ITEM 1. BUSINESS
Certain statements contained in this filing are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements relating to financial results and plans for future business development activities, and are thus prospective. Such forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, economic conditions, competition and other uncertainties detailed from time to time in the Company's Securities and Exchange Commission filings.
GENERAL
Metal Arts Company, Inc. established in 1913 ("Metal Arts" or the "Company"), has operated as a holding company. Except where specific reference is made in this Part I to the individual operations of Metal Arts or its 100 percent owned subsidiary Coating Technology, Inc., references in the Part I to the "Company" are intended to be a reference to the collective operations of Metal Arts and Coating Technology. Coating Technology engages in contract electroless and electroplated nickel, aluminum anodizing and other surface coating and enhancement operations.
Metal Arts had outstanding liabilities of $1,462,917 as of the close of Fiscal 2000. A detailed description of these liabilities is set forth in the Financial Statements and Supplementary Data annexed as Item 8 to this Form 10-K. Specific reference is made to Notes 1, 6 and 7 of these Financial Statements for information concerning specific liabilities.
The Company's proprietary specialty chemicals consist of Microsmooth(R), a patented aluminum activator solution used in conjunction with a proprietary electroless-nickel bath for plating on aluminum. Both the products and process are proprietary, rendering a smoother surface with enhanced corrosion protection, elimination of several toxic chemicals, while reducing plating and waste treatment costs. Marketing efforts to the aluminum wheel market continues now. If successful in the U.S., it is the company's intention to market the technology or license it internationally.
Compliance with environmental laws and regulations has a material and on-going impact on the Company. The Company must comply and the costs are both capital and operational. It has a positive impact in that certain companies that cannot comply are at a disadvantage, operationally. It has a negative impact in that the costs of compliance affects capital resources and cash flow. During the fiscal year 2000, Coating Technology spent approximately $123,000 on various compliance requirements, including the cost of closure at its former metal finishing facility. As new technologies and methods are available to the company, additional capital and operational costs will be incurred to comply with and/or reduce on-going expenses of waste treatment.
THE COMPANY'S MARKET
During the past three fiscal years, substantially all of the company's sales were attributable to the operations of Coating Technology. Coating Technology provides surface coating services for various regional industries.
FISCAL YEARS (ENDING JUNE 30) ---------------------------- 2000 1999 1998 ---------- ---------- ----------
Metal Arts $ -0- $ 10,000 $ 82,000 Coating Technology 1,712,000 1,420,000 1,790,000 ---------- ---------- ----------
$1,712,000 $1,430,000 $1,872,000 ========== ========== ==========
THE COMPANY'S PRODUCTS
Metal Arts is entering the Specialty chemical business, marketing its new process for plating electroless nickel on aluminum. The process consists of Microsmooth (R), a patented activator and a proprietary high-phosphorus electroless nickel formulation, initially to manufacturers of aluminum wheels. Coating Technology is engaged in contract electroless and brite nickel and aluminum anodizing operations. Coating Technology services the office products industry through large, medium and small metal fabricating companies who in turn supply subassemblies and individual component parts to major office product manufacturers such as Xerox, Kodak, IBM, Cannon, Sun Microsystems, Cisco, Phillips, Heidelberg and others. It also provides other surface finishes to various contract customers.
MANUFACTURING OPERATIONS
Metal Arts' specialty chemical mixing operations will be conducted with newly acquired mixing equipment.
SURFACE COATING OPERATIONS
Coating Technology engages in the Surface Coatings and Enhancements business. It is a leading regional Electroless Nickel Plater, a plating technique that deposits nickel on metal without the use of an applied electrical current. The process is used to prevent corrosion, enhance smoothness and improve overall surface quality on various metals including aluminum, copper and steel. It is now a leading regional anodizer. All surface finishing operations are conducted at its facility at 800 St. Paul Street, Rochester, NY.
COMPLIANCE WITH GOVERNMENTAL REGULATIONS
The company believes that its present operations are in compliance with the current requirements of OSHA, EPA, NYSDEC and all applicable local and state regulations, utilizing an up-to-date waste treatment system.
COMPETITION
Metal Arts will be competing initially in the aluminum wheel market where established, substantially larger companies dominate. There are approximately 20 companies that sell plating chemicals to these markets. Metal Arts will compete on the basis of an improved technology that will save its potential customers material, labor and waste treatment costs.
Coating Technology competes with several regional plating firms including two that are larger and several of the same or smaller size. The company competes on the basis of superior service and, in certain instances, on the basis of proprietary technology or equipment.
CUSTOMERS
During the fiscal year ended June 30, 2000, Coating Technology had one customer which accounted for 20 percent of its sales.
INVENTORY REQUIREMENTS
Coating Technology does not maintain an inventory other than its normal chemical plating and surface finishing solutions which are sourced as needed and are readily available.
SOURCES OF RAW MATERIALS
Metal Arts will be able to source all components for its proprietary process, readily, from multiple sources at competitive prices. The company can accommodate raw material requirements out of current working capital during the initial stages of commercialization. It will be necessary to enhance its working capital either out of cash flow or other external means if sales increase substantially. Coating Technology sources its raw materials on regular trade terms and has the working capital required to sustain current operations and continue to grow. There are no rights of return, or extended payment terms for Coating Technology, nor are any anticipated for Metal Arts. Coating Technology sources all chemicals and related supplies from local and national companies at competitive prices.
EMPLOYEES
The company employs one executive in its Metal Arts operations and 30 in its Coating Technology operations, none of whom are union members.
ITEM 2.
ITEM 2. PROPERTIES
Coating Technology has signed a ten year lease with a ten year option to renew for approximately 40,000 square feet of factory and office space in a superior building initially at $2.00 per square foot with responsibility for utilities.
The plant includes surface finishing machinery and equipment which the company believes are adequate to satisfy the requirements of Metal Arts' and Coating Technology's present business.
