 8,219,115
Long-term debt, less current portion 8,528,836 1,755,000
Accrued pension cost 918,746 962,869
Note payable to bank 11,644,370 6,526,421
Total liabilities 29,712,052 17,463,405
Shareholders' equity:
Common stock, $.0025 par value, authorized
20,000,000 and 10,000,000 shares;
issued 2,788,617 and 2,477,592 shares;
and outstanding 2,526,565 and 2,215,540
shares, respectively at September 30, 1998
and March 31, 1998 6,972 6,194
Additional paid-in-capital 3,688,764 2,873,101
Retained earnings 4,855,653 4,242,146
Treasury stock, at cost (3,951,537) (3,951,537)
Total shareholders' equity 4,599,852 3,169,904
Total liabilities & shareholders'equity $34,311,904 $20,633,309
CANISCO RESOURCES, INC.
(formerly Nuclear Support Services, Inc).
Consolidated Statements of Operations
(Unaudited)
Three Months Ended September 30,
1998 1997
Revenues from services $ 17,826,729 $ 14,901,690
Cost of services 14,339,389 12,115,416
Gross margin 3,487,340 2,786,274
General and administrative expenses 2,456,350 1,949,865
Income from operations 1,030,990 836,409
Interest expense (481,284) (264,538)
Other income, net 8,510 3,985
Income before income taxes 558,216 575,856
Income tax expense 243,308 230,343
Net earnings $ 314,908 $ 345,513
Earnings per share (basic) $0.12 $0.16
Weighted average common shares (basic) 2,526,565 2,193,040
Earnings per share (diluted) $0.12 $0.14
Weighted average common shares (diluted) 2,699,803 2,425,742
CANISCO RESOURCES, INC.
(formerly Nuclear Support Services, Inc).
Consolidated Statements of Operations
(Unaudited)
Six Months Ended September 30,
1998 1997
Revenues from services $ 36,433,878 $ 27,709,523
Cost of services 29,625,998 22,443,456
Gross margin 6,807,880 5,266,067
General and administrative expenses 4,800,696 3,883,960
Income from operations 2,007,184 1,382,107
Interest expense (951,938) (525,884)
Other income (expense), net 34,000 (12,788)
Income before income taxes 1,089,246 843,435
Income tax expense 475,739 337,375
Net earnings $ 613,507 $ 506,060
Earnings per share (basic) $0.25 $0.23
Weighted average common shares (basic) 2,496,053 2,193,040
Earnings per share (diluted) $0.23 $0.21
Weighted average common shares (diluted) 2,670,188 2,426,496
CANISCO RESOURCES, INC.
(formerly Nuclear Support Service, Inc.)
Consolidated Statements of Cash Flows
Unaudited
Six Months Ended September 30,
1998 1997
Cash flows from operating activities:
Net earnings $613,507 $506,060
Adjustments to reconcile net
earnings to net cash
used in operating activities:
Depreciation and amortization 546,349 254,590
Deferred income taxes 489,000
Change in assets and liabilities
net of effects from purchases
of subsidiaries:
(Increase) in accounts receivable (3,691,900) (1,822,492)
Decrease in inventory 62,765 21,195
(Increase) in costs and estimated
earnings in excess of billings
on uncompleted contracts (33,282) (810,557)
Decrease in other assets 533,801 1,281,185
Decrease in accounts payable (174,696) (643,880)
Decrease in accrued expenses (457,327) (500,988)
Increase (Decrease) in billings in excess
of costs and estimated earnings on
uncompleted contracts 40,474 (10,802)
Net cash used in operating
activities (2,071,309) (1,725,689)
Cash flows from investing activities:
Purchase of property and equipment (353,209) (45,052)
Purchase of company (net of
cash acquired) (6,704,373) 0
Net cash used in
investing activities (7,057,582) (45,052)
Cash flows from financing activities:
Net borrowings on notes payable 3,923,728 1,781,324
Proceeds from long term debt 6,284,633 0
Principal payments on long-term debt (1,320,998) (1,051,901)
Proceeds from sale of common stock 816,441 73,125
Net cash provided by
financing activities 9,703,804 802,548
Net increase (decrease) in cash 574,913 (968,193)
Cash at beginning of period 1,188,393 1,308,225
Cash at end of period $1,763,306 $340,032
See the accompanying notes to the consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1998
NOTE 1:
The accompanying unaudited interim consolidated financial statements have
been prepared in accordance with the rules and regulations of the
Securities and Exchange Commission pertaining to interim financial
information and do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. These financial statements should be read in
conjunction with the consolidated financial statements and accompanying
notes included in the Company's Annual Report for the year ended March 31,
1998. In the opinion of management, all adjustments consisting only of
normal recurring adjustments considered necessary for a fair
presentation of financial position and results of operations have
been included therein. The results for the three months ended September
30, 1998 are not necessarily indicative of the results that may be
expected for a full fiscal year.
