U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-QSB/A
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended October 2, 1998.
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT.
For the transition period from __________ to __________
Commission file number 33-11062-D
UNITED SHIELDS CORPORATION
(Exact name of small business issuer as specified in its charter)
Colorado 84-1049047
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
655 Eden Park Drive, Suite 260, Cincinnati, Ohio 45202
(Address of principal executive offices)
(513) 241-7470
(Issuer's telephone number)
_________________________________________________________________
(Former name, former address and formal fiscal year, if changes
since last report.)
Check whether the issuer (1) filed all reports required to be filed
by Section 3 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to filing requirements for
the past 90 days.
Yes X No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING
THE PRECEDING FIVE YEARS:
Check whether the registrant filed all documents and reports to be
filed by sections 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.
Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
12,604,375 shares as of October 31, 1998.
Transitional Small Business Disclosure Format (check one):
Yes No X <PAGE>
UNITED SHIELDS CORPORATION
INDEX
Part I. Financial Information Page No.
Item 1. Condensed Financial Statements
Consolidated Balance Sheets as of
October 2, 1998 and December 31, 1997 3
Consolidated Statements of Operations
for the quarter ended October 2, 1998
compared to the quarter ended September 30, 1997
and for the nine-month period ended
October 2, 1998 compared to the
nine-month period ended September 30, 1997 5
Consolidated Statement of Cash Flows for
the nine-month period ended
October 2, 1998 compared to the nine-month
period ended September 30, 1997 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
Part II. Other Information
Item 2. Changes in Securities 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
United Shields Corporation
Consolidated Balance Sheets
(unaudited)
October 2, 1998 December 31, 1997
--------------- -----------------
Current Assets:
Cash $126,446 512,839
Accounts receivable, net 1,642,797 1,375,475
Other receivables 24,026 45,247
Inventories 1,330,513 1,424,661
Prepaid expenses and
deposits 26,690 101,701
Refundable income taxes --- 123,440
----------- -----------
Total Current Assets 3,150,472 3,583,363
Property and Equipment, at cost:
Land 399,838 224,045
Machinery and equipment 3,492,467 3,435,526
Office furniture and fixtures 73,579 106,482
Vehicles 21,850 21,850
Building and leasehold
improvements 1,286,211 1,415,956
----------- -----------
5,273,945 5,203,859
Less accumulated
depreciation (454,173) (1,915)
----------- -----------
Net Property and Equipment 4,819,772 5,201,944
Other Assets:
Deposits 74,819 58,647
Investment in potential
acquisitions 514,807 540,000
Cash surrender value of
life insurance 1,005,284 1,030,365
Goodwill, net 5,079,769 5,347,940
Other 11,643 1,403
----------- -----------
Total Other Assets 6,686,322 6,978,355
----------- -----------
Total Assets $14,656,566 15,763,662
=========== ===========
The Notes to Consolidated Financial Statements are an integral part
of this statement.<PAGE>
United Shields Corporation
Consolidated Balance Sheets
(unaudited)
October 2, 1998 December 31, 1997
--------------- -----------------
Current Liabilities:
Notes payable-NAVICAP - current $ 494,584 ---
Revolving line of credit 59,195 ---
Capital lease obligation -
current 177,251 121,635
Accounts payable 1,459,694 1,496,165
Accounts payable - In Flow 449,577 449,577
Accrued interest 16,415 82,910
Accrued taxes 49,341 55,945
Accrued and other current
liabilities 768,656 573,718
---------- -----------
Total Current Liabilities 3,474,713 2,779,950
Notes payable - NAVICAP 1,438,752 3,727,081
Long-term debt-First Union Bank 4,167,060 4,551,000
Accrued interest - NAVICAP 247,480 ---
Capital lease obligation --- 140,895
Deferred compensation 625,357 625,357
---------- -----------
Total Liabilities 9,953,362 11,824,283
Stockholders' Equity:
Common stock 126,027 115,301
Additional paid in capital 7,900,680 4,238,236
Retained deficit (3,323,503) (2,008,324)
Stock subscriptions --- 1,594,166
---------- -----------
Total Stockholders'
Equity 4,703,204 3,939,379
---------- -----------
Total Liabilities and
Stockholders' Equity $14,656,566 15,763,662
========== ===========
The Notes to Consolidated Financial Statements are an integral part
of this statement.
