<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. 2)
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
[ ] Definitive Proxy Statement Rule 14a-6(e)(2)
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
COVENTRY INDUSTRIES CORP.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
----------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE>
COVENTRY INDUSTRIES CORP.
7777 Glades Road, Suite 211
Boca Raton, Florida 33434
Telephone 561-488-4802 Facsimile 561-488-3419
August , 1998
Dear Stockholder:
You are cordially invited to attend a Special Meeting of the
Stockholders of Coventry Industries Corp. to be held on October 2, 1998 at 9:00
a.m. at Embassy Suites, 661 NW 53 Street, Boca Raton, Florida 33487.
We hope you will attend the meeting in person. Whether you expect to
be present and regardless of the number of shares you own, please mark, sign
and mail the enclosed proxy in the envelope provided. Matters on which action
will be taken at the meeting are explained in detail in the notice and proxy
statement following this letter.
Sincerely,
/s/ Robert Hausman
--------------------------------------
Robert Hausman
President and Chief Executive Officer
<PAGE>
PRELIMINARY PROXY STATEMENT
COVENTRY INDUSTRIES CORP.
7777 GLADES ROAD, SUITE 211
BOCA RATON, FLORIDA 33434
--------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 2, 1998
Notice is hereby given that a Special Meeting of the Stockholders of
Coventry Industries Corp. (the "Company") will be held at Embassy Suites, 661
NW 53 Street, Boca Raton, Florida 33487, at 9:00 a.m. on Friday, October 2,
1998 for the following purposes:
1. To approve the possible issuance of in excess of 19.95% of the
presently issued and outstanding Common Stock of the Company upon
the conversion of the Company's 5% Convertible Preferred Stock
("5% Preferred Stock"), the possible payment of dividends on the
5% Preferred Stock in shares of Common Stock and to approve such
other matters as may come before the meeting which are incident to
such matters.
Holders of shares of the Company's Series A Preferred Stock, Series E
Cumulative NonParticipating Preferred Stock, and Common Stock of record at the
close of business on August 17, 1998 will be entitled to notice of and to vote
at the meeting.
Stockholders unable to attend the Special Meeting in person are
requested to read the enclosed Proxy Statement and then complete and deposit
the Proxy together with the power of attorney or other authority, if any,
under which it was signed, or a notarized certified copy thereof, with the
Company prior to the commencement thereof. Stockholders who received the Proxy
through an intermediary must delivery the Proxy in accordance with the
instructions given by such intermediary.
By Order of the Board of Directors
/s/ Robert Hausman
--------------------------------------
Robert Hausman, President and Chief
Executive Officer
August __, 1998
THE PROXY WHICH ACCOMPANIES THIS NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
CONTAINS MATERIAL INFORMATION CONCERNING THE MATTERS TO BE CONSIDERED AT THE
MEETING, AND SHOULD BE READ IN CONJUNCTION WITH THIS NOTICE.
<PAGE>
PRELIMINARY PROXY STATEMENT
COVENTRY INDUSTRIES CORP.
7777 GLADES ROAD, SUITE 211
BOCA RATON, FLORIDA 33434
(PRINCIPAL EXECUTIVE OFFICES)
--------------------
PROXY STATEMENT
SPECIAL MEETING OF STOCKHOLDERS
--------------------
INTRODUCTION
This Proxy Statement is being furnished to stockholders in connection
with the solicitation of proxies by the Board of Directors of Coventry
Industries Corp. (the "Company") for use at a Special Meeting of Stockholders of
the Company (the "Meeting") to be held at Embassy Suites, 661 NW 53 Street, Boca
Raton, Florida 33487, at 9:00 a.m. on October 2, 1998, and at any adjournments
thereof, for the purpose of considering and voting upon the matters set forth in
the accompanying Notice of Special Meeting of Stockholders. This Proxy Statement
and the accompanying form of proxy are first being mailed to stockholders on or
about August __, 1998.
The close of business on August 17, 1998, has been fixed as the record
date for the determination of stockholders entitled to notice of and to vote at
the Meeting and any adjournment thereof. As of the record date, there were
2,994,798 shares of the Company's common stock, par value $.001 per share
("Common Stock"), 30 shares of Series A Preferred Stock and 115,000 shares of
Series E Cumulative Non-Participating Preferred Stock issued and outstanding,
the only classes of the Company's securities entitled to vote at the Meeting.
The presence, in person or by proxy, of the holders of a majority of
the outstanding shares of Common Stock, Series A Preferred Stock and Series E
Cumulative Non-Participating Preferred Stock entitled to vote on the record date
is necessary to constitute a quorum at the Meeting. Abstentions and broker
non-votes will be counted towards a quorum. If a quorum is not present or
represented at the Meeting, the stockholders present at the Meeting or
represented by proxy have the power to adjourn the Meeting from time to time,
without notice other than an announcement at the Meeting, until a quorum is
present or represented. At any such adjournment Meeting at which a quorum is
present or represented, any business may be transacted that might have been
transacted at the original Meeting.
The affirmative vote of a majority of the shares of Common Stock,
Series A Preferred Stock and Series E Cumulative Non-Participating Preferred
Stock present in person or by proxy at the Meeting are required for approval of
Proposal 1. The holders of shares of Common Stock are each entitled to one vote
for each share held of record on all matters to be voted on by stockholders. The
holders of shares of Series A Preferred Stock and Series E Cumulative
Non-Participating Preferred Stock are also each entitled to one vote for each
share of held of record and are entitled to full voting rights, share for share,
with the then outstanding Common Stock concerning any matter being voted upon by
the Company's stockholders. The result is that holders of more than 50% of the
aggregate outstanding shares of Common Stock, Series A Preferred Stock and
Series E Cumulative Non-Participating Preferred Stock can approve Proposal 1.
Abstentions will have the same effect as a vote against a proposal and broker
non-votes will be disregarded.