Metal Arts has added approximately $300,000 of new equipment for its aluminum wheel demonstration. This equipment was paid for with funds from the U.S. Department of Energy. At the conclusion of the project this equipment will represent a significant enhancement for overall metal finishing operations.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
There are no legal proceedings at the present time.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fiscal year ended June 30, 2000, no annual meeting was held and no shareholder votes took place. It is anticipated that no annual meeting will take place in the next fiscal year.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON SHARES AND RELATED STOCKHOLDER MATTERS
The common shares of Metal Arts have been traded in the over-the-counter market since its initial public offering on January 22, 1981, and are now traded on the NASDAQ "Bulletin Board" under the symbol MTRT.
The following table sets forth, for the calendar quarters indicated, the range of high and low bid quotations on the NASDAQ National Market System, as reported by the National Quotation Bureau, Inc.
HIGH LOW FISCAL YEAR ENDED JUNE 30, 1999
First Quarter (July - September 1998) 1/4 3/16 Second Quarter (October - December 1998) 1/4 3/16 Third Quarter (January - March 1999) 1/4 3/16 Fourth Quarter (April - June 1999) 5/8 1/4
FISCAL YEAR ENDED JUNE 30, 2000
First Quarter (July - September 1999) 1/4 3/16 Second Quarter (October - December 1999) 1/4 3/16 Third Quarter (January - March 2000) 1/4 3/16 Fourth Quarter (April - June 2000) 1/4 3/16
FISCAL YEAR ENDED JUNE 30, 2001
First Quarter (July - September 2000) 1/4 3/16
For a recent reported quotation for the company's common shares, see the cover page of this Form 10-K. The quotations listed above reflect inter-dealer prices, without retail markup, markdown, or commissions and may not necessarily represent actual transactions.
To date, the company has not paid a dividend on its common shares. The payment of future dividends is subject to the company's earnings and financial position and such other factors, including contractual restrictions, as the Board of Directors may deem relevant and it is unlikely that dividends will be paid in the foreseeable future.
As of October 1, 2000, there were approximately 980 holders of record of the common shares of Metal Arts and ten holders of record of the June 30, 1994 Debentures, which are potentially convertible into a total of 210,000 common shares of the company.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
Cash dividends paid per common share - No dividends have been paid in the past.
The following table illustrates the major components of consolidated net sales and net loss:
2000 1999 1998 ---- ---- ----
CONSOLIDATED NET SALES:
Metal Arts $ -0- $ 10,000 $ 82,000 Coating Technology 1,712,000 1,420,000 1,790,000 ----------- ----------- -----------
$ 1,712,000 $ 1,430,000 $ 1,872,000 =========== =========== ===========
CONSOLIDATED NET INCOME (LOSS):
Metal Arts $ 801,000 $ (150,000) $ (143,000) Coating Technology 64,000 (118,000) (20,000) Minority Interest (15,000) 35,000 6,000 ----------- ----------- -----------
$ 850,000 $ (233,000) $ (157,000) =========== =========== ===========
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management Discussion and Analysis should be read in conjunction with this entire Form 10-K 2000 Annual Report. Except where specific reference is made in this Item 7 to the individual operations of Metal Arts or its 100 percent owned subsidiary, Coating Technology, references in this Item 7 to the "Company" are intended to be a reference to the joint operations of all of Metal Arts, and Coating Technology.
LIQUIDITY AND CAPITAL RESOURCES
On January 17, 2000 former Director and President of Coating Technology, Geoffrey A. Rich, died at the age of 50. There were two insurance policies in force at that time. The first, for $350,000, was, by prior agreement, for the purpose of acquiring Mr. Rich's 30% interest in Coating Technology. As a result, Metal Arts now owns 100% of Coating Technology. The second, a key man policy, was in the face amount of $350,000, the beneficiary of which was Metal Arts Company,
PRIVATE PLACEMENT OF DEBENTURES
The company sold, as of September 30, 1994, eleven debentures for a total of $275,000. The purpose of the private placement was to acquire the technology for plating electroless nickel on aluminum, complete all research and development, conduct test trials with potential customers leading up to commercialization.
NEW YORK STATE ENERGY RESEARCH AND DEVELOPMENT AUTHORITY AND U.S. DEPARTMENT OF ENERGY FUNDING
The company signed an agreement with the New York State Energy Research and Development Authority (NYSERDA) dated June 22, 1995 for funding of $325,000 for its new technology. This was done as a part of NYSERDA's Industrial Waste Minimization Program. The purpose of the funding was to provide money for the completion of research and development, test trials, commercial demonstrations and commercialization of the technology. To date, the company has received a total of $325,000 on this contract.
On June 30, 1998, the company signed a new agreement with NYSERDA to demonstrate the use of Microsmooth(R) for hard anodizing in the amount of $55,000. To date, the Company has received at total of $50,000 on this contract.
On August 12, 1998, the company signed an additional agreement with NYSERDA to demonstrate the Microsmooth(R) process on aluminum automobile wheels. This contract also includes funding from the US Department of Energy with the Aluminum Company of America (ALCOA) as a strategic partner in the effort. The funding from NYSERDA and US DOE totals $640,000. In addition, ALCOA has pledged $100,000 of in-kind material, services and cash. To date, the Company has received $402,117 from NYSERDA/DOE and $10,000 from ALCOA, on this contract.
OPERATING ACTIVITIES
Coating Technology has rebounded from FY 1999 in sales and operating earnings. Cash flow was adequate to provide for the acquisition of capital equipment and provide the working capital necessary to run the business.
Through the first quarter of fiscal year 2001, Coating Technology operated profitably with sufficient resources to sustain operations.
MICROSMOOTH(R)
The Company initially applied for a patent on Microsmooth(R), its proprietary activator for plating electroless nickel on aluminum in March, 1994. That application was then split into three separate applications; the chemical formula; the process and; the resulting product.
Subsequently, and as a result of significant chemical formula modifications, the original formula application was abandoned and a new patent application was filed in December 1997. On May 19, 1998, the United Stated Patent office issued patent number 5,753,304 covering the Microsmooth(R) formula and the Microsmooth(R) process. A trademark was issued on the name, Microsmooth(R), on June 30, 1998.