NOTE 2:
On April 22, 1998 the Company acquired the stock of Mansfield Industrial
Coatings, Inc. The acquisition was accounted for under the purchase
method and accordingly the results of operations were included in the
Company's consolidated statement of operations from the date of
acquisition forward. The purchase price, paid in cash and common stock,
has been allocated to the assets and liabilities on a preliminary basis
and the excess of cost over the fair value of net assets acquired is being
amortized over a 15 year period on a straight line basis. The preliminary
purchase price allocation is as follows:
Net assets $4,413,622
Goodwill 3,002,851
Total purchase price $7,416,473
NOTE 3:
In April 1998, the Company expanded its credit facility to a three year
secured $25,000,000 facility. Borrowings under this agreement are secured
by substantially all assets of the Company. This loan agreement, among
other things, requires the Company to meet various covenants including
minimum levels of working capital and tangible net worth.
PART I ITEM 2 FINANCIAL STATEMENTS
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1998
COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 1997
On April 22, 1998 the Company acquired all the outstanding stock of
Mansfield Industrial Coatings, Inc. Mansfield provides painting and
specialty coating as well as asbestos and lead abatement, insulation and
scaffolding services to the power generation, pulp and paper, petro-
chemical and other general industries located throughout the southeastern
and gulf coast regions of the United States. The addition of the
Mansfield business has had the positive financial impact anticipated and
unless otherwise noted, the variance between this quarter's results and the
comparable period last year are attributable to the addition of the
Mansfield business.
Revenues for the period were Seventeen Million Eight Hundred Twenty Seven
Thousand ($17,827,000) compared to Fourteen Million Nine Hundred Two
Thousand ($14,902,000) in the prior year, an increase of Two Million Nine
Hundred Twenty Five Thousand ($2,925,000) or twenty percent (20%).
The power generation market accounted for twenty percent (20%) of total
revenues compared to twenty eight percent (28%) of total revenues for the
same period last year. The petro-chemical business was thirty percent
(30%) compared to twenty two percent (22%) of second quarter revenues.
The pulp and paper market increased to twenty seven percent (27%) of
second quarter 1998 revenues compared to twenty percent (20%) for the same
period a year ago. The revenue contribution of all other markets
collectively was twenty three percent (23%) compared to thirty percent
(30%) from the same period last year.
The gross margin for the period was Three Million Four Hundred Eighty
Seven Thousand ($3,487,000) compared to Two Million Seven Hundred Eighty
Six Thousand ($2,786,000) for the same period a year ago. The increase is
attributable to the acquisition of Mansfield. As a percent or revenue,
the gross margin for the current period was twenty percent (20%) compared
to nineteen percent (19%) during the period ended September 30, 1997. The
power generation market margin contribution was twenty five percent (25%)
versus thirty three percent (33%) for the same period last year. The
margin contribution for the petro-chemical business increased from fifteen
percent (15%) a year ago to nineteen percent (19%). The pulp and paper
industry accounted for thirty two percent (32%) of gross margin compared
to twenty one percent (21%) during the same period last year. All other
markets contributed twenty eight percent (28%) of gross margin compared to
twenty seven percent (27%) in the comparable period a year ago. The
variance in margin contribution is attributable to shift in market mix.
