SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
___________________
Date of Report (Date of earliest event reported) March 5, 1998
BIOCONTROL TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 0-10822 25-1229323
(State of other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
300 Indian Springs Road, Indiana, Pennsylvania 15701
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (412) 349-1811
_________________________________________________________________
(Former name or former address,
if changes since last report.)
Item 1. Change in Control of Registrant.
Not applicable.
Item 2. Acquisition or Disposition of Assets.
Not applicable.
Item 3. Bankruptcy or Receivership.
Not applicable.
Item 4. Changes in Registrant's Certifying Accountant
Not applicable.
Item 5. Other Events.
On March 5, 1998 Biocontrol Technology, Inc. (NASDAQ:BICO)
announced that it has acquired the controlling interest in
International Chemical Technologies, Inc. (ICTI), a Florida
company with a patented metal coating technology that is an
alternative for hard chrome and electroless nickel.
Item 6. Resignation of Registrant's Directors.
Not Applicable
Item 7. Financial Statement, Pro Forma Financial Information
and Exhibits.
(a) Financial Statements and Businesses Acquired -
(b) Pro Forma Financial Information -
(c) Exhibits - Financial Statements.
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act
of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned hereunto duly authorized.
BIOCONTROL TECHNOLOGY, INC.
by /s/ Fred E. Cooper
Fred E. Cooper, CEO
DATED: March 5, 1998
<PAGE>
BICO
BIOCONTROL TECHNOLOGY, INC
2275 Swallow Hill Road, Building 2500
Pittsburgh, PA 15220
Press Release
For More Information, Call:
Investors Media
Diane McQuaide Susan Taylor
1.412.429.0673 phone 1.412.279.9455 phone
1.412.279.9690 fax 1.412.279.9447 fax
BIOCONTROL ACQUIRES METAL COATING COMPANY WITH 1998
POTENTIAL REVENUE OF $50,000,000
Pittsburgh, PA - March 5, 1998 - Biocontrol Technology, Inc.
(Nasdaq:BICO) announced today that it has acquired the
controlling interest in International Chemical Technologies, Inc.
(ICTI), a Florida company with a patented revolutionary new metal
coating technology that is an alternative for hard chrome and
electroless nickel. Details of the acquisition are limited at
this time, but did involve a minimum down payment with the
balance payable over a three-year period. In 1998, ICTI's
potential revenues from the $48 billion metal finishing industry
could be as high as $50,000,000 with sizable profit margins.
Incorporated to produce and market cemkoter coating, ICTI,
located in Palm City, FL, has a 10,000 sq. ft. state-of-the-art
plating facility capable of annual chemistry sales of $50,000,000
and plating sales in excess of $20,000,000. In addition to
production, this facility will be used as a demonstration and
training facility for additional plants and potential licensees
of the coating technology. In business since August of 1997,
ICTI has invoiced, tested for, or is in negotiations with
companies such as Ford Motor; General Motors; Allied Signal
Braking Systems; Pratt Whitney Aircraft; USA Today, New York
Times, Los Angeles Times, and The San Francisco Chronicle.
"Because those who have already used and tested it claim
that in the very near future cemkote will capture the majority of
the vast metal alloy coating business," said Biocontrol Chief
Executive Officer Fred E. Cooper, "Biocontrol expects ICTI and
cemkote to generate immediate revenue and be the major profit
center of the company. ICTI is already in serious licensing
contract negotiations with several large coating users."
The metal coating, marketed as cemkoter, is an alternative
for the approximately ten million metric tons of chromium now
used annually worldwide for plating because cemkote and its
application technology deliver a significantly harder and more
abrasive resistant coating without the water and airborne toxic
emissions of chromium plating. These emissions are so much a
concern that the Metal Finishing Subcommittee of the
Environmental Protection Agency's Common Sense Initiative is
conducting significant research on chromium replacement products
and improved plating technologies to reduce the toxic wastes.
Produced in a very stable bath with a closed loop system
that produces no water discharge and clean exhaust air, cemkote
is cost-efficient and environmentally friendly coating that can
be applied to most alloys, including all steels, titanium and
aluminum.