<TABLE>
United Shields Corporation
Consolidated Statements of Operations
(unaudited)
<CAPTION>
Three Months Ended: Nine Months Ended:
---------------------------- ---------------------------
October 2, September 30, October 2, September 30,
1998 1997 1998 1997
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Net sales $3,464,824 --- 9,923,346 ---
Cost of goods sold 2,629,208 --- 7,706,088 ---
---------- --------- ----------- ----------
Gross profit 835,616 --- 2,217,258 ---
Selling, general and
administrative expenses 800,823 341,845 2,491,232 467,559
---------- --------- ----------- ----------
Operating income (loss) 34,793 (341,845) (273,974) (467,559)
Other income (expense):
Interest expense, net (447,098) (7,179) (1,063,739) (13,245)
Loss on sale of property
and equipment (38,944) --- (39,967) ---
---------- --------- ----------- ----------
Loss before income taxes
and extraordinary item (451,249) (349,024) (1,377,680) (480,804)
Income taxes --- --- --- ---
---------- --------- ----------- ----------
Loss before extraordinary
item (451,249) (349,024) (1,377,680) (480,804)
Extraordinary item Gain on
restructuring of debt 62,500 --- 62,500 ---
---------- --------- ----------- ----------
Net loss $ (388,749) (349,024) (1,315,180) (480,804)
========== ========= =========== ==========
Weighted average number
of shares outstanding 12,290,523 10,661,622 12,110,130 10,661,622
========== ========= =========== ==========
Loss before extraordinary
item per common share
- basic and diluted $ (0.04) (0.03) (0.11) (0.05)
========== ========= =========== ==========
Extraordinary item per
common share - basic
and diluted $ 0.01 --- --- ---
========== ========= =========== ==========
Net loss per common share
- basic and diluted $ (0.03) (0.03) (0.11) (0.05)
========== ========= =========== ==========
The Notes to Consolidated Financial Statements are an integral part of this statement.
</TABLE>
United Shields Corporation
Consolidated Statement of Cash Flows
(unaudited)
Nine Months Ended:
----------------------------
October 2, September 30,
1998 1997
---------- -------------
Operating Activities:
Net loss $(1,315,180) (480,804)
Adjustments to reconcile net
loss to net cash provided by
(used in) operating activities:
Amortization 778,842 16,945
Depreciation 452,258 723
Loss on sale of plant, property
and equipment 39,967 ---
Gain on restructuring of debt (62,500) ---
Issuance of stock - naming rights 2,110 ---
(Increase) decrease in:
Accounts and other receivables (246,101) ---
Inventories 94,148 ---
Prepaid expenses and deposits 75,011 (19,026)
Other assets 97,028 ---
Accounts payable (36,471) (190,359)
Accrued expenses and other
current liabilities 369,319 13,842
---------- ----------
Cash provided by (used in) operating
activities 248,431 (658,679)
Investing Activities:
Purchases of property and
equipment (132,303) (18,829)
Proceeds from sale of
property and equipment 22,250 ---
Investment in potential
acquisitions 25,193 (205,000)
Decrease in CSV of life insurance 25,081 ---
---------- ----------
Cash (used in) investing activities (59,779) (223,829)
Financing Activities:
Borrowings on notes payable
stockholders --- 630,400
Borrowings on revolving line
of credit 59,195 ---
Payments on notes payable (587,411) ---
Payments on long-term debt (383,940) ---
Payments on capital lease
obligation (242,784) ---
Proceeds from issuance of
common stock, net of expenses 579,895 274,964
---------- ----------
Cash provided by (used in)
financing activities (575,045) 905,364
---------- ----------
Net decrease in cash (386,393) 22,856
Cash at the beginning of the year 512,839 107
---------- ----------
Cash at end of the period $ 126,446 22,963
========== ==========
The Notes to Consolidated Financial Statements are an integral part
of this statement.