On July 30, 1997 the Company entered into an exclusive license agreement with Alyn Corporation, Inc. for Alyn to use the Microsmooth(R) process on Alyn's Boralyn ? alternate computer memory disks. To date, the Company has received no royalties under the agreement.
On May 3, 1999, the Company entered into a Subcontract and Exclusive License Agreement with Alcoa, Inc., the largest aluminum company in the world. The subcontract section relates to the U.S. Department of Energy Award and the license section relates to the use of the Microsmooth(R) process for the chrome plating of certain aluminum truck and automobile wheels.
If Metal Arts is successful in commercializing its new technology it will be necessary to raise additional capital. The amount of capital required will depend on how rapidly market acceptance might occur. If this does occur it could result in growth in the company's sales and earnings over the next few years. The company will seek, if commercial sales commence, to raise additional capital in the form of receivables financing, warrant conversion or other investment mechanisms to sustain operations.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Independent Auditors' Report 1
Consolidated Balance Sheets at June 30, 2000 and 1999 2 - 3
Consolidated Statements of Operations for the years ended June 30, 2000, 1999 and 1998 4
Consolidated Statements of Changes In Stockholders' Equity (Deficiency) for the years ended June 30, 2000, 1999 and 1998 5 - 6
Consolidated Statements of Cash Flows for the years ended June 30, 2000, 1999 and 1998 7 - 8
Notes to Consolidated Financial Statements 9 - 19
Financial Schedules
II - Amounts Receivable from Related Parties and Underwriters, Promoters, and Employees Other Than Related Parties 20
V - Property, Plant and Equipment 21
VI - Accumulated Depreciation and Amortization of Property, Plant and Equipment 22
VII - Valuation and Qualifying Accounts and Reserves 23
X - Supplementary Income Statement Information 24
All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or the notes thereto.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders The Metal Arts Company, Inc. and Subsidiary
We have audited the accompanying consolidated balance sheets of The Metal Arts Company, Inc. and Subsidiary as of June 30, 2000 and 1999, and the related consolidated financial statements listed in the accompanying index for each of the years in the three-year period ended June 30, 2000. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
As described in Notes 1 and 2 to the financial statements, the Company has elected not to consolidate its Bastian subsidiary as required by generally accepted accounting principles.
In our opinion, except for the effects of not consolidating its Bastian subsidiary as discussed in the preceding paragraph, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of The Metal Arts Company, Inc. and Subsidiary as of June 30, 2000 and 1999, and the results of their operations, changes in their stockholders' equity (deficiency) and their cash flows for each of the years in the three-year period ended June 30, 2000, in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The financial schedules listed in the accompanying index are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
September 24, 2000
The accompanying Notes to Financial Statements are an integral part these statements
The accompanying Notes to Financial Statements are an integral part these statements
The accompanying Notes to Financial Statements are an integral part of these statements
The accompanying Notes to Financial Statements are an integral part of these statements
THE METAL ARTS COMPANY, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements June 30, 2000, 1999 and 1998
1. BUSINESS DESCRIPTION
The Company and its wholly owned subsidiary, Coating Technology, Inc., are primarily engaged in the surface coatings and enhancements business. Customers, substantially all of whom are manufacturers, are located primarily in Western, New York.
Prior to June 30, 1995, the Company owned 89% of The Bastian Company, Inc. (Bastian) and 100% of Ocean State Enameling, Inc. (Ocean State). On June 7, 1995, the Company's Board of Directors approved the sale of the Company's interest in Ocean State at its original investment amount of $500 to Bastian. In addition, the spin-off of Bastian in the form of a stock dividend to the Company's stockholders of record as of June 30, 1995 was approved. As of June 30, 2000, Bastian has not filed a registration statement with the Securities and Exchange Commission to register the Bastian common shares pursuant to the Securities Exchange Act of 1934. Therefore, the Company has not completed the pro rata distribution of the Bastian common shares and, as such, Bastian is still technically a subsidiary of the Company (see Note 2). See SUBSEQUENT EVENTS.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PURCHASE OF MINORITY INTEREST
On January 1, 2000 the Company purchased the 30% minority interest in its subsidiary, Coating Technology. The total cost of the acquisition was $350,000 which exceeded the minority interest at the time by $234,839. The excess is being amortized on the straight line method over 15 years.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Coating Technology, Inc. All material intercompany items have been eliminated in consolidation.
The consolidated financial statements do not include the accounts of its 89% owned subsidiary, The Bastian Company, Inc. as required by generally accepted accounting principles. The Company believes that not consolidating this subsidiary provides for a more meaningful presentation of continuing operations (see Note 1). See SUBSEQUENT EVENTS.
USE OF ESTIMATES
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 and disclosure of contingent 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.
THE METAL ARTS COMPANY, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements June 30, 2000, 1999 and 1998
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
REVENUE RECOGNITION
The Company records its revenues and expenses on the accrual basis of accounting. Revenues are recognized on the date goods are shipped.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are carried at cost. Depreciation is computed on the straight-line method over a period of 5 to 39 years. Accelerated methods are used for tax purposes by Coating Technology, Inc.
OPERATING RIGHTS
During 1995, the Company acquired the rights to a new technology, which is a new process for plating electroless nickel on aluminum. These operating rights are being amortized using the straight-line method over 15 years.
DEBT ISSUANCE COSTS
Debt issuance costs are being amortized using the straight-line method over the term of the related debt instrument, five years.
INCOME TAXES
Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the bases of certain assets and liabilities for financial and tax reporting. The deferred taxes represent the future tax return consequences of those differences, which will either be taxable when the assets and liabilities are recovered or settled.
EARNINGS PER SHARE
Earnings per common share were computed by dividing net income by the weighted average number of shares of common stock outstanding during the year. Options to purchase common stock have a negligible effect on earnings per share.