Cemkote is a uniform, nickel boride coating that provides
extreme hardness, corrosion resistance, ductility and low
friction. The coating is harder than tungsten carbide coatings,
hard chrome and electroless nickel; passes ASTM B117 accelerated
and salt spray tests of two hundred (200) hours; and has a lower
coefficient of friction than electroless nickel, tungsten
carbide, and hard chrome.
According to the 1996-1997 Market Survey of the Surface
Finishing Market Research Board, the metal finishing industry
involves about 10,000 companies generating an annual $48 billion
in revenue and contributing about $40 billion to the US gross
domestic product. At this time, ICTI plans are to license to
these metal finishers the use of the cemkote coating solution;
both the solution and the closed loop production system; or an
entire plant for exclusive use of cemkote. Because only industry
standard equipment is needed, converting to the use of cemkote by
plating facilities currently using chromium or electroless nickel
can be accomplished quickly within 2 - 3 months.
ICTI also plans to seek joint ventures, develop cemkote-
coated product lines, and coat products from other companies in
its own facilities. Literally hundreds of thousands of uses for
cemkote exist in all domestic and international major industries
such as aerospace; petroleum; agriculture; military; tools;
mining; textile; printing; automotive; high performance
equipment, etc.
Biocontrol Technology, Inc. has its corporate offices in
Pittsburgh, PA and is involved in the development and manufacture
of biomedical devices and environmental products.
<PAGE>
THOMPSON DUGAN
CERTIFIED PUBLIC ACCOUNTANTS
_______________________
Pinebridge Commons
1580 McLaughlin Run Rd.
Pittsburgh, PA 15241
Report of Independent Certified Public Accountants
Independent Auditor's Report
Board of Directors
International Chemical Technologies, Inc.
We have audited the accompanying balance sheet of
International Chemical Technologies, Inc. (a development stage
company) as of December 31, 1997, and the related statements of
operations, changes in stockholders' equity (deficit) and cash
flows for the year then ended. 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 audit.
We conducted our audit 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 financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in
all material respects, the financial position of International
Chemical Technologies, Inc. as of December 31, 1997 and the
results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting
principles.
The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going
concern. As discussed in Note 2 to the financial statements, the
Company is in the development stage and has incurred losses from
operations and negative cash flows from operations through
December 31, 1997, raising substantial doubt about its ability to
continue as a going concern. Management's plans in regard to
these matters are also described in Note 2. The financial
statements do not include any adjustments that might result from
the outcome of this uncertainty, including adjustments relating
to the recoverability and classification of recorded assets that
might be necessary in the event the Company cannot continue to
meet its financing requirements and achieve productive
operations.
Thompson Dugan, PC
October 14, 1998
<PAGE>
INTERNATIONAL CHEMICAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
DECEMBER 31, 1997
ASSETS
Current Assets:
Cash $ 15,084
Accounts Receivable - trade 5,697
Employee Advances 2,900
Inventory, FIFO (note 3) 7,495
Prepaid expenses 1,187
------------
Total current assets 32,363
------------
Property and equipment (note 1):
Machinery and equipment 353,538
Leasehold improvements 288,107
Computer equipment 15,321
Furniture and fixtures 10,437
------------
667,403
Less - Accumulated depreciation 41,405
------------
625,998
------------
Other Assets:
Intangible assets (net of accumulated
amortization of $39,417) (note 4) 262,970
Deposits 9,745
------------
272,715
------------
TOTAL ASSETS $ 931,076
============
The accompanying notes are an integral part of these financial statements.
<PAGE>
BALANCE SHEET
(Continued)
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current Liabilities:
Accounts payable $ 26,627
Sales tax payable 200
Accrued interest payable (stockholder) 36,204
Stockholder loan (unsecured and due on demand) 246,380
Current portion of long-term debt-stockholder (note 5) 324,999
------------
Total current liabilities 634,410
Long-term debt-stockholder (note 5) 975,001
------------
Total liabilities 1,609,411
------------
Stockholders' (deficit):
Common stock - par $.001; 2,000,000 shares
authorized, issued and outstanding 2,000
Deficit accumulated during development stage (680,335)
------------
Total stockholders' (deficit) (678,335)
------------
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) $ 931,076
============
The accompanying notes are an integral part of these financial statements.