1
<PAGE>
All shares represented by properly executed proxies, unless such
proxies previously have been revoked, will be voted at the Meeting in accordance
with the directions on the proxies. IF NO DIRECTION IS INDICATED, THE SHARES
WILL BE VOTED TO APPROVE THE POSSIBLE ISSUANCE OF IN EXCESS OF 19.95% OF THE
PRESENTLY ISSUED AND OUTSTANDING COMMON STOCK UPON THE CONVERSION OF THE 5%
PREFERRED STOCK, THE POSSIBLE PAYMENT OF DIVIDENDS ON THE 5% PREFERRED STOCK IN
SHARES OF COMMON STOCK AND SUCH OTHER MATTERS WHICH ARE INCIDENT TO SUCH
MATTERS. The enclosed proxy, even though executed and returned, may be revoked
at any time prior to the voting of the proxy by one of the following methods:
(a) execution and submission of a revised proxy, (b) written notice to the
Secretary of the Company, or (c) voting in person at the Meeting.
Proposal 1
TO APPROVE THE POSSIBLE ISSUANCE OF IN EXCESS OF 19.95% OF THE
PRESENTLY ISSUED AND OUTSTANDING COMMON STOCK UPON THE
CONVERSION OF THE 5% CONVERTIBLE PREFERRED STOCK AND THE
POSSIBLE PAYMENT OF DIVIDENDS ON THE 5%
CONVERTIBLE PREFERRED STOCK IN SHARES OF COMMON STOCK
Terms of the Private Placement
On January 16, 1998 the Company sold 1,750 shares of its 5%
Convertible Preferred Stock ("5% Preferred Stock"), at a purchase price of
$1,000 per share ("Purchase Price"), to ProFutures Special Equities Fund,
L.P., a Delaware limited partnership and an unaffiliated third party
("ProFutures") in a private transaction exempt from registration under the
Securities Act of 1933, as amended (the "Act") pursuant to Section 4(2) of the
Act. ProFutures is the only holder of 5% Preferred Stock. The designations,
rights and preferences of the Preferred Stock are described below.
The shares of 5% Preferred Stock are convertible at any time at the
holder's option into shares of the Company's Common Stock at a conversion
price determined by dividing the liquidation value of $1,000 per share by the
conversion price, i.e., 80% of the average closing bid price of the Common
Stock as reported on The Nasdaq SmallCap Market for the five (5) trading days
immediately preceding the date of conversion. The holder of the 5% Preferred
Stock does not have any preemptive or similar rights with respect to either
the 5% Preferred Stock or the Common Stock.
$500,000 of the Purchase Price paid for the 1,750 shares of 5%
Preferred Stock, as well a certificate for 500 shares of 5% Preferred Stock, was
previously deposited in escrow by the purchaser with Atlas, Pearlman, Trop &
Borkson, P.A., counsel for the Company, pending approval of this Proposal 1 by
the Company's stockholders. Subsequently, in June 1998 pursuant to an oral
agreement between the Company and ProFutures, such $500,000 was released from
escrow and returned to ProFutures pending approval of this Proposal 1 in
compliance with the terms of the Subscription Agreement for the 5% Preferred
Stock. The certificate for 500 shares of 5% Preferred Stock remains in escrow
pending such approval. Pursuant to the terms of the private placement, should
the Company obtain stockholder approval, the purchaser will also purchase an
additional 750 shares of 5% Preferred Stock at $1,000 per share, resulting in a
sale of an aggregate of 2,500 shares of 5% Preferred Stock.
2
<PAGE>
The Company has agreed to register for resale the shares of Common
Stock underlying the 5% Preferred Stock (the "Registerable Securities") under
the Act in a registration statement on Form S-3 which was to be filed with the
Securities and Exchange Commission (the "Commission") no later than 30 days from
the closing date of the transaction. The Company agreed to use its best efforts
to cause such registration statement to become effective within 120 days from
its filing, and thereafter to maintain an effective registration statement under
the Act for a period of two years. In the event such registration statement was
not declared effective by the Commission by May 17, 1998, being 121 days from
closing date, the Company was subject to a cash penalty of 2% of the Purchase
Price per month until the effectiveness thereof. As of the date hereof, the
Company has not filed the registration statement. On March 31, 1998 the Company
and ProFutures entered into an agreement whereby ProFutures agreed to waive the
penalties due by the Company and extended the date by which the registration
statement was to be declared effective to July 1, 1998 in exchange for the
Company issuing ProFutures a five (5) year warrant to purchase 250,000 shares of
the Company's restricted Common Stock at an exercise price of $4.50. Pursuant to
the terms of such warrant, the Company has also granted ProFutures piggy-back
registration rights for the shares of Common Stock underlying such warrant.
Accordingly, as such registration statement has not been declared effective by
July 1, 1998, the cash penalty of $25,000 per month commenced accrual on
July 1, 1998.
Assuming the approval of this Proposal 1, and the sale of all 2,500
shares of 5% Preferred Stock, the gross proceeds to the Company from the sale of
such stock would be $2,500,000. The Company received gross proceeds of
$1,250,000 from the sale of the first 1,750 shares of 5% Preferred Stock, with
the remaining $500,000 previously deposited in escrow as hereinbefore described.
After payment of the fees and expenses totaling approximately $175,000, or
approximately 14% of the gross proceeds (including $125,000 payable to European
Equity Partners, Inc., an NASD member firm which served as placement agent, and
approximately $35,000 in legal fees related to this proxy and the registration
statement), the Company received net proceeds of approximately $1,090,000. The
Company used these proceeds for general working capital, including, but not
limited to, inventory purchases and reduction of accounts payable. Should the
Company obtain stockholder approval for this Proposal 1, the gross proceeds to
the Company will be $1,250,000, representing the $500,000 previously held in
escrow but subsequently returned to ProFutures and $750,000 from the purchase of
the additional 750 shares of 5% Preferred Stock. After payment of placement fees
to European Equity Partners, Inc. of $125,000, or 10% of the gross proceeds, the
net proceeds to the Company will be $1,125,000. Such net proceeds will be used
by the Company as general working capital.