RECLASSIFICATIONS
Certain reclassifications have been made to the 1999 financial statements. The reclassifications do not affect 1999 net income as originally reported.
THE METAL ARTS COMPANY, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements June 30, 2000, 1999 and 1998
3. DUE FROM NYSERDA
On August 12, 1998, the Company entered into an agreement with the New York State Energy Research and Development Authority (NYSERDA). Under the terms of the agreement, NYSERDA will share in the cost to test a new process by paying up to $274,000, which represents 68% of the actual development costs. NYSERDA shall pay the Company 90% of its 68% share upon receipt of an invoice for a progress payment, and final payment shall be made after completion of work and receipt of the final report. In another term of the agreement, the Company will be reimbursed by the United States Department of Energy (USDE) for purchases of equipment of up to $366,000 which represents 97.6% of actual equipment purchases. Through June 30, 2000, the Company has recorded $252,226 of reimbursements from NYSERDA and $325,412 from USDE.
In accordance with a previous agreement, the Company is obligated to pay to NYSERDA 2% of sales of new technology to New York State manufacturers and 4% of sales to non-New York State manufacturers. The Company's obligation to make payments to NYSERDA shall commence upon the earlier of the two following events; 1) sales exceed $500,000; 2) two years after the Company's receipt of final payment under the contract.
NYSERDA possesses certain rights to contract data and certain liquidation or dissolution preferences pursuant to the contract.
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
2000 1999 ---- ----
Leasehold improvements $ 36,061 $ 36,061 Machinery and equipment 1,776,989 1,366,856 Furniture and fixtures 79,908 77,686 Vehicles 11,758 -- ---------- ----------
$1,904,716 $1,480,603 ========== ==========
Depreciation and amortization expense for each of the three years in the period ended June 30, 2000 was $184,927, $136,229 and $107,449, respectively.
THE METAL ARTS COMPANY, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements June 30, 2000, 1999 and 1998
5. LONG-TERM DEBT
Long-term debt consists of the following:
2000 1999 ---- ----
8% convertible subordinated debentures due and payable on June 30, 2001. The debentures are subordinated to the Company's senior indebtedness. See Note 8 for conversion provisions. $ 182,500 $ 275,000
Unsecured note payable. Interest accrues at 8% and is payable monthly. Principal was due in full on April 30, 1999. During 1999, the note was refinanced and the principal is now payable on demand. 25,000 50,000
Note payable secured by specific equipment. Interest accrued at 5% and principal, in the amount of $26,667, plus interest was payable each December through 1998. This note was refinanced during 1999. The note now accrues interest at 6% and principal, in the amount of $8,889, plus interest is payable December, 1999, June, 2000 and December, 2000. The note was refinanced during 2000 with the full amount of interest and principal due by December 31, 2000. 17,778 26,666
Installment note payable in monthly payments of $1,667, plus interest at prime plus 1.5%, through October, 2000. The note is secured by a general lien on equipment, accounts receivable and inventory and is guaranteed by the stockholders of Coating Technology, Inc. 6,666 26,667 --------- ---------- 231,944 378,333 Less: Current portion 231,944 363,100 --------- ----------
Long-term debt, net of current portion $ -- $ 15,233 ========= ==========
THE METAL ARTS COMPANY, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements June 30, 2000, 1999 and 1998
5. LONG-TERM DEBT (Continued) --------------
The aggregate maturities for all long-term borrowings as of June 30, 2000 are as follows:
YEAR AMOUNT
2001 $ 231,944 ===========
6. CAPITAL LEASE OBLIGATIONS
The Company maintains various machinery and equipment held under capital lease obligations as follows:
2000 1999 ---- ----
Various capital lease obligations due in monthly installments ranging from $118 to $1,738, including interest ranging from 14.5% to 17.7% through January, 2004. Machinery and equipment are collateral to the leases. $196,498 $ 248,000 Less amount due within one year 60,180 50,981 -------- --------- Amount due after one year $136,318 $ 197,019 ======== =========
Minimum lease payments for all capital leases as of June 30, 2000 are as follows:
YEAR AMOUNT
2001 $ 86,052 2002 86,052 2003 63,749 2004 8,003 -------- Total minimum lease payments 243,856 Less: Amount representing interest and sales tax 47,358 --------
Present value of net minimum lease payments $ 196,498 =========
Assets held under capital leases are as follows:
2000 1999 ---- ----
Machinery and equipment $ 297,678 $ 297,678 Less: Accumulated depreciation 65,220 35,452 ------------ -----------
$ 232,458 $ 262,226 =========== ===========
THE METAL ARTS COMPANY, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements June 30, 2000, 1999 and 1998
7. OTHER LONG-TERM LIABILITY
The Company entered into a partnership on September 1, 1981.
The Company incurred a liability to certain vendors relating to silver price fluctuations during the period of time that the partnership was operating. The Company has denied responsibility for these amounts. The vendors obtained a judgement against the Company in 1983, but no collection effort has been made since that time.
8. INCENTIVE STOCK OPTION PLAN
The Company has an incentive stock option plan for key employees, reserving 850,000 shares of common stock for issuance upon the exercise of options granted under the plan. The options expire 10 years from date of grant (5 years for grantees who hold 10% or more of the Company voting power) and are exercisable one year from the date of the grant on a cumulative basis at the rate of 25% of the total number of shares covered by the grant. As of June 30, 2000, options on 435,000 shares have been exercised at $.06 per share; options on 150,000 shares at $.06 per share are outstanding and exercisable and expire in December, 2002; leaving options on 265,000 shares available under the plan.
9. COMMON STOCK AND STOCK WARRANTS
During the year ended June 30, 1995, the Company issued convertible subordinated debentures. These debentures are redeemable by the Company upon at least 30 days notice at any time after December 30, 1995, and will be convertible into common shares of the Company. The holders of the debentures may convert the debentures into common shares of the Company at any time prior to 5:00 pm on June 30, 2001.