<PAGE>
INTERNATIONAL CHEMICAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
Revenue - sales $ 8,319
------------
Manufacturing expense:
Materials 12,964
Wages 108,834
Contract labor 75,849
Overhead applied 174,468
------------
372,115
------------
Selling expenses:
Freight and shipping 7,620
Advertising 1,084
------------
8,704
------------
General expenses:
Professional fees 96,780
Interest and bank charges 89,704
Depreciation and amortization 80,822
Wages - administrative 48,461
Supplies 38,886
Rent (note 6) 31,988
Insurance 26,708
Utilities 19,093
Payroll and other taxes 13,156
Repairs and maintenance 9,042
Telephone 5,722
Travel and entertainment 5,130
Printing and reproduction 4,563
Employee benefits 4,507
Education and seminars 4,201
Miscellaneous 1,903
Equipment rental 1,276
Recruiting 861
------------
Less - amounts allocated to overhead applied 482,803
(174,468)
------------
308,335
------------
Total Expenses 689,154
------------
Net loss from operations (680,835)
Other income - miscellaneous 500
------------
Net loss (680,335)
============
Loss per common share (note 1) $ (0.34)
============
The accompanying notes are an integral part of these financial statements.
<PAGE>
INTERNATIONAL CHEMICAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
YEAR ENDED DECEMBER 31, 1997
Deficit Accumulated Total
Common stock During Development Stockholders'
Shares Amount Stage Equity(Deficit)
------ ------ ----------- ---------------
Balance at beginning
of year 2,000,000 $ 2,000 $ - $ 2,000
Net loss - - (680,335) (680,335)
---------- ------ ----------- ----------------
Balance at end
of year 2,000,000 $ 2,000 $ (680,335) (678,335)
========== ====== =========== ================
The accompanying notes are an integral part of these financial statements.
<PAGE>
INTERNATIONAL CHEMICAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1997
Increase (decrease) in cash
Cash flows from operating activities:
Net loss $ (680,335)
------------
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation and amortization 80,822
Changes in assets and liabilities:
Increase in accounts receivable (5,697)
Increase in inventory (7,495)
Increase in prepaid expenses (1,187)
Increase in employee advances (2,900)
Increase in deposits (4,220)
Increase in accrued interest payable 36,204
Increase in accounts payable 12,457
Increase in sales tax payable 200
------------
Total adjustments 108,184
------------
Net cash used by operating activities (572,151)
------------
Cash flow from investing activities:
Acquisition of property and equipment (601,190)
Investment in intangible assets (132,952)
------------
Net cash used by investing activities (734,142)
------------
Cash flow from financing activities:
Principal payments on stockholder loan (150,000)
Loan from stockholder 166,716
Proceeds from issuance of long-term debt 1,300,000
------------
Net cash provided by financing activities 1,316,716
------------
Net increase in cash 10,423
Cash at beginning of year 4,661
------------
Cash at end of year $ 15,084
============
Supplemental disclosures of cash flow information (see note 7).
The accompanying notes are an integral part of these financial statements.
<PAGE>
INTERNATIONAL CHEMICAL TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting 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.
Accounts Receivable -- The company maintains an allowance for
uncollectible accounts based upon historical experience. No
allowance for bad debts is reflected in these financial
statements as they are considered immaterial. The Company
extends credit to customers located throughout the country.
Inventory -- Inventory is stated at the lower of first-in, first-
out (FIFO) cost or market.
Property and Equipment -- Property and equipment are stated at
cost. Depreciation is computed using straight-line methods over
the following estimated useful lives:
Leasehold improvements 39 years
Machinery and equipment 7 - 10 years
Furniture and fixtures 7 - 10 years
Computer equipment 3 - 5 years
Expenditures for maintenance and repairs are charged against
operations. Renewals and betterments that materially extend the
life of an asset are capitalized.
Intangible Assets -- Intangible assets are stated at cost less
accumulated amortization. Amortization is computed using
straight-line methods over the following estimated useful lives:
Patents 15 years
Start up costs 5 years
Organizational costs 5 years
Income Taxes -- The Company was treated as an `S' Corporation
for federal income tax purposes and, therefore, the stockholders
were taxed on the Company's taxable income through December 31,
1997. Therefore, no provision or liability for federal income
taxes is reflected in these financial statements.