Rule 4460(i)(1)(D) of The Nasdaq Stock Market, Inc. Nasdaq
Marketplace Rules requires certain companies whose securities are traded on
the Nasdaq SmallCap Market (such as the Company) to obtain stockholder
approval prior to issuing common stock (or shares convertible into common
stock) in a transaction other than a public offering at a price less than the
market value of the common stock when the amount of common stock to be issued
(or issuable upon conversion) is or will be greater than 20% of the common
stock or voting power of the company outstanding prior to issuance. The
initial purchase of 1,250 shares of 5% Preferred Stock did not require
stockholder approval pursuant to Rule 4460(i)(1)(D) as the ability of the
3
<PAGE>
purchaser to convert the shares of 5% Preferred Stock is presently limited to a
conversion of up to 526,034 shares of the Company's Common Stock (the "Maximum
Control Shares"), being a maximum of 19.95% of the then currently issued and
outstanding Common Stock. The Company, however, must obtain stockholder approval
of this Proposal 1 prior to the release of the escrowed stock and the sale of
the remaining 750 shares of 5% Preferred Stock. Initially, the terms of the
purchase provided that in the event the Company did not obtain stockholder
approval of this Proposal 1 prior to March 31, 1998, (i) the $500,000 in escrow
would be returned to ProFutures and the certificate for the 500 shares of 5%
Preferred Stock would be canceled, (ii) concurrently the Company would pay to
ProFutures the sum of $50,000 as liquidated damages, (iii) ProFutures would not
be obligated to purchase the remaining 750 shares of 5% Preferred Stock, and
(iv) on the day immediately following the date of issuance of the Maximum
Control Shares, the Company would redeem all remaining shares of issued and
outstanding 5% Preferred Stock not so converted (due to the numerical
limitation) at a price of $1,300 per share. As hereinbefore set forth, the
$500,000 previously held in escrow has been returned to ProFutures pursuant to
an oral agreement between the Company and ProFutures. The certificate for the
750 shares of 5% Preferred Stock remains in escrow. The remaining provisions
were waived by ProFutures in the March 31, 1998 agreement as described above.
Assuming approval of this Proposal 1, the ultimate number of shares
of Common Stock into which the remaining 1,250 shares of 5% Preferred Stock
are convertible is unknown at this time. However, based upon a closing bid
price of [$2.00] per share (the closing bid price of the Company's Common
Stock on [August 13, 1998], being the lowest closing bid price of the Company's
Common Stock as reported on The Nasdaq Small Cap Market during the preceding
90 consecutive trading days), assuming the conversion of all 2,500 shares of
5% Preferred Stock, the Company would issue an additional [1,562,500] shares of
Common Stock. Such [1,562,500] shares of Common Stock would represent
approximately [52%] of the currently issued and outstanding Common Stock, or
approximately [34%] of the Company's issued and outstanding Common Stock,
giving proforma effect to such issuance. The amount of shares and percentage
of Common Stock ultimately issuable upon conversion of all 2,500 shares of 5%
Preferred Stock may increase or decrease substantially, depending on changes
in the closing bid price of the Company's Common Stock. Based upon the
ultimate number of shares of Common Stock into which the 5% Preferred Stock
would be convertible, and assuming the approval of this Proposal 1, the
subsequent conversion of all 2,500 shares of 5% Preferred Stock by ProFutures
could result in ProFutures having effective voting control of the Company.
5% Convertible Preferred Stock
The Company is authorized to issue up to 2,000,000 shares of
preferred stock, par value $.0001 per share, issuable in such series and
bearing such voting, dividend, conversion, liquidation and other rights and
preferences as the Board of Directors may determine. As of July 31, 1998 there
were 30 shares of Series A Preferred Stock, 30,000 shares of Series C
Preferred Stock and 115,000 shares of Series E Cumulative Non-Participating
Preferred Stock issued and outstanding, none of which have conversion rights.
In addition, in connection with the aforedescribed private placement, the
Company designated a series of 2,500 shares of 5% Convertible Preferred Stock,
of which 1,250 shares are presently issued and outstanding. The balance of
1,777,470 shares of preferred stock remaining without designation.
4
<PAGE>
The following is a summary description of the preferences, rights and
limitations of the 5% Convertible Preferred Stock as set forth in the Articles
of Amendment to the Articles of Incorporation of the Company as filed with the
Secretary of State of Florida on January 20, 1998, a copy of which is attached
as an Addendum A to this Proxy Statement.
Voting Rights
The shares of 5% Preferred Stock carry no voting rights.
Dividends
The holders of the 5% Preferred Stock are entitled to cumulative
dividends at the rate of $50 per share per annum, accrued daily and payable
quarterly in arrears on March 31, June 30, September 30 and December 31 of
each year in preference and priority to any payment of any dividend on the
Common Stock or any other class or series of stock of the Company. The
dividends are payable in cash or in shares of the Company's Common Stock
providing the shares of Common Stock issuable upon the conversion of the 5%
Preferred Stock have been registered under the Act.
Liquidation Preference
The 5% Preferred Stock has a face value of $1,000 per share (the
"Face Value"). The liquidation preference is Face Value, plus any accrued but
unpaid dividends.
Redemption
At any time commencing on May 17, 1998 (121 days from the closing
date), upon 20 days notice the Company has the right to redeem any outstanding
shares of 5% Preferred Stock at a redemption price of $1,300 per share, plus
any accrued but unpaid dividends (the "Redemption Value").
Optional Conversion
The shares of 5% Preferred Stock are convertible at the holder's
option into shares of the Company's Common Stock at a conversion price
determined by dividing the liquidation value of $1,000 per share by the
conversion price, i.e., 80% of the average closing bid price of the Common
Stock as report on The Nasdaq SmallCap Market for the five (5) trading days
immediately preceding the date of conversion.
Liquidated Damages
The Company is obligated to pay the holder of the 5% Preferred Stock
liquidated damages of $500 per day plus an amount equal to 2% of the Purchase
Price of the shares for the first 30 day period after the date on which the
Common Stock should have been issued by the Company or the 5% Preferred Stock
redeemed, plus an amount equal to 3% of the total Purchase Price of the shares
of 5% Preferred Stock for each subsequent 30 day period.
5
<PAGE>
THE BOARD OF DIRECTORS HAS APPROVED THE OFFERING AND RECOMMENDS A VOTE
FOR THE APPROVAL OF THE OFFERING. SUCH APPROVAL REQUIRES THE AFFIRMATIVE VOTE OF
THE HOLDERS OF A MAJORITY OF THE COMMON STOCK, SERIES A PREFERRED STOCK AND
SERIES E CUMULATIVE NON-PARTICIPATING PREFERRED STOCK REPRESENTED IN PERSON OR
BY PROXY AT THE MEETING.
