SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20509
FORM 8-K-A1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
December 15, 1998
Date of Report
(Date of Earliest Event Reported)
VITRISEAL, INC.
(Exact Name of Registrant as Specified in its Charter)
Nevada 2-99110-NY 11-2751537
(State or other juris- (Commission File No.) (IRS Employer
diction of incorporation) I.D. No.)
12226 South 1000 East, Suite 9
Draper, Utah 84020
(Address of Principal Executive Offices)
(801)553-8785
Registrant's Telephone Number
A.X.R. Development Corporation, Inc.
9005 Cobble Canyon Lane
Sandy, Utah 84093
(Former Address of Principal Executive Offices)
Item 1. Changes in Control of Registrant.
(a) On December 15, 1998, the Registrant and Dancor, Inc., a Delaware
corporation ("Dancor"), executed an Agreement and Plan of Reorganization (the
"Plan") as outlined in the Letter of Intent between the Registrant and Dancor
dated December 14, 1998 (see the 8-K Current Report dated December 15, 1998,
Item 7, which has been previously filed with the Securities and Exchange
Commission and which is incorporated herein by reference), whereby the
Registrant, subject to the approval of persons owning not less than 80 percent
of outstanding voting securities of Dancor, would acquire a controlling
interest in Dancor, and Dancor would become a majority owned subsidiary of the
Registrant.
The initial offer in a stock for stock exchange was made only to
"accredited investors" and the first 35 non-accredited investors who executed
and delivered a copy of the Plan. As of the closing on March 18, 1999,
Dancor stockholders representing 16,636,464 of the 19,500,000 shares to be
issued under the Plan (approximately 85% of the Dancor stockholders shares)
had executed and delivered the Plan. It is the intention of management to
continue to attempt to acquire 100% of the outstanding voting securities of
Dancor, on the same terms and conditions afforded the Dancor stockholders
who have already become party to the Plan.
The Plan was also adopted, ratified and approved by the Board of
Directors of the Company by unanimous written consent in accordance with
the Bylaws of the Registrant and the Nevada Revised Statues.
The former principal stockholders of the Registrant and their
percentage of ownership of the outstanding voting securities of the Registrant
prior to the completion of the Plan were: David C. Merrell, former President
and Director, owned 515,217 shares of the Registrant (51.5%); Corie
Merrell, former Secretary/Treasurer and Director (and wife of David C.
Merrell), owned no shares of the Registrant; and Joe K. Johnson, a stockholder
of the Registrant and a finder in the transaction, owned 184,783 shares of
the Registrant (including the 150,000 shares registered on Form S-8 which
are referred to in the following paragraph).
The pre-Plan outstanding shares were 1,000,000 (including 150,000
shares registered on Form S-8 of the Securities and Exchange Commission,
the issuance of which was conditioned upon the completion of the Plan;
taking into account the 16,636,463 shares of "restricted securities"
issued under the Plan, there are currently 17,636,464 shares of
common stock of the Registrant issued and outstanding.
The source of the consideration used by Dancor and the
stockholders to acquire their respective interests in the Registrant was the
exchange of 100% of the outstanding common stock of Dancor pursuant to the
Plan.
The basis of the "control" by the Dancor stockholders is stock
ownership or positions held. Pursuant to the Plan, the then members of the
Board of Directors and executive officers resigned, in seriatim, and the
persons named in paragraph (b) below were designated to serve as directors and
executive officers of the Registrant, until the next respective annual
meetings of the stockholders and directors of the Registrant or until their
prior resignations or terminations.
(b) To the knowledge of management and based upon a review of the
stock ledger maintained by the Registrant's transfer agent and registrar, the
following table sets forth the beneficial ownership of persons who own more
than five percent of the Registrant's common stock as of the date hereof, and
the share holdings of new management, to wit:
Name Shares Owned %
Culley W. Davis 55,836 .003%
Pinnacle Enterprises, Ltd.* 1,729,464 9.80%
T-6G, Ltd. 3,173,376 17.99%
Daniel L. Corbin 1,410,375 8.00%
John W. Nagel --0 0%
Bruce H. Haglund, 198,336 1.12%
Dennis A. Repp 321,000 1.82%
Officers and Directors
Collectively
* Culley W. Davis, as the President of Pinnacle Enterprises,
Inc., has sole voting and investment power with respect to the
shares owned by Pinnacle Enterprises, Ltd; Culley W. Davis personally
owns 55,836 (.003%) which are not included in this number.
