U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended July 3, 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:
12,102,875 shares as of July 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 July 3, 1998 and December
31, 1997 3
Consolidated Statements of Operations for the quarter ended
July 3, 1998
compared to the quarter ended June 30, 1997 and for the
six-month period
ended July 3, 1998 compared to the six-month period ended
June 30, 1997 5
Consolidated Statement of Cash Flows for the six-month
period ended
July 3, 1998 compared to the six-month period ended June
30, 1997 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition
and Results of Operations 9
Part II. Other Information 12
Item 2. Changes in Securities 12
Item 4. Submission of Matters to Vote of Security Holders
12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14<PAGE>
United Shields Corporation
Consolidated Balance Sheets
(unaudited) December 31,
July 3, 1997
Current Assets:
Cash $ 146,336 512,839
Accounts receivable, net 1,509,829 1,375,475
Other receivables 23,657 45,247
Inventories 1,280,188 1,424,661
Prepaid expenses and deposits 35,757 101,701
Refundable income taxes 111,827 123,440
--------- ---------
Total Current Assets 3,107,594 3,583,363
Property and Equipment, at cost:
Land 399,838 224,045
Machinery and equipment 3,484,446 3,435,526
Office furniture and fixtures 71,834 106,482
Vehicles 21,850 21,850
Building and leasehold
improvements 1,285,883 1,415,956
--------- ---------
5,263,851 5,203,859
Less accumulated depreciation (320,240) (1,915)
--------- ---------
Net Property and Equipment 4,943,611 5,201,944
Other Assets:
Deposits 58,649 58,647
Investment in potential
acquisitions 503,741 540,000
Cash surrender value of life
insurance 1,065,365 1,030,365
Goodwill, net 5,169,160 5,347,940
Other 3,915 1,403
--------- ---------
Total Other Assets 6,800,830 6,978,355
--------- ---------
Total Assets $ 14,852,035 15,763,662
========== ==========
The Notes to Consolidated Financial Statements are an integral part
of this statement.<PAGE>
United Shields Corporation
Consolidated Balance Sheets
(unaudited) December 31,
July 3, 1998 1997
Current Liabilities:
Capital lease obligation -
current $ 181,742 121,635
Accounts payable 1,478,433 1,496,165
Accounts payable - In Flow 449,577 449,577
Accrued interest 179,829 82,910
Accrued taxes 11,793 55,945
Accrued and other current
liabilities 740,142 573,718
Total Current Liabilities 3,041,516 2,779,950
Notes payable - NAVICAP 2,145,764 3,727,081
Long-term debt-First Union Bank 4,365,060 4,551,000
Capital lease obligation 21,995 140,895
Deferred compensation 625,357 625,357
Total Liabilities 10,199,692 11,824,283
Stockholders' Equity:
Common stock 121,021 115,301
Additional paid in capital 7,466,077 4,238,236
Retained deficit (2,934,755) (2,008,324)
Stock subscriptions --- 1,594,166
Total Stockholders' Equity 4,652,343 3,939,379
Total Liabilities and Stockholders'
Equity $ 14,852,035 15,763,662
The Notes to Consolidated Financial Statements are an integral part
of this statement.
<PAGE>
<TABLE>
United Shields Corporation
Consolidated Statements of Operations
(unaudited)
<CAPTION>
Three Months Ended: Six Months Ended:
------------------ -----------------
July 3, June 30, July 3, June 30,
1998 1997 1998 1997
----------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Net sales $ 3,234,461 --- 6,458,522 ---
Cost of goods sold 2,496,941 --- 5,076,880 ---
----------- ---------- ---------- --------
Gross profit 737,520 --- 1,381,642 ---
Selling, general and
administrative expenses 862,858 76,131 1,661,947 124,789
----------- ---------- ---------- --------
Operating loss (125,338) (76,131) (280,305) (124,789)
Other income (expense):
Interest expense,
net (482,315) (6,094) (616,641) (6,066)
Other income (expense) (11,897) (925) (29,485) (925)
----------- ---------- ---------- --------
Loss before income
taxes (619,550) (83,150) (926,431) (131,780)
Income taxes --- --- --- ---
----------- ---------- ---------- --------
<PAGE>
Net loss $ (619,550) (83,150) (926,431) (131,780)
=========== ========= ======== ========
Weighted average
number of shares
outstanding 12,067,273 10,590,100 12,020,915 10,590,100
Net loss per common
share basic and
diluted $ (0.05) (0.01) (0.08) (0.01)
</TABLE>
The Notes to Consolidated Financial Statements
are an integral part of this statement.