Accompanying each $25,000 debenture is a non-detachable warrant. Each non-detachable warrant enables the holder to purchase up to an additional 33,333 shares at an exercise price of $.85 per share. The warrants can only be exercised coincidentally with the conversion of the debenture.
The Company has an outstanding warrant to purchase 60,000 common shares at $.40 per share. The warrant was issued in connection with the purchase of equipment in 1994 and expires December 31, 2001.
The Company also has an outstanding warrant to purchase 30,000 common shares at $.40 per share. The warrant was issued in connection with the refinancing of debt in 1999 and expires October 22, 2002.
THE METAL ARTS COMPANY, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements June 30, 2000, 1999 and 1998
9. COMMON STOCK AND STOCK WARRANTS (Continued)
During the year ended June 30, 1995, the Company acquired the operating rights to a new chemical process. As part of the purchase price, the Company was obligated to issue 100,000 common shares upon the transfer of clear title to certain patent pending rights and receipt of $.06 per share. An additional 100,000 common shares must be issued when the patent is accepted. Also, 300,000 common shares must be issued based upon the Company attaining certain sales levels of the new chemical process. All common shares issued under this agreement require payment of $.06 per share.
10. MINORITY INTEREST
Coating Technology, Inc. is in the business of electroless nickel and aluminum anodizing operations. On January 1, 2000, The Metal Arts Company, Inc. purchased the 30% minority interest owned by another party. The accounts of Coating Technology, Inc. for the years ended June 30, 2000 and 1999 are included in the consolidated financial statements of the Company. Recognition has been made of a minority interest representing the 30% interest owned by another party for the six months ended December 31, 2000 and for the years ended June 30, 1999 and 1998.
11. SIGNIFICANT CUSTOMERS AND CONCENTRATION OF CREDIT RISK
During the year ended June 30, 2000, Coating Technology, Inc. had one customer who accounted for 20% of consolidated sales.
During the year ended June 30, 1999, Coating Technology, Inc. had one customer who accounted for 18% of consolidated sales.
During the year ended June 30, 1998, Coating Technology, Inc. had two customers who, in the aggregate, accounted for 24% of consolidated sales.
The Company grants credit to its customers, substantially all of whom are manufacturers located in Western New York. Three Coating Technology, Inc. customers comprised 51% of accounts receivable at June 30, 2000. Two Coating Technology, Inc. customers comprised 22% of accounts receivable at June 30, 1999.
THE METAL ARTS COMPANY, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements June 30, 2000, 1999 and 1998
12. INCOME TAXES
Provision for income taxes was determined as follows:
2000 1999 1998 ---- ---- ----
Loss before income taxes $ 857,207 $(230,884) $(142,337) Excess tax depreciation (38,466) (18,439) 2,190 State income tax (425) (650) (650) Minority interest in income of subsidiary 14,700 (35,440) (6,280) Net operating loss carryforward (utilitized) (161,158) 269,740 109,107 Life insurance proceeds (690,297) -- -- Other 18,439 15,673 39,975 --------- --------- ---------
Federal taxable income $ -- $ -- $ 2,005 ========= ========= =========
Federal statutory income tax $ -- $ -- $ 301 Federal alternative minimum tax credit -- -- (301) State income tax 425 650 650 Deferred 6,500 1,600 14,000 --------- --------- ---------
Provision for income taxes $ 6,925 $ 2,250 $ 14,650 ========= ========= =========
Financial Accounting Standards Board Statement of Financial Accounting Standards No. 109 (FASB 109), "Accounting for Income Taxes" requires that an asset be recorded for the expected realizable value of net operating loss carryforwards and tax credits and a corresponding valuation allowance for the amount of tax benefits not expected to be realized.
The Company has recorded a deferred tax asset of $168,000 reflecting the benefit of net operating loss carryforwards and investment tax credit carryforwards. Realization is dependent on generating sufficient taxable income prior to expiration of the net operating loss and investment tax credit carryforwards. Although realization is not assured, management believes it is more likely than not that all of the deferred tax asset will be realized. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced.
THE METAL ARTS COMPANY, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements June 30, 2000, 1999 and 1998
12. INCOME TAXES (Continued)
At June 30, 2000, the Company has the following net operating loss deduction carryforwards available for federal income tax purposes:
Year of EXPIRATION AMOUNT
2003 $ 6,842 2009 8,000 2010 206,000 2011 152,000 2012 124,000 2013 109,000 2019 269,000 -------- $874,842 ========
Coating Technology, Inc. has approximately $102,000 of New York State investment tax credit carryforwards that expire in various years from 2004 to 2015 and federal and New York State alternative minimum tax credit carryforwards of approximately $5,300.
Deferred income taxes consist of:
2000 1999 ---- ----
Assets NOL carryforward $ 328,600 $ 346,100 Federal tax credit carryforwards -- 1,000 NYS tax credit carryforwards 107,300 103,100 Allowance for doubtful accounts 2,200 2,200 Valuation allowance (200,000) (215,600) --------- ---------
Net deferred tax assets 238,100 236,800
Liabilities Accelerated depreciation 70,100 62,300 --------- ---------
$ 168,000 $ 174,500 ========== ==========
Deferred taxes are classified as current or non-current, depending on the classification of the assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse. The net deferred tax asset is presented on the balance sheet as follows:
THE METAL ARTS COMPANY, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements June 30, 2000, 1999 and 1998
12. INCOME TAXES (Continued)
2000 1999 -------- --------
Net current deferred tax asset $ 43,000 $ 7,400 Net long-term deferred tax asset 125,000 167,100 -------- --------
$168,000 $174,500 ======== ========
13. COMMITMENTS
Coating Technology has entered into a ten-year lease agreement for its new manufacturing and office space. The lease requires monthly rental payments of $5,958 from September 1, 1997 until December 31, 2000. The annual rent as of January 1, 2001, and each January 1st thereafter, shall be increased by the percentage increase in the consumer price index for the previous calendar year, but in no event, more than three percent in any year. In addition, the Company is also responsible for its own utilities. Minimum lease payments as of June 30, 2000 are as follows:
YEAR AMOUNT
2001 $ 71,496 2002 71,496 2003 71,496 2004 71,496 2005 71,496 Thereafter 119,160 --------- $ 476,640 =========
Consolidated rent expense for each of the years ended June 30, 2000, 1999 and 1998 was approximately $71,496, $141,982 and $166,122, respectively.