Item 2. Acquisition or Disposition of Assets.
See Item 1 of this Report. The consideration exchanged under the
Plan was negotiated at "arms length" between the directors and executive
officers of the Registrant and Dancor, and the members of the Board
of Directors of the Registrant used criteria used in similar proposals
involving the Registrant in the past, including the relative value of the
assets of the Registrant; its present and past business operations; the future
potential of Dancor; its management; and the potential benefit to the
stockholders of the Registrant. The members of the Board of Directors
determined in good faith that the consideration for the exchange was
reasonable, under these circumstances.
No director, executive officer or person who may be deemed to be an
"affiliate" of the Registrant had any direct or indirect interest in Dancor
prior to the completion of the Plan, except Joe K. Johnson, who owned
18,000 shares of Dancor, and who will receive 54,000 of the Registrant's
"restricted securities" issued under the Plan.
DESCRIPTION OF THE BUSINESS
The Company
The Company has developed, tested and patented a proprietary
coating technology which it has named VitrosealTM, "The Optimal Clear Coating
Process."
The Company intends to engage in licensing, joint ventures and the
sale of rights to this product to strategically selected coatings
manufacturers. The Company plans to earn a reputation in the coatings
industry for excellent clear coating technology, aggressive technology
development, strong legal support and savvy business management. Through
development of these qualities, the Company believes it will be in position to
directly license its technology to leading manufacturers in the coatings
industry.
Product
The Company's patented process, VitrosealTM, makes clear, protective
and environmentally friendly coatings. The technology has the promise of
being a major breakthrough in the industrial coatings market. Key benefits of
VitrosealTM include:
Exceptional Coating Performance:
_ excellent surface adhesion,
_ optimal hardness (4H pencil hardness),
_ excellent brightness (water white),
_ excellent film flexibility,
_ versatile applicability to a wide variety of metals,
_ chip resistance,
_ low film weight,
_ corrosion resistant,
_ high dielectric strength, and
_ thermal cycling resistance.
Low Cost:
_ raw material costs at 80% less than conventional coatings,
_ heat cure compatible with existing equipment,
_ no environmental control costs, and
_ fast cure to full hardness for faster manufacturing production
lines.
Environmental Compliance:
_ waterborne,
_ no volatile organic compounds (VOCs),
_ no isocyanates,
_ no lead,
_ no chromates,
_ no cadmium,
_ no chlorine or chloro-compounds,
_ no formaldehyde, and
_ ingredients "generally regarded as safe" by the FDA for food
contact.
During the past two years, the Company has expended over $1,500,000
on research and development of the characteristics, qualities and uses of its
VitrosealTM technology and its others products and processes.
Industry
Coatings are used in virtually every manufacturing industry to
protect, preserve and enhance a wide variety of products. Commonly coated
products are found in the transportation, container, metals, wood and non-
wood furniture, equipment, appliance, paper and machinery industries.
Because the coatings industry is so vast, it is generally a profitable and
financially stable industry.
The U.S. OEM coatings market consists of thousands of manufacturers
in the United States who buy and use hundreds of different types of coatings.
Some product sectors, such as military coatings or powder coatings, contain
few coatings suppliers who heavily dominate the market niche. Other product
sectors, such as appliance, wood and metal coatings, have many suppliers,
most of whom have small shares of the market. Du Pont, PPG Industries,
Morton International, Valspar, Akzo Nobel and BASF are all companies that
can be considered giants of the U.S. OEM coatings market. The coating
manufacturers compete aggressively on quality, technological excellence,
price and changing industry trends. Recent major market trends in the
industry include the search for environmentally friendly coatings, for less
expensive organic chemical raw materials and for more durable coatings.
