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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No.: 0-20101
-----------------------------
URECOATS INDUSTRIES INC.
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(Exact name of registrant as specified in its charter)
Delaware 13-3545304
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4100 North Powerline Road, Suite F-1, Pompano Beach, Florida 33073
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(Address of principal executive offices)
(954) 977-5428
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(registrant's telephone number, including area code)
Check whether the registrant (1) filed all reports required to be filed
by Section 13 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 such filing requirements for the past 90 days.
Yes [X] No [ ]
--- ---
The number of shares of common stock, par value $.01 per share, outstanding
as of August 4, 2000 was 96,755,469 shares.
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URECOATS INDUSTRIES INC.
FORM 10-QSB
JUNE 30, 2000
INDEX
-----
PAGE
------
PART I - FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets as of June 30, 2000 and
December 31, 1999 ................................................... 3-4
Condensed Consolidated Statements of Operations for the three months
and six months ended June 30, 2000 and 1999.......................... 5
Condensed Consolidated Statements of Cash Flows for the six months
ended June 30, 2000 and 1999 ....................................... 6-7
Notes to Condensed Consolidated Financial Statements................. 8-9
ITEM 2. MANAGEMENT'S PLAN OF OPERATION ............................. 10-14
PART II - OTHER INFORMATION
---------------------------
ITEM 1. LEGAL PROCEEDINGS ......................................... 14
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS ................. 14
ITEM 3. DEFAULTS UPON SENIOR SECURITIES ........................... 14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ....... 15-16
ITEM 5. OTHER INFORMATION ......................................... 16
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K .......................... 16
SIGNATURES ......................................................... 17
EXHIBIT INDEX ...................................................... 18
PART I - FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
-----------------------------
URECOATS INDUSTRIES INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
------
JUNE 30, 2000 DECEMBER 31, 1999
------------------ -----------------
(UNAUDITED)
Current Assets:
Cash $ 34,893 $ 15,026
Loans Receivable 27,972 21,283
Prepaid Expenses 13,312 6,143
------------------ -----------------
Total Current Assets 76,177 42,452
------------------ -----------------
Property and Equipment, Net 938,130 526,102
------------------ -----------------
Other Assets:
Intangibles, Net 1,024,960 1,012,844
Deposits 54,976 8,341
------------------ -----------------
Total Other Assets 1,079,936 1,021,185
------------------ -----------------
Total Assets $ 2,094,243 1,589,739
================== =================
See Accompanying Notes to Condensed Consolidated Financial Statements
Page 3
URECOATS INDUSTRIES INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED BALANCE SHEETS
(CONTINUED)
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
---------------------------------------
JUNE 30, 2000 DECEMBER 31, 1999
------------------ -----------------
(UNAUDITED)
Current Liabilities:
Current Maturities of
Long Term Debt $ 130,476 $ 59,387
Accounts Payable and
Accrued Expense 526,417 571,131
Loans Payable 22,624 65,124
Due to Related Parties 1,790,000 250,000
------------------ -----------------
Total Current Liabilities 2,469,517 945,642
------------------ -----------------
Long Term Debt 190,965 34,327
------------------ -----------------
Total Liabilities 2,660,482 979,969
------------------ -----------------
Commitments and Contingencies 667,629 669,421
------------------ -----------------
Stockholders' (Deficit):
Preferred Stock, $1.00 Par
Value, 2,000,000 Shares
Authorized; Series A
Convertible, 750,000 Shares
Authorized; Issued &
Outstanding, 62,500 Shares
Unconverted (Less Offering
Costs of $7,465) 55,035 55,035
Common Stock $.01 Par Value,
100,000,000 shares Authorized;
96,753,469 Shares Issued &
Outstanding, JUNE 30, 2000;
92,748,219 Shares Issued &
Outstanding, December 31, 1999. 967,555 927,482
Additional Paid-In-Capital 20,312,218 19,203,292
Accumulated (Deficit) -
Discontinued Operations (13,534,532) (13,530,532)
Accumulated (Deficit) -
Development Stage Operations (9,034,144) (6,714,928)
------------------ -----------------
Total Stockholders' (Deficit) (1,233,868) (59,651)
------------------ -----------------
Total Liabilities and
Stockholders' (Deficit) $ 2,094,243 $ 1,589,739
================== =================