United Shields Corporation
Notes To Consolidated Financial Statements
October 2, 1998
1. Company Description
United Shields Corporation (the "Company") is a holding company
which operates two subsidiaries. RP Industries of Ohio, Inc. is
engaged primarily in the production of injection molded plastic
components. RP has plants located in Virginia and North Carolina.
The HeaterMeals Company, located in Cincinnati, assembles, markets
and distributes portable electrochemical heaters and packaged food
products incorporating such heaters.
2. Summary of Significant Accounting Policies
a. Interim Financial Statements
The October 2, 1998 and September 30, 1997 financial data are
unaudited, however, in the opinion of management, the accompanying
unaudited consolidated financial statements contain all adjustments
(consisting of only normal recurring accruals) necessary to present
fairly the consolidated financial statements for the respective
periods. Interim results are not necessarily indicative of results
for a full year. The consolidated financial statements should be
read in conjunction with the Company's audited consolidated
financial statements and notes thereto for the fiscal year ended
December 31, 1997.
b. Principles of Presentation
The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries after elimination of
intercompany balances and transactions.
c. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the dates of the financial statements and the reported amounts of
revenues and expenses during the reporting periods. Actual results
could differ from those estimates.
d. Change of Accounting Period
Effective January 1, 1998, the Company changed its accounting period
from a calendar year-end to a 52/53 week fiscal year. All
accounting periods will end on Friday. The year-end will always be
the last Friday of the calendar year.
e. Per Share Data
The Company has adopted Statement of Financial Accounting Standards
No. 128, Earning per Share (SFAS No. 128). Basic earnings per share
is computed based on the weighted average number of shares
outstanding during the period. Diluted earnings per share gives
effect to all dilutive potential common shares outstanding during
this period. Potential common shares include shares issuable upon
exercise of the Company's stock options and warrants.
Potential common shares relating to options and warrants to purchase
common stock were not included in the weighted average number of
shares for the quarter and nine-month periods ended October 2, 1998
because their effect would have been anti-dilutive. There were no
dilutive potential common shares outstanding at September 30, 1997.
f. Impact of Recently Issued Accounting Standards
The Financial Accounting Standards Board ("FASB") recently issued
Statements No. 130, "Reporting Comprehensive Income" and No. 131,
"Disclosure about Segments of an Enterprise and Related
Information". Statement 130 was adopted in the first quarter of
1998 and has not had a material impact on financial disclosures
because net income approximates comprehensive income. Statement 131
is effective for the year ending December 31, 1998 and will be
adopted at that time.
In June 1998 the FASB issued Statement No. 133, "Accounting for
Derivative Instruments and Hedging Activities". Statement 133 is
effective for fiscal quarters of fiscal years beginning after June
15, 1999. The Company currently has no such financial instruments.
3. Debt Restructuring
On August 30, 1998, the Company restructured its indebtedness to
NAVICAP Corporation ("NAVICAP") by issuing 500,000 shares of its
common stock in exchange for a $500,000 reduction in the longer-term
promissory note payable to NAVICAP. A gain of $62,500 was recorded
by the Company in the quarter ended October 2, 1998 as a result of
this debt restructuring. In addition, the Company also agreed to
begin making payments on the outstanding balance of the indebtedness
of not less than $125,000 per quarter beginning on January 1, 1999.
On November 16, 1998, NAVICAP agreed to amend the terms of its
longer-term promissory note with the Company to provide for a
maturing date of October 30, 1999. The amount reflected as notes
payable - NAVICAP - current in the consolidated balance sheet
includes $174,277 due under shorter term notes payable to NAVICAP,
$500,000 due within the next twelve months under the longer-term
promissory note payable to NAVICAP, net of an unamortized warrant
value of $179,693.