The need for more environmentally friendly coatings is an issue that
the entire U.S. coatings industry must face. Many OEMs have met current
environmental emissions standards by using incinerators to burn volatile
organic compounds (VOCs) emitted during the application and curing of
coatings. Increasing environmental regulation, however, is creating a need
for products that do not emit VOCs. Many manufacturers are turning from
solvent-based coatings to other technologies such as waterborne, high-
solids, powder and UV-cured coatings to cope with the more stringent
environmental regulations. Each of these relatively new technologies has
its own unique requirements for application and curing, along with
limitations, but each provides an alternative to the traditional solvent-
based coatings that are coming under increased scrutiny and regulation.
Rising end-product quality expectations, due to rising product
prices, are driving consumers and corporate customers to expect more durable
coatings from coatings manufacturers. These obstacles are forcing
significant and fundamental changes in the coatings industry and every
aspect of the design, manufacture and application of coatings.
The recent changes in the coatings industry have created tremendous
opportunities, as exemplified by the increased demand for powder coatings.
Powder coatings are considered by many to be an environmentally friendly
alternative. These coatings contain no solvents and emit very low VOCs
while providing significant chip and mar resistance. Powder coatings have
become the fastest growing finishing technology in North America, currently
representing more than 10% of the total coatings market. Most of this growth
has been in the last six to seven years.
Powder coatings do not produce an attractive, smooth finish; and are
not generally used on surfaces where appearance is highly valued. For
example, the automotive industry does not use powder clear coats on the
exterior of automobiles. The industry is, nevertheless, conducting a great
deal of research on powder coatings to overcome the technology's inability to
produce a smooth surface with an even thickness. The increased use of and
research in powder coatings is an indication of the changing environment in
the coatings industry, and it shows the immense opportunities present in
todays market.
Market Opportunities
Market opportunities in the coatings industry are enormous and
encompass a wide variety of areas. Recently passed environmental
regulations, escalating costs of organic chemical raw materials, heightened
expectations for performance and increased demand for all types of coatings
have forced the industry to search for new technologies to answer the
toughest question it faces - whether the industry can find a coating that
simultaneously provides high performance, low cost and environmental
friendliness. These external conditions acting on the industry are causing
an internal industry revolution which is creating tremendous market
opportunities.
Because the coatings industry encompasses so many different types of
customers, a variety of market opportunities exist for new market entries.
The transportation segment is key to the OEM coatings market. This segment
yields the highest amount of revenue and sets the pace for the rest of the
industry. It has been said that where the transportation coatings segment
goes, the rest of the product coatings industry follows. This segment is
presently under strong pressure to make fundamental changes in the coatings
it uses. Unrelenting environmental control regulations and customer
expectations that climb in synch with new-car prices are driving the
industry to change.
The Company's ability to enter the industry will be facilitated
through strategic alliances with sound companies already successfully
serving as suppliers to specific market segments, i.e., wheel coaters,
coatings manufacturers and "tier 1" automotive O.E.M. suppliers. The
Company's markets will be continually expanded through ongoing research and
development to produce additional proprietary technologies, improve
application knowledge and verify by continued testing that the coatings
meet user specifications.
Market Analysis
To gain strong industry insight, the Company has purchased and
commissioned a series of market studies by Frost & Sullivan, a firm
recognized for its specialization in coatings industry analysis and
forecasting. Based on their findings, the Company has estimated the world
OEM coatings market in 1995 to be $7.22 billion, with shipments of
approximately 560 million gallons of coating product. The U.S. dominates
the world market in coatings production, exporting 20 to 28 times what it
imports, in revenue dollars. The five largest export markets, in descending
order, are Canada, Mexico, Japan, Hong Kong and the United Kingdom.
The 1995 U.S. OEM coatings market was estimated at $4.25 billion,
and the market is projected to grow steadily through the year 2000 at a
compound annual growth rate of 5.2%, or to $5.44 billion. The largest and
fastest growing segment is transportation, which represents 38% of the U.S.
market, or $1.6 billion. The segment is expected to grow at a rate of 5.5%
through 2000, or to $2.1 billion. This segment also commands the highest
revenue per equivalent gallon of coating sold at $21.02/gallon. Other major
segments of the industry include metal and container, wood and non-wood,
appliance and machinery and paper, representing 27%, 21%, 12%, and 2% of
the U.S. market, respectively.
