U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-SB
Amendment No. 2
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUER
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
OZOLUTIONS INC.
(Name of Small Business Issuer in its charter)
Delaware 98-0229321
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
30 Denver Crescent, Suite 200, Toronto, Ontario, Canada M2J 1G8
(Address of Principal Executive Offices and Zip Code)
Issuer's Telephone Number: (416) 490-0254
Securities to be registered under Section 12(b) of the Act: None
Securities to be registered under Section 12(g) of the Act:
Common Stock, Par Value $0.001
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TABLE OF CONTENTS
ITEM NUMBER AND CAPTION Page
Part I
1. Description of Business 3
2. Management's Discussion and Analysis or Plan of Operations 10
3. Description of Properties 12
4. Security Ownership of Certain Beneficial Owners and Management 12
5. Directors, Executive Officers, Promoters and Control Persons 14
6. Executive Compensation 15
7. Certain Relationships and Related Transactions 15
8. Description of Securities 16
Part II
1. Market Price of and Dividends on the Registrant's 16
Common Equity and Related Stockholder Matters
2. Legal Proceedings 17
3. Changes in and Disagreements with Accountants 17
4. Recent Sales of Unregistered Securities 17
5. Indemnification of Directors and Officers 17
Part F/S Financial Statements 18
Part III
1. Index to Exhibits 19
2. Description of Exhibits 19
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
General
Ozolutions Inc. was formed as a Delaware corporation in January
1996 under the name "Unipak Process, Inc." as a subsidiary of Aban
Hytek, Inc. ("AHI"). It received certain assets of AHI for its stock
and the stock was spun-off to the stockholders of AHI in connection
with a business reorganization between AHI and an unrelated party.
In October 1999, Ozolutions changed its name to Rico Resources
1999, Inc., in connection with its plan at that time to engage in the
business of developing a gold mining prospect in Costa Rica.
Following further study and evaluation of the prospect, management
determined that the estimated yield of gold from the prospect would
not be sufficient based on prevailing gold prices to cover extraction
costs and produce an acceptable profit. Consequently, this business
endeavor was abandoned.
In June 2000, Ozolutions acquired marketing rights to products
of Hankin Ozone Systems Limited, a Canadian corporation, from 1421209
Ontario Limited, a Canadian corporation. No stockholder approval was
required for the transaction under our certificate of incorporation or
bylaws or by the General Corporation Law of Delaware. We acquired the
marketing rights for 8,000,000 shares of Ozolutions common stock, or
approximately 42% of the outstanding shares, a non-refundable payment
of $17,217 (CDN$25,000) made at closing, and an additional $1,000,000
payable in installments commencing in November 2000. In November
2000, Ozolutions and 1421209 Ontario Limited agreed to an extension
for the installment payments scheduled as follows:
$550,000 on the earlier of 90 days following the establishment of
a public market in Ozolutions common stock or June 30, 2001;
$250,000 on the earlier of 150 days following the establishment
of a public market in Ozolutions common stock or August 30, 2001; and
$200,000 on the earlier of 180 days following the establishment
of a public market in Ozolutions common stock or September 30, 2001.
We have yet to generate significant revenue from operations and
there is no assurance we will generate significant revenue from
operations prior to the end of June 2001. Consequently, Ozolutions
may need to seek financing from outside sources to make the payment of
$550,000 due June 30, 2001, or negotiate with 1421209 Ontario Limited
a further extension on the payment. We have not identified any
potential sources of financing and have no assurances that 1421209
Ontario Limited would grant an extension in June 2001. Failure to
make the installment payment due in June 2001, or any subsequent
payment, would be a default
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under the purchase contract for the marketing rights that could result
in a claim against Ozolutions and a loss of our marketing rights to
Hankin products. Our present plan is to focus only on the
distribution of Hankin products, so the loss of our right to
distribute those products for any reason would effectively terminate
our business operations.
The marketing rights we acquired were valued for financial
reporting purposes at $1,025,217, which includes the non-refundable
payment made at closing in the amount of $17,217, the $1,000,000
installment obligation, and a value of $8,000 assigned to the common
stock issued, which is the total par value for 8,000,000 shares. In
connection with the acquisition, we changed our name to Ozolutions
Inc.
Ozolutions is a development stage company engaged in the business
of distributing Hankin ozone water treatment systems. Ozone water
treatment systems are based on ozonation, which is the treatment of
water with ozone gas to purify the water. Ozone systems include an
ozone generator that applies an electrical discharge to oxygen or
ambient air to produce ozone, and a transfer system for injecting the
ozone into a water stream to oxidize or purify the water. The medium
to large size Hankin systems are produced for specific projects out of
modular components, so the system can provide the volume of water
treatment required for each project. The smaller OzoTitan is self-
contained unit designed to serve a range of small water treatment
uses.
Ozolutions has an exclusive distributorship agreement with
Hankin, which allows us to market and sell the complete range of
Hankin water treatment products in Mexico and the Caribbean Zone. In
addition, Ozolutions has an exclusive agreement to market in the
Province of Ontario, Canada, a new compact ozone power generator
called the OzoTitan, which can be used by consumers and smaller
commercial and institutional customers to purify water.
Under our distribution agreements for Mexico and the Caribbean
Zone, we receive a commission for completed sales. In Ontario we are
entitled to purchase from Hankin the OzoTitan and related products at
Hankin's established prices, which are no higher than prices to other
distributors, and we resell the product to end users at a mark-up.
We began our marketing efforts in Mexico and the Caribbean Zone in
July 2000, and have identified eight potential water treatment
projects in Mexico. The Mexican state of Chihuahua has three new
water projects and two wastewater treatment projects proposed for
development before the end of 2001. As proposed, a significant
portion of the projects would consist of ozone water treatment
systems. Pemex Refinacion, the Mexican petroleum agency, has proposed
three cooling tower installations for refineries that incorporate
ozone water treatment systems. The current schedule is to collect
field data and specifications for the projects in November 2000, so
that bids for the projects can be submitted in February or March 2001.
Although we are unaware of any other bidders, there is always the
possibility that other companies will submit competitive bids for the
ozone treatment components of these projects, so there is no assurance
that one or more of the project contracts will be awarded to the
Hankin products we offer. We have yet to realize any revenue from
sale of water treatment systems, but
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we expect we will complete sales of our first systems before the end
of 2001. A system is sold when the water treatment unit is delivered
and billed.
We expect to commence a marketing program for the OzoTitan in
Ontario during the first quarter of 2001. Ozolutions is now
interviewing and evaluating independent dealers in Ontario for the
OzoTitan. We expect to select approximately 15 dealers by the end of
November 2000 and hold training sessions through Hankin for sales and
installation in December 2000, so that sales efforts can begin in
January 2001. We plan on taking delivery of 25 OzoTitan units in
December 2000, which will be resold to our dealers for their initial
inventory. OzoTitan units will be sold to dealers and directly to
consumers at a mark-up from our purchase cost.