During the year ended June 30, 1995, the Company entered into a royalty agreement in conjunction with the purchase of the operating rights to a new chemical process. The agreement requires royalty payments of 2% of gross sales of the new chemical process throughout the former owner's lifetime. As of June 30, 2000, no royalties were due under this agreement.
In addition, the Company entered into a licensing agreement for an existing chemical process. The agreement requires licensing fees equal to 50% of the Company's net profit on sales of this process. As of June 30, 2000, no fees were due under this agreement.
THE METAL ARTS COMPANY, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements June 30, 2000, 1999 and 1998
14. BENEFIT PLAN
Coating Technology, Inc. has a salary reduction plan pursuant to Section 401(k) of the Internal Revenue Code that covers all eligible employees. Employees are eligible for participation in the plan after the completion of six months of service and attainment of age twenty-one. Under terms of the plan, the Company contributes up to 1.25% of each participant's compensation. Also, Coating Technology, Inc. may make additional contributions to the plan at its discretion. Coating Technology, Inc.'s contributions to the plan amounted to $3,178 in 2000, $2,659 in 1999 and $3,328 in 1998.
15. TRANSACTIONS WITH RELATED PARTIES
Amounts due to/from shareholder do not bear interest, are unsecured and have no fixed repayment terms.
16. SUBSEQUENT EVENTS
On August 23, 2000 the Company transferred its shares of The Bastian Company, Inc. There was no gain or loss on this transaction. Therefore as of that date Bastian is no longer a subsidiary of The Metal Arts Company, Inc.
THE METAL ARTS COMPANY, INC. AND SUBSIDIARY
SCHEDULE II - AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS, PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
For the Years Ended June 30, 2000, 1999 and 1998
BALANCE AT BALANCE BEGINNING AMOUNTS AMOUNTS AT END NAME OF DEBTOR OF YEAR ADDITIONS COLLECTED WRITTEN OFF OF YEAR - -------------- ------- --------- --------- ----------- -------
June 30, 2000
N/A $ -- $ -- $ -- $ -- $ -- ======= ====== ====== ====== ======
June 30, 1999
N/A $ -- $ -- $ -- $ -- $ -- ======= ====== ====== ====== ======
June 30, 1998
N/A $ -- $ -- $ -- $ -- $ -- ======= ====== ====== ====== ======
THE METAL ARTS COMPANY, INC. AND SUBSIDIARY
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
For the Years Ended June 30, 2000, 1999 and 1998
BALANCE AT BALANCE BEGINNING ADDITIONS AT END CLASSIFICATION OF YEAR AT COST RETIREMENTS OF YEAR - -------------- ------- ------- ----------- -------
June 30, 2000
Leasehold improvements $ 36,061 $ -- $ -- $ 36,061 Machinery and equipment 1,366,856 410,133 -- 1,776,989 Furniture and fixtures 77,686 2,222 -- 79,908 Vehicles -- 11,758 -- 11,758 ---------- ---------- ---------- ----------
$1,480,603 $ 424,113 $ -- $1,904,716 ========== ========== ========== ==========
June 30, 1999
Leasehold improvements $ 36,061 $ -- $ -- $ 36,061 Machinery and equipment 1,139,632 227,224 -- 1,366,856 Furniture and fixtures 75,930 1,756 -- 77,686 ---------- ---------- ---------- ----------
$1,251,623 $ 228,980 $ -- $1,480,603 ========== ========== ========== ==========
June 30, 1998
Leasehold improvements $ 28,784 $ 7,277 $ -- $ 36,061 Machinery and equipment 827,891 311,741 -- 1,139,632 Furniture and fixtures 72,954 2,976 -- 75,930 ---------- ---------- ---------- ----------
$ 929,629 $ 321,994 $ -- $1,251,623 ========== ========== ========== ==========
THE METAL ARTS COMPANY, INC. AND SUBSIDIARY
SCHEDULE VI - ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
For the Years Ended June 30, 2000, 1999 and 1998
ADDITIONS BALANCE AT CHARGED TO BALANCE AT BEGINNING COSTS AND AT END CLASSIFICATION OF YEAR EXPENSES RETIREMENTS OF YEAR - -------------- ------- -------- ----------- -------
June 30, 2000
Leasehold improvements $ 21,327 3,172 $ -- $ 24,499 Machinery and equipment 632,210 170,461 -- 802,671 Furniture and fixtures 59,610 8,943 -- 68,553 Vehicles -- 2,351 -- 2,351 -------- -------- -------- --------
$713,147 $184,927 $ -- $898,074 ======== ======== ======== ========
June 30, 1999
Leasehold improvements $ 17,617 $ 3,710 $ -- $ 21,327 Machinery and equipment 510,068 122,142 -- 632,210 Furniture and fixtures 49,233 10,377 -- 59,610 -------- -------- -------- --------
$576,918 $136,229 $ -- $713,147 ======== ======== ======== ========
June 30, 1998
Leasehold improvements $ 14,331 $ 3,286 $ -- $ 17,617 Machinery and equipment 416,231 93,837 -- 510,068 Furniture and fixtures 38,907 10,326 -- 49,233 -------- -------- -------- --------
$469,469 $107,449 $ -- $576,918 ======== ======== ======== ========
THE METAL ARTS COMPANY, INC. AND SUBSIDIARY
SCHEDULE VII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
For the Years Ended June 30, 2000, 1999 and 1998
ADDITIONS BALANCE AT CHARGED TO BALANCE BEGINNING COSTS AND AT END DESCRIPTION OF YEAR EXPENSES DEDUCTIONS OF YEAR - ----------- ------- -------- ---------- -------
Allowance for doubtful accounts - deducted from accounts and notes receivable in the balance sheet
June 30, 2000 $ 10,000 $ -- $ -- $ 10,000 ======== ======= ======= ========
June 30, 1999 $110,000 $ -- $ -- $110,000 ======== ======= ======= ========
June 30, 1998 $110,000 $ -- $ -- $110,000 ======== ======= ======= ========
THE METAL ARTS COMPANY, INC. AND SUBSIDIARY
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
For the Years Ended June 30, 2000, 1999 and 1998
ITEM CHARGED TO COSTS AND EXPENSES
2000 1999 1998 ---- ---- ----
Maintenance and repairs $ 24,185 $ 52,726 $ 86,719 ======== ========= =========
Depreciation and amortization of Intangible assets, pre-operating costs and similar deferrals * * * ======== ========= =========
Taxes, other than payroll and income taxes * * * ======== ========= =========
Royalties * * * ======== ========= =========
Advertising costs * * * ======== ========= =========
*Less than 1% of total sales
ITEM 9.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
During the two most recent fiscal years, there have been no changes in, or disagreements with, accountants on accounting and financial disclosures.