The major market segments which make up the coatings industry are
very broad and encompass many manufacturing processes that make only limited
use of clear coats. Clear coatings, however, are generally the final
appearance coating and command the highest price in the coatings market.
Because each coating has unique uses, generalizations about market segments
can not be used as solid quantitative bases for understanding the market
potential for clear coats within the segments, and do not suggest a simple
direction for introduction of a breakthrough clear coat technology. To gain
stronger insight into the market for clear coat technology and to create
realistic estimates of market potential, the Company has gone further into
these segments to identify markets in which clear coats are heavily used in
manufacturing. Based on Frost & Sullivan market data and the Company's
understanding of the coatings industry, the Company has selected key markets
for pursuit. The markets that the Company will concentrate on during the
nest few years includes: automotive wheel, OEM automotive and specialty and
metal finishers.
The automotive wheel market consists of both after market and OEM
wheel manufacturers. The Company will begin by targeting after market wheel
coaters and makers, a market that has low barriers to entry and is actively
seeking value-added technologies such as VitrosealTM. Simultaneously, the
Company will work to overcome entry barriers in OEM wheels, which are higher
due to the need to demonstrate that VitrosealTM meets the specifications of
OEM automotive manufacturers. The Company believes that success with after
market wheel manufacturers and laboratory verification of
VitrosealTM compliance to OEM wheel specifications will quickly overcome
barriers in the OEM wheel market and will lead to rapid adoption of the
VitrosealTM process. The strategy behind the Company's choice is to initially
move into a market that will generate quick cash flow for the Company, while
it works to overcome barriers in larger more sophisticated market niches that
will take greater time to penetrate.
The Company's decision to enter the automotive wheel market now is
an important strategic move because it will act as a proving ground for the
Company to demonstrate the benefits of the technology, develop name
recognition and establish a track record for performance, all of which will
be key elements for overcoming barriers in the larger OEM automotive market.
The Company has chosen to enter the transportation segment because it
possesses characteristics that suggest strong opportunities for profitable
licensing and business relationships. Among these key characteristics are
the following: The segment is the most responsive to competitive threats;
it typically leads the industry in technology adoption; and revenue per gallon
of transportation coatings is the highest in the coatings industry.
Research and Development
In January 1997, the Company retained the services of Hamlin M.
Jennings, Ph.D., a professor at Northwestern University, as an independent
contractor on a month-to-month basis as a technical specialist for Dancor,
to perform development work to enable VitrosealTM to be sufficiently
elastomeric or flexible for commercialization, and research the properties
of VitrosealTM and prior art to develop a scientific explanation of the
VitrosealTM process. The Company believes Dr. Jennings research will
provide the Company with additional research findings enabling the Company
to more effectively market the VitrosealTM technology.
Insurance
The Company has obtained a general liability insurance policy and
believes that the insurance in place will be adequate for the Company's
anticipated immediate and near future needs.
Employees
At present, the Company has a full-time staff of one salaried
employee and one part-time employee. None of these employees is
represented by a labor union. The Company considers its relations with
its employees to be excellent.
Properties
The Company entered into a one year lease in March 1999 for a
primary business office located at 1101 Dove Street, Suite 235, Newport
Beach, California, containing approximately 720 square feet with a
monthly rental of $1,188. The Company believes it has a good relationship
with the Landlord and can remain in the facility for the term of the lease.
The Company also recently entered into a one year lease in March
1997, for a research facility located at 1801 Maple Avenue, Evanston,
Illinois, containing approximately 700 square feet with a monthly rental
of $1,167. Currently the Company continues to rent the space on a month to
month basis. The research facility was opened to provide Dr. Jennings with
necessary research space close to his home and full time work.
Legal Proceedings
The Company has no pending or threatened litigation.