We are in the development stage, in that we have yet to generate
significant revenue from operations. We had a net loss of $41,678 for
the year ended August 31, 2000. Ozolutions has no history of
profitable operations on which to base a judgment regarding our future
operations. Our operations and resulting cash flows are subject to
all of the risks inherent in an emerging business enterprise, which
has not achieved profitability. There can be no assurance that
product sales made by us in the future will be at volumes and prices
sufficient for us to achieve and maintain profitable operations.
As a result of filing this registration statement we are required
to file with the Securities and Exchange Commission annual reports on
Form 10-KSB, quarterly reports on Form 10-QSB, current reports of
certain events on Form 8-K, and proxy and information statements
disseminated to stockholders in connection with meeting of
stockholders and other stockholder actions. Copies of these and any
other materials we file with the Commission may be inspected without
charge at the public reference facilities maintained by the Commission
in:
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549;
The Chicago Regional Office, Suite 1400, 500 West Madison Street,
Citicorp Center, Chicago, Illinois 60661; and
The New York Regional Office, Suite 1300, 7 World Trade Center,
New York, New York 10048.
Copies of all or any part of our filings may be obtained from the
Public Reference Section of the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549, upon payment of the prescribed fees. The
public may obtain information on the operation of the Public Reference
Room by calling the SEC at 1-800-SEC-0330. Our filings with the
Commission are also available through the SEC's Web site at
http://www.sec.gov.
Ozolutions' offices are located at 30 Denver Crescent, Suite 200,
Toronto, Ontario, Canada M2J 1G8, where our telephone number is (416)
490-0254.
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Our Distributorship
In Mexico and the Caribbean Zone (countries located in or
bordering on the Caribbean Ocean with the exception of Mexico and
Cuba) Ozolutions is entitled to market on an exclusive basis medium to
large size Hankin ozone generating equipment systems used for water
treatment in various applications. We can also distribute in Mexico
and the Caribbean Zone the smaller OzoTitan, but we have not developed
any marketing plans for the OzoTitan in these territories and do not
expect we will do so prior to the end of 2001. Each distribution
agreement is for a term of three years and is renewable for two
additional three-year terms. In order to obtain renewal of our
exclusive marketing rights in Mexico only, we must obtain at least
CDN$1,000,000 (approximately USD$666,666 based on current exchange
rates) of sales in each three-year term of the agreement. Due to this
condition in the distribution contract for Mexico, we have focused on
marketing Hankin products in Mexico and expect we will continue to do
so through the first six months of 2001. We are required to use our
best efforts to procure orders in the territories and to maintain a
sales force in each territory. Each order or contract for purchase of
a Hankin system must be submitted to Hankin for final pricing and
approval, and we receive a commission on the final contract price,
excluding any portion of the price attributable to consulting,
engineering and design services provided by Hankin and post
installation maintenance and repair. Our commission is
10% of the first CDN$100,000 of the contract price (approximately
USD$66,666 based on current exchange rates),
7.5% of the next CDN$100,000 (approximately USD$66,666 based on
current exchange rates),
6% of the next CDN$300,000 (approximately USD$200,000 based on
current exchange rates),
2% of the next CDN$500,000 (approximately USD$333,333 based on
current exchange rates), and
1% of any remaining amount.
A territory fee of CDN$50,000 (USD$33,333) was required to secure the
marketing rights in Mexico. Of this fee, CDN$15,000 (USD$10,000) has
been paid and the balance is payable out of 10% of our commission
earned on product sales.
In Ontario, Canada, Ozolutions is the exclusive distributor
for Hankin's Point of Use and Point of Entry water treatment units,
which are referred to as the OzoTitan, and related products. We do
not hold marketing rights for any of the larger Hankin systems in
Ontario. The distribution agreement for this smaller system covering
Ontario is for a term of three years and is renewable for two
additional three-year terms without minimum sale requirements. We are
required to use our best efforts to procure orders in the territories
and to maintain a sales force for that purpose. Under the agreement
we purchase the OzoTitan and related products from Hankin
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at published prices to all distributors and, if there are no published
prices, at prices no higher than those charged other distributors. We
expect to resell the product to our dealers at a mark-up of
approximately 50% of our cost, or a price of approximately $2,600
based on our current cost.
Hankin Products
Hankin offers a variety of medium to large size ozone process
equipment for use in treating water for recreational, industrial,
municipal and other commercial applications. These would include
swimming and wave pool facilities, treatment of industrial effluent,
treatment of cooling tower water, municipal water treatment,
purification of drinking water, and bottled water purification. The
equipment consists of modules or component parts that can be
configured to meet the specific treatment needs of the customer. In
unusual applications, Hankin can design custom systems for the
customer. The price for ozone process systems range from $27,000 for
medium-sized systems to $200,000 for larger systems.
The OzoTitan is a smaller, self-contained ozone process system
designed by Hankin for the consumer market. It incorporates the
latest electronics and semi-conductor technology integrated with a
dielectric assembly to provide a low-cost, high efficiency ozone
generator. Perhaps the most significant feature of the OzoTitan is
its great versatility. Due to its size, weight and energy
consumption, it is well suited to a number of small ozone treatment
applications, including:
Small bottled water systems
Cooling water treatment
Laboratory use
Ultra pure water
Residential/cottage use
The OzoTitan comes cabinet mounted with connections in the rear
of the unit. Controls are front panel mounted for easy access.
Electrical components are maintained at a cool operating temperature
by a cabinet mounted fan. Tubing and fittings in contact with
ozonated gas are constructed of glass, 316 stainless steel or Teflon.
Manufacturing of the OzoTitan has been out-sourced, but not sold,
by Hankin to an independent manufacturer. 1421209 Ontario Limited
acquired a right of first refusal to purchase the manufacturing rights
on the same terms and conditions offered by a prospective purchaser in
the event Hankin ever decides to sell the manufacturing rights. This
first right of refusal was assigned to Ozolutions when we acquired the
marketing rights to the OzoTitan in Ontario. We have not received any
indication that Hankin ever intends to sell the manufacturing rights,
so we cannot predict whether we would ever be in a position to
exercise this first right of refusal.
Hankin publicly-held Canada corporation that has engaged in
the business of designing, manufacturing, and selling ozone generating
equipment systems since 1972.
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Hankin's sales (unaudited) for the nine months ended June 30, 2000,
were CDN$11,614,588, its income before interest, taxes, and
amortization were CDN$1,140,000, and its net income for the period was
CDN$451,729. For the fiscal year ended September 30, 1999 sales were
CDN$13,662,896, income before interest, taxes, and amortization was
CDN$590,099, and net loss for the period was CDN$451,729.
Marketing Strategy
Ozolutions intends to market Hankin systems in Mexico and the
Caribbean Zone primarily to national, state, and local governmental
units and municipalities as a solution for their water treatment
needs. These marketing efforts will be undertaken primarily by
management and through independent contractors and consultants. We
are now establishing our independent contractors in Mexico and the
Caribbean Zone and are pursuing directly contacts with government
officials responsible for water projects. These efforts have resulted
in the identification of sales opportunities in food processing, water
bottling, hotels, hospitals, and industrial cooling towers. Mexico
and the Caribbean Zone represent new markets for Hankin where it has
not previously sold its large and medium size water treatment systems.