4. Issuance of Shares by Private Placement
In the nine-month period ended October 2, 1998, the Company sold
156,950 shares of its common stock at $4.00 per share. Total net
proceeds of $579,895 generated from this private placement were used
to fund operations.
5. Issuance of Warrants
On March 30, 1998, the Company issued 500,000 stock purchase
warrants to NAVICAP in connection with the amendment of a note
payable. These warrants are exercisable immediately at $4.00 per
share for a period of up to five years. The total value of the note
payable has been allocated to the note payable and warrants based
upon the relative fair values. The value allocated to the warrants,
$1,059,500, has been recorded as additional paid in capital and a
reduction to notes payable.
On June 10, 1998, the Company issued 37,875 stock purchase warrants
to investment brokers in connection with the sale of the Company's
common stock via a private placement program. These warrants are
exercisable immediately at $4.75 per share for a period of up to two
years.
6. Related Party Transactions
On April 13, 1998, consulting agreements were entered into between
the Chief Executive Officer of the Company and his spouse,
individually, and NAVICAP Corporation which provided for the
payments of 300,000 and 200,000 shares, respectively, of the
Company's common stock in exchange for expertise, consultation,
advice and other services rendered.
In conjunction with the debt restructuring referred to above,
NAVICAP released 300,000 and 200,000 shares associated with a stock
pledge agreement with the Chief Executive Officer of the Company and
his spouse, respectively.
7. Acquisition Letter of Intent
On September 4, 1998, the Company entered into a letter of intent
with a manufacturer of plastic injection molded products. The
letter of intent provides for a total purchase price of $12.6
million. The Company is currently completing its due diligence and
arranging for the financing of the acquisition.
8. Contingencies
The Company is involved in litigation and other matters which
involve routine matters incident to the Company's business. In the
opinion of management, the ultimate disposition of such litigation
and matters will not have a material effect upon the Company's
financial statements.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Safe Harbor Clause
This report contains certain "forward-looking statements". The
Company desires to take advantage of the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995 and is
including this statement for the express purpose of availing itself
of the protection of such safe harbor with respect to all such
forward-looking statements. These forward-looking statements, which
are included in Management's Discussion and Analysis, describe
future plans or strategies and include the Company's expectations of
future financial results. The words "believe", "expect",
"anticipate", "estimate", "project", and similar expressions
identify forward-looking statements. There are important factors
that could cause the actual results, performance or achievement of
the Company to differ materially from the Company's expectations.
Presently, the Company does not have sufficient capital to finance
its current corporate operations and obligations through December
31, 1998, and there can be no assurance the Company will be able to
obtain additional capital. Other important factors include the
following: (1) one or more of the assumptions or other factors
discussed in connection with particular forward-looking statements
prove not to be accurate; (2) the Company is unsuccessful in
increasing sales through its anticipated marketing efforts; (3)
mistakes in cost estimates and cost overruns; (4) the Company's
inability to obtain financing for one or more acquisitions and/or
for general operations; (5) non-acceptance of one or more of the
products of the Company in the marketplace due to costs or other
reasons; (6) the Company's inability to supply any product to meet
market demand; (7) generally unfavorable economic conditions which
would adversely affect purchasing decisions by retailers or
consumers; (8) development of a similar competing product with the
Bottle and/or HeaterMeals which is an infringement of any of the
patents pertaining to those products and the potential inability of
the owner to protect such patents; (9) the inability to successfully
integrate one or more of the acquisitions with the Company's
operations (including the inability to integrate several
acquisitions at the same time, integrate businesses which may be
diverse as to type of business, geographic area, or customer base
and the diversion of management's attention among several acquired
businesses) without substantial costs, delays or other problems;
(10) if the Company experiences labor and/or employment problems
such as work stoppages, inability to hire and/or retain competent
personnel; and (11) a shortage in the supply of raw materials, such
as resin and magnesium, which would significantly increase the cost
of goods sold. These factors should be considered in evaluating the
forward-looking statements, and undue reliance should not be placed
on such statements.