<PAGE>
United Shields Corporation
Consolidated Statement of Cash Flows
(unaudited)
Six-months Ended:
July 3, 1998 June 30, 1997
Operating Activities:
Net loss $ (926,431) (131,780)
Adjustments to reconcile net
loss to net cash provided
by (used in) operating activities:
Amortization 457,734 11,112
Depreciation 318,325 505
Loss on sale of property
and equipment 1,023
(Increase) decrease in:
Accounts and other receivables (112,764) ---
Inventories 144,473 ---
Prepaid expenses and deposits 65,944 (25,333)
Other assets 9,099 ---
Accounts payable (17,732) (204,958)
Accrued expenses and other
current liabilities 219,191 6,144
-------- --------
Cash provided by (used in) operating
activities 158,862 (344,310)
Investing Activities:
Purchases of property, and equipment (81,765) (14,161)
Proceeds from sale of property and
equipment 20,750 ---
Investment in potential acquisitions 36,259 (50,000)
Increase in CSV of life insurance (35,000)
-------- --------
Cash (used in) investing activities (59,756) (64,161)
Financing Activities:
Borrowings on notes payable
stockholders --- 133,400
Payments on notes payable (698,401) ---
Payments on long-term debt (185,940) ---
Payments on capital lease obligation (161,163) ---
Proceeds from issuance of common
stock, net of expenses 579,895 274,964
-------- --------
Cash provided by (used in) financing
activities (465,609) 408,364
-------- --------
Net decrease in cash (366,503) (107)
Cash at the beginning of the year 512,839 107
-------- --------
Cash at end of the period $ 146,336 ---
The Notes to Consolidated Financial Statements are an integral part
of this statement.<PAGE>
United Shields Corporation
Notes To Consolidated Financial Statements
July 3, 1998
Company Description
United Shields Corporation (the "Company") is a holding
company, which operates two subsidiaries. R.P. Industries of Ohio,
Inc. ("RPI") is engaged primarily in the production of injection
molded plastic components. RPI 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.
Summary of Significant Accounting Policies
Interim Financial Statements
The July 3, 1998 and 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.
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.
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 sock were not included in the weighted average
number of shares for the quarter and six-month periods ended July 3,
1998 because their effect would have been anti-dilutive. There were
no dilutive potential common shares outstanding at June 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. Issuance of Shares by Private Placement
In the six months ended July 3, 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.
4. Issuance of Warrants
On March 30, 1998, the Company issued 500,000 stock purchase
warrants to a merchant banker/stockholder 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.
Related Party Transaction
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.
6. Contingencies
The Company is involved in litigation and other matters, which
involves 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. Important factors that could
cause the actual results, performance or achievement of the Company
to differ materially from the Company's expectations 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 purchasing decisions by retailers or consumers; (8)
development of a similar competing product with the Bottle and/or
HeaterMeals(R) 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. Management expects
that it is possible that during the third quarter of 1998, the
Company will enter into letters of intent to acquire some of those
companies. 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 86
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(R) 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 six-month period ended July 3, 1998, compared with the
quarter and six-month period ended June 30, 1997, and changes in
financial condition during the first six months of 1998.
United Shields Corporation did not own an operating company during
the first half of 1997. Therefore, the operating results for the
quarter and the six-month periods ended July 3, 1998 represent the
Company's first complete periods of operations with its wholly-owned
subsidiaries, HeaterMeals and RPI. Net sales for the second quarter
and six-month periods ended July 3, 1998 were $3,234,461 and
$6,458,522 respectively. Cost of sales as a percentage of net sales
for the second quarter and six-month periods ended July 3, 1998 were
77.2% and 78.6%, respectively. Selling, general and administrative
expenses of $862,858 in the second quarter of 1998 represented 26.7%
of net sales in that period. Selling, general and administrative
expenses of $1,661,947 for the six-month period ended July 3, 1998
represented 25.7% of net sales in that period.
Net interest expense for the second quarter and six-month periods
ended July 3, 1998 was $482,315 and $616,641, 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 second quarter and
six-month periods ended July 3, 1998 related to the amortization of
the issuance of warrants to ILC and NAVICAP was $253,059 and
$278,954, respectively.
The net loss for the second quarter and six-month periods ended July
3, 1998 was $619,550 and $926,431, respectively, as compared to net
loss for the comparable periods of the prior year of $83,150 and
$131,780, 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 six months of 1998, the Company generated $158,862
of cash from operations which when combined with the available cash
on hand was used to fund $59,756 of investing activities and
$465,609 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 $698,401 and $185,940, respectively,
the repayment of $161,163 related to the capital lease obligation
and cash provided by the issuance of common stock of $579,895.
The Company is actively pursuing additional funding through public
or private financing, including equity financing. There can be no
assurance 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 of its products or operations.
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.
