SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
Amendment No. 1
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 2000
Commission File Number
1-15261
IR OPERATING CORPORATION
(Exact name of small business issuer as specified in its Charter)
Delaware 11-2165149
(State or other jurisdiction (IRS employer
of Incorporation) identification number)
112 Main Street
Webster, MA 01570
(888)444-4762
(Address including zip code and telephone
number, of principal executive offices)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
--------- --------
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
Date: May 5, 2000 Class: Common Stock, par value $.01 per share
Shares Outstanding: 5,169,428
<PAGE>
IR OPERATING CORPORATION
FORM 10-QSB/A
INDEX
Description Page
Part I- Financial Information
Item 1. Consolidated Financial Statements
Balance Sheets-March 31, 2000 and December 31, 1999............. 3
Statements of Operations-Three months ended March 31, 2000,
Period January 10, 1999 (inception) through March 31, 2000,
and cumulative during development stage......................... 4
Statements of Cash Flows three months ended March 31, 2000
and period January 10, 1999 (inception) through March 31, 2000
And cumulative through development stage........................ 5
Notes to Consolidated Financial Statements...................... 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations...................................... 8
Part II-Other Information
Item 6. Changes in Securities and Proceeds.............................. 8
2
<PAGE>
IR OPERATING CORPORATION
CONSOLIDATED BALANCE SHEETS
(A Development Stage Company)
<TABLE>
<CAPTION>
ASSETS March 31, 2000 December 31, 1999
(Unaudited) (Audited)
-------------- ------------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $151,382 $ 4,551
Prepaid expenses and other current assets 42,057 30,057
-------------- ------------------
Total Current Assets 193,439 34,608
PROPERTY AND EQUIPMENT, NET
OTHER ASSETS
Patents and Trademarks 68,007 67,641
-------------- ------------------
Total Assets $261,446 $102,249
============== ==================
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Accounts payable $109,361 $ 89,467
Loan Payable Shareholders 360,000 328,000
-------------- ------------------
Total Current Liabilities $469,361 $417,467
SHAREHOLDERS' DEFICIENCY
Common stock, $.01 par value; 50,000,000
shares authorized; issued and
Outstanding: 5,033,128 Shares 5,033
Outstanding: 5,169,428 Shares 5,169
Convertible preferred stock, $.01 par value;
5,000,000 shares; authorized; issued
and outstanding: None Issued
Additional paid-in capital 462,761 312,967
Deficit accumulated during the
development stage (675,845) (633,218)
-------------- ------------------
Total Shareholders' Deficiency (207,915) (315,218)
-------------- ------------------
Total Liabilities and Shareholders' Deficiency $261,446 $102,249
============== ==================
</TABLE>
See Notes to Consolidated Financial Statements.
3
<PAGE>
IR OPERATING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(A Development Stage Company)
<TABLE>
<CAPTION>
Three months ended Period January 10,1999 Cumulatie During
March 31, 2000 (Inception) Through Development stage
(Unaudited) March 31, 1999 (Unaudited)
------------------ ---------------------- -----------------
<S> <C> <C> <C>
Net Sales $ 0 $ 0 $ 0
Cost of Sales 0 0 0
------------------ ---------------------- -----------------
Gross Profit 0 0 0
EXPENSES:
General and Administrative 38,117 76 192,466
Organization and merger costs 288,000 347,905
Loss on aborted acquisition 103,586 122,114
Interest Expense 4,511 13,361
------------------ ---------------------- -----------------
Net Loss $ (42,628) $ (391,932) $ (675,846)
================== ====================== =================
Loss per common share
Basic and Diluted $ (.01) $ (0.10) $ (0.14)
================== ====================== =================
Shares used in computing loss
per common share 5,065,552 3,826,548 4,820,883
================== ====================== =================
</TABLE>
See Notes to Consolidated Financial Statements.