See Accompanying Notes To Condensed Consolidated Financial Statements
Page 4
URECOATS INDUSTRIES INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED JUNE 30,
----------------------------
2000 1999
----------------- -----------------
Revenues $ -0- $ -0-
----------------- -----------------
Costs and Expenses:
Selling, General and
Administrative 327,065 534,163
Professional Fees 60,428 ---
Depreciation and Amortization 67,893 23,904
Research and Development 237,944 216,256
Consulting Fees 127,644 ---
----------------- -----------------
Total Costs and Expenses 819,974 774,323
----------------- -----------------
Net (Loss) from Development Stage
Operations (819,974) (774,323)
(Loss) from Discontinued Operations $ (384) $ (367)
----------------- -----------------
Net (Loss) $ (820,358) $ (774,690)
----------------- -----------------
Net (Loss) Per Common Share
Basic
Development Stage Operations $ (0.009) $ (0.011)
Discontinued Operations (0.000) (0.000)
----------------- -----------------
Total $ (0.009) $ (0.011)
----------------- -----------------
Weighted Average Shares Outstanding 94,754,469 70,434,002
----------------- -----------------
Dilutive
Development Stage Operations $ (0.008) $ (0.011)
Discontinued Operations (0.000) (0.000)
----------------- -----------------
Total $ (0.008) $ (0.011)
----------------- -----------------
Weighted Average Shares Outstanding 99,191,969 72,792,002
----------------- -----------------
See Accompanying Notes to Condensed Consolidated Financial Statements
Page 5
URECOATS INDUSTRIES INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
SIX MONTHS ENDED JUNE 30,
-------------------------
2000 1999
---------------- -----------------
Revenues $ -0- $ -0-
---------------- -----------------
Costs and Expenses:
Selling, General and
Administrative 741,265 1,057,395
Professional Fees 93,859 ---
Depreciation and Amortization 121,761 42,414
Research and Development 436,806 452,144
Consulting Fees 925,525 ---
---------------- -----------------
Total Costs and Expenses 2,319,216 1,551,953
---------------- -----------------
Net (Loss) from Development Stage
Operations (2,319,216) (1,551,953)
(Loss) from Discontinued Operations $ (4,001) $ (568)
---------------- -----------------
Net (Loss) $ (2,323,217) $ (1,552,521)
---------------- -----------------
Net (Loss) Per Common Share
Basic
Development Stage Operations $ (0.025) $ (0.024)
Discontinued Operations (0.000) (0.000)
---------------- -----------------
Total $ (0.025) $ (0.024)
---------------- -----------------
Weighted Average Shares Outstanding 94,751,844 65,655,252
---------------- -----------------
Dilutive
Development Stage Operations $ (0.024) $ (0.023)
Discontinued Operations (0.000) (0.000)
---------------- -----------------
Total $ (0.024) $ (0.023)
---------------- -----------------
Weighted Average Shares Outstanding 97,104,344 66,875,752
---------------- -----------------
See Accompanying Notes to Condensed Consolidated Financial Statements
Page 6
URECOATS INDUSTRIES INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED JUNE 30,
-------------------------
2000 1999
--------------- ---------------
Cash Flows from Operating Activities:
Net (Loss)
Development Stage Operations $ (2,319,216) $ (1,551,953)
Discontinued Operations (4,001) (568)
Adjustments to Reconcile Net (Loss)
to Net Cash (Required) by Operating
Activities:
Depreciation and Amortization
Development Stage Operations 121,677 42,414
Discontinued Operations 84 2,847
Non Cash Development Stage Expenses 981,049 ---
Changes in Assets and Liabilities:
Prepaid Expenses (7,169) 10,396
Loans Receivable (6,689) 17,206
Deposits (46,635) (2,989)
Accounts Payable and Accrued
Expenses 60,793 (770,605)
Due to Related Parties 1,540,000 773,201
Increase (Decrease) in Commitments
and Contingencies (1,792) (118,424)
--------------- ---------------
Net Cash (Required) by
Operating Activities 318,101 (1,598,475)
--------------- ---------------
Cash Flows from Investing Activities:
Acquisition of Property & Equipment
Development Stage Operations (533,705) (222,973)
Acquisition of Intangibles
Development Stage Operations (12,200) (281)
--------------- ---------------
Net Cash (Required) by Investing
Activities $ (545,905) $ (223,254)
--------------- ---------------
See Accompanying Notes to Condensed Consolidated Financial Statements
Page 7
URECOATS INDUSTRIES INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED JUNE 30,
(CONTINUED)
-------------------------
2000 1999
--------------- ---------------
Cash Flows from Financing Activities:
Proceeds from Issuance of
Common Stock 22,444 1,742,807
Proceeds from Issuance of Notes 264,492 ---
<Payment> of Notes (39,265) (53,764)
--------------- ---------------
Net Cash Provided by Financing
Activities 247,671 1,736,291
--------------- ---------------
Net (Decrease)Increase in Cash
Development Stage Operations 19,966 (94,739)
Discontinued Operations (99) 9,301