STOCK OWNERSHIP
As of August 17, 1998 there were 2,994,798 shares of Common Stock, 30
shares of Series A Preferred Stock and 115,000 shares of Series E Cumulative
Non-Participating Preferred Stock issued and outstanding, all of which are
voting securities of the Company. Neither the 30,000 shares of Series C
Preferred Stock which are issued and outstanding nor the 5% Preferred Stock
which is the subject of this Proxy have voting rights. Other than the 5%
Preferred Stock, no series of preferred stock is convertible or exchangeable
into Common Stock. The following table sets forth, as of August 17, 1998,
certain information with respect to the beneficial ownership of each class of
the Company's voting securities by (i) each person known to the Company who
beneficially owns more than 5% of each class of the Company's voting
securities (ii) each director; (iii) all named executive officers, (iv) all
directors and officers as a group:
<TABLE>
<CAPTION>
Series A Preferred Stock
- ------------------------
Percentage of
Blended Voting
Power Assuming
Name and Amount of Percentage Percentage Conversion of
Address of Beneficial of of Blended 2,500 Shares of
of Beneficial Owner Ownership of Stock Class Voting Power(1) 5% Preferred Stock
- ------------------- ------------------ ----- --------------- ------------------
<S> <C> <C> <C> <C>
Outside Industrial 30 100% (2) (2)
Services, Inc. (3)
2415 Sycamore Drive
Knoxville, TN 37921
All Officers and
Directors as a
Group (four persons) none n/a n/a n/a
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Series E Cumulative Non-Participating Preferred Stock
- -----------------------------------------------------
Percentage of
Blended Voting
Power Assuming
Name and Amount of Percentage Percentage Conversion of
Address of Beneficial of of Blended 2,500 Shares of
of Beneficial Owner Ownership of Stock Class Voting Power(1) 5% Preferred Stock
- ------------------- ------------------ ----- --------------- ------------------
<S> <C> <C> <C> <C>
Robert Hausman 115,000 100% 12.4%(4) 9.6%(4)(8)
7777 Glades Road
Suite 211
Boca Raton, FL 33433
All Officers and
Directors as a
Group (four persons) 115,000 100% 16.4%(4)(6)(8) 12.8%(4)(6)(8)
Common Stock
- ------------
Percentage of
Blended Voting
Power Assuming
Name and Amount of Percentage Percentage Conversion of
Address of Beneficial of of Blended 2,500 Shares of
of Beneficial Owner Ownership of Stock Class Voting Power(1) 5% Preferred Stock
- ------------------- ------------------ ----- --------------- ------------------
Robert Hausman 327,300(5) 10.2% 13.3%(4) 9.7%(4)(8)
7777 Glades Road
Suite 211
Boca Raton, Florida 33434
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Percentage of
Blended Voting
Power Assuming
Name and Amount of Percentage Percentage Conversion of
Address of Beneficial of of Blended 2,500 Shares of
of Beneficial Owner Ownership of Stock Class Voting Power(1) 5% Preferred Stock
- ------------------- ------------------ ----- --------------- ------------------
<S> <C> <C> <C> <C>
C. Lawrence Rutstein 27,300(6) (2) (2) (2)(8)
7777 Glades Road
Suite 211
Boca Raton, Florida 33434
Lester Gann 151,481 5.0% 4.8% 3.2%(8)
2415 Sycamore Drive
Knoxville, Tennessee 37921
Marc Weisz 100 (2) (2) (2)(8)
498 Cambridge Lane
Weston, Florida 33326
ProFutures Special Equities 0 n/a n/a 34%(8)
Fund, L.P.
1310 Highway 620 South
Suite 200
Austin, Texas 78734
All officers and 506,101 15.4% 14.9%(4)(6)(7)(8) 10.2%(4)(6)(7)(8)
Directors as a group
(four persons)(5)(6)
</TABLE>
(1) Blended voting power represents the total voting power of the named
individual or entity calculated as a percentage of all presently issued
and outstanding voting securities of the Company.
(2) Represents less than 1%.
(3) Outside Industrial Services, Inc. is a subsidiary of the Company.
(4) Includes (i) 115,000 shares of Series E Cumulative Non-Participating
Preferred Stock (ii) 100,000 shares of Common Stock (iii) options to
acquire 100,000 shares of the Company's Common Stock at an exercise price
of $5.00 per share and an options to acquire an additional 100,000 shares
of the Company's Common Stock at an exercise price of $4.00 granted
pursuant to Mr. Hausman's management agreement with the Company and (iv)
options to acquire 7,500 shares of the Company's Common Stock at an
exercise price of $2.00 per share granted pursuant to the Company's 1997
Stock Option Plan.
(5) Includes (i) 100,000 shares of Common Stock (ii) options to acquire
100,000 shares of the Company's Common Stock at an exercise price of $5.00
per share and an options to acquire an additional 100,000 shares of the
Company's Common Stock at an exercise price of $4.00 granted pursuant to
Mr. Hausman's management agreement with the Company and (iii) options to
acquire 7,500 shares of the Company's Common Stock at an exercise price of
$2.00 per share granted pursuant to the Company's 1997 Stock Option Plan.
Also includes 19,800 shares of Common Stock owned by Barbara Hausman, his
spouse, however, pursuant to Rule 16a-3 of the Securities Exchange Act of
1934, Mr. Hausman disclaims beneficial ownership of the shares held by his
spouse.
(6) Includes options to acquire 7,500 shares of the Company's Common Stock at
an exercise price of $2.00 per share granted pursuant to the Company's
1997 Stock Option Plan. Also includes 19,800 shares of Common Stock owned
by Ronna Newman Rutstein, his spouse, however, purusant to Rule 16a-3 of
the Securities Exchange Act of 1934, Mr. Rutstein disclaims beneficial
ownership of the shares held by his spouse.
(7) Includes options to purchase 30,000 shares of Common Stock pursuant to
Mr. Gann's employment agreement.
(8) Assumes the approval of Proposal 1 set forth herein and the conversion of
2,500 shares of 5% Preferred Stock into 1,562,500 shares of Common Stock
based upon the assumptions hereinbefore set forth.
8
<PAGE>
OTHER MATTERS
Management is not aware of any other matters to be presented for
action at the Meeting. However, if any other matter is properly presented, it
is the intention of the persons named in the enclosed form of proxy to vote in
accordance with their best judgment on such matter.