Our marketing rights give us the opportunity to develop these markets
for Hankin.
Historically, ozone based water treatment products were only
available to medium and larger sized municipal, industrial and
institutional users. The OzoTitan, which is a new product developed
by Hankin, has the potential to increase greatly the number of units
sold because it opens the market to consumers and smaller commercial
and institutional customers. Since June 2000, we have been developing
a dealer network in Ontario of independent contractors to promote the
OzoTitan for use in home and small industrial applications. We began
by identifying engineering, electrical, mechanical, and water system
contractors, capable of selling and installing the system and
providing ongoing service. We are now interviewing 35 dealer
candidates, and expect to select a total of 15 dealers for sales and
installation training by the end of 2000. Our objective is to have
the dealers ready to offer the OzoTitan in the first quarter of 2001
to take advantage of the beginning of the construction season in the
spring of 2001.
Ozolutions has engaged two consultants to assist with the
development of our marketing effort. Edward G. Deans will assist us
with the development of the market in Mexico and the Caribbean Zone
under a consulting agreement that pays to him a fee of $90,000 per
year over the three-year term of the agreement. Either party may
cancel the agreement after the first year on six months prior notice
to the other. Mr. Deans has over 10 years experience as an
independent sales consultant in marketing water systems and equipment.
Ronald L. Larocque & Associates Ltd. will provide at least six hours
per month of marketing and business development services to Ozolutions
for $12,000 payable over the one-year term of the consulting
agreement. Additional services may be rendered at the rate of $175
per hour. Mr. Larocque is an engineer who has been involved with
ozonation technology, system design and installation since 1972.
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Competition
Hankin products compete with similar products manufactured by
other multi-national companies, many of which have greater financial
and marketing resources than Ozolutions. Ozonia, PCI Wedeco,
Vivendi/US Filter and Mitsubishi are the major competitors that offer
medium and large size ozone water treatment systems similar to the
systems offered by Hankin. These companies are pursuing the market
for water treatment solutions in areas such as Mexico and the
Caribbean Zone where there is a growing need for water treatment
facilities, but we have found no evidence that these companies have
captured a significant portion of the market for water treatment
systems. We believe we can compete with these companies based on
price and product performance.
The market for smaller water treatment systems in Ontario is
fragmented with a large number of companies offering systems with
differing technologies. The different technologies used in available
systems include filtration through active carbon or other substances,
distillation, ultra violet treatment, and reverse osmosis. We have
found no evidence that any one technology has a significantly greater
market share than the other. Only one company, OzoMax, offers a
product similar to the OzoTitan. The OzoMax is manufactured in China
in the form of a core units with add on components that must be
purchased to make the product functional, while the OzoTitan comes
complete as a fully integrated unit. Based solely on its own
examination of the products, management of Ozolutions believes the
OzoTitan is superior in materials and workmanship to the OzoMax.
Ozolutions has not found any evidence that there is an established
dealer or service network for the OzoMax in Ontario. We believe we
can compete with other small water treatment systems on the basis of
price and product performance.
Government Regulation
Ozolutions sales activity in various countries may be subject to
local business licensing requirements, to the extent such requirements
exist in a given country. We do not believe these licensing
requirements represent a significant barrier to our distribution
business. Generally, on sale of Hankin products in various countries
Hankin is responsible for complying with any import and installation
regulations applicable to the systems sold. The adoption of NAFTA
several years ago has removed any significant barriers to the
importation of Hankin products in the countries where we are pursuing
our sales efforts.
Employees
As of June 30, 2000, Ozolutions employed a total of three
persons, including two executives and one clerical employee. None of
the its employees is represented by a labor union. Ozolutions has
experienced no work stoppages and believes that its relations with its
employees are good.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Plan of Operation
At the present time Ozolutions is in the development stage and
does not provide any product or service. We intend to be an
international marketer and distributor of water purification systems
using ozone technology. The markets we will target are Mexico, the
Caribbean Zone, and Ontario, Canada.
Ozolutions acquired distribution rights to Hankin products
from 1421209 Ontario Limited for 8,000,000 shares of Ozolutions common
stock, or approximately 42% of the outstanding shares, $17,217
(CDN$25,000) paid at closing, and an additional $1,000,000 payable in
installments.
Ozolutions is required to make a payment of $550,000 to
1421209 Ontario Limited no later than June 30, 2001, as part of the
purchase price for the distribution rights it acquired from 1421209
Ontario Limited. Additional payments of $250,000 and $200,000 are due
no later than August 30, 2001 and September 30, 2001. There was no
affiliation between 1421209 Ontario Limited and Ozolutions prior to
the purchase of the distribution rights.
There is no assurance that we will be able to generate
sufficient revenue from operations within a time frame that will allow
for timely payment of our obligations to 1421209 Ontario Limited. If
this occurs, we will seek financing from outside sources to make these
payments, but we have not identified any sources of financing, and
there is no assurance any financing will be available on terms
acceptable to Ozolutions. If we are unable to locate financing,
Ozolutions will seek an extension of our payment obligations from
1421209 Ontario Limited. We have already obtained one extension from
1421209 Ontario Limited, but there is no assurance that 1421209
Ontario Limited will grant us another extension should we request it.
Failure to make our June 2001 payment to 1421209 Ontario Limited as
required under our purchase agreement would give rise to a claim
against Ozolutions, which could result in a loss of our marketing
rights and effectively terminate our business.
1421209 Ontario Limited has agreed to loan to Ozolutions up to
USD$300,000 at our option to provide financing for our operations at
the time 1421209 Ontario Limited receives its first payment
USD$550,000 from us under the purchase agreement for the distribution
rights to Hankin products. The loan will be represented by a note due
in two years bearing interest at an annual rate of 6.5% and payable
quarterly in arrears.
Following the filing of this registration statement and clearing
comment from the Securities and Exchange Commission, Ozolutions will
seek a broker-dealer that may be willing to make a market in its
common stock and establish a public trading market. We have not
identified any broker-dealer prepared to make a market in our common
stock, so we cannot predict if or when a public market will develop.
Assuming a public market for our common
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stock develops, Ozolutions believes this may facilitate our efforts to
obtain debt or equity financing.
Until Ozolutions receives outside financing to fund its
capital commitments, its operations will be limited to those that can
be effected through its officers, directors and consultants. These
persons, except for Edward G. Deans and Ronald L. Larocque &
Associates, have verbally agreed to defer payment of compensation from
Ozolutions until revenue generated from sales of product and financing
from outside sources provides sufficient working capital to fund
operations and payment of their compensation. From June 1 through
August 31, 2000, D. Brian Robertson, a stockholder of Ozolutions,
advanced $28,833 to Ozolutions to cover administrative expenses. The
advances do not bear interest and no payment terms have been set by
the parties. This individual has indicated verbally his willingness
to make further advances in the future as required to fund
administrative costs. These advances are the sole source of capital
to fund administrative costs. However, there is no written or fixed
obligation to make further advances, so there is no assurance that
Ozolutions will have capital to fund its operations over the next 12
months.