Overview
The Company operates as a holding and marketing company, intending
to continue acquiring operating companies engaged in blow molding
and injection molding plastics businesses in a range of press
capacities from 22 ton to 700 ton clamp pressure, providing a fully
integrated company that can provide its customers with "one-stop
shopping" for their blow molding and injection molding needs.
Additionally, the Company intends to develop further its existing
food and beverage packaging business. The Company is seeking
potential acquisition candidates involved in blow molding and
injection molding plastics manufacturing, production, packaging, and
distribution that will complement the Company's business and
increase the Company's asset and revenue base. During the third
quarter of 1998, the Company entered into a letter of intent to
acquire a manufacturer of plastic injection molded products.
Acquisitions may involve a number of risks, some of which could have
a material adverse effect on the Company's operations and financial
results including, without limitation, whether the Company will have
the ability to integrate several acquisitions at the same time
successfully (if the Company is able to acquire several companies
within a short period of time); whether the Company can integrate
businesses that may be diverse with respect to type of business,
geographic area, or customer base; the risk of the diversion of
management's attention among acquired businesses and in seeking
additional acquisition opportunities; the risk of a dependence on
retaining, hiring and training key personnel; and adverse short-term
effects on operating results and amortization of acquired intangible
assets. There can be no assurance that the Company will be
successful in consummating the acquisition of candidates or in
integrating acquired businesses.
Plastics Division
The Plastics Division currently is comprised of R.P. Industries of
Ohio, Inc. ("RPI"). The Company has operations in Chester, Virginia
and Oxford, North Carolina, with approximately 40 molding machines
ranging in capacity from 22 tons to 700 tons of clamp pressure. The
Company manufactures component parts and finished products primarily
for original equipment manufacturers in the southeast and mid-Atlantic regions
and markets in Indiana, Illinois and Canada.
Secondary operations include hot stamping, sonic welding, pad
printing, chemical bonding, heat transfer decal application, spray
painting, drilling and assembly.
The Company intends to continue acquiring operating companies
engaged in the blow molding and injection molding industry in an
effort to create a fully integrated company that can provide its
customers with "one-stop shopping" for their blow molding and
injection molding needs. The Company expects to target financially-
sound acquisition candidates that have developed a unique process,
design or product within the blow molding and injection molding
industry. The Company believes that consolidation within such
industry will occur as a result of what it believes is a trend of
customers desiring to reduce the number of vendors they use. As the
Company increases its holdings within the industry, it believes it
will benefit from the ability to service a broad range of blow
molding and injection molding needs adequately, thereby providing
customers with an option currently not readily available within the
industry. Additionally, by targeting acquisition candidates with a
unique process, design or product, the Company believes it will be
able to offer a unique range of plastics blow molding and injection
molding services currently not available.
Food and Beverage Packaging
The HeaterMeals Company ("HeaterMeals") manufactures and markets
portable electrochemical heating devices and a line of shelf-stable
meals with a patented self-heating device. The self-heating device
is comprised of metallic alloy powder embedded with plastic that
generates heat when activated by water, but is flameless, non-toxic
and flexible in design. Since 1990, the Company has sold over 90
million flameless ration heaters ("FRH") to government contractors
which incorporate the FRH into Meals-Ready-to-Eat, or MRE's, for the
United States military. Since 1996, the Company has sold over 1.3
million shelf-stable meals under the trademark "HeaterMeals"(R).
HeaterMeals(R) is an assortment of breakfast and dinner entrees
packaged with the patented self-heating device, utensil pack and
water activation pouch, distributed to truckstops throughout the
United States, approximately 1200 grocery stores located in
Kentucky, Ohio, Indiana and Michigan and various specialty retail
outlets and catalogues. The Company intends to expand its marketing
and sales of the HeaterMeals brand by broadening the geographic
distribution of the products, creating new meals for new target
audiences where the convenience of the self-heating feature is
important, developing direct marketing opportunities, and exploiting
the self-heating technology in other commercial categories.
