:
URECOATS INDUSTRIES INC.
FORM 10-QSB
MARCH 31, 1999
INDEX
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PAGE
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PART I - FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets as of March 31, 1999
and December 31, 1998 ............................................... 3-4
Condensed Consolidated Statements of Operations for the three months
months ended March 31, 1999 and 1998 ................................ 5
Condensed Consolidated Statements of Cash Flows for the three months
ended March 31, 1999 and 1998 ....................................... 6-7
Notes to Condensed Consolidated Financial Statements................. 8
ITEM 2. MANAGEMENT'S PLAN OF OPERATION ............................. 9-11
PART II - OTHER INFORMATION
---------------------------
ITEM 1. LEGAL PROCEEDINGS ......................................... 12
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS ................. 12
ITEM 3. DEFAULTS UPON SENIOR SECURITIES ........................... 13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ....... 13
ITEM 5. OTHER INFORMATION ......................................... 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K .......................... 14
Page 2
PART I - FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
-----------------------------
URECOATS INDUSTRIES INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
------
MARCH 31, 1999 DECEMBER 31, 1998
------------------ -----------------
(UNAUDITED)
Current Assets:
Cash $ 10,379 $ 102,801
Loans Receivable 7,508 21,042
Prepaid Expenses 27,517 39,535
------------------ -----------------
Total Current Assets 45,404 163,378
------------------ -----------------
Property and Equipment, Net 291,651 207,036
------------------ -----------------
Other Assets:
Deposits 5,227 5,227
Intangibles, Net 998,024 997,777
------------------ -----------------
Total Other Assets 1,003,251 1,003,004
------------------ -----------------
Total Assets $ 1,340,306 $ 1,373,418
================== =================
See Accompanying Notes to Condensed Consolidated Financial Statements
Page 3
URECOATS INDUSTRIES INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED BALANCE SHEETS
(CONTINUED)
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
---------------------------------------
MARCH 31, 1999 DECEMBER 31, 1998
------------------ -----------------
(UNAUDITED)
Current Liabilities:
Accounts Payable and
Accrued Expense 849,288 1,460,515
Loans Payable 65,452 72,752
Notes Payable $ 184,453 $ 184,453
Due to Related Parties 389,178 232,623
------------------ -----------------
Total Current Liabilities 1,488,371 1,950,343
------------------ -----------------
Commitments and Contingencies 634,966 685,114
------------------ -----------------
Stockholders' (Deficit):
Preferred Stock, $1.00 Par
Value, 2,000,000 Shares
Authorized; Series A
Convertible, 750,000 Shares
Authorized; Issued &
Outstanding, 62,500 Shares
Unconverted (Less Offering
Costs of $7,465) 55,035 55,035
Common Stock $.01 Par Value,
100,000,000 shares Authorized;
68,550,284 Shares Issued &
Outstanding, March 31, 1999;
58,992,784 Shares Issued &
Outstanding, December 31, 1998. 685,503 589,928
Additional Paid-In-Capital 16,967,449 15,806,185
Accumulated (Deficit) -
Discontinued Operations (14,156,915) (13,379,285)
Accumulated (Deficit) -
Development Stage Operations (4,334,103) (4,333,902)
------------------ -----------------
Total Stockholders' (Deficit) (783,031) (1,262,039)
------------------ -----------------
Total Liabilities and
Stockholders' (Deficit) $ 1,340,306 $ 1,373,418
================== =================
See Accompanying Notes To Condensed Consolidated Financial Statements
Page 4
URECOATS INDUSTRIES INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
----------------------------
1999 1998
----------------- -----------------
(RESTATED)
Revenues $ -0- $ -0-
----------------- -----------------
Costs and Expenses:
Selling, General and
Administrative 523,232 333,564
Depreciation and Amortization 18,510 2,766
Research and Development 235,888 31,051
----------------- -----------------
Total Costs and Expenses (777,630) (367,381)
----------------- -----------------
Net (Loss) from Development Stage
Operations (777,630) (367,381)
(Loss) from Discontinued Operations $ (201) $ (220,691)
----------------- -----------------
Net (Loss) $ (777,831) $ (588,072)
----------------- -----------------
Net (Loss) Per Common Share
Basic and Dilutive
Development Stage Operations $ (0.012) $ 0.011
Discontinued Operations (0.000) 0.006
----------------- -----------------
Total $ (0.012) (0.017)
Weighted Average Shares Outstanding 63,771,534 32,900,109
----------------- -----------------
See Accompanying Notes to Condensed Consolidated Financial Statements
Page 5
URECOATS INDUSTRIES INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