DIRECTORS, OFFICERS AND SIGNIFICANT EMPLOYEES
The following individuals are the directors, nominees to become
directors, officers and significant employees of the Company along with
their age, capacity and terms of office:
Name Title/Position Age
Culley W. Davis Chairman of the Board, CEO, Director 43
Daniel L. Corbin President, Director 43
Dennis A. Repp Director 59
John W. Nagel Chief Financial Officer, Director 58
Bruce H. Haglund, Esq. Secretary, Director 47
Culley W. Davis
Mr. Davis became the chairman, CEO and a director at the time of the
acquisition and he has been the Chairman of the Board, the Chief Executive
Officer, and a Director of Dancor since its formation in April 1992. He
is also President and a Director of Pinnacle Enterprises, Inc., and the
general partner of Pinnacle Enterprises, Ltd., a California Limited
Partnership. Mr. Davis has specialized in real estate development and
new business start-ups, acquisitions, mergers, restructuring and initial
public stock offerings. He has over 17 years experience with extensive
business organization, financing and leadership skills in arranging
private placements, structuring transactions, conducting negotiations,
organizing public relations and providing sales and management strategies
for domestic and international operations. He has co-founded or founded
several corporations and served as their presidents. As President and
co-founder of Vencor International, Inc., he was one of the key people
responsible for merging and taking the company public on the OTC market
in 1987. Mr. Davis has held leadership positions and been an officer,
director, or general partner in several entities.
In May 1996, Mr. Davis entered into a stipulation for judgment and
permanent injunction (the "Injunction") with the Department of Finance of
the State of Idaho (the "State") in connection with a complaint (the
"Complaint") filed by the State alleging that Mr. Davis violated
provisions of the Idaho Securities Act. In accordance with the
Injunction, Mr. Davis paid a $50,000 fine to the State and was
permanently enjoined from violating the Idaho Securities Act, from
offering or selling unregistered securities in Idaho, and from
transacting securities business in Idaho without applicable securities
licenses.
Daniel L. Corbin
Mr. Corbin became President and a director of the Company at the
time of the acquisition, and has been the President and a Director of Dancor
since its formation in April 1992. He was the founder, and from 1980 until
1984, the President of Snuggles Corporation, a California-based private
company. He patented and developed the world's first form fitted
reusable cloth infant/adult diaper with Velcro . In 1984, he merged
Snuggles with Vencor International, Inc. and was one of the key
individuals responsible for taking the company public on the OTC market
in 1987. More recently, Mr. Corbin acquired a controlling interest in
"Fins and Flippers," a privately-held California retail sales corporation.
Mr. Corbin has also had extensive experience in organization and
management development as the Marketing Director for Press Steel
Corporation, and from 1979 to 1980, as Vice President of Sales for American
Data Industries. For the last four years, Mr. Corbin has analyzed and
evaluated the sales and business opportunities in the worldwide coatings
industry and initiated the acquisition of the VitrosealTM technology for
the Company.
Dennis A. Repp
Mr. Repp became a director of the Company at the time of the
acquisition and has been a Director of Dancor since May 1996. He has been
a business consultant and private investor since 1980. Through the years,
he has also founded several companies, primarily in the computer and
electronics field, and provided continuing service to these companies
through board membership. Prior to 1980, Mr. Repp served as the
President of Union Bank's venture capital subsidiary. He has also
previously managed the venture capital investments for Allstate Insurance
Company. Mr. Repp holds an M.S. degree in economics and an M.B.A. degree
in finance.
John W. Nagle
Mr. Nagel became the CFO and a director of the Company at the time
of the acquisition and has been the CFO and a director of Dancor since
September 1998. From 1988 to August 1998, Mr. Nagel served as Director of
Finance for WVUE Television of New Orleans, Louisiana. During the period of
1983 to 1988, he was operator and part owner of several franchised ice cream
parlors. From 1980 to 1983, Mr. Nagel held positions in administration
and management for The Nautilus Group, Inc., a poultry incubation
equipment manufacturer and portable electronic stage lighting system
manufacturer. From 1968 to 1980, Mr. Nagel worked for Arthur Anderson
& Co. in numerous capacities relating to consulting for the design and
implementation of computer-based management information systems. He
served as an officer in the U.S. Navy Supply Corps from 1962 to 1966.