Although not the only contemplated use for the patented collapsible
plastic bottle (the "Bottle") licensed by the Company, the Company,
through UNSC, Inc. ("UNSC"), owns marketing rights for the Bottle
for retail/consumer sale of water and water-based beverages and pre-packed
powdered instant drink mixes. The Bottle can be shipped and
stored in its collapsible state and water or other liquids can be
added manually, without the use of special equipment. The Company
believes that the convenience of being able to add liquids to the
Bottle at any stage in the sales and distribution chain will enable
the Company to market the Bottle for a variety of uses. The Company
believes that in addition to uses within the food and beverage
industry, the Bottle may provide the medical industry with a clean,
safe and inexpensive alternative to glass containers.
Results of Operations
The following is a discussion of the results of operations for the
quarter and nine-month period ended October 2, 1998, compared with
the quarter and nine-month period ended September 30, 1997, and
changes in financial condition during the first nine months of 1998.
United Shields Corporation did not own an operating company during
the first nine months of 1997. Therefore, the operating results for
the quarter and the nine-month periods ended October 2, 1998
represent the Company's first complete periods of operations with
its wholly-owned subsidiaries, HeaterMeals and RPI. Net sales for
the third quarter and nine-month periods ended October 2, 1998 were
$3,464,824 and $9,923,346 respectively. Cost of sales as a
percentage of net sales for the third quarter and nine-month periods
ended October 2, 1998 were 75.9% and 77.7%, respectively. Selling,
general and administrative expenses of $800,823 in the third quarter
of 1998 represented 23.1% of net sales in that period. Selling,
general and administrative expenses of $2,491,232 for the nine-month
period ended October 2, 1998 represented 25.1% of net sales in that
period.
Net interest expense for the third quarter and nine-month periods
ended October 2, 1998 was $447,098 and $1,063,739, respectively.
NAVICAP waived its interest charges for the first quarter of 1998,
which provided a reduction of interest expense in the amount of
$106,773. Non-cash interest expense incurred during the third
quarter and nine-month periods ended October 2, 1998 related to the
amortization of the issuance of warrants to ILC and NAVICAP was
$231,717 and $510,671, respectively.
The net loss for the third quarter and nine-month periods ended
October 2, 1998 was $388,749 and $1,315,180, respectively, as
compared to net loss for the comparable periods of the prior year of
$349,024 and $480,804 respectively.
Liquidity and Capital Resources
The Company's principal cash requirements are for operating
expenses, capital expenditures and acquisitions. Historically, the
Company's primary sources of cash have been from operations,
borrowings from NAVICAP and financial institutions, and the proceeds
from the sale of the Company's common stock through its private
placement programs.
During the first quarter of 1998, the Company sold 97,125 shares
through the private placement program, pursuant to Rule 506 of
Regulation D, promulgated under the Securities Act of 1933, as
amended, with net proceeds of $349,733. During the second quarter
of 1998 the Company sold 59,825 shares through the private placement
program with net proceeds of $230,162. This brings the total shares
sold in the current private placement program to 378,742 with total
net proceeds of $1,400,525.
During the first nine months of 1998, the Company generated $248,431
of cash from operations which when combined with the available cash
on hand was used to fund $59,779 of investing activities and
$575,045 of financing activities. The net cash used in financing
activities in this period was comprised of repayments of the notes
payable and long-term debt of $587,411 and $383,940, respectively,
the repayment of $242,784 related to the capital lease obligation
and cash provided by the issuance of common stock of $579,895.