General and administrative expenses for the quarter were Two Million Four
Hundred Fifty Six Thousand ($2,456,000) compared to One Million Nine
Hundred Fifty Thousand ($1,950,000) in the same period last year. As a
percentage of revenue, general & administrative expenses increased to
fourteen percent (14%) percent from thirteen percent (13%) in the prior
year.
Income from operations was One Million Thirty One Thousand ($1,031,000)
compared to Eight Hundred Thirty Six Thousand ($836,000) for the same
period last year. The increase is attributable to the effect of the
Mansfield acquisition.
Interest expense increased Two Hundred Seventeen Thousand ($217,000) to
Four Hundred Eighty One Thousand from the same period a year ago. This
increase was due to additional debt associated with the acquisition of
Mansfield offset somewhat by reduced interest rates. Other income, net of
expenses, was Nine Thousand ($9,000) compared to Four Thousand ($4,000) a
year ago.
Income taxes of Two Hundred Forty Three Thousand ($243,000) were accrued
for the period compared to Two Hundred Thirty Thousand ($230,000) for the
same period a year ago. The effective tax rate increased to 44% from 40%
a year ago as a result of nondeductible amortization expense related to
the Mansfield acquisition.
The net earnings were approximately Three Hundred Fifteen Thousand
($315,000) or $0.12/share compared to Three Hundred Forty Six
Thousand ($346,000) or $0.16/share for the same period last year. There
were 2,526,565 weighted average shares outstanding for the quarter ended
September 30, 1998 compared to 2,193,040 weighted average shares
outstanding for the same period a year ago.
SIX MONTHS ENDED SEPTEMBER 30, 1998
COMPARED TO THE SIX MONTHS ENDED SEPTEMBER 30, 1997
Revenues for the period were Thirty Six Million Four Hundred Thirty Four
Thousand ($36,434,000) compared to Twenty Seven Million Seven Hundred Ten
Thousand ($27,710,000) for the prior year. The power generation market
accounted for twenty two percent (22%) of total revenues compared to
thirty three percent (33%) of total revenues for the same period last
year. The petro-chemical market provided revenues of twenty six percent
(26%) compared to twenty two percent (22%) for the six months ended
September 1997. The pulp and paper market accounted for thirty one
percent (31%) of revenues compared to twenty two percent (22%) for the
same period last year. The revenue contribution of all other markets
collectively was twenty one percent (21%) compared to twenty three percent
(23%) a year ago.
The gross margin for the period increased One Million Five Hundred Forty
Two Thousand ($1,542,000) to Six Million Eight Hundred Seventy One
Thousand ($6,871,000) when compared to the same period a year
ago. As a percent of revenue, the gross margin for the current period
remained unchanged at nineteen percent (19%). The power generation market
margin contribution was twenty one percent (21%) compared to thirty-
eight percent (38%) in the comparable period last year. The margin
contribution of the petro-chemical business increased to twenty one
percent (21%) from nineteen percent (19%) a year ago. The pulp and paper
industry accounted for thirty three percent (33%) of gross margin, up from
twenty three percent (23%) during the same period last year. All other
markets contributed twenty five percent (25%) of gross margin compared to
twenty percent (20%) in the comparable period a year ago. Shifts in gross
margin contribution reflect shifts in market concentration, which is
predominately attributable to the Mansfield acquisition.
General and administrative expenses for the first six months increased
Nine Hundred Seventeen Thousand ($917,000) to Four Million Eight Hundred
One Thousand ($4,801,000) compared to the same period last year. As a
percentage of revenue general & administrative expenses decreased to
thirteen percent (13%) from fourteen percent (14%).