COST OF SOLICITATION
The Company will bear the costs of the solicitation of proxies from
its stockholders. In addition to the use of the mail, proxies may be solicited
by directors, officers and regular employees of the Company in person or by
telephone or other means of communication. The directors, officers and
employees of the Company will not be compensated additionally for the
solicitation but may be reimbursed for out-of-pocket expenses in connection
with the solicitation. Arrangements are also being made with brokerage houses
and any other custodians, nominees and fiduciaries for the forwarding of
solicitation material to the beneficial owners of the Company, and the Company
will reimburse the brokers, custodians, nominees and fiduciaries for their
reasonable out-of-pocket expenses.
STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company which are intended to be
presented by such stockholders at the 1998 Annual Meeting must be received by
the Company no later than October 1, 1998 in order to have them included in the
proxy statement and form of proxy relating to that meeting.
PRO FORMA COMBINED FINANCIAL INFORMATION
The Proforma Condensed Consolidated Balance Sheet (unaudited) at March
31, 1998 attached hereto as an Addendum B presents the historical financial
statements of the Company at March 31, 1998, giving effect to the disposition of
LPS Acquisition Corp., a subsidiary of the Company, on June 29, 1998 as if such
transaction had occurred at March 31, 1998.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents, which have been filed by the Company with the
Commission, are incorporated herein by reference.
1. The Company's Annual Report on Form 10-KSB/A for the fiscal year
ended June 30, 1997;
2. The Company's Quarterly Report on Form 10-QSB/A for the quarter
ended September 30, 1997;
3. The Company's Quarterly Report on Form 10-QSB/A for the quarter
ended December 31, 1997;
4. The Company's Quarterly Report on Form 10-QSB/A for the quarter
ended March 31, 1998;
5. The Company's Report on Form 8-K as filed on September 22, 1997 as
amended by Form 8-K/A as filed on July 1, 1998;
6. The Company's Report on Form 8-K as filed on October 23, 1997 as
amended by Form 8-K/A as filed on July 1, 1998.
7. The Company's Report on Form 8-K as filed on January 29, 1998 as
amended by Form 8-K/A as filed on July 1, 1998.
8. The Company's Report on Form 8-K as filed on July 10, 1998 as
amended by Form 8-K/A as filed on July 16, 1998.
Any document incorporated herein by reference shall be deemed to be
modified or superseded for the purposes of this Proxy Statement to the extent
that any subsequently filed document, which also is or is deemed to be
incorporated by reference herein, modified or supersedes such document. The
Company will provide, without charge upon oral or written request, to each
person whom this Proxy Statement is delivered, a copy of any or all of the
documents incorporated by reference, other than exhibits to such documents not
specifically incorporated by reference above. Requests for such documents should
be directed to the Company, 7777 Glades Road, Suite 211, Boca Raton, Florida
33434, Attention: Robert Hausman, President, 561-488-4802 (telephone),
561-488-3419 (facsimile). In addition, the Commission maintains a Web site on
the Internet at www.sec.gov that contains reports, proxy and information
statements and other information regarding issuers, including the Company, who
file electronically with the Commission. Visitors to the site may access the
documents incorporated by reference herein by searching the EDGAR data base on
the site.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Robert Hausman
-----------------------------------
Robert Hausman, President and
Chief Executive Officer
August __, 1998
9
<PAGE>
COVENTRY INDUSTRIES CORP.
SPECIAL MEETING OF STOCKHOLDERS
October 2, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF COVENTRY
INDUSTRIES CORP. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN
ACCORDANCE WITH THE CHOICES SPECIFIED BELOW.
The undersigned stockholder of Coventry Industries Corp. (the "Company")
hereby appoints Robert Hausman the true and lawful attorney, agent and proxy
of the undersigned with full power of substitution for and in the name of the
undersigned, to vote all of the shares of Common Stock of the Company which
the undersigned may be entitled to vote at the Special Meeting of Stockholders
of the Company to be held at Embassy Suites, 661 NW 53 Street, Boca Raton,
Florida 33487, on October 2, 1998 at 9:00 a.m., and any and all adjournments
thereof, with all of the powers which the undersigned would possess if
personally present, for the following purposes:
FOR AGAINST ABSTAIN
1. To approve the possible [ ] [ ] [ ]
issuance of in excess
of 19.95% of the presently
issued and outstanding
Common Stock upon the
conversion of the 5%
Convertible Preferred Stock,
the possible payment of dividends
on the 5% Convertible Preferred
Stock in shares of Common Stock and
on any other matters incident to Proposal
1 contained in the Proxy Statement
accompanying this Proxy
THIS PROXY WILL BE VOTED FOR THE CHOICE SPECIFIED. IF NO CHOICE IS
SPECIFIED FOR PROPOSAL 1, THIS PROXY WILL BE VOTED FOR THAT ITEM.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting
and Proxy Statement dated ________, 1998.
DATED:
________________________ _____________________________________
(Signature)
_____________________________________
(Signature if jointly held)
_____________________________________
(Printed name(s))
Please sign exactly as name appears
on the stock certificate(s). Joint
owners should each sign. Trustees
and others acting in a
representative capacity should
indicate the capacity in which they
sign.
<PAGE>
ADDENDEM A TO PROXY STATEMENT
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
COVENTRY INDUSTRIES CORP.
The undersigned, being a natural person competent to contract, does
hereby make, subscribe and file the Articles of Amendment to the Articles of
Incorporation of Coventry Industries Corp., formerly known as Workforce Systems
Corp., a Florida corporation, pursuant to Sections 607.0602 and 607.10025 of the
Florida Business Corporation Act:
1. The name of the corporation is Coventry Industries Corp. (the
"Company").
2. The text of the resolution of the Board of Directors on January 14,
1998 setting forth amendments to the designations, rights and privileges of the
Company's 5% Convertible Preferred Stock is as set forth on Schedule 1 attached
hereto and incorporated herein by reference.
3. The foregoing resolutions were duly adopted by unanimous vote of the
Board of Directors held on January 14, 1998 and shareholders' action was not
required.
IN WITNESS WHEREOF, this Articles of Amendment to the Articles of
Incorporation has been executed on the 15th day of January, 1998.
Coventry Industries Corp.