Under distribution agreements with Hankin, product is shipped by
Hankin against purchase orders we place either directly to the end
user or dealer or to us for delivery to the end user or dealer.
Accordingly, we do not require any significant amount of capital for
inventory or facilities required to maintain and distribute inventory.
Based solely on Management's evaluation of the potential market,
Ozolutions believes 125 OzoTitan units can be sold in Ontario by the
end of April 2001. In December 2000 we plan on taking delivery of the
first 25 units, which will be sold and delivered to our independent
dealers for their initial inventory. An additional 100 units have
been ordered for delivery in the first four months of 2001 against
purchase orders from our independent dealers. If we have
significantly over-estimated the potential market for the OzoTitan,
our need for capital could increase by as much as $170,000 to purchase
and hold in inventory the OzoTitan units ordered.
Ozolutions believes its general, selling and administrative
expenses during the 12-month period following the date it can obtain
additional financing of at least $300,000 will be $255,000.
Approximately $75,000 will be used for marketing and sales expenses,
including:
production of printed sales materials,
advertising in industry publications,
travel expenses associated with advancing proposed projects in
Mexico and the Caribbean Zone, and
travel expenses associated with establishing dealers in Ontario.
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Approximately $102,0000 will be used to make payments under consulting
contracts with Edward G. Deans and Ronald L. Larocque & Associates,
who have assisted Ozolutions in formulating marketing plans and will
assist in implementing those plans. The remaining $78,000 is the
estimated cost of clerical and management staff and facilities
required to operate over the next year. This increase in general,
selling and administrative expenses will be attributable to
implementation of our marketing plans for Hankin ozone products.
Forward-Looking Statements
All statements, other than statements of historical fact, which
address activities, actions, goals, prospects, or new developments
that Ozolutions expects or anticipates will or may occur in the
future, including such things as expansion and growth of its
operations and other such matters are forward-looking statements. Any
one or a combination of factors could materially affect Ozolutions'
operations and financial condition. These factors include competitive
pressures, success or failure of marketing programs, changes in
pricing and availability of services and products offered to members,
legal and regulatory initiatives affecting member marketing and rebate
programs or long distance service, and conditions in the capital
markets. Forward-looking statements made by Ozolutions are based on
knowledge of its business and the environment in which it operates as
of the date of this report. Because of the factors listed above, as
well as other factors beyond its control, actual results may differ
from those in the forward-looking statements.
ITEM 3. DESCRIPTION OF PROPERTIES
Ozolutions uses approximately 400 square feet of office space at
30 Denver Crescent, Suite 200, Toronto, Ontario, Canada M2J 1G8,
provided by Max Weissengruber, one of its officers and directors, at
no charge. We believe this space will be adequate for our needs for
at least the next 12 months.
Ozolutions has a verbal understanding with an unaffiliated
person, Graham Lintell, we expect to employ in 2001 to assist in
managing our Ontario dealer group to use, as needed, 1,000 square feet
of warehouse space to store OzoTitan units that are not shipped
directly to end users or dealers. We expect the cost of this
temporary storage space will be approximately $500 per month. If for
any reason this arrangement is not effected, we believe there is a
substantial amount of warehouse space available at reasonable rates in
the Toronto area that can meet our needs.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth as of July 31, 2000, the number and
percentage of the outstanding shares of common stock which, according
to the information supplied to Ozolutions, were beneficially owned by
(i) each person who is currently a director, (ii) each executive
officer, (iii) all current directors and executive officers as a group
and (iv) each person who, to the knowledge of Ozolutions, is the
beneficial owner of more than 5% of the outstanding
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common stock. Except as otherwise indicated, the persons named in the
table have sole voting and dispositive power with respect to all
shares beneficially owned, subject to community property laws where
applicable.
Amount and Nature of Beneficial
Ownership
Name and Address Common Percent
Shares of Class
1421209 Ontario Limited (1) 8,000,000 42.1
Carl Lavoie
134 Melrose Avenue
Toronto, Ontario CN M5M 1Y7
Max Weissengruber (2) 0 0
30 Denver Crescent, Suite 200
Toronto, Ontario, CN M2J 1G8
James A. Clemenger (2) 0 0
53 Duggan Avenue
Toronto, Ontario, CN M4V 1Y1
Dennis P. Caplice (2) 0 0
1210 Don Mills Road, #125
Toronto, Ontario, CN M3B 3N1
All Executive officers and 0 0
Directors as a Group (3
persons)
________________________________
(1) Carl Lavoie is the sole owner of 1421209 Ontario Limited.
Accordingly, Mr. Lavoie may be deemed to have voting and
investment control over the 8,000,000 shares of common stock held
of record by 1421209 Ontario Limited. From 1991 to the present,
Mr. Lavoie has served as a Director of Financial Services with CB
Richard Ellis Limited of Toronto, Ontario, where he has provided
commercial mortgage and real estate transaction development and
consulting services.
(2) These persons are all of the directors and executive officers of
Ozolutions.
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ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Directors and Officers
The following table sets forth the names, ages, and positions
with Ozolutions for each of the directors and officers.
Name Age Positions (1) Since
Max Weissengruber 62 President and Director April 2000
James A. Clemenger 44 Secretary, Treasurer and April 2000
Dennis P. Caplice 64 Director April 2000
All directors hold office until the next annual meeting of
stockholders and until their successors are elected and qualify.
Officers serve at the discretion of the Board of Directors. We have
no Board committees and do not expect to form any committees until our
operations increase. The following is information on the business
experience of each director and officer.
Max Weissengruber has been a Managing Partner and sole owner
of Acris Partners of Toronto, Ontario since May 1993. Acris Partners
is a marketing and communications consulting firm engaged in the
business of conducting employee surveys and developing marketing
communications materials and customized training packages. Annual
revenues for Acris partners over the four year period ended December
31, 1999, have averaged $60,000 per year. Mr. Weissengruber began
Acris Partners after retiring from the position of Director of
Marketing of Wilson Learning Systems, a worldwide provider of
strategic business development planning and employee training program
services. He started with Wilson Learning Systems in November 1987,
and was responsible for developing programs for a number of clients,
including General Motors and IBM Hong Kong.
James A. Clemenger has been employed since November 1999 as a
Sales Manager for Dynamex of Toronto, Ontario, where he is responsible
for marketing sales programs for Postal Promotions, a specialized high
priority courier service based in Toronto. From May 1997 to October
1999, he provided consulting services to MacLeod Trading Inc. on Latin
America trading opportunities and development of product distribution
strategies. Mr. Clemenger was Consul and Trade Commissioner for the
Colombian Government trade Bureau in Toronto form June 1991 through
October 1996 where he was responsible for promoting expansion of
Colombian goods and services exports to Canada. He earned a Masters
of Business Administration from the University of Western Ontario in
1995.
Dennis Caplice has been retired since 1992 from his position of
Deputy Minister of Government Services for the Province of Ontario,
where he was responsible for common services, purchasing, and land and
buildings for the Government of Ontario. He is formerly a
14
<PAGE>
director and President of the Pollution Control Association of
Ontario, a former board member of the International Joint Commission's
Water Quality Advisory Board (US/Canada boundary waters), and is a
member of the Professional Engineers Organization of Ontario. Mr.