PART II
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The directors and executive officers of Metal Arts are listed below, followed by a brief description of their business experience for at least the last five years. These persons also hold officer and director positions with Coating Technology.
NAME AGE POSITIONS WITH METAL ARTS - ---- --- -------------------------
Stanley J. Dahle 63 President, Chief Executive Officer and Director
Albert A. Cauwels 66 Director
Ronald L. Feeley 62 Director Chief Executive Officer of Coating Technology
STANLEY J. DAHLE has been President of Metal Arts since October, 1981 and Chairman since 1990. He was Executive Vice President of Metal Arts since its inception in June, 1976, until October, 1981. Mr. Dahle has also served in various other offices for Metal Arts since its inception. He is a director of Coating Technology.
ALBERT A. CAUWELS became a director of Metal Arts in June, 1984. He is a director of Coating Technology, Inc. Mr. Cauwels has been President of a former subsidiary, Bastian Company, Inc., for the past 5 years.
RONALD L. FEELEY became a director in June 2000 after the death in January, 2000 of former Director Geoffrey A. Rich. Mr. Feeley has served in various capacities with Coating Technology for the past 10 years with 30 years in this industry.
None of Metal Arts' Directors is a Director of any company with a class of securities registered pursuant to Section 12 of the Securities & Exchange Act of 1934, as amended, or of any company registered under the Investment Company Act of 1940, as amended. There is no family relationship among any members of the Board of Directors or the Executive Officers or significant employees of Metal Arts. The Board of Directors met 4 times during the fiscal year ended June 30, 2000. At the present time, the company has no Audit, Compensation or Nominating Committees. All Directors and Executive Officers have been elected to serve as Directors and Executive Officers until the next annual meeting of shareholders of Metal Arts or until their successors have been elected and qualified. There are no arrangements or understandings between any Director or Executive Officer and any other persons pursuant to which any such Directors or Executive Officers was or is to be selected as a Director or nominee for Director.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
The aggregate direct remuneration accrued and paid by Metal Arts and Coating Technology, during the fiscal year ended June 30, 2000, to each of Metal Arts' Officers and Directors whose aggregate remuneration exceeded $50,000, and to all Directors and Officers of Metal Arts as a group, is set forth in the following table.
CASH AND CASH-EQUIVALENT FORM OF REIMBURSEMENT --------------------------------
SALARIES, FEES, SECURITIES OR DIRECTOR'S PROPERTY, FEES, INSURANCE NAME OF INDIVIDUAL COMMISSIONS BENEFITS OR OR NUMBER OF CAPACITIES IN AND REIMBURSEMENTS, PERSONS IN GROUP WHICH SERVED (1) BONUSES PERSONAL BENEFITS - ---------------- ---------------- ------- -----------------
Stanley J. Dahle President, $ 95,000 $ 5,000 CEO, and Director
Albert A. Cauwels Secretary and $ -0- $ -0- Director
Ronald L. Feeley Director $ 52,000 $ 5,000
All Officers and All Officers $147,000 $10,000 Directors as a and Directors group (3) persons as a group
OTHER COMPENSATION
There was no other compensation of any kind paid to the officers and directors during fiscal year 2000. No executive earned more than $100,000 of total compensation. There is no executive committee and all compensation decisions are made by the Board of Directors. There were no loans made to officers, no directors fees and no long term compensation arrangements. There were no outstanding stock option grants to officers at year end. There are no employment agreements.
OPTION EXERCISE AND VALUE TABLE Number of Securities In-the-Money Underlying Options/SARs Shares Unexercised at Fiscal Acquired Value Options/SARs Year-End ($)*** On Exercise Realized*** at Fiscal Exercisable (E) / Name (#) ($) Year-End (#) Unexercisable (U) Exercisable (E) / Unexercisable (U)
Stanley J. Dahle -0- -0- -0- -0-
Albert A. Cauwels -0- -0- -0- -0-
Ronald L. Feeley -0- -0- -0- -0-
(1) These capacities include the capacities in which each such individual served Metal Arts and Coating Technology as officers and directors as set forth in the preceding table in Item 10 of this Form 10-K.
Non-Management directors are paid a fee of $250 per meeting attended. There are no such directors at this time. During the past fiscal year, fees aggregating $-0- were paid. Directors who are also full time employees are not paid director's fees.
OFFICER COMPENSATION FOR THE PRECEDING THREE FISCAL YEARS SECURITIES OR PROPERTY, INSURANCE BENEFITS OR FISCAL DIRECTORS FEES, REIMBURSEMENTS NAME YEAR COMMISSIONS & BUSINESS PERSONAL BENEFITS
Stanley J. Dahle 2000 $95,000 $ 5,000 1999 95,000 5,000 1998 95,000 5,000
Albert A. Cauwels 2000 -0- -0- 1999 -0- -0- 1998 -0- -0-
Ronald L. Feeley 2000 52,000 5,000
STOCK OPTION PLAN
On March 3, 1982, Metal Arts adopted an incentive stock option plan (the "Plan" or the "Stock Option Plan") pursuant to Section 422A of the Internal Revenue Code. Under the Plan, as amended, Metal Arts' Board of Directors may grant options to key employees (including executive officers of Metal Arts) to purchase up to an aggregate 850,000 common shares.