--------------- ---------------
Net (Decrease)Increase in Cash $ 19,867 $ (85,438)
=============== ===============
Supplemental Disclosure of
Cash Flow Information:
Non-Cash Financing Activities:
Board of Director Fees $ 67,852 $ ---
Legal Fees 0 73,160
Consultant Fees 785,937 501,324
Repayment of Debts 145,506 955,652
Employee Compensation 127,260 212,375
--------------- ---------------
Totals $ 1,126,555 $ 1,742,511
=============== ===============
See Accompanying Condensed Consolidated Financial Statements
Page 8
URECOATS INDUSTRIES INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
------------------------------
The accompanying unaudited condensed consolidated financial statements for
the three and six month periods ended June 30, 2000 and 1999, have been
prepared in conformity with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB and
Regulation S-B. The financial information as of December 31, 1999, is
derived from the Company's Form 10-KSB for the year ended December 31, 1999.
Certain information or footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission.
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 at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. In
the opinion of management, the accompanying financial statements include all
adjustments necessary (which are of a normal and recurring nature) for the
fair presentation of the results of the interim periods presented. While the
registrant believes that the disclosures presented are adequate to keep the
information from being misleading, it is suggested that these accompanying
financial statements be read in conjunction with the registrant's audited
consolidated financial statements and notes for the year ended December 31,
1999, included in the registrant's Form 10-KSB for the year ended December 31,
1999.
Operating results for the three and six month periods ended June 30, 2000,
are not necessarily indicative of the results that may be expected for the
remainder of the fiscal year ending December 31, 2000. The accompanying
unaudited condensed consolidated financial statements: include the accounts
of the registrant and its wholly-owned subsidiaries. All significant inter-
company accounts and transactions have been eliminated in consolidation.
NOTE 2 - INTANGIBLES
--------------------
The registrant evaluates the amortization period of intangibles on an ongoing
basis in light of changes in any business conditions, events or circumstances
that may indicate the potential impairment of intangible assets. The adoption
of Statement of Accounting Standards 121, "Accounting for the Impairment of
Long-Lived Assets to be Disposed Of", and the evaluation by the registrant,
did not have a significant effect on the consolidated financial position or
results of operations of the registrant for the three months ended JUNE 30,
2000.
Page 9
ITEM 2. MANAGEMENT'S PLAN OF OPERATION
---------------------------------------
FORWARD LOOKING STATEMENTS
This Form 10-QSB contains certain forward-looking statements. For this
purpose, any statements contained in this Form 10-QSB that are not statements
of historical fact may be deemed to be forward-looking statements. Without
limiting the foregoing, words such as "may," "will," "expect," "believe,"
"anticipate," "estimate" or "continue" or the negative or other variations
thereof or comparable terminology are intended to identify forward-looking
statements. These statements by their nature involve substantial risks and
uncertainties, and actual results may differ materially depending on a
variety of factors.
PLAN OF OPERATION
The Company's plan of operation for the next twelve (12) months, through
its wholly-owned subsidiaries, Urecoats International and Urecoats
Technologies, is to manufacture five full production spray application
systems for its URECOATS 100(TM) RUBBER SEALANT MEMBRANE(RSM)(TM) product
and commence full-scale sales, marketing and distribution efforts.
Urecoats seeks to develop and market its products in the construction
industries and specifically in the industries involving manufacturing and
industrial building, single-family housing, multifamily housing, water,
sewer, and pipeline, bridge and tunnel, and structural steel erection
industries. The Company intends to compete in these industries by providing
its products and systems as part of the materials, components and supplies
therefor. Management will continue to research the applicability of its
formulae, and modifications thereto, in developing additional products
and/or uses for its existing products in these construction industries.
TESTING AND CERTFICATION
The Company will continue to work closely with world renowned testing and
certification agencies for testing its products to their limitations. This
testing process has already uncovered new cross-over industry uses for the
RUBBER SEALANT MEMBRANE(RSM)(TM).