Caplice earned a Masters of Science in Sanitary Engineering from the
University of Toronto in 1961.
ITEM 6. EXECUTIVE COMPENSATION
No executive compensation was paid to any officer of
Ozolutions during the year ended August 31, 2000, or from that date to
the present. Each of the current executive officers have agreed to
defer any compensation until Ozolutions obtains sufficient capital
from operations or outside sources to cover compensation expenses.
Since July 1, 2000, Max Weissengruber has devoted substantially all of
his time to getting the business of Ozolutions started, and he has
agreed to defer compensation of $3,000 per month for his services,
which began to accrue at July 1, 2000. James A. Clemenger has not
devoted any material amount of time to the business of Ozolutions, and
we do not expect his time commitment to us will change until our
business develops and we begin recognizing revenue from sales of
Hankin products. Dennis Caplice is currently devoting between eight
and sixteen hours a week to the business of Ozolutions, and we expect
his time commitment will increase as our business develops and we
begin recognizing revenue from sales of Hankin products. Officers and
directors are reimbursed for travel expenses incurred in connection
with Ozolutions' business.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In June 2000, Ozolutions acquired marketing rights to products
of Hankin Ozone Systems Limited, a Canadian corporation, from 1421209
Ontario Limited, a Canadian corporation. At the time of the
transaction 1421209 Ontario Limited was not affiliated with
Ozolutions. We acquired the marketing rights for 8,000,000 shares of
Ozolutions common stock, or approximately 42% of the outstanding
shares, $17,217 (CDN$25,000) paid at closing, and an additional
$1,000,000 payable in installments as follows:
$550,000 on the earlier of 90 days following the establishment of
a public market in Ozolutions common stock or June 30, 2001;
$250,000 on the earlier of 150 days following the establishment
of a public market in Ozolutions common stock or August 30, 2001;
and
$200,000 on the earlier of 180 days following the establishment
of a public market in Ozolutions common stock or September 30, 2001.
As a negotiated element of the transaction, 1421209 Ontario
Limited agreed to loan to Ozolutions up to USD$300,000, at our option,
to provide financing for our operations at the time 1421209 Ontario
Limited receives its first payment $550,000 from us under the purchase
agreement. The loan will be represented by a note due in two years
bearing interest at an annual rate of 6.5% and payable quarterly in
arrears.
15
<PAGE>
Ozolutions uses approximately 400 square feet of office space
provided by Max Weissengruber, one of its officers and directors, at
no charge. Ozolutions is of the opinion that the value of the space
provided is not material to Ozolutions or its financial condition.
ITEM 8. DESCRIPTION OF SECURITIES
The authorized capitalization of Ozolutions consists of
50,000,000 shares of common stock, par value $0.001, of which
18,999,133 shares are outstanding. Holders of common stock are
entitled to one vote for each share held on all matters submitted to a
vote of shareholders and do not have cumulative voting rights.
Accordingly, holders of a majority of the shares of all common stock
outstanding entitled to vote in any election of directors may elect
all of the directors standing for election. Holders of common stock
are entitled to receive ratably such dividends, if any, as may be
declared by the board of directors out of funds legally available
therefor. Upon the liquidation, dissolution or winding up of
Ozolutions, the holders of all shares of common stock are entitled to
receive ratably the net assets of Ozolutions available after the
payment of all debts and other liabilities. Holders of common stock
have no preemptive, subscription, redemption or conversion rights.
The Securities Exchange Act of 1934 and regulations promulgated
thereunder place restrictions on trading activities in "penny stocks."
Penny stocks are defined as equity securities priced under $5.00,
which are not listed for trading on a national exchange or Nasdaq and
are securities of issuers with a net tangible book value less than
$2,000,000 (if in business for three years), a net tangible book value
less than $5,000,000 (if in business less than three years), and
average annual revenues less than $6,000,000 for the prior three
years. Although there is presently no trading market for our common
stock and we cannot predict what the market price may be in the
future, it is likely the common stock of Ozolutions will be a penny
stock if a trading market develops because we do not meet any of the
asset or revenue tests described above. Brokers dealing in penny
stocks are subject to special rules of disclosure to their clients
regarding the risks of penny stock transactions, current market price,
and trading activity and compensation to the broker. In addition,
brokers are required to determine the suitability of penny stock
transactions for each of their clients and obtain from each client
written consent to participation in penny stock transactions. These
regulatory burdens discourage a number of brokers from becoming
involved in a security until it is no longer a penny stock, which may
adversely affect the depth and liquidity of any future market in the
common stock of Ozolutions.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
From the date of inception to the date of this registration
statement there has been no public trading market for Ozolutions'
common stock. Following the filing of this registration statement,
Ozolutions will seek out one or more stock brokerage firms to make a
market in our stock and submit an application for quotation of our
common stock on the OTC Bulletin Board.
16
<PAGE>
We voluntarily filed this registration statement on Form 10-SB to
become a reporting company under the Securities Exchange Act of 1934,
because being a reporting company is one of the conditions to
quotation on the OTC Bulletin board. Furthermore, we believe it is
difficult to find reputable broker-dealers willing to look at us and
make a market in our stock unless we are a reporting company. Even if
we become a reporting company, there is no assurance that we will be
able to interest any broker-dealer in making a market in our stock or
that a trading market in the common stock will be established or exist
at any time in the future. Consequently, anyone who acquires stock in
Ozolutions may hold an investment with little or no liquidity.
Since its inception, no dividends have been paid on our common
stock. Ozolutions intends to retain any earnings for use in its
business activities, so it is not expected that any dividends on the
common stock will be declared and paid in the foreseeable future.
On July 31, 2000, there were 1,530 holders of record of the
Company's Common Stock.
ITEM 2. LEGAL PROCEEDINGS
Neither Ozolutions nor any of its officers, directors or
holders of five percent or more of its common stock is a party to any
material pending legal proceedings, and to the best of our knowledge,
no such proceedings by or against Ozolutions or its officers,
directors or holders of five percent or more of its common stock have
been threatened.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
There have been no changes in or disagreements with accountants
since the Company's organization.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
Under the Asset Purchase Agreement dated June 21, 2000, between
Ozolutions and 1421209 Ontario Limited, Ozolutions issued to Ontario
Limited 8,000,000 shares of common stock to acquire all of Ontario
Limited's distribution rights to Hankin products. These shares were
issued in reliance on the exemptions from registration under Sections
3(b) and/or 4(2) of the Securities Act of 1933, and the safe harbor
from registration provided in Regulation S. No broker was involved in
the transaction and no commissions were paid to any person.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by the Delaware General Corporation Law, Ozolutions'
Certificate of Incorporation provides that no director or officer
shall have any liability to Ozolutions or its stockholders for
monetary damages except: (1) to the extent that it is provided that
the person actually received an improper benefit or profit in money,
property or services, for the amount of the benefit or profit in
money, property or services actually received, or (2) to the extent
that a judgment or other final adjudication adverse to the person is
entered in a proceeding based on a finding in the proceeding that the
person's action, or failure to act, was the result of active and
17
<PAGE>
deliberate dishonesty and was material to the cause of action
adjudicated in the proceeding. Ozolutions' Bylaws provide that it
shall indemnify and advance expenses to its officers and directors
with respect to liabilities arising form their service to Ozolutions.