Income from operations was Two Million Seven Thousand ($2,007,000)
compared to One Million Three Hundred Eighty Two Thousand ($1,382,000) for
the same period last year.
Interest expense increased approximately Four Hundred Twenty Six Thousand
($426,000) to Nine Hundred Fifty Two Thousand ($952,000) compared to the
same period a year ago. The increase was due to additional debt load
associated with the Mansfield acquisition.
The Company had other income net of (expense), of Thirty Four Thousand
($34,000) compared to other (expense) net of income of Thirteen Thousand
($13,000), for the same period a year ago.
Income taxes of Four Hundred Seventy Six Thousand ($476,000) were accrued
for the period compared to Three Hundred Thirty Seven Thousand ($337,000)
for the same period a year ago.
Net earnings for the first six months of fiscal year 1998 were
approximately Six Hundred Fourteen Thousand ($614,000) or $0.25/share
compared to $0.23/share or Five Hundred Six Thousand ($506,000) for the
same period last year.
Weighted average shares outstanding for the period were 2,496,053 compared
to 2,193,040 for the same period a year ago.
LIQUIDITY AND CAPITAL RESOURCES
The Company's ability to generate cash adequate to meet its needs depends
primarily upon payments for its services and periodic bank borrowings.
These sources of liquidity are reduced by the payment of direct costs,
taxes, purchase of property and equipment and periodic repayment of the
Company's revolving lines of credit and long term debt.
Effective April 17, 1998, the Company amended its credit facility with its
current lender. The amended credit facility consists of a three-year
commitment for a $25,000,000 credit facility, including a $5,000,000
acquisition credit line.
At September 30, 1998, on its credit facility of $25,000,000, the Company
had borrowed approximately $11,644,000 on its working capital line and had
an outstanding principal balance of $7,324,000 on its long term secured
loan obligation.
At September 30, 1998, the Company had working capital of approximately
$12,689,000 compared to working capital of $5,293,000 at March 31, 1998.
The increase in working capital was due primarily to the acquisition of
Mansfield Industrial Coatings, accounts receivable, cost and earnings in
excess of billings on uncompleted contracts offset somewhat by the
decrease in other assets and accrued expenses.
The Company anticipates that working capital and available bank credit
will be sufficient to meet cash needs for the coming year.
GOING FORWARD
The Company plans to continue its growth strategy and has entered into an
agreement to raise up to $7.5M, in two separate transactions, by the sale
of preferred stock to a group of investors (see Part II, Item 2 herein and
the Company's 8-K filed October 30, 1998 for details). These funds will
be used to support this strategy. The Company anticipates that this
matter will be placed to the shareholders for vote in January, 1999.
RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income". SFAS No. 130 establishes standards for reporting
and display of comprehensive income and its components in financial
statements.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information". SFAS No. 131 requires that public
business enterprises report certain information about operating segments,
products and services, geographic areas and major customers in financial
statements.
Both of the statements are effective for fiscal years beginning after
December 15, 1997. These statements address presentation and disclosure
matters and adoption of the statements will have no effect on the
Company's financial position or results of operations.
YEAR 2000
Many computer systems were written using two digits rather
than four to define the applicable year. As a result, those computer
programs have time sensitive software that recognizes a date using "00" as
the year 1900 rather than the year 2000. This could cause a system
failure or miscalculations causing disruptions of operations, including,
among other things, a temporary liability to process transactions, send
invoices, or engage in similar normal business activities.
The Company utilizes software vendors for its major computer program
applications. The installation of a year 2000 compliant version of the
Company's financial, inventory, and job costing software occurred prior to
the fiscal year end 1998. The Company is also in the process of assessing
its internal personal computer network, telephones, facsimile machines and
labeling equipment for year 2000 compliance.