By: /s/ Robert Hausman
-----------------------------------
Robert Hausman,
President and Chairman
of the Board of Directors
1
<PAGE>
SCHEDULE 1
COVENTRY INDUSTRIES CORP.
RESOLUTION ESTABLISHING RIGHTS AND PREFERENCES
FOR 5% CONVERTIBLE PREFERRED STOCK
RESOLVED, that there shall be a series of shares of the Corporation
designated "5% Convertible Preferred Stock"; that the number of shares of such
series shall be 2,500 and that the rights and preferences of such series (the
"5% Preferred") and the limitations or restrictions thereon, shall be as set
forth herein.
The following shall be adopted and incorporated by reference into the
foregoing resolutions as if fully set forth therein:
1. Dividends.
(a) The holders of the 5% Preferred shall be entitled to receive out of
any assets legally available therefor cumulative dividends at the rate of $50
per share per annum, accrued daily and payable quarterly in arrears on March 31,
June 30, September 30 and December 31 of each year in preference and priority to
any payment of any dividend on the Common Stock or any other class or series of
stock of the Corporation. Such dividends shall accrue on any given share from
the day of original issuance of such share and shall accrue from day to day
whether or not earned or declared. If at any time dividends on the outstanding
5% Preferred at the rate set forth above shall not have been paid or declared
and set apart for payment with respect to all preceding periods, the amount of
the deficiency shall be fully paid or declared and set apart for payment, but
without interest, before any distribution, whether by way of dividend or
otherwise, shall be declared or paid upon or set apart for the shares of any
other class or series of stock of the Corporation.
(b) Any dividend payable on a dividend payment date may be paid, at the
option of the Corporation, either (i) in cash or (ii) in shares of the
Corporation's Common Stock, $.001 par value per share (the "Common Stock"), if
the Common Stock issuable upon conversion of such shares has been registered for
resale under the Securities Act of 1933, as amended (the "Act"), and the
registration statement including a current prospectus with respect thereto
remains in effect at the date of delivery of such shares, and if the Corporation
shall have given written notice of its intention to pay such dividend in Common
Stock to all holders of the 5% Preferred at least ten (10) days before the
record date for such dividend.
2. Liquidation Preference; Redemption.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, either voluntary or involuntary, the holders of the 5% Preferred
shall be entitled to receive, prior and in preference to any distribution of any
assets of the Corporation to the holders of any other class or series of shares,
the amount of $1,000 per share plus all accrued but unpaid dividends (the
"Liquidation Preference").
2
<PAGE>
(b) A consolidation or merger of the Corporation with or into any other
corporation or corporations, or a sale of all or substantially all of the assets
of the Corporation (other than a sale or transfer to a wholly-owned subsidiary
of the Corporation), shall, at the option of the holders of the 5% Preferred, be
deemed a liquidation, dissolution or winding up within the meaning of Section
2(a) hereof if the shares of stock of the Corporation outstanding immediately
prior to such transaction represent immediately after such transaction less than
a majority of the voting power of the surviving corporation (or of the acquirer
of the Corporation's assets in the case of a sale of assets). Such option may be
exercised by the vote or written consent of holders of a majority of the 5%
Preferred at any time within thirty (30) days after written notice (which shall
be given promptly) of the essential terms of such transaction shall have been
given to the holders of the 5% Preferred in the manner provided by law for the
giving of notice of meetings of shareholders.
(c) The Corporation, at its option, may cause any or all outstanding
shares of the 5% Preferred to be redeemed at any time beginning on the one
hundred twenty first (121st) day following the Closing Date, provided the
Corporation has given notice of its intention to redeem to the holders of the 5%
Preferred at least twenty (20) days prior to the redemption date. On the
redemption date, the Corporation shall pay such holders by cashier's check or
wire transfer in immediately available funds the amount of $1,300 per share,
plus all accrued but unpaid dividends payable under Section 1 hereof and any
other amounts and liquidated damages due with respect to the Shares. Promptly
thereafter, the holders shall surrender the certificate or certificates
representing the 5% Preferred, duly endorsed, at the office of the Corporation
or of any transfer agent for such shares, or at such other place designated by
the Corporation.
3. 5% Preferred - Optional Conversion. The holders of the 5% Preferred
shall have optional conversion rights as follows:
(a) Right to Convert. Shares of 5% Preferred shall be convertible, at
the option of the holder thereof, into such number of fully paid and
nonassessable shares of Common Stock as is determined by dividing (x) the
Liquidation Preference of the 5% Preferred determined pursuant to Section 2
hereof on the date the notice of conversion is given, by (y) the Conversion
Price determined as hereinafter provided in effect on the applicable conversion
date. Notwithstanding any provision to the contrary, in no event shall the
Company be required to issue more than 526,034 shares of Common Stock upon
conversion of the 5% Preferred (the "Maximum Common Shares") without first
having obtained the stockholder approval of the issuance of 5% Preferred, the
Common Stock pursuant to the conversion of the 5% Preferred and payment of
dividends under the 5% Preferred. If the Corporation's stockholders disapprove
of the foregoing or such approval has not been obtained by March 31, 1998, the
Company shall on the day following issuance of the Maximum Common Shares redeem
all remaining 5% Preferred in accordance with the second sentence of Section
2(c) hereof.
(b) Mechanics of Conversion. To convert shares of 5% Preferred into
shares of Common Stock under Section 3(a), the holder shall give written notice
to the Corporation (which notice may be given by facsimile transmission) that
such holder elects (with the right to revoke) to convert the shares and shall
state therein date of the conversion, the number of shares to be converted and
the name or names in which such holder wishes the certificate or certificates
for shares of Common Stock to be issued. Promptly thereafter, the holder shall
surrender the certificate or certificates representing the shares to be
3
<PAGE>
converted, duly endorsed, at the office of the Corporation or of any transfer
agent for such shares, or at such other place designated by the Corporation;
provided, that the holder shall not be required to deliver the certificates
representing such shares if the holder is waiting to receive all or part of such
certificates from the Corporation. The Corporation shall immediately issue and
deliver to or upon the order of such holder, against delivery of the
certificates representing the shares which have been converted, a certificate or
certificates for the number of shares of Common Stock to which such holder shall
be entitled. The Corporation shall cause such issuance to be effected within
five (5) business days and shall transmit the certificates by messenger or
overnight delivery service to reach the address designated by such holder within
five (5) business days after the receipt of such notice. The notice of
conversion may be given by a holder at any time during the day up to 5:00 p.m.