However, nothing in the Certificate of Incorporation or Bylaws of
Ozolutions protects or indemnifies a director, officer, employee or
agent against any liability to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office.
PART F/S
FINANCIAL STATEMENTS
The financial statements of Ozolutions appear at the end of this
registration statement beginning with the Index to Financial
Statements on page 20.
18
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS
ITEM 2. DESCRIPTION OF EXHIBITS
Copies of the following documents are included as exhibits to
this report.
<TABLE>
<C> <C> <C> <C>
Exhibit Form 1-A Title of Document Location
No. Ref. No.
1 (2) Certificate of Incorporation, as amended Initial filing
October 22, 1999 and April 12, 2000 Page E-1
2 (2) By-Laws Initial filing
Page E-5
3 (6) Asset Purchase Agreement dated June 21, 2000, Initial filing
between 1421209 Ontario Limited and Page E-14
Ozolutions Inc.
3(a) (6) Addendum A dated November 7, 2000, to Am. No. 2
Asset Purchase Agreement dated June 21, Page E-1
2000, between 1421209 Ontario Limited and
Ozolutions Inc.
4 (6) Assignment of Contract for Hankin product Initial filing
distribution rights in Mexico between Hankin Page E-20
Atlas Ozone systems Ltd., 1421209 Ontario
Limited and Ozolutions Inc.
5 (6) Assignment of Contract for Hankin product Initial filing
distribution rights in the Caribbean Zone Page E-31
between Hankin Atlas Ozone systems Ltd.,
1421209 Ontario Limited and Ozolutions Inc.
6 (6) Assignment of Contract for Hankin product Initial filing
distribution rights in Ontario between Hankin Page E-41
Atlas Ozone systems Ltd., 1421209 Ontario
Limited and Ozolutions Inc.
7 (6) Loan Agreement dated June 21, 2000 Initial filing
between 1421209 Ontario Limited and Page E-49
Ozolutions Inc.
8 (6) Consulting Agreement between Ozolutions Inc. Initial filing
and Edward G. Deans Page E-54
9 (6) Consulting Agreement between Ozolutions Inc. Initial filing
and R.L. Larocque & Associates Page E-59
19
<PAGE>
10 (15) Financial Data Schedules Am. No. 1
</TABLE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of
1934, the registrant caused this registration statement to be signed
on its behalf by the undersigned thereunto duly authorized.
OZOLUTIONS, INC.
Date: November 27, 2000 By: /s/ Max Weissengruber, President
In accordance with the Exchange Act, this registration statement
has been signed by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.
Dated: November 27, 2000 /s/ Max Weissengruber, Chief Executive Officer
and Director
Dated: November 27, 2000 /s/ James A. Clemenger,Chief Financial Officer
and Director
Dated: November 27, 2000 /s/ Dennis P. Caplice, Director
20
<PAGE>
OZOLUTIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Toronto, Ontario, Canada
TABLE OF CONTENTS
Independent Auditors' Report F-2
Balance Sheets at August 31, 2000 and 1999 F-3
Statements of Changes in Stockholders' Equity (Deficit) for
the Period from the Date of Inception (January 10, 1996)
through August 31, 1999 and August 31, 2000 F-4
Statements of Operations for the three years in the period
ending August 31, 2000 and for the period from the Date of
Inception (January 10, 1996) through August 31, 2000 F-5
Statements of Cash Flows for the three years in the period
ending August 31, 2000 and for the period from the Date of
Inception (January 10, 1996) through August 31, 2000 F-6 - F-7
Notes to Financial Statements F-8 - F-11
F-1
<PAGE>
Rotenberg & Company, LLP
Certified Public Accountants & Consultants
500 First Federal Plaza, Rochester, N.Y. 14614
(716) 546-1158 Fax (716) 546-2943
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
and Stockholders
Ozolutions, Inc.
Toronto, Ontario, Canada
We have audited the accompanying balance sheets of Ozolutions,
Inc. (A Development Stage Company) (A Delaware Corporation) as of
August 31, 2000 and 1999, and the related statements of operations,
changes in stockholders' equity (deficit), and cash flows for each of
the three years in the period ended August 31, 2000 and for the period
from the date of inception (January 10, 1996) through August 31, 2000.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
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 audit 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 presentation of
the financial statements. We believe that our audits provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of
Ozolutions, Inc. (A Development Stage Company) (A Delaware
Corporation) as of August 31, 2000 and 1999, and the results of its
operations and its cash flows for each of the three years in the
period ended August 31, 2000 and for the period from the date of
inception (January 10, 1996) through August 31, 2000, in conformity
with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming
Ozolutions, Inc. (A Development Stage Company) (A Delaware
Corporation) will continue as a going concern. As more fully
described in Note H, the Company has incurred losses that have
resulted in a retained deficit. This condition raises substantial
doubt about the Company's ability to continue as a going concern. The
financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
/s/ Rotenberg & Company, LLP
Rotenberg & Company, LLP
Rochester, New York
October 5, 2000
F-2
<PAGE>
OZOLUTIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Toronto, Ontario, Canada
BALANCE SHEETS
(U.S. Dollars)
August 31, 2000 1999
ASSETS
Cash and Cash Equivalents $ - $ -
Marketing Rights 1,025,217 -
Total Assets $1,025,217 $ -
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accounts Payable $ 6,845 $ -
Due to 1421209 Ontario Limited - Due Within
One Year 800,000 -
Due to Stockholder 28,883 50
Total Current Liabilities 835,728 50
Other Liabilities
Due to 1421209 Ontario Limited - Due
After One Year 200,000 -
Total Liabilities 1,035,728 50
Stockholders' Equity (Deficit)
Common Stock: $.001 Par; 50,000,000 Shares
Authorized as of August 31, 2000 and
20,000,000 Shares Authorized as of
August 31, 1999; 18,999,133 and 10,999,000
Issued and Outstanding as of August 31, 2000
and 1999, respectively 18,999 10,999
Additional Paid-In Capital 23,217 -
Deficit Accumulated During Development Stage (52,727) (11,049)
Total Stockholders' Equity (Deficit) (10,511) (50)
Total Liabilities and Stockholders' Equity
(Deficit) $1,025,217 $ -
The accompanying notes are an intergral part of this financial statement.