Item 4 Submission of Matters to a Vote of Security Holders
The 1998 Annual Shareholders Meeting of United
Shields Corporation (the "Meeting") was held on May 26, 1998. The
holders of 9,790,966 shares of the Company's 12,076,536 then
outstanding shares of common stock (approximately 81%) were present
at the Meeting in person or by proxy.
At such Meeting, the following two individuals were
duly nominated and properly elected as Directors of the Company to
serve until the 1999 Annual Shareholders Meeting and until their
successors are elected and qualified T.J. Tully and Anthony G.
Covatta. The number of votes cast for, against and withheld with
respect to each nominee for office are indicated below:
T.J. Tully:
-------------
Voting For Director 9,509,895 Shares
Votes Against -- Shares
Votes Abstained 281,071 Shares
Anthony G. Covatta:
Voting For Director 9,509,895 Shares
Votes Against -- Shares
Votes Abstained 281,071 Shares
(c) At such Meeting, a proposal to approve
the 1998 Long-Term Incentive Plan (the "1998 LTIP") was approved.
The number of votes cast for, against and to abstain are indicated
below:
Voting For the 1998 LTIP 9,027,984 Shares
Votes Against 298,054 Shares
Votes Abstained 130,300 Shares
(d) At such Meeting, a proposal to amend the
Company's Articles of Incorporation was approved. The number of
votes cast for, against and to abstain are indicated below:
Voting For the Amendment 9,209,595 Shares
Votes Against 456,321 Shares
Votes Abstained 125,050 Shares
(e) At such Meeting, a proposal to ratify the
appointment of the firm of Grant Thornton LLP to serve as
independent auditors for fiscal 1998 was approved. The number of
votes cast for, against and to abstain are indicated below:
Voting For Grant Thornton LLP 9,671,716 Shares
Votes Against 200 Shares
Votes Abstained 119,050 Shares
Item 5 Other Information
Effective June 1, 1998, Anthony G. Covatta resigned as a
Director of the Board of Directors of the Company.
Item 6 - Exhibits
Exhibit 10.1 Amendment to Articles of Incorporation
Exhibit 27 Financial Data Schedule<PAGE>
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 August 17, 1998 /s/ T.J. Tully
T.J. Tully
Chairman of the Board
and Chief Executive Officer
Date August 17, 1998 /s/ Jeffrey A. Pakrosnis
Jeffrey A. Pakrosnis
Vice President and
Chief Financial Officer
Exhibit 10.1
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
OF
UNITED SHIELDS CORPORATION
The undersigned, T.J. Tully, Chairman of the Board, and Beverly R.
Gill, Secretary, of United Shields Corporation, a Colorado
corporation, with its principal location at 655 Eden Park Drive,
Cincinnati, Ohio 45202, do hereby certify that a meeting of the
shareholders was duly called for the purpose of adopting this
amendment and held on May 26, 1998, at which meeting a quorum of the
shareholders was present in person or by proxy.
The undersigned further certify that the following resolutions to
amend the Articles were adopted:
RESOLVED, that the Articles of Incorporation of United Shields
Corporation shall be amended and to add the following new Article
Eleventh:
ELEVENTH: 1. Limitation of Liability. To the fullest extent
permitted by the Colorado Business Corporation Act (the "Act"), as
the same exists or may hereafter be amended, a director of the
corporation shall not be personally liable to the corporation or its
shareholders for monetary damages for any breach of fiduciary duty
as a director, except that this provision shall not eliminate or
limit the liability of a director to the corporation or to its
shareholders for monetary damages otherwise existing for (i) any
breach of the director's duty of loyalty to the corporation or to
its shareholders; (ii) acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law; (iii)
acts specified in Section 7-108-403 of the Act relating to unlawful
distributions, or (iv) any transaction from which the director
directly or indirectly derived an improper personal benefit. If the
Act is hereafter amended to eliminate or limit further the liability
of a director, then, in addition to the elimination and limitation
of liability provided by the preceding sentence, the liability of
each director shall be eliminated to the fullest extent permitted by
the Act as so amended.
2. Indemnification. The corporation shall indemnify and
advance expenses to its officers, directors, employees and agents to
the fullest extent permitted by Colorado law as in effect from time
to time.
3. Repeal or Modification. Any repeal or modification of this
Article by the shareholders of the corporation shall be prospective
only and shall not adversely affect any right or protection of a
director of the corporation existing at the time of such repeal or
modification.
<PAGE>
IN WITNESS WHEREOF, the above-named officers, acting for and on
behalf of the Corporation, have hereunto subscribed their names this
_____ day of June, 1998.
By:T.J. Tully
T.J. Tully, Chairman of the Board
By:Beverly R. Gill
Beverly R. Gill, Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000808432
<NAME> UNITED SHIELDS CORPORATION
<S> <C>
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<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUL-03-1998
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0
0
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