Boca Raton, Florida time and such conversion shall be deemed to have been made
immediately prior to the close of business on the date such notice of conversion
is given. The person or persons entitled to receive the shares of Common Stock
issuable upon such conversion shall be treated for all purposes as the record
holder or holders of such shares of Common Stock at the close of business on
such date.
(c) Conversion and Redemption Required. The Corporation acknowledges
and understands that a delay in the issuance of the Common Stock or redemption
pursuant to the provisions hereof could result in economic loss to the holders
of the 5% Preferred. As compensation to any holder when the Corporation has
failed with respect to such holder to comply with the Corporation's obligations
under this Section, and not as a penalty, the Corporation shall pay to such
holder liquidated damages of $500 per day plus an amount equal to two percent
(2%) of the total Purchase Price of Shares for the first thirty (30) day period
after the date on which the Common Stock should have been issued by the
Corporation (i.e., the end of the five (5) business day period described in
Subsection (b)) or shares of 5% Preferred redeemed, plus amount equal to three
percent (3%) of the total Purchase Price of Shares for each subsequent thirty
(30) day period thereafter. Amounts payable shall be pro-rated daily as to a
periods of less than thirty (30) days. Such amounts shall be paid to the holder
immediately by cashier's check or wire transfer in immediately available funds
to such account as shall be designated in writing by the holder.
(d) Determination of Conversion Price.
(i) The "Conversion Price" shall be equal to eighty percent
(80%) of the average of the closing bid prices of the Common Stock as reported
by NASDAQ during the five (5) consecutive trading days preceding the conversion
date (but not including such date).
(ii) The "closing bid price" of the Common Stock on a trading
day shall be the closing bid price of the Common Stock on NASDAQ or any other
principal securities price quotation system or market on which prices of the
Common Stock are reported. The term "trading day" means a day on which trading
is reported on the principal quotation system or market on which prices of the
Common Stock are reported.
(iii) If, during the period of consecutive trading days
provided for above, the Corporation shall declare or pay any dividend on the
Common Stock payable in Common Stock or in rights to acquire Common Stock, or
shall effect a stock split or reverse stock split, or a combination,
4
<PAGE>
consolidation or reclassification of the Common Stock, the Conversion Price
shall be proportionately decreased or increased, as appropriate, to give effect
to such event.
(e) Distributions. If the Corporation shall at any time or from time to
time make or issue, or fix a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution payable in
securities of the Corporation or any of its subsidiaries other than additional
shares of Common Stock, then in each such event provision shall be made so that
the holders of 5% Preferred shall receive, upon the conversion thereof, the
securities of the Corporation which they would have received had they been the
owners on the date of such event of the number of shares of Common Stock
issuable to them upon conversion.
(f) Certificates as to Adjustments. Upon the occurrence of any
adjustment or readjustment of the Conversion Price pursuant to this Section 3,
the Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and cause the independent
public accountants regularly employed to audit the financial statements of the
Corporation to verify such computation and prepare and furnish to each holder of
5% Preferred a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
The Corporation shall, upon the reasonable written request at any time of any
holder of 5% Preferred, furnish or cause to be furnished to such holder a like
certificate prepared by the Corporation setting forth (i) such adjustments and
readjustments, and (ii) the number of other securities and the amount, if any,
of other property which at the time would be received upon the conversion of 5%
Preferred with respect to each share of Common Stock received upon such
conversion.
(g) Notice of Record Date. In the event of any taking by the
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any security or
right convertible into or entitling the holder thereof to receive additional
shares of Common Stock, or any right to subscribe for, purchase or otherwise
acquire any shares of stock of any class or any other securities or property, or
to receive any other right, the Corporation shall mail to each holder of 5%
Preferred at least ten (10) days prior to the date specified therein, a notice
specifying the date on which any such record is to be taken for the purpose of
such dividend, distribution, security or right and the amount and character of
such dividend, distribution, security or right.
(h) Issue Taxes. The Corporation shall pay any and all issue and other
taxes, excluding any income, franchise or similar taxes, that may be payable in
respect of any issue or delivery of shares of Common Stock on conversion of
shares of 5% Preferred pursuant hereto; provided, however, that the Corporation
shall not be obligated to pay any transfer taxes resulting from any transfer
requested by any holder in connection with any such conversion.
(i) Reservation of Stock Issuable Upon Conversion. The Corporation
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the 5% Preferred, such number of its shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding shares of the 5% Preferred, and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
5
<PAGE>
the conversion of all then outstanding shares of the 5% Preferred, the
Corporation will take such corporate action as may be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purpose, including, without limitation, engaging in best
efforts to obtain any requisite shareholder approval.
(j) Fractional Shares. No fractional shares shall be issued upon the
conversion of any share or shares of 5% Preferred. All shares of Common Stock
(including fractions thereof) issuable upon conversion of more than one share of
5% Preferred by a holder thereof shall be aggregated for purposes of determining
whether the conversion would result in the issuance of any fractional share. If,
after the aforementioned aggregation, the conversion would result in the
issuance of a fraction of a share of Common Stock, the Corporation shall, in
lieu of issuing any fractional share, pay the holder otherwise entitled to such
fraction a sum in cash equal to the fair market value of such fraction on the
date of conversion (as determined in good faith by the Board of Directors of the
Corporation or an authorized Committee thereof).
(k) Notices. Any notice required by the provisions of this Section to
be given to the holders of shares of 5% Preferred shall be deemed given if
deposited in the United States mail, postage prepaid, and addressed to each
holder of record at its address appearing on the books of the Corporation.
(l) Reorganization or Merger. In case of any reorganization or any
reclassification of the capital stock of the Corporation or any consolidation or
merger of the Corporation with or into any other corporation or corporations or
a sale of all or substantially all of the assets of the Corporation to any other
person (other than a sale or transfer to a wholly-owned subsidiary of the
Corporation), and the holders of 5% Preferred do not elect to treat such
transaction as a liquidation, dissolution or winding up as provided in Section 2
hereof, then, as part of such reorganization, consolidation, merger or sale,
provision shall be made so that each share of 5% Preferred shall thereafter be
convertible into the number of shares of stock or other securities or property
(including cash) to which a holder of the number of shares of Common Stock
deliverable upon conversion of such share of 5% Preferred would have been
entitled upon the record date of (or date of, if no record date is fixed) such
event and, in any case, appropriate adjustment (as determined by the Board of
Directors) shall be made in the application of the provisions herein set forth
with respect to the rights and interests thereafter of the holders of the 5%
Preferred, to the end that the provisions set forth herein shall thereafter be
applicable, as nearly as equivalent as is practicable, in relation to any shares
of stock or the securities or property (including cash) thereafter deliverable
upon the conversion of the shares of 5% Preferred.