4
<PAGE>
IR OPERATING CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(A Development Stage Company)
<TABLE>
<CAPTION>
Three months ended Period January 10 Cumulative
March 31, 2000 1999 (Inception) During
(Unaudited) Through Development
March 31, 1999 Stage
(Unaudited)
------------------- ----------------- ------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net Loss $ (42,628) $ (391,932) $ (675,846)
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation and amortization
Loss incurred in merger transaction 0 200,000 200,000
Non-cash compensation 0 18,000 18000
Changes in operating assets and liabilities
Prepaid expenses and other current assets (12,000) (42,057)
Accounts payable 19,894 932 109,361
------------------- ----------------- ------------
Net Cash Used in Operating Activities (34,734) (173,000) (390,542)
INVESTING ACTIVITIES
Net cash used in business acquistion 0 (200,000) (200,000)
Acquisition of intangible (365) (68,006)
------------------- ----------------- ------------
Net Cash Used in Investing Activities (365) (200,000) (268,006)
------------------- ----------------- ------------
FINANCING ACTIVITIES
Proceeds from loan payable stockholder 32,000 73,000 360,000
Proceeds from issuance of common stock 149,930 300,000 449,930
------------------- ----------------- ------------
Net Cash Provided by Financing Activities 181,930 373,000 809,930
------------------- ----------------- ------------
NET INCREASE IN CASH AND
CASH EQUIVALENTS 146,831 0 151,382
CASH AND CASH EQUIVALENTS
AT THE BEGINNING OF
THE PERIOD 4,551 0 0
------------------- ----------------- ------------
CASH AND CASH EQUIVALENTS AT
THE END OF THE PERIOD $ 151,382 $ 0 $ 151,382
=================== ================= ============
</TABLE>
See Notes to Consolidated Financial Statements.
5
<PAGE>
IR OPERATING CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS PERIOD JANUARY 10, 1999
(INCEPTION)
THROUGH MARCH 31, 2000
1. Basis of Presentation
The interim condensed consolidated financial statements furnished reflect
all adjustments which aee, in the opinion of management, necessary to present a
fair statement of the financial position, as of March 31, 2000, and the results
of operations and statements of cash flows for the three month period ended
March 31, 2000, the period January 10, 1999 (Inception) through March 31, 1999,
and cumulative from inception to date. The balance sheet as of December 31,
1999, has been derived from the audited balance sheet as of that date. This
report should be read in conjunction with the Company's annual report filed on
Form 10-KSB for the period January 10, 1999, through December 31, 1999. The
results of operations and cash flows for the three month period ended March 31,
2000, are not necessarily indicative of the results to be expected for the full
year.
2. Loan Payable - Stockholder:
As of March 31, 2000, the Company has borrowed an aggregate of $360,000
from an officer/stockholder and his family. The loans are evidenced by
promissory notes with interest accruing at the rate of 5.5% per annum. The
entire amount must be repaid when the Company receives funding of $1,500,000.
In the event of default, as defined, the unpaid principal balance shall, at
the option of the holder, become immediately due, with the amount then due
accruing interest at a rate of 18% per annum or the highest rate permitted by
law, which ever is less.
3. Stockholders' Deficiency:
a. Capitalization
Pursuant to an amendment of the Company's certificate of incorporation, the
Company has authorized 50,000,000 shares, par value $0.001, of common stock. The
common stock has one vote per share, with no cumulative voting. There are no
pre-emptive rights, no conversion rights, no preferences, no redemption
provision, no sinking fund provisions or any liability for further calls or
assessments. There are no stated liquidation rights other than those that may
exist under Delaware law.
The Company has authorized 5,000,000 shares, par value $0.001 of preferred
stock. Shares of preferred stock may be issued in such classes or series, and
may have such voting powers, full or limited, or no voting powers, and such
designations, preferences and relative, participating, optional or other special
rights and qualifications, or restrictions thereof, shall be stated and
expressed in the Articles of Incorporation or of any amendment thereto, or in
the resolution or resolutions providing for the issue of such stock adopted by
the Board of Directors pursuant to the authority which is expressly vested in it
by the provisions thereof.
6
<PAGE>
b. Net loss per share
Statement of Financial Accounting Standards No. 128, "Earnings Per Share"
(SFAS No. 128) requires dual presentation of basic and diluted EPS. Basic EPS
excludes dilution and is computed by dividing net income available to common
stockholders by the weighted average number of common shares outstanding for the
period. Diluted EPS reflects the potential dilution that could occur if stock
options or convertible securities were exercised or converted into common stock.
Contingently issuable and issued shares are excluded from the weighted
average number of shares outstanding until all necessary conditions have been
satisfied at the end of the reporting period. The 3,867,204 shares subject to
reversion to the Company in connection with a business acquisition were excluded
for all periods presented.