F-3
<PAGE>
OZOLUTIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Toronto, Ontario,
Canada
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) FOR THE PERIOD
FROM THE DATE OF INCEPTION (JANUARY 10, 1996) TTHROUGH AUGUST 31, 1999 AND
AUGUST 31, 2000
(U.S. DOLLARS)
<TABLE>
<CAPTION>
Deficit
Accumulated
During
Number Par Common Paid In Developing Stockholders'
of Shares Value Stock Capital Stage Deficit
<S> <C> <C> <C> <C> <C> <C>
Balance - January 10, 1996 - $ - $ - $ - $ - $ -
January 11, 1996
Common Stock issued
in exchange for expenses paid
by shareholders 10,999,133 0.001 10,999 - - 10,999
Net Loss for the Period - - - - (11,049) (11,049)
Balance - August 31, 1999 10,999,133 0.00 10,999 - (11,049) (50)
June 21, 2000
Common Stock issued as partial
consideration for acquisition
of marketing contracts 8,000,000 0.001 8,000 - - 8,000
Cash Contribution of Capital - - - 17,217 - 17,217
Consulting Services contributed
by shareholers - - - 6,000 - 6,000
Net Loss for the Period - - - - (41,678) (41,678)
Balance - August 31, 2000 18,999,133 $ 0.001 $ 18,999 $(52,727) $(52,727) $ (10,511)
</TABLE>
The accompanying notes are an integral part of this financial statement.
F-4
<PAGE>
OZOLUTIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Toronto, Ontario, Canada
STATEMENTS OF OPERATIONS FOR THE THREE YEARS IN THE PERIOD ENDED
AUGUST 31, 2000 AND FOR THE PERIOD FROM THE DATE OF INCEPTION (JANUARY
10, 1996) THROUGH AUGUST 31, 2000
U.S. DOLLARS
<TABLE>
<CAPTION>
Inception to Year Ended Year Ended Year Ended
August 31, August 31, August 31, August 31,
2000 2000 1999 1998
<S> <C> <C> <C> <C>
Revenues $ - $ - $ - $ -
Expenses
Consulting Fees 6,000 6,000 - -
Organization Costs 11,049 - - -
Professional Fees 26,333 26,333 - -
Transfer Agent Fees 7,035 7,035 - -
General and Administrative 2,310 2,310 - -
Total Expenses 52,727 41,678 - -
Net Loss for the Period $ (52,727) $ (41,678) $ - $ -
Weighted Average Outstanding Shares 12,555,164 12,555,164 10,999,133 10,999,133
Loss per Share-Basic and Diluted $ (0.01) $ (0.01) $ (0.00) $ (0.00)
</TABLE>
The accompanying notes are an integral part of this financial statement
F-5
<PAGE>
OZOLUTIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Toronto, Ontario, Canada
STATEMENTS OF CASH FLOWS FOR THE THREE YEARS IN THE PERIOD ENDED AUGUST
31, 2000 AND FOR THE PERIOD FROM THE DATE OF INCEPTION (JANUARY 10, 1996)
THROUGH AUGUST 31, 2000
U.S. DOLLARS
<TABLE>
<CAPTION>
Inception to Year Ended Year Ended Year Ended
August 31, August 31, August 31, August 31,
2000 2000 1999 1998
<S> <C> <C> <C> <C>
Cash Flows from Operating
Activities
Net Loss for the Period $ (52,727) $ (41,678) $ - $ -
Add: Non-Cash Adjustments
Contributing Services 6,000 6,000 - -
Changes in Assets and Liabilities:
Non-Refundable Payment -
Marketing Rights (17,217) (17,217) - -
Accounts Payable 6,845 6,845 - -
Due to Stockholder 28,883 28,833 50 -
Net Cash Flows from Operating Activities (28,216) (17,217) - -
Cash Flows from Investing Activities - - - -
Cash Flows from Financing Activities
Paid-in Capital 17,217 17,217 - -
Proceeds from Common Stock 10,999 - - -
Net Cash Flows from Financing Activities 28,216 17,217 - -
Net Increase in Cash and Cash Equivalents - - - -
Cash and Cash Equivalents - Beginning of Period - - - -
Cash and Cash Equivalents - End of Period $ - $ - $ - $ -
</TABLE>
The accompanying notes are an integral part of this financial statement
F-6
<PAGE>
OZOLUTIONS
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Toronto, Ontario, Canada
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
<TABLE>
<CAPTION>
Inception to Year Ended Year Ended Year Ended
August 31, August 31, August 31, August 31,
2000 2000 1999 1998
<C> <C> <C> <C> <C>
Acquisition of Marketing Contracts
Assets Purchased $ 1,025,217 $ 1,025,217 $ - $ -
Less: Purchase Price Financed via
Payable to 1421209 Ontario Limited (1,000,000) (1,000,000) - -
Less: Purchase Price Paid via
Stock Issuance (8,000) (8,000) - -
Cash Paid - Non-Refundable Deposit $ 17,217 $ 17,217 $ - $ -
</TABLE>
The accompanying notes are an integral part of this financial statement
F-7
<PAGE>
OZOLUTIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Toronto, Ontario, Canada
NOTES TO FINANCIAL STATEMENTS
Note A - The Company
The Company was incorporated under the laws of the state
of Delaware on January 10, 1996 as Unipack Process, Inc.
The name of the Company was changed to Rico Resources
1999, Inc. on October 22, 1999. On April 12, 2000 the
Board of Directors filed a Certificate of Amendment with
the Secretary of the State of Delaware changing the name
to Ozolutions, Inc. On April 12, 2000, the Board of
Directors amended the articles of incorporation to
increase the number of authorized shares of common stock
from 20,000,000 to 50,000,000 shares of $.001 par value
common stock. The Company's principal office is located
in Toronto, Ontario, Canada.
Scope of Business
At the present time the Company is in the development
stage and does not provide any product or service. The
Company intends to be an international marketer and
distributor of water purification systems using ozone
technology. The markets the Company will target are
Mexico, Caribbean, and Ontario, Canada.
The Company's future success is dependent upon its ability
to raise sufficient capital in order to continue to
develop its market for its services. There is no
guarantee that such capital will be available on
acceptable terms, if at all.
Purchase of Marketing Rights
The Company purchased the exclusive marketing rights to
distribute "Hankin Atlas Ozone Systems" products in Canada
and Mexico from 1421209 Ontario Limited. The purchase
price was for ($1,017,217) One Million Seventeen Thousand
Two Hundred and Seventeen Dollars, U.S. and the issue of
Eight Million (8,000,000) common shares of Ozolutions,
Inc. Of this amount, $17,217 U.S. is a non-refundable
payment to 1421209 Ontario Limited. The sum of Five
Hundred and Fifty Thousand ($550,000) Dollars, U.S. is
payable on or before the 90th day following qualification
for trading of Ozolutions stock on a recognized U.S.
exchange but in no case later than June 30, 2001, and the
delivery of Eight Million (8,000,000) common shares of
stock are payable on or before the thirtieth (30th) day
following the qualification for trading of the Ozolutions,
Inc. common shares on a recognized United States
Securities Exchange, but in no case later than April 30,
2001. In November 2000, the 8,000,000 shares of common
stock were delivered to 141209 Ontario Limited. The sum
of Two Hundred and Fifty Thousand ($250,000) Dollars, U.S.
is payable on or before the one hundred fiftieth (150th)
day following the qualifications for trading of the
Ozolutions, Inc. common shares on a recognized United
States Securities Exchange, but in no case later than
August 30, 2001. The remainder of the purchase price for
Two Hundred Thousand ($200,000) Dollars, U.S. is payable
on or before the expiration of one hundred eighty days
after the shares of Ozolutions, Inc. have been qualified
for trading on a recognized United States Securities
Exchange, but in no case later than September 30, 2001.
