SECURITIES AND EXCHANGE COMMISSION
EXCHANGE ACT OF 1934
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URECOATS INDUSTRIES INC.
Delaware (State of Incorporation) | 13-3545304 (I.R.S. Employer Identification No.) | |
Quorum Business Center 718 South Military Trail Deerfield Beach, Florida (Address of Principal Executive Offices) | 33442 (Zip Code) |
(954) 428-8686
(Registrant's Telephone Number, Including Area Code)
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2003
Page | |||
PART I | |||
3 | |||
14 | |||
21 | |||
21 | |||
PART II | |||
21 | |||
21 | |||
22 | |||
22 | |||
22 | |||
22 |
2 | ||
INDEX TO FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
September 30, 2003 and December 31, 2002 | 4 | ||
Three Months Ended September 30, 2003 and 2002 | 6 | ||
Nine Months Ended September 30, 2003 and 2002 | 8 | ||
Nine Months Ended September 30, 2003 and 2002 | 10 | ||
12 |
3 | ||
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, | December 31, | ||||||
2003 | 2002 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Current Assets: | |||||||
Cash | $ | 124,366 | $ | 41,520 | |||
Accounts Receivable, Net | 567,192 | 604,945 | |||||
Inventory – Note 3 | 1,581,456 | 1,416,674 | |||||
Prepaid Expenses and Other Current Assets | 189,765 | 204,526 | |||||
Total Current Assets | 2,462,779 | 2,267,665 | |||||
Property, Plant and Equipment, Net | 1,195,085 | 1,514,063 | |||||
Other Assets: | |||||||
Intangibles, Net | 1,869,074 | 1,879,433 | |||||
Notes Receivable - Long Term | 62,983 | 348,412 | |||||
Deposits and Other Non-Current Assets | 66,035 | 139,211 | |||||
Total Other Assets | 1,998,092 | 2,367,056 | |||||
Total Assets | $ | 5,655,956 | $ | 6,148,784 | |||
4 | ||
September 30, |
|
| December 31, |
| |||
|
| 2003 |
|
| 2002 | ||
(unaudited) | |||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current Liabilities: | |||||||
Accounts Payable and Accrued Expenses – Note 4 | $ | 5,050,418 | $ | 3,187,449 | |||
Current Maturities of Long-Term Debt | 74,577 | 105,257 | |||||
Short-Term Notes and Loans Payable | 756,656 | 739,027 | |||||
Deferred Revenue | 7,500 | 70,000 | |||||
Total Current Liabilities | 5,889,151 | 4,101,733 | |||||
Long-Term Debt | 57,405 | 45,427 | |||||
Total Liabilities | 5,946,556 | 4,147,160 | |||||
Stockholders’ Equity: | |||||||
Preferred Stock, $1.00 Par Value; 2,000,000 Shares Authorized, of which Designations: | |||||||
Series A Convertible, 750,000 Shares Authorized; 62,500 Issued and Outstanding (Less Offering Costs of $7,465) | 55,035 | 55,035 | |||||
Series B Convertible, 500,000 Shares Authorized; -0- and 500,000 Issued and Outstanding at September 30, 2003 and December 31, 2002, respectively | -0- | 500,000 | |||||
Series C Convertible, 750,000 Shares Authorized; 607,643 and 414,781 Issued and Outstanding at September 30, 2003 and December 31, 2002, respectively | 607,643 | 414,781 | |||||
Common Stock, $.01 Par Value; 40,000,000 Shares Authorized; 16,408,250 and 14,071,254 Issued and Outstanding at September 30, 2003 and December 31, 2002, respectively | 164,083 | 140,713 | |||||
Additional Paid-In Capital | 50,743,212 | 44,696,841 | |||||
Subscriptions Receivable – Note 6 | --- | --- | |||||
Accumulated (Deficit) | (51,860,573 | ) | (43,805,746 | ) | |||
Total Stockholders’ Equity | (290,600 | ) | 2,001,624 | ||||
Total Liabilities and Stockholders’ Equity | $ | 5,655,956 | $ | 6,148,784 | |||
5 | ||
Three Months Ended |
| ||||||
| September 30, |
| September 30, |
| |||
| 2003 |
| 2002 | ||||
Revenue: | |||||||
Application Systems | $ | --- | $ | 262,817 | |||
Coatings, Sealants and Other Products | 712,181 | 1,268,523 | |||||
Total Revenue | 712,181 | 1,531,340 | |||||
Cost of Sales: | |||||||
Application Systems | --- | 240,648 | |||||
Coatings, Sealants and Other Products | 504,105 | 935,720 | |||||
Warranty Costs, Freight and Other Cost of Sales | 236,230 | 126,707 | |||||
Total Cost of Sales | 743,336 | 1,303,075 | |||||
Gross Profit (Loss) | (31,155 | ) | 228,265 | ||||
Operating Expenses: | |||||||