In addition to risks associated with the Company's own computer systems
and equipment, the Company has relationships with, and is to varying
degrees dependent upon, a number of third parties that provide goods,
services and information to the Company. These include contract
manufacturers, suppliers, licensees, vendors, and financial institutions.
If any of these third parties experience failures in their computer
systems or equipment, which systems and equipment are outside the control
of the Company, due to year 2000 non-compliance, it could affect the
Company's ability to engage in normal business activities. Although the
Company has minimal computer interface with third parties, the Company is
in the process of making contact with all of its significant customers,
suppliers and partners to determine the extent, if any, to which the
Company is vulnerable should these third parties experience a year 2000
failure of their system and to ascertain their year 2000 compliance and risks.
The Company does not believe that the cost of becoming year 2000 compliant
will be in excess of $25,000. To date, the Company has incurred minor
expenses, primarily for assessment of the year 2000 issue, development of
a modification plan, and preparation for the installation of a year 2000
compliant version of its financial, inventory, and job costing software.
The cost of the project and the dates on which the Company believes it
will complete the year 2000 modifications are based on management's best
estimates. However, there can be no guarantee that these estimates will
be achieved.
SUBSEQUENT EVENT
On October 16, 1998, the Company entered into an agreement with an
institutional investment group for the sale of $1,412,000 of
convertible preferred stock. The preferred stock to be acquired by the
investors will be convertible into Canisco's common stock, initially at
$2.50 per common share and thereafter at prices ranging from $2.75 to
$2.25 per share, depending on Canisco's performance for the fiscal year
ending March 31, 1999. These conversion prices represented a substantial
premium to the market price of Canisco's shares on the date of the
transaction. The Company currently intends to use the proceeds of the
sale principally to implement its previously announced strategic
acquisition plan and for working capital requirements.
The agreement also provides for the sale of additional preferred stock in
the amount of $6,088,000, subject to approval of the Company's
shareholders.
Closing of the two agreements is subject to conditions including:
finalization of the investors due diligence, appropriate documentation
and, with respect to the second closing, shareholder approval.
The 8-K filing for this transaction was filed on October 30, 1998.
CAUTIONARY STATEMENT
Statements in this Report on Form 10Q which express the "belief",
"anticipation" or "expectation", as well as other statements which are not
historical fact, are forward-looking statements within the meaning of the
Private Securities Litigation Reform Action of 1995 and involve risks and
uncertainties that could cause actual results to differ materially from
those projected. Certain factors such as competitive market pressures,
material changes in demand from larger customers, changes in weather,
availability of labor, changes in government policies and changes in
economic conditions could cause actual results to differ materially from
those in the forward-looking statements.
PART II ITEM 2 CHANGES IN SECURITIES AND USE OF PROCEEDS
Canisco Resources, Inc., a Delaware corporation, entered into a Securities
Purchase Agreement, dated as of October 16, 1998, by and among
Mellon Ventures, L.P. and Morse Partners, Ltd. and the Company, pursuant
to which the Investors may purchase up to an aggregate of 75,000 shares of
Series A and Series B 12% Cumulative Convertible Preferred Stock at an
issue price of $100.00 per share. The preferred stock is convertible into
Canisco's common stock initially at $2.50 per common share and thereafter
at prices ranging from $2.75-$2.25 a share. The investors are entitled to
have certain expenses reimbursed by the Company and is a fee equal to 1%
of the amount invested. See the Company's 8-K filed October 30, 1998,
incorporated herein by reference. The agreement and the issuance of
preferred stock pursuant thereto are exempt from registration under
Section 4(2) of the Securities Act of 1933 as transactions not involving a
public offering.