Mr. Nagel was awarded his M.B.A. degree from Harvard University and his
B.S. degree in accounting from Ohio State University.
Bruce H. Haglund, Esq.
Mr. Haglund became the Secretary and a director of the Company at
the time of the acquisition and has served as the Secretary of Dancor since
September 1998. Mr. Haglund has practiced law in Orange County, California
since 1980. Mr. Haglund is a principal in the law firm of Gibson, Haglund &
Johnson in Orange County, California, where he has been engaged in the private
practice of law since 1980. He is member of the Board of Directors of Santa
Barbara Restaurant Group, Inc. and the Secretary of Metalclad Corporation, a
public company whose stock is traded on the NASDAQ Small Cap Market. Mr.
Haglund is also the Secretary and a member of the Board of Directors of
Aviation Distributors, Inc. and Renaissance Golf Products, Inc., public
companies whose stock is traded on the OTC/BB. He is a graduate of the
University of Utah College of Law.
Item 3. Bankruptcy or Receivership.
None; not applicable.
Item 4. Changes in Registrant's Certifying Accountant.
None; not applicable.
Item 5. Other Events.
On January 19, 1999, the Company filed a Certificate of
Amendment to the Articles of Incorporation changing the name of the
Company to "VitroSeal, Inc." On February 18, 1999, the Company filed
another Certificate of Amendment to the Articles of Incorporation
changing the name to "VitriSeal, Inc."
Item 6. Resignations of Registrant's Directors.
See Item 1.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired.
Audited financial statements of Dancor are currently being prepared,
and will be filed with the Securities and Exchange Commission as an
amendment to this Report on or about June 1, 1999, which is 75 days
after the completion of the Plan on March 18, 1999.
(b) Pro Forma Financial Information.
Pro Forma financial statements, taking into account the completion
of the Plan, are being prepared and will be filed on or before June
1, 1999, which is 75 days after the completion of the Plan on March
18, 1999.
(c) Exhibits.
3.1 Certificate of Amendment to the Articles of
Incorporation of Advanced Coating Technologies,
Inc. changing the name to VitroSeal, Inc.
3.2 Certificate of Amendment to the Articles of
Incorporation of VitroSeal, Inc. changing the
name to VitriSeal, Inc.
10 Plan of Reorganization between VitriSeal, Inc.
and Dancor, Inc. dated March 18, 1999
Exhibit A-List of Dancor Shareholders and
number of VitriSeal Shares
Exhibit B-Letter of Intent
Exhibit C-Schedule of Option Holders
Exhibit D-Schedule of Exceptions
Exhibit E-Schedule of Patents
Exhibit F-Bank Account Information
Exhibit G-VitroSeal Exceptions
Exhibit H-VitroSeal Financial Statements
including 10-QSB for the Quarter
ended September 30, 1998 and 10-
KSB for the Year ended December
31, 1997
Exhibit I-VitriSeal Bank Accounts
Exhibit J-VitriSeal Form of Power of
Attorney
99 Press Release regarding same dated March 18,
1999
Item 8. Change in Fiscal Year.
None; not applicable.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned hereunto duly authorized.
VITRISEAL, INC.
Date: 4/2/99 By:/s/Daniel Corbin
--------- --------------------------------------
Daniel Corbin
President and Director
Date: 4/2/99 By:/s/John W. Nagel
--------- --------------------------------------
John W. Nagel
Chief Financial Officer and Director
Date: 4/2/99 By:/s/Bruce H. Haglund
--------- --------------------------------------
Bruce H. Haglund, Esq.
Secretary and Director
Date: 4/2/99 By:/s/Culley W. Davis
--------- --------------------------------------
Culley W. Davis
Chairman of the Board
Chief Executive Officer and Director
Date: 4/2/99 By:/s/Dennis A. Repp
--------- --------------------------------------
Dennis A. Repp
Director