Basic and diluted loss per share amounts were equivalent for the period.
c. Stock Issuances
In March 2000 the Company issued 136,300 shares of its common stock to two
parties for cash consideration of $149,930.
4. Commitments:
a. Employment agreement
In April 1999 the Company entered into a five year employment agreement
with an officer which provides for a minimum annual salary of $100,000. The
officer is also entitled to options to acquire 50,000 shares of the Company's
stock at an exercise price to be determined by the Board.
b. Consulting agreement
The Company is party to a five year agreement with an outside consultant
which becomes effective April 5, 2000. The agreement provides for minimum annual
compensation of $100,000 in the first year, with annual 10% increases
thereafter. Additional increases will be earned in the event the Company meets
certain operating thresholds. In the event the Company generates annual revenues
from the its plastic processing technology, in excess of $1 million, the
consultant shall be granted options to acquire 10,000 shares of common stock at
an exercise price equal to the current market value.
In consideration for a covenant not to compete with the Company, the
consultant will be entitled to receive 25,000 shares of common stock upon the
Company's commencement of operations.
5. Supplemental Information - Statement of Cash Flows:
No cash payments for interest or income taxes were made during the period
January 10, 1999 (inception) through March 31, 2000.
7
<PAGE>
IR OPERATING CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
QUARTER ENDED March 31, 2000
Capital Resources and Plan of Operations
The Company generally has been inactive. The Company is seeking to acquire
suitable business opportunities or technologies within the recycling field.
During the quarter ended September 30, 1999, the Company acquired ownership of
two patents through the acquisition of a debt owed by the former owner of the
patents, and then foreclosing on the debt, for a process known as the I-ROCK
Process. This process is a cold extrusion process for converting waste plastic
into profile shapes that can be used for a variety of applications. The Company
has signed a lease for an existing plant site which is located in Bradley, IL.
The Company was able to negotiate favorable terms for leasing the plant site.
The Company is currently negotiating with the State of Illinois and the County
of Kankakee, IL, to lease the equipment, that is installed in the leased plant
site and designed for the I-ROCK Process, which is owned by the state and the
county. The Company believes that it will be able to negotiate a favorable lease
for the equipment with both the state and the county.
The Company's statement of cash flows for the three months ended March 31,
2000, reflects cash used in operations of $34,733, reflecting the net loss of
$42,628. The statement also reflects cash provided from financing activities of
$181,930, reflecting loans from stockholders ($32,000) and the proceeds from the
isuance of common stock ($149,930).
Results of Operations
The Company has generated no revenues to date. Operating expenses for the
three months ended March 31, 2000, consisting of general and administrative
expenses and interest, approximated $43,000. Expenses for the period ended March
31, 1999, approximated $392,000, including organization and merger costs of
$288,000 and loss on an aborted acquisition of $104,000.
Part II-Other Information
Item 6. Changes in Securities and Proceeds
In March of 2000 the Company sold shares of its common stock to two
entities. There were a total of 136,300 shares of common stock sold at a price
of $1.10 per share for a total aggregate price of $149,930. These Securities
were sold pursuant to Section 4(2) of the Securities Act of 1933 for private
placements.
Item 7. Exhibits and Reports on Form 8-K
(a) Exhibits. Exhibits required by Item 601 of Regulation SB and required
hereunder, as filed with the Securities and Exchange Commission on Form 10-SB on
August 26, 1999, Form 10Q-SB on November 12, 1999 and on Form 10K-SB filed on
March 27, 2000, are incorporated herein by reference.
Number Exhibit
------ ----------------
27 Financial Data Schedule
8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
IR OPERATING CORPORATION
Dated: May 15, 2000 By:/s/ Murray Fox
----------------------------
Murray Fox
Chief Executive Officer and
Chief Financial Officer
9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0001093371
<NAME> IR Operating Corporation
<MULTIPLIER> 1
<CURRENCY> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 151,382
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 193,439
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 261,446
<CURRENT-LIABILITIES> 469,361
<BONDS> 0
0
0
<COMMON> 5,169
<OTHER-SE> (213,084)
<TOTAL-LIABILITY-AND-EQUITY> 261,446
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 38,117
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,511
<INCOME-PRETAX> (42,628)
<INCOME-TAX> 0
<INCOME-CONTINUING> (42,628)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (42,628)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