STRATEGIC ACQUISITIONS
The Company intends to pursue strategic acquisitions that will allow it to
establish its market position in targeted markets. Management believes that
the high degree of fragmentation in the adhesives, sealants and coatings
industry will continue to provide suitable acquisition candidates. Potential
acquisition candidates will be evaluated based upon their capacity to enhance
the ability of the Company to: (i) expand its product line; (ii) enhance its
product development capabilities; (iii) market products through new or
expanded distribution channels; and (iv) increase its international presence.
Management believes it has significant opportunities to establish its
products in international markets, to enter developing markets and to
establish new customer relationships.
Page 10
Management also believes: (a) it has a world class RUBBER SEALANT
MEMBRANE(RSM)(TM) that will enhance, support and change many industries;
and (b) many new businesses will be developed out of the emergence of the
Company's RUBBER SEALANT MEMBRANE(RSM)(TM) into the world markets.
MARKETING
The Company has identified the Roofing Industry for the introduction of its
first RUBBER SEALANT MEMBRANE (RSM)(TM) product.
ROOFING MARKETS
Maintenance. Maintenance involves the physical inspection of an existing
roofing system to determine its current condition, detect weaknesses and
failures and identify any potential future problems. Through a program of
regularly scheduled annual or semi-annual inspections, roofing contractor
technicians assist owners in protecting their roofing investments by seeking
to identify damage in its early stages. Early detection of leaks and roofing
system failures make it possible for the roofing contractors to repair and
extend the life of a roofing system through repair or restoration, which is
significantly less expensive and time consuming than re-roofing.
Roofing contractors sometimes offer their customers a facility management
program to coordinate maintenance, repair, restoration and re-roofing as
needed. The Company believes that assisting the roofing contractors with the
cost-effectiveness of their regularly scheduled maintenance, repair and
restoration enables the Company to cultivate strong relationships with its
customers and establish a basis for recurring revenues.
Repair. Repair is a process where an existing roofing system has additions
and adjustments made to it, such as caulking, re-coating, and repairing
penetrations to fix leaks in the roofing system.
Restoration. Restoration involves the major repair of the roofing system,
including the repair of all penetrations and re-surfacing of the roof to
restore it to serviceable condition. Roofing contractors inform building
owners when a roof is approaching the end of its 14 year average life cycle
through regularly scheduled maintenance and repair programs. The opportunity
to perform restoration work normally exists two or three years prior to the
end of a roof's life cycle and before significant damage occurs. As many as
10 years can be added to the useful life of the roof through restoration and
typically the cost of restoration is one-half the cost of re-roofing.
Re-roofing. Re-roofing is the process of installing a new roof when a
roofing system fails. Roofing system failure can be caused by a number of
factors, including age, severe weather, poor workmanship, defective materials,
improper specification of a roofing system, abuse and failure to maintain the
roof through inspections. Re-roofing is performed only when all repair and
restoration alternatives are deemed incapable of bringing a roof back to
serviceable condition, or at the specific request of a customer.
Page 11
New Construction. New roof construction involves the construction of a
variety of roofing systems, including metal roofing systems, built-up roofing
membranes and single ply roofing systems. New roof construction coincides
with the construction of a new building. New commercial roofing work usually
begins with either a proposal request from the owner, general contractor or
roof consultant. Initial meetings with the parties allow the roofing
contractor to prepare preliminary and then more detailed design and product
specifications, drawings and cost estimates. Once a project is awarded, it is
conducted in scheduled phases, and progress billings are rendered to the
owner for payment, less a retainage of 5% to 10% of the construction cost of
the project. Actual field work (ordering of equipment and materials,
fabrication or assembly of certain components, delivery of materials and
components to the job site, scheduling of work crews and inspection and
quality control) is coordinated during these phases. The Company intends to
assist the roofing contractors in providing the materials to be installed as
a part of these contracts.
The Company plans to continue implementation of product development for
value-added end-use applications in higher growth market segments,
particularly sealant and coatings which facilitate recycling and other
environmentally-useful sealants and coatings. Management believes the
Company's technologies provide it with advantages in the development of new
products and the penetration of new markets.
Management has determined that there are significant opportunities available
to establish its products in international markets, to enter developing
markets and to establish new customer relationships. Furthermore, it is
Management's long-term goal to establish its world class RUBBER SEALANT
MEMBRANE(RSM)(TM) to assist, enhance and change the landscape of many
industries.