Selling, General and Administrative | 1,355,682 | 2,611,394 | |||||
Professional Fees | 60,776 | 168,998 | |||||
Depreciation and Amortization | 127,533 | 120,243 | |||||
Research and Development | 139,966 | 208,133 | |||||
Consulting Fees | 30,257 | 70,427 | |||||
Interest Expense | 24,497 | 28,052 | |||||
Loss on Disposal of Assets | 32,197 | --- | |||||
Total Operating Expenses | 1,770,908 | 3,207,247 | |||||
Operating (Loss) | (1,802,063 | ) | (2,978,982 | ) | |||
Income (Loss) From Discontinued Operations | --- | (49,270 | ) | ||||
Net (Loss) | $ | (1,802,063 | ) | $ | (3,028,252 | ) | |
6 | ||
Three Months Ended | |||||||
| September 30, |
| September 30, |
| |||
| 2003 |
| 2002 | ||||
Net (Loss) Per Common Share-Basic: | |||||||
Continuing Operations | $ | (0.109 | ) | $ | (0.23 | ) | |
Discontinued Operations | (0.000 | ) | (0.00 | ) | |||
Total | $ | (0.109 | ) | $ | (0.23 | ) | |
Weighted Average Shares Outstanding | 16,568,377 | 13,305,304 | |||||
Net (Loss) Per Common Share-Diluted: | |||||||
Continuing Operations | $ | (0.082 | ) | $ | (0.19 | ) | |
Discontinued Operations | (0.000 | ) | (0.00 | ) | |||
Total | $ | (0.082 | ) | $ | (0.19 | ) | |
Weighted Average Shares Outstanding | 21,982,904 | 16,270,964 | |||||
7 | ||
Nine Months Ended | |||||||
September 30, |
| September 30, |
| ||||
| 2003 |
| 2002 | ||||
Revenue: | |||||||
Application Systems | $ | 439,700 | $ | 1,340,951 | |||
Coatings, Sealants and Other Products | 2,814,026 | 3,204,623 | |||||
Total Revenue | 3,253,726 | 4,545,574 | |||||
Cost of Sales: | |||||||
Application Systems | 373,500 | 1,324,859 | |||||
Coatings, Sealants and Other Products | 2,018,562 | 2,152,669 | |||||
Warranty Costs, Freight and Other Cost of Sales | 1,303,431 | 280,433 | |||||
Total Cost of Sales | 3,695,493 | 3,757,961 | |||||
Gross Profit (Loss) | (441,767 | ) | 787,613 | ||||
Operating Expenses: | |||||||
Selling, General and Administrative | 5,627,966 | 6,811,079 | |||||
Professional Fees | 536,901 | 329,536 | |||||
Depreciation and Amortization | 395,419 | 335,714 | |||||
Research and Development | 383,140 | 485,110 | |||||
Consulting Fees | 173,249 | 433,911 | |||||
Interest Expense | 85,621 | 47,405 | |||||
Loss on Disposal of Assets | 32,197 | --- | |||||
Total Operating Expenses | 7,234,493 | 8,442,755 | |||||
Operating (Loss) | (7,676,260 | ) | (7,655,142 | ) | |||
(Loss) From Discontinued Operations | (3,413 | ) | (120,218 | ) | |||
Net (Loss) | $ | (7,679,673 | ) | $ | (7,775,360 | ) | |
8 | ||
Nine Months Ended |
| ||||||
|
|
| |||||
| September 30, |
| September 30, | ||||
Net (Loss) Per Common Share-Basic: | |||||||
Continuing Operations | $ | (0.50 | ) | $ | (0.58 | ) | |
Discontinued Operations | (0.00 | ) | (0.01 | ) | |||
Total | $ | (0.50 | ) | $ | (0.59 | ) | |
Weighted Average Shares Outstanding | 15,239,752 | 13,234,294 | |||||
Net (Loss) Per Common Share-Diluted: | |||||||
Continuing Operations | $ | (0.40 | ) | $ | (0.50 | ) | |
Discontinued Operations | (0.00 | ) | (0.01 | ) | |||
Total | $ | (0.40 | ) | $ | (0.51 | ) | |
Weighted Average Shares Outstanding | 19,365,376 | 15,131,803 | |||||
9 | ||
Nine Months Ended | |||||||
September 30, |
| September 30, |
| ||||
| 2003 |
| 2002 | ||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net (Loss): | |||||||
Continuing Operations | $ | (7,676,260 | ) | $ | (7,655,142 | ) | |
Discontinued Operations | (3,413 | ) | (120,218 | ) | |||
Adjustments to Reconcile Net (Loss) to Net Cash Provided (Used) by Operating Activities: | |||||||
Depreciation and Amortization | 395,419 | 354,092 | |||||
Disposition of Property and Equipment | 32,197 | 217,787 | |||||
Non-Cash Operating Activities: | |||||||
Board of Director Fees | 174,000 | 23,625 | |||||
Interest | 50,873 | 21,060 | |||||
Legal Fees, Settlements and Other Services | 6,000 | --- | |||||
Consultant Fees | --- | 190,575 | |||||
Other Compensation | 40,344 | 265,855 | |||||
Purchases of Cost of Goods Sold | 34,408 | --- | |||||
Changes in Assets and Liabilities: | |||||||
Prepaid Expenses | (5,233 | ) | (137,028 | ) | |||