----------------------------
1999 1998
--------------- ---------------
Cash Flows from Operating Activities:
Net (Loss)
Development Stage Operations $ (777,630) $ (367,381)
Discontinued Operations (201) (220,691)
Adjustments to Reconcile Net (Loss)
to Net Cash (Required) by Operating
Activities:
Depreciation and Amortization
Development Stage Operations 18,510 2,766
Discontinued Operations 176 6,118
Changes in Assets and Liabilities:
Prepaid Expenses 12,018 789
Loans Receivables 13,534 -0-
Deposits -0- (9,595)
Accounts Payable and Accrued
Expenses (611,227) 74,919
Due to Related Parties 156,555 5,749
Decrease in Commitments and
Contingencies (50,148) -0-
--------------- ---------------
Net Cash (Required) by
Operating Activities (1,238,413) (507,326)
--------------- ---------------
Cash Flows from Investing Activities:
Acquisition of Property & Equipment
Development Stage Operations (103,267) (20,370)
Discontinued Operations - (135)
(Acquisition) Write-off of Intangibles
Development Stage Operations (281) -0-
Discontinued Operations -0- -0-
--------------- ---------------
Net Cash (Required) by
Investing Activities $ (103,548) (20,505)
--------------- ---------------
See Accompanying Notes to Condensed Consolidated Financial Statements
Page 6
URECOATS INDUSTRIES INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
(CONTINUED)
----------------------------
1999 1998
--------------- ---------------
(RESTATED)
Cash Flows from Financing Activities:
Proceeds from Issuance of
Common Stock 1,256,839 556,815
Payment of Notes (7,300) -0-
(Decrease)Increase from Loans -0- (27,271)
--------------- ---------------
Net Cash Provided by Financing
Activities 1,249,539 529,554
--------------- ---------------
Net Increase (Decrease) in Cash
Development Stage Operations (94,698) (17,298)
Discontinued Operations 2,276 15,585
--------------- ---------------
Net (Decrease) in Cash $ (92,422) 1,713
=============== ===============
Supplemental Disclosure of
Cash Flow Information:
Non-Cash Financing Activities:
Legal Fees $ 4,760 $ -0-
Consultant Fees 192,844 204,500
Repayment of Debts 846,860 5,000
Employee Compensation 212,375 -0-
--------------- ---------------
Totals $ 1,256,839 209,500
=============== ===============
See Accompanying Condensed Consolidated Financial Statements
Page 7
URECOATS INDUSTRIES INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
------------------------------
The accompanying unaudited condensed consolidated financial statements
for the three month periods ended March 31, 1999 and 1998, have been prepared
in conformity with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Regulation
S-B. The financial information as of December 31, 1998, is derived from the
registrant's Form 10-KSB for the year ended December 31, 1998. Certain
information or footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to the rules and regulations of the Securities
and Exchange Commission.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates. In the opinion of management, the accompanying financial
statements include all adjustments necessary (which are of a normal and
recurring nature) for the fair presentation of the results of the interim
periods presented. While the registrant believes that the disclosures
presented are adequate to keep the information from being misleading, it is
suggested that these accompanying financial statements be read in conjunction
with the registrant's audited consolidated financial statements and notes for
the year ended December 31, 1998, included in the registrant's Form 10-KSB for
the year ended December 31, 1998.
Operating results for the three month period ended March 31, 1999, are
not necessarily indicative of the results that may be expected for the
remainder of the fiscal year ending December 31, 1999. The accompanying
unaudited condensed consolidated financial statements: include the accounts
of the registrant and its wholly-owned subsidiaries. All significant inter-
company accounts and transactions have been eliminated in consolidation. The
unaudited condensed consolidated financial statements for the three months
ended March 31, 1998, have been restated to conform with the results indicated
in the December 31, 1998 Form 10-KSB.
NOTE 2 - INTANGIBLES
--------------------
The registrant evaluates the amortization period of intangibles on an
ongoing basis in light of changes in any business conditions, events or
circumstances that may indicate the potential impairment of intangible assets.
The adoption of Statement of Accounting Standards 121, "Accounting for the
Impairment of Long-Lived Assets to be Disposed Of", and the evaluation by the
registrant, did not have a significant effect on the consolidated financial
position or results of operations of the registrant for the three months ended
March 31, 1999. |