Such options expire 10 years from the date of the grant (but must be exercised within 5 years of the date of grant for grantees who hold 10 percent or more of the common shares) and are exercisable one year from the date of the grant on a cumulative basis at the rate of 25 percent of the total number of common shares subject to the option granted. Options must be granted at no less than fair market value (but not less than 110 percent of fair market value for grantees who hold 10 percent or more of the common shares). During the Fiscal Year ended June 30, 2000, no options were exercised. There are currently available under the plan 415,000 common shares for future grants. Metal Arts' management believes that the availability of the Plan, and the grants of the options, will enable the Company to attract and hold valuable employees by providing them with incentives to foster growth.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of October 1, 2000, with respect to all directors, officers, and persons who are known by Metal Arts to be the beneficial owners of more than five percent (5%) of the common shares of Metal Arts. The common shares are the only voting securities of Metal Arts. All persons listed below have sole voting and investment power with respect to their common shares unless otherwise indicated.
NAME AND ADDRESS OF AMOUNT BENEFICIALLY PERCENT BENEFICIAL OWNER OWNED OF CLASS --------------------- ------------------- --------
Stanley J. Dahle 1,419,000(a) 20 81 Country Club Drive Rochester, New York
Clifford W. Charlson 598,000 8 997 East Avenue Rochester, New York
Albert A. Cauwels 436,551 6 28 Franklin Street Phelps, New York
All officers and directors as a group (3) persons 1,855,551 30
(a) Includes 195,000 shares owned by Mr. Dahle's wife and children of which Mr. Dahle disclaims any beneficial ownership.
As noted, Metal Arts owns 100 percent of Coating Technology, and therefore, Coating Technology is considered to be a subsidiary of Metal Arts. No member of management of Metal Arts owns any common shares of Coating Technology. No one person other than Metal Arts owns in the aggregate in excess of 5 percent of the common shares of Coating Technology.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this Form 10-K 2000 Annual Report:
1 and 2. Consolidated Financial Statements and Schedules. (See "INDEX TO FINANCIAL STATEMENTS AND SCHEDULES.")
3. (See "INDEX TO EXHIBITS.")
SIGNATURE
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
THE METAL ARTS COMPANY, INC.
Date: 10-13-00 By: STANLEY J. DAHLE ----------------- Stanley J. Dahle President and Chief Executive Officer
Date: 10-13-00 By: ALBERT A. CAUWELS ------------------ Albert A. Cauwels Secretary and Director
Pursuant to the requirement of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
Chairman, President Chief Executive Officer 10-13-00 STANLEY J. DAHLE and Director - ---------------- Stanley J. Dahle
ALBERT A. CAUWELS Director 10-13-00 - ----------------- Albert A. Cauwels
RONALD L. FEELEY Director 10-13-00 - ---------------- Ronald L. Feeley
EXHIBITS
3(a) Certificate of Incorporation of Registrant and Amendments thereto. (Filed as Exhibits 2 (a-c, e) to Registration Statement No. 2-69789-NY (the "Registration Statement") and incorporated herein by reference.)
3(a)(1) Certificate of Amendment to the Certificate of Incorporation of Registrant as approved at the1989 Annual Meeting.
3(b) By-laws of Registrant. (Filed as Exhibit 2(d) to the Registration Statement and incorporated herein by reference.)
4(a) Secured Promissory Note dated November 30, 1992, between Coating Technology and M&T Bank. (Filed as Exhibit 4(i) to the company's Form 10-K for the year ended June 30, 1993 and incorporated herein by reference.)
4(b) Secured Promissory Note dated December 10, 1993, between Coating Technology and M&T Bank. (Filed as Exhibit 4(j) to the company's Form 10-K for the year ended June 30, 1994 and incorporated herein by reference.)
10(a) The company's Stock Option Plan, as approved by the company's shareholders on March 3, 1982. (Filed as Exhibit 10(a) to the company's Form 10-K for the year ended July 3, 1982, and incorporated herein by reference.)
10(b) First amendment to the Incentive Stock Option Plan of the Metal Arts Company, Inc., approved at the 1989 Annual Meeting of shareholders.
10(c) Asset purchase agreement between Coating Technology and Rochester Steel Treating Works, Inc. dated December 22, 1993. (Filed as Exhibit 10(c) to the company's 10-K for the year ended June 30, 1994 and incorporated herein by reference.)
10(d) Option Agreement between the company and LeKem Inc., and Richard Feagins dated February 28, 1994. (Filed as Exhibit 10(d) to the company's Form 10-K for the year ended June 30, 1994 and incorporated herein by reference.)
10(e) Agreement between Metal Arts Company and the New York State Energy Research and Development Authority, dated June 22, 1995. (Filed as Exhibit 10(e) to the company's Form 10-K for the year ended June 30, 1995, and incorporated herein by reference.)
10(f) Lease agreement dated February 19, 1998 between O'Brien and Gere Property Development, Inc. as Landlord and Coating Technology, Inc. as Tenant relating to its facility at 800 St. Paul St., Rochester, New York. (Filed as exhibit (f) to the Company's Form 10-K for the year ended June 30, 1999, and incorporated herein by reference.)
11 Description of computation of per share earnings. (See Note 2 of Notes to Consolidated Financial Statements of the Metal Arts Company, Inc.)
22 Subsidiaries. The subsidiaries of the company and the state of incorporation are as follows:
(a) Coating Technology incorporated in the State of New York.
23 Reports on Form 8-K: (a) 8-K dated November 23, 1994 (b) 8-K dated June 9, 1995