PART II ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its Annual Meeting of Shareholders on August 25, 1998. The
following actions were taken:
1. The following directors were elected to serve on the Board of
Directors of the Company:
Dale Ferguson (For 1,766,006 / Withheld 75,081 / Exception 6,551)
Don Lyons (For 1,761,006 / Withheld 80,081 / Exception 11,551)
Tom McShane (For 1,748,857 / Withheld 92,230 / Exception 23,700)
Larry Petcovic (For 1,772,457 / Withheld 68,630 / Exception 100)
Joe Quick (For 1,753,841 / Withheld 87,246 / Exception 18,716)
Ralph Trallo (For 1,767,372 / Withheld 73,715 / Exception 5,185)
2. Ratification of appointment of KPMG Peat Marwick LLP as Independent
Auditors. (For 1,790,379 / Against 5,283 / Abstain 45,425)
3. Approval of the Stock Option Incentive Plan.
(For 1,164,222 / Against 659,165 / Abstain/Non-vote 17,700)
4. Approval of the amendment of Certificate of Incorporation to
increase the authorized common stock.
(For 1,479,089 / Against 359,698 / Abstain/Non-vote 2,300)
5. Approval of the amendment of Certificate of Incorporation regarding
authorized preferred stock.
(For 1,378,077 / Against 448,589 / Abstain/Non-vote 14,420)
PART II ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3. Articles of Incorporation, as amended, as filed with the
Secretary of State of Delaware on September 16, 1998.
10.2 Securities Purchase Agreement, dated as of October 16, 1998,
by and among Mellon Ventures, L.P. and Morse Partners, Ltd.
and Canisco Resources, Inc. (incorporated by reference, see
Exhibit 10.2 to 8-K filed October 30, 1998).
10.3 Stock Purchase Agreement for acquisition of Mansfield
Industrial Coatings, Inc. on April 22, 1998 (incorporated by
reference, see Exhibit 1 to 8-K filed May 7, 1998)
10.4 Amended and Restated Security Agreement with the BNY
Financial Corporation dated as of April 17, 1998
(incorporated by reference, see Exhibit 4 to 8-K filed May
7, 1998).
27 Financial Data Schedule for the Six-Month Period Ended
September 30, 1998.
(b) On May 7, 1998, the Company filed an 8-K which detailed the
acquisition of Mansfield Industrial Coatings, Inc., incorporated
herein by reference.
On July 7, 1998, the Company filed an 8-K/A related to the
acquisition of Mansfield Industrial Coatings, Inc., which
contained the financial statements and pro-forma financial
information, incorporated herein by reference
On October 30, 1998, the Company filed an 8-K related to the
execution of a Securities Purchase Agreement for the sale of
preferred stock to Mellon Ventures, L.P and Morse Partners, Ltd.,
incorporated herein by reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed by the undersigned
thereunto duly authorized.
Date: ___________________________CANISCO RESOURCES, INC.
/s/ Ralph A. Trallo
Ralph A. Trallo
President and CEO
/s/ Michael J. Olson
Michael J. Olson
Chief Financial Officer
CERTIFICATE OF INCORPORATION
OF
CANISCO RESOURCES, INC.
FIRST: Name. The name of the Corporation is Canisco Resources, Inc. (the
"Corporation").
SECOND: Purpose. The purpose of the Corporation is to transact, promote,
carry out and/or engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of the State of Delaware.
THIRD: Capital Stock. The Corporation shall have authority to issue Twenty
Five Million (25,000,000) shares of capital stock, of which Twenty Million
(20,000,000) shall be common stock and Five Million (5,000,000) shall be
preferred stock.
The Corporation shall have authority to issue Twenty Million (20,000,000)
shares of common stock, having a par value of One Quarter Cent ($0.0025) per
share. The Corporation shall not have authority to issue non-voting shares
of common stock.