MANUFACTURING, PACKAGING AND DISTRIBUTION
The production of sealants and coatings is a multi-stage process which
involves extensive formulation, mixing and in some cases, chemical synthesis.
Following one or more of these processes, the product is packaged in totes,
drums, pails, cartridges or other delivery forms for sale based upon the
customer's requirements. Principal manufacturing processes include blending,
polymerization and extrusion. Blending consists of dissolving or dispersing
various compounds in organic solvents or water. In polymerization, urethane
polymers are synthesized in closed reactor systems. Extrusion consists of
feeding formulated materials through an extruder to compound pressure
sensitive products.
Urecoats has initiated plans to handle initial URECOATS 100(TM) manufacturing,
packaging and distribution through contract manufacturers and/or through
cooperative relationships with certain chemical suppliers. These manufacturers
will prepare the various components of the product, as specified by Urecoats,
provide for private label packaging and assist with worldwide shipping of
product for ultimate distribution to the customer.
Page 12
EMPLOYEES AND CONSULTANTS
The Company and its subsidiaries have fifteen full-time employees performing
various necessary corporate and operations functions.
Urecoats entered into a Consulting Agreement on July 21, 1998, effective June
1, 1998, with Creative Chemical and Ponswamy Rajalingam, Ph.D. ("Dr. Raja"),
the owners and inventor of the purchased formulas, including certain
technologies for their spray application, which terminates on May 31, 2000.
Urecoats entered into a new Consulting Agreement on March 29, 2000, effective
January 1, 2000, incorporating and modifying certain terms and conditions
from the June 1, 1999 agreement, which terminates on March 1, 2001 ("Raja
Agreement"). In exchange for certain restricted common stock, options,
consulting fees, and other non-employee compensation, Dr. Raja is to exercise
his best efforts to complete all patent work on the URECOATS 100(TM) RUBBER
SEALANT MEMBRANE(RSM)(TM); complete the prototype delivery system; add a
delivery system patent; build a full production delivery system; develop a
repair kit, application system and add patents for such; develop a topcoat;
add a formula patent; and establish training methods for application of the
product, including but not limited to safety features, technical specifications
and product approvals.
The Company entered into a Consulting Agreement on January 31, 1999, effective
January 1, 1999, with R. Uma Umarani, Ph.D. ("Dr. Uma"), a chemist, for the
research and development of an asphalt sealant formula. This agreement
terminated with all of its terms and conditions satisfied by Dr. Uma and the
Company. Urecoats entered into a new Consulting Agreement on March 29, 2000,
effective January 1, 2000, which terminates on JUNE 30, 2001. In exchange for
certain restricted common stock, options, consulting fees, and other non-
employee compensation, Dr. Uma is to exercise her best efforts to complete all
patent work on the URESEAL 200(TM) asphalt sealant; add a formula patent;
complete the prototype delivery system; add a delivery system patent and build
a full production delivery system; develop a repair kit, application system
and add patents for such; establish training methods for application of the
product, including but not limited to safety features, technical specifications
and product approvals.
Urecoats will retain additional qualified and respected professionals in the
various industries for advice, consultation and direction related to its
products and applications; development and building of different types of
roof systems for its products; working with testing labs, government agencies,
and other agencies for approval of its products; seeking other potential
applications and uses for its products other than construction, such as
waterproofing, marine, steel vapor barrier, etc.; assistance in writing
technical articles on its products and applications; and establish guidelines
for application procedures for its products and applications in the various
industries.
The Company will hire more personnel, perform new research and development
activities, and seek additional board of directors, executives, and consultants
for anticipated growth from increased awareness of the Urecoats products in the
marketplaces.
Page 13
MAJOR CUSTOMERS
Urecoats is working directly with COSMOSEAL S.A. de C.V., a company in Mexico
formed by a core group of individuals from Mexico (formerly referred to as
"Team Mexico", in establishing infrastructure guidelines for future
anticipated sales, marketing and distribution of its products in Central and
South America, the Caribbean and Mexico.
FINANCIAL CONDITIONS
The Company currently does not have the liquidity or capital resources to
fund Urecoats without raising capital either from borrowing or from the sale
of additional shares of stock. As of June 30, 2000, the Company received
approximately $ 1,790,000 in short-term loans, bearing interest at 9% per
annum, payable on demand, from Richard J. Kurtz, Chairman of the Board and
Chief Executive Officer of the Company, for operations. The Company anticipates
raising further financing through short-term loans and/or, subject to an
increase in the Company's authorized capitalization, the sale of additional
restricted common stock to accredited sophisticated investors.