Accounts and Loans Receivable | 37,753 | (1,096,807 | ) | ||||
Inventory | 17,218 | (214,951 | ) | ||||
Other Current Assets | --- | (104,610 | ) | ||||
Deposits | --- | 5,659 | |||||
Accounts Payable and Accrued Expenses | 1,498,432 | 1,146,596 | |||||
Deferred Income | 7,500 | --- | |||||
Net Cash (Used) by Operating Activities | (5,390,762 | ) | (7,103,507 | ) | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
(Acquisition) of Property and Equipment | (92,305 | ) | (686,328 | ) | |||
(Acquisition) of Intangibles | (5,974 | ) | (45,607 | ) | |||
(Additions) Dispositions of Deposits and Other Non Current Assets | 92,960 | (571,792 | ) | ||||
Net Cash (Used) by Investing Activities | (5,319 | ) | (1,303,727 | ) | |||
10 | ||
Nine Months Ended | |||||||
September 30, |
| September 30, |
| ||||
| 2003 |
| 2002 | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Proceeds from the Issuance of Stock | $ | 350,000 | $ | 5,753,000 | |||
Proceeds of Notes and Credit Lines | 1,435,048 | 2,144,742 | |||||
(Payments) of Notes and Credit Lines | (1,436,121 | ) | (1,962,310 | ) | |||
Proceeds of Loans from Related Parties | 5,130,000 | 2,275,000 | |||||
Net Cash Provided by Financing Activities | 5,478,927 | 8,210,432 | |||||
Net Increase (Decrease) In Cash | 82,846 | (196,802 | ) | ||||
Cash at Beginning of Period | 41,520 | 519,225 | |||||
Cash at End of Period | $ | 124,366 | $ | 322,423 | |||
Supplemental Disclosure of Cash Flow Information: | |||||||
Cash Payments for Income Taxes | $ | --- | $ | --- | |||
Cash Payments for Interest | $ | 34,748 | $ | 26,345 | |||
Non-Cash Investing Activities: | |||||||
Dispositions of Deposits and Other Non Current Assets | $ | --- | $ | --- | |||
Total Non-Cash Investing Activities | $ | --- | $ | --- | |||
Non-Cash Financing Activities: | |||||||
Issuance of Stock: | |||||||
Operating Activities | $ | 305,625 | $ | 501,115 | |||
Repayment of Debts | 5,130,000 | 2,275,000 | |||||
Total Non-Cash Financing Activities | $ | 5,435,625 | $ | 2,776,115 | |||
11 | ||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, |
| December 31, |
| ||||
| 2003 |
| 2002 | ||||
Raw Materials | $ | 20,636 | $ | 177,695 | |||
Finished Goods | |||||||
Application Systems* | 1,152,000 | 1,037,500 | |||||
Coatings, Sealants and Other Products | 408,820 | 201,479 | |||||
Total Finished Goods | 1,560,820 | 1,238,979 | |||||
Total Inventory | $ | 1,581,456 | $ | 1,416,674 | |||
12 | ||
September 30, |
| December 31, |
| ||||
| 2003 |
| 2002 | ||||
Accounts Payable | $ | 3,180,647 | $ | 2,615,127 | |||
Accrued Payroll Taxes | --- | 358 | |||||
Accrued Sales Tax | 41,592 | 39,188 | |||||
Accrued Other | 131,380 | 124,046 | |||||
Accrued Warranty Reserve | 870,144 | 129,962 | |||||
Accrued Dividend Payable | 654,535 | 278,768 | |||||
Accrued Severance | 172,120 | --- | |||||
Total Accounts Payable and Accrued Expenses | $ | 5,050,418 | 3,187,449 | ||||
13 | ||
Three Months Ended September 30, | ||||||
Year | Basic | Diluted | ||||
2003 | 16,568,377 | 21,982,904 | ||||
2002 | 13,305,304 | 16,270,964 | ||||
14 | ||
15 | ||
16 | ||
Three Months Ended | |||||||
September 30, 2003 |
| September 30, 2002 | |||||
Revenue: | |||||||
Application Systems | $ | --- | $ | 262,817 | |||
Coatings, Sealants and Other Products | 712,181 | 1,268,523 | |||||
Total Revenue | $ | 712,181 | $ | 1,531,340 | |||
17 | ||
Nine Months Ended | |||||||
September 30, 2003 |
| September 30, 2002 | |||||
Revenue: | |||||||
Application Systems | $ | 439,700 | $ | 1,340,951 | |||
Coatings, Sealants and Other Products | 2,814,026 | 3,204,623 | |||||
Total Revenue | $ | 3,253,726 | $ | 4,545,574 | |||
18 | ||
19 | ||
Forward Looking Statements
20 | ||
21 | ||
22 | ||
Date: November 14, 2003 | URECOATS INDUSTRIES INC. | |
| | |
By: | ![]() | |
Michael T. Adams | ||
President |
Date: November 14, 2003 | URECOATS INDUSTRIES INC. | |
| | |
By: | ![]() | |
John G. Barbar | ||
Chief Financial Officer and Treasurer |
23 | ||
ExhibitNumber | Description | |
31.1 | ||
31.2 | ||
32 |
24 | ||