The Corporation shall have the authority to issue Five Million (5,000,000)
shares of preferred stock, having a par value of One Dollar ($1.00) per
share. The preferred stock may be issued in such classes or series as shall
be determined by the Board of Directors of the Corporation and shall have
such voting powers, full or limited, or no voting powers, and such
designations, preferences and relative, participating, optional and other
special rights, and qualifications, limitations and restrictions thereof, as
shall be stated and expressed in the resolution or resolutions of the Board
of Directors from time to time providing for the issuance of such stock. Any
of the voting powers, designations, preferences, rights and qualifications,
limitations or restrictions of any such class or series of preferred stock
may be made dependent upon facts ascertainable outside of the Certificate of
Incorporation of the Corporation or any amendment thereto, or outside the
resolution or resolutions providing for the issuance of such stock adopted by
the Board of Directors, provided that the manner in which such facts shall
operate upon the voting powers, designations, preferences, rights and
qualifications, limitations or restrictions of such class or series of stock
is clearly and expressly set forth in the resolution or resolutions providing
for the issue of such stock adopted by the Board of Directors.
FOURTH: Preemptive Rights. No holder of any shares of the stock of the
Corporation shall have a preemptive right to purchase, subscribe for, or
otherwise acquire shares of stock of the Corporation of any class hereby or
hereafter authorized, or any security exchangeable for or convertible into
such shares, or any warrants or other instruments evidencing rights or
options to subscribe for, purchase or otherwise acquire shares of stock
issued subsequent to the initial issue of stock by the Corporation.
FIFTH: Contracts and Business Relations with Officers and Directors. The
Corporation freely may contract with all stockholders, officers and
directors; and no contract of the Corporation shall be affected or
invalidated by the fact that one or more of the stockholders, directors or
officers of the Corporations is a party to the contract or interested in the
contract, or by the fact that any stockholder, director or officer holds
similar positions in any other Corporation which is a party to the contract.
SIXTH: Bylaws. In the furtherance and not in limitation of the object,
purposes and powers prescribed herein and conferred by the laws of the State
of Delaware, the Board of Directors is expressly authorized to make, amend
and repeal the bylaws.
SEVENTH: Registered Office and Agent. The registered office of the
Corporation in the State of Delaware is located at 1201 Market Street, Suite
1700, County of New Castle, Wilmington, DE 19801. The registered agent of
the Corporation at such address is Delaware Incorporation & Registration
Service, Inc.
EIGHTH: The Board of Directors. The initial number of directors who shall
constitute the whole board shall be eight (8). The number of directors may
be increased or decreased from time to time by amendment of the bylaws of the
Corporation. No decrease in the number of directors shall have the effect of
shortening the term of any incumbent director. The directors need not be
elected by ballot unless required by the bylaws of the Corporation.
NINTH: Director Liability: Director liability shall be limited to the
fullest extent permitted by law.
TENTH: Incorporator. The name and mailing address of the incorporator is
Delaware Incorporators & Registration Service, Inc., 1201 Market Street,
Suite 1700, Wilmington, DE 19801.
ELEVENTH: Termination of the Powers of the Incorporator. The powers of the
incorporator shall terminate upon the election of directors.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CANISCO RESOURCES, INC.'S FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
Canisco Resources, Inc.
Financial Data Schedule
(Unaudited)
SEPTEMBER 30,
1998
Cash $ 1,763,306
Securities 0
Receivables 15,058,563
Allowances 209,933
Inventory 382,144
Current assets 21,309,265
PP&E 9,482,709
Depreciation 2,304,092
Total assets 34,311,904
Total current liabilities 8,620,100
Bonds - Long term debt 21,091,952
Common 6,972
Preferred mandatory 0
Preferred 0
Other-se 4,592,880
Total liability and equity 34,311,904
Sales 36,433,878
Total revenues 36,433,878
CGS 29,625,998
Total costs 29,625,998
Other expenses 4,766,696
Loss provision 0
Interest expense 951,938
Income-pre-tax 1,089,246
Income tax 475,739
Income continuing 613,507
Discontinued 0
Extraordinary 0
Changes 0
Net income 613,507
EPS - primary 0.25
EPS - diluted 0.23
</TABLE>