PART II - OTHER INFORMATION
---------------------------
ITEM 1. LEGAL PROCEEDINGS
--------------------------
1. Designer Wear et. al. vs. Smith & Wesson et. al.
This litigation is currently undergoing further discovery and motions
for request to produce documents and information are now pending between
the parties. The Company's litigation counsel is vigorously pursuing the
case. To date, no acceptable settlement offers have been made by Smith &
Wesson to the Company; however, although no assurance can be given,
litigation counsel is of the continuing opinion that the case will
eventually be settled favorably to Urecoats.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
--------------------------------------------------
During the quarterly period ended June 30, 2000, the Company issued
restricted common stock, for a private transaction, in reliance on Section
4(2) of the Act, as described below:
(a) The Company issued 100,000 shares of restricted common stock,
in cancellation of consulting fees, valued and recorded at $67,500.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
----------------------------------------
None
Page 14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------------------------------------------------------------
The Annual Meeting of the Shareholders of the Company was held at the
offices of the Company on June 20, 2000 pursuant to notice and proxy statement,
wherein the following matters were considered and approved by the requisite
majority voting requirements:
1. Elected the Company's entire Board of Directors;
2. Ratified the selection of the Company's independent auditors for the
year 2000;
3. Authorized an amendment to the Company's Restated Certificate of
Incorporation increasing the authorized common stock of the
Company from a total of 100,000,000 shares of common stock having
a par value $.01 per share to 140,000,000 shares of Common Stock
having a par value of $.01 per share; and
4. Approved the Company's 2000 Stock Purchase and Option Plan
covering a total of 5,000,000 shares of common stock.
The President of the Company acknowledged that a total of 47,618,735
shares represented the amount necessary to constitute a quorum for a valid
meeting. There was present, by proxy and in person a total of
74,904,103 shares, constituting more than a majority of outstanding shares
entitled to vote. Accordingly, a quorum was present for the valid conduct
of business.
The Inspector of Elections' report reflected the following results:
1. A total of between 74,457,620 and 74,460,620 shares were voted for
Proposal #1, electing the entire board of directors, constituting
more than a majority of the total number of shares present at the
meeting and entitled to vote in person and by proxy. The vote
tabulations for each director are described below:
Name For Against Abstain
------------------ ---------- ------- -------
Richard J. Kurtz 74,458,620 0 445,483
David M. Goldblatt 74,458,620 0 445,483
Arthur J. Gregg 74,460,620 0 443,483
Larry T. Clemons 74,457,620 0 446,483
------------------ ---------- ------- -------
Page 15
2. A total of 73,232,629 shares were voted for Proposal #2 constituting
more than a majority of the total number of shares present at the
meeting and entitled to vote in person or by proxy. The vote
tabulations are described below:
For Against Abstain
---------- ------- ---------
73,232,629 352,923 1,318,550
---------- ------- ---------
3. A total of 74,094,120 shares were voted for Proposal #3 constituting
more than a majority of the total number of shares present at the
meeting and entitled to vote in person or by proxy. The vote
tabulations are described below:
For Against Abstain
---------- ------- -------
74,094,120 757,572 52,411
---------- ------- -------
4. A total of 43,232,241 shares were voted for Proposal #4 constituting
more than a majority of the total number of shares present at the
meeting and entitled to vote in person or by proxy. The vote
tabulations are described below:
For Against Abstain
---------- ------- -------
43,232,241 506,458 142,941
---------- ------- -------
ITEM 5. OTHER INFORMATION
--------------------------
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
-----------------------------------------
(a) EXHIBITS - 27.1 FINANCIAL DATA SCHEDULE - JUNE 30, 2000
(b) REPORTS ON FORM 8-K - None
Page 16
SIGNATURES
----------
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Pompano Beach, and State of Florida on
August 11, 2000.
URECOATS INDUSTRIES INC.
(Registrant)
/s/ Larry T. Clemons August 14, 2000
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Larry T. Clemons Date
President and Treasurer
/s/ Michael T. Adams August 14, 2000
---------------------------- ---------------
Michael T. Adams Date
Executive Vice President
and Secretary
Page 17
EXHIBIT INDEX
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EXHIBIT NO. EXHIBIT DESCRIPTION
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27.1 FINANCIAL DATA SCHEDULE - JUNE 30, 2000
Page 18