On August 30, 1998, the Company restructured its indebtedness to
NAVICAP by issuing 500,000 shares of its common stock in exchange
for a $500,000 reduction in the longer-term promissory note payable
to NAVICAP. A gain of $62,500 was recorded by the Company in the
quarter ended October 2, 1998 as a result of this debt
restructuring. In addition, the Company also agreed to begin making
payments on the outstanding balance of the indebtedness of not less
than $125,000 per quarter beginning on January 1, 1999. During the
quarter ended October 2, 1998, the Company borrowed additional funds
from NAVICAP in the form of shorter-term promissory notes. As of
October 2, 1998, these amounts, along with other short-term
promissory notes, were due and payable to NAVICAP. The amount
reflected as notes payable - NAVICAP - current in the consolidated
balance sheet includes $174,277 due under shorter term notes payable
to NAVICAP, $500,000 due within the next twelve months under the
longer-term promissory note payable to NAVICAP, net of an
unamortized warrant value of $179,693. On October 30, 1998, the
Company repaid $25,000 of the aggregate balance due NAVICAP.
Further, on November 16, 1998, NAVICAP agreed to amend the terms of
its longer-term promissory note with the Company to provide for a
maturity date of October 31, 1999. The Company anticipates a
further restructuring of its indebtedness to NAVICAP in order to
accommodate the repayment of the promissory note. In addition to
restructuring its indebtedness to NAVICAP, the Company is currently
pursuing additional funding through public or private financing,
including equity financing, to support its corporate operations.
While the cash flows of the wholly-owned subsidiaries, RP
Industries, Inc. and The HeaterMeals Company, through the nine
months ending October 2,1998 were sufficient to support their
respective businesses, without a restructuring of its indebtedness
to NAVICAP and/or without additional funding through public or
private financing, including equity financing, the Company currently
estimates that cash generated from operations and available under
the Company's existing credit facilities will not be sufficient to
finance its current corporate operations and obligations through
December 31, 1998.
Furthermore, there can be no assurance that a restructuring of the
Company's indebtedness to NAVICAP will occur or that adequate
financing will be available, or if available, on terms acceptable to
the Company. In the event the Company can not secure additional
financing, it may be required to scale back or eliminate certain
corporate functions or sell some of its products or operating
assets.
Acquisitions
The Company is continuing its identification, analysis and
recruitment of potential acquisition candidates involved in the blow
molding and injection molding plastics manufacturing, production,
packaging and distribution. In addition, the Company is continuing
its negotiations with the owners of Master Molders, Inc. to arrive
at an agreement satisfactory to both parties.
PART II - Other Information
Item 2 - Change in Securities
Issuance of Shares in Connection with the Acquisition of RPI.
On October 22, 1997, the Company entered into a definitive
agreement with RPI pursuant to which RPI received 993,384 shares of
the Company's Common Stock to be distributed to RPI's shareholders
on the date of the merger, December 31, 1997.
Issuance of Warrants to NAVICAP.
On March 30, 1998, the Company amended the terms of its debt to
NAVICAP in exchange for 500,000 five-year stock purchase warrants.
Issuance of Shares in Connection with Consent to Use Name.
On June 3, 1998, the Company issued 649 shares of its common
stock to an individual in return for the individual's consent to use
the name "R.P. Industries, Inc." in Ohio.
Issuance of Warrants to Investment Brokers.
On June 10, 1998, the Company issued 37,875 two-year stock
purchase warrants to investment brokers in connection with the sale
of the Company's stock via a private placement program.
Issuance of Shares in Connection with Restructuring of Debt
with NAVICAP.
On August 30, 1998, the company restructured its indebtedness
to NAVICAP by issuing 500,000 shares of its common stock in exchange
for a $500,000 reduction in the notes payable to NAVICAP.
Item 6 - Exhibit
Exhibit 27 Financial Data Schedule
Signatures
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereto duly authorized.
UNITED SHIELDS CORPORATION
Date: November 20, 1998 /s/ T.J. Tully
_________________________
T.J. Tully
Chairman of the Board
and Chief Executive Officer
Date: November 20, 1998 /s/ Jeffrey A. Pakrosnis
_________________________
Jeffrey A. Pakrosnis
Vice President and
Chief Financial Officer