4. Re-issuance of Certificates. In the event of a conversion (or, if
applicable, redemption) of 5% Preferred in which less than all of the shares of
5% Preferred of a particular certificate are converted or redeemed, as the case
may be, the Corporation shall promptly (within three (3) business days) cause to
be issued and delivered to the holder of such certificate, a certificate
representing the remaining shares of 5% Preferred which have not been so
converted or redeemed.
6
<PAGE>
5. Other Provisions. For all purposes of this Resolution, the term
"date of issuance" and the terms "Closing" or "Closing Date" shall mean the day
on which the 5% Preferred is first issued by the Corporation. Any provision
herein which conflicts with or violates any applicable usury law shall be deemed
modified to the extent necessary to avoid such conflict or violation. The term
"NASDAQ" herein refers to the principal market on which the Common Stock of the
Corporation is traded. If the Common Stock is listed on a securities exchange,
or if another market becomes the principal market on which the Common Stock is
traded or through which price quotations for the Common Stock are reported, the
term "NASDAQ" shall be deemed to refer to such exchange or other principal
market.
6. Restrictions and Limitations. The Corporation shall not undertake
the following actions without the consent of the holders of a majority of the 5%
Preferred: (i) modify its Certificate of Incorporation or Bylaws so as to amend
or change any of the rights, preferences, or privileges of the 5% Preferred,
(ii) authorize or issue any other preferred equity security senior to or on a
parity with the 5% Preferred as to dividends, liquidation preferences,
conversion rights, redemption rights or other rights, preferences or privileges
for a period of thirty (30) days after Closing, as applicable or (iii) purchase
or otherwise acquire for value any Common Stock or other equity security of the
Corporation either junior or senior to or on a parity with the 5% Preferred
while there exists any arrearage in the payment of cumulative dividends
hereunder.
7. Voting Rights. Except as provided herein or as provided for by law,
the 5% Preferred shall have no voting rights.
8. Attorneys' Fees. Any holder of 5% Preferred shall be entitled to
recover from the Corporation the reasonable attorneys' fees and expenses
incurred by such holder in connection with enforcement by such holder of any
obligation of the Corporation hereunder.
7
<PAGE>
ADDENDUM B
----------
Proforma Combined Financial Information
Introductory Note
The following proforma financial statements set forth certain unaudited
condensed proforma financial information for the Company after giving effect to
the disposition of LPS Acquisition, Inc. on June 29, 1998 (effective May 29,
1998) as if such transaction had been consummated as of the beginning of each
period presented, and with respect to the balance sheet as of March 31, 1998.
The information contained in the following statements do not purport to be
indicative of the results of operations of the Company which may have been
obtained had the disposition of LPS Acquisition, Inc. been disposed of on the
dates assumed.
The unaudited condensed proforma combined financial information is preliminary
and, accordingly, is subject to change. The disposition adjustments are
preliminary and have been made solely for purposes of developing such proforma
financial information.
<PAGE>
COVENTRY INDUSTRIES CORP
PROFORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Historical
------------
Coventry Proforma
Industries Adjustments Combined
------------ ----------- -----------
<S> <C> <C> <C>
ASSETS
Current assets
Cash $ 16,033 (1) 2,672 $ 18,705
Accounts receivable 1,551,614 (1) (283,894) 1,267,720
Other receivable 319,793 (1) (125,307) 194,486
Inventory 1,942,066 (1) 42,427 1,984,493
Prepaid expenses 746,914 (1) (6,288) 740,626
----------- -----------
Total current assets 4,576,420 4,206,030
Property, plant and equipment 2,993,980 (1) (159,279) 2,834,701
Other assets 3,975,193 (1) (3,399) 3,971,794
----------- -----------
$11,545,593 $11,012,525
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Trade accounts payable $ 1,227,120 (1) (258,469) $ 968,651
Accrued expenses 849,200 (1) (2,584) 846,616
Factoring line of credit 291,888 291,888
Income tax payable 58,451 58,451
Current maturities of long-term debt 67,353 67,353
Note payable - related party 27,958 27,958
----------- -----------
Total current liabilities 2,521,970 2,260,917
Other liabilities 1,252,847 (1) (377,940) 874,907
Total stockholders' equity (deficit) 7,770,776 (1) 105,925 7,876,701
----------- -----------
$11,545,593 $11,012,525
=========== ===========
</TABLE>
<PAGE>
COVENTRY INDUSTRIES CORP
PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED MARCH 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Historical
-------------
Coventry Proforma
Industries Adjustments Combined
------------- ----------- ------------
<S> <C> <C> <C>
Revenue $ 7,766,881 (2) (1,511,262) $ 6,255,619
Cost of sales 6,004,200 (2) (1,563,722) 4,440,478
----------- -----------
Gross profit 1,762,681 1,815,141
Operating expenses
General and administrative 2,267,774 (2) (575,059) 1,692,715
Depreciation and amortization 261,412 261,412
Professional fees 747,471 747,471
----------- -----------
3,276,657 2,701,598
Operating income (loss) (1,513,976) (886,457)
Other expenses
Interest expense (131,913) (2) 45,022 (86,891)
Interest income 3,222 (2) (367) 2,855
Other 40,241 (2) (36,249) 3,992
Gain on sale of subsidiary 0 (2) 815,000 815,000
----------- -----------
(88,450) 734,956
----------- -----------
Loss before income tax benefit (1,602,426) (151,501)
Income tax (benefit) 0
----------- -----------
Net income (loss) $(1,602,426) $ (151,501)
=========== ===========
Income (loss) per share
Net loss per common share $ (0.58) $ (0.05)
=========== ===========
Weighted average shares 2,764,280 2,764,280
outstanding =========== ===========
</TABLE>