The above terms reflect the current terms of the asset
purchase agreement as outlined in an addendum effective on
November 7, 2000. Should the Company fail to achieve
qualification on a recognized US Securities Exchange, the
purchase agreement will continue as long as the Company
meets the above payment obligations.
Note B - Summary of Significant Accounting Policies
Method of Accounting
The Company maintains its books and prepares its financial
statements on the accrual basis of accounting.
- continued -
F-8
<PAGE>
OZOLUTIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Toronto, Ontario, Canada
NOTES TO FINANCIAL STATEMENTS
Note B - Summary of Significant Accounting Policies - continued
Development Stage
The Company has operated as a development stage enterprise
since its inception by devoting substantially all of its
efforts to financial planning, raising capital, research
and development, and developing markets for its services.
The Company prepares its financial statements in
accordance with the requirements of Statement of Financial
Accounting Standards No. 7, Accounting and Reporting by
Development Stage Enterprises.
Earnings (Loss) Per Common Share
Earnings (loss) per common share is computed in accordance
with SFAS No. 128, "Earnings Per Share," by dividing
income available to common stockholders by weighted
average number of common shares outstanding for each
period.
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 expense during the reporting period.
Actual results can differ from those estimates.
Organizational Expenses
Organizational expenses represent management, consulting,
legal, accounting, and filing fees incurred to date in the
formation of the Company. Organizational costs are
expensed as incurred pursuant Statement of Position 98-5
on Reporting on the Costs of Start-Up Activities.
Income Taxes
The Company accounts for income taxes in accordance with
SFAS No. 109, "Accounting for Income Taxes," using the
asset and liability approach, which require recognition of
deferred tax liabilities and assets for the expected
future tax consequences of temporary differences between
the carrying amounts and the tax basis of such assets and
liabilities. This method utilizes enacted statutory tax
rates in effect for the year in which the temporary
differences are expected to reverse and gives immediate
effect to changes in income tax rates upon enactment.
Deferred tax assets are recognized, net of any valuation
allowance, for temporary differences and net operating
loss and tax credit carryforwards. Deferred income tax
expense represents the change in net deferred assets and
liability balances. The Company had no material deferred
tax assets or liabilities for the periods presented.
Provision for Income Taxes
Deferred income taxes result from temporary differences
between the basis of assets and liabilities recognized for
differences between the financial statement and tax basis
thereon, and for the expected future tax benefits to be
derived from net operating losses and tax credit
carryforwards. A valuation allowance is recorded to
reflect the likelihood of realization of deferred tax
assets. At August 31, 2000 the Company has approximately
$53,000 of net operating losses available for Federal tax
purposes which are available to offset future taxable
income. The net operating loss carry forwards begin to
expire in 2011. The Company has fully reserved for any
furture tax benefits from the net operating loss carry
forwards since it has not generated any revenues to date.
F-9
<PAGE>
OZOLUTIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Toronto, Ontario, Canada
NOTES TO FINANCIAL STATEMENTS
Note B - Summary of Significant Accounting Policies - continued
Marketing Rights
Marketing rights represent the exclusive rights to
distribute "Hankin Atlas Ozone Systems" acquired from
1421209 Ontario Limited. Contracts are recorded at cost.
No amortization has been taken since the contracts have
not yet been placed in service.
Note C - Stockholders' Equity
Common Stock
The Company's Securities are not registered under the
Securities Act of 1933 and, therefore, no offering may be
made which would constitute a "Public Offering" within the
meaning of the United States Securities Act of 1933,
unless the shares are registered pursuant to an effective
registration statement under the Act.
The stockholders may not sell, transfer, pledge or
otherwise dispose of the common shares of the company in
the absence of either an effective registration statement
covering said shares under the 1933 Act and relevant state
securities laws, or an opinion of counsel that
registration is not required under the Act or under the
securities laws of any such state.
Initial Capitalization
The Company had all of its organizational costs paid by
the shareholders. The shareholders paid $10,999 for these
services for which they received 10,999,133 shares of the
Company's common stock. The value assigned to the shares
was $.001 U.S. per share.
Shares Issued in Connection with the Purchase of the
Marketing Contracts
The Company issued Eight Million (8,000,000) Shares of
common stock in November 2000 as part of the purchase of
the business. See Note A for details. The value assigned
to the shares was $.001 U.S.
Note D - Loan Agreement
The Company signed a loan agreement on June 21, 2000 with
1421209 Ontario Limited (A Related Party) for Three
Hundred Thousand ($300,000) Dollars, U.S. The proceeds
will be made available to the Company at its option for
use as working capital during the start up phase of the
operation. The proceeds become available to the company
upon 1421209 Ontario Limited receiving the first
installment of $550,000 of the purchase price of the
marketing rights. No amounts were outstanding under this
agreement as of August 31, 2000 or 1999. The loan is
payable quarterly in arrears with an interest rate of Six
and One-Half Percent (6.5 %) per annum, and is payable in
full in two (2) years.
F-10
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OZOLUTIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Toronto, Ontario, Canada
NOTES TO FINANCIAL STATEMENTS
Note E - Due to Stockholder
Due to stockholder represents amounts due for expenses
paid on behalf of the Company. The amount due is non-
interest bearing and contains no formal repayment terms.
Note F - Consulting Agreements
The Company signed a consulting agreement on July 1, 2000.
The consulting services consist of managerial services,
advising on production, distribution, sales and promotion,
labor negotiations, contract negotiations, financial
services, and such other consulting services as the
Company and consultant agree upon. The agreement is in
effect September 1, 2000 through August 31, 2003 with an
annual fee of Ninety Thousand ($90,000) Dollars, U.S.
The Company entered into a consulting agreement on May 5,
2000, which consists of the development of sales,
marketing and application of technology for the use of
ozone related technologies. The agreement is for a term
of one year commencing September 1, 2000 with an annual
fee of $12,000.
Note G - Related Party Transactions
The expenses of Ozolutions, Inc. have been paid on behalf
of one of the stockholders, therefore a Due to Stockholder
account has been set up. The balance for the period from
inception (January 10, 1996) to August 31, 2000 and August
31, 1999 is $28,883 and $-0-, respectively. The Company
purchased marketing rights from and has outstanding debt
with 1421209 Ontario Limited, a Company which owns 42% of
the outstanding stock of Ozolutions, Inc. at August 31,
2000. The Company used office space in a facility owned
by a stockholder at no cost. The estimated fair rental of
the office space is deemed immaterial to financial
statements.
Note H - Going Concern
The Company's financial statements have been presented on
the basis that it is a going concern, which contemplates
the realization of assets and the satisfaction of
liabilities in the normal course of business. The Company
reported net losses of $52,727 from the period of
inception (January 10, 1996) through August 31, 2000. As
a result there is a retained deficit of $52,727 at August
31, 2000.
The Company's continued existence is dependent upon its
ability to raise capital or to successfully market and
sell its products. The financial statements do not
include any adjustments that might be necessary should the
Company be unable to continue as a going concern.
F-11
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