During 1998, majority control of the Company was acquired by
another corporation and the Company's `S' Corporation status was
terminated.
Advertising Costs -- The Company defers the cost of direct
solicitation advertising and amortizes it over the future periods
which the revenue is expected to be earned. All other
advertising costs are expensed in the period it is incurred.
Cash Flows -- The Company presents changes in cash flow using
the indirect method. For purposes of
reporting cash flow, the Company considers all highly liquid
investments with original maturities of three months or less to
be cash equivalents.
Loss Per Common Share -- Loss per common share is based upon the
weighted average number of common shares outstanding (2,000,000
shares for 1997).
NOTE 2 - ORGANIZATION AND BUSINESS
International Chemical Technologies, Inc. was incorporated in
Florida in 1995. The Company is engaged in the business of
manufacturing Cemkoter, an extremely hard, uniform, nickel boride
coating that provides wear and abrasion resistance. The Company
is currently licensing Cemkote's patented technology to the metal
finishing industry.
International Chemical Technologies, Inc. started operations May
1, 1997. The process of Cemkote is a new process and the market
place is currently being established. The year of 1997 was a
development stage year with plans to be fully operational in
1998. In the initial year of production, costs to manufacture
far out weighed sales due to the chemical process to initiate the
system, and discounts and promotional items to create an interest
in the product. Current year revenues and expenses reflect total
development stage activity.
Effective March 4, 1998, pursuant to a Stock Purchase Agreement
dated February 20, 1998, Biocontrol Technology, Inc. acquired
58.4% of the Company's outstanding common stock. The ability of
the Company to continue in existence is dependent on its having
sufficient financial resources to maintain operations and to
successfully develop a market for its product. Until the Company
can become financially self sufficient it will be dependent on
funding provided by its parent company, Biocontrol Technology,
Inc. (BICO) and capital raised through a private placement of its
common stock. In the past BICO has financed its own operations
from proceeds generated from private and public sales of its
securities, the issuance of debt in the form of convertible
debentures and funds from other subsidiaries. The failure of
BICO to continue to exist as a going concern would have a
material adverse effect on the business of International Chemical
Technologies, Inc. and its ability to continue operations.
The Company is currently raising additional capital through a
private placement memorandum and anticipates that sales of its
product will begin to provide funding to its operations by late
1998.
NOTE 3 - INVENTORY
Inventory consists of the following:
Raw material $ 7,495
----------
NOTE 4 - INTANGIBLE ASSETS
Intangible assets consist of the following:
Patents $ 10,140
Start up costs 197,731
Organizational costs 94,516
----------
302,387
Less - accumulated amortization (39,417)
----------
$ 262,970
----------
NOTE 5 - LONG-TERM DEBT
Long-term debt consists of the following:
Brenda and Farrell Jones (stockholders) - due in
36 monthly installments of $36,111 plus
interest at 9.5% beginning April 1, 1998 $1,300,000
Less - current portion (324,999)
-------------
$ 975,001
-------------
Long-term debt maturing subsequent to December 31, 1998 is as
follows: 1999 - $433,334; 2000 - $433,334; 2001 - $108,333
NOTE 6 - LEASE OBLIGATIONS
The Company entered a lease of a building effective January 1997
for a term of seven years. during 1997, the Company's rent
expense was $31,988. The following is a schedule by years of
future minimum rental payments required under operating leases
that have initial or remaining noncancellable lease terms in
excess of one year as of December 31, 1997.
Year ending December 31:
1998 $34,125
1999 $35,100
2000 $36,075
2001 $37,050
2002 $38,025
NOTE 7 - SUPPLEMENTAL DISCLOSURES OF CASH FLOW
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $53,373
The Company did not engage in any non-cash investing or financing
f
activities during 1997.
Unaudited Pro Forma Condensed Consolidated
Balance Sheet
at December 31, 1997
International
Biocontrol Chemical
Technology Technologies, Pro Forma Pro Forma
Inc. Inc. Adjustment Combined
CURRENT ASSETS
Cash and equivalents $ 2,759,067 $ 15,084 $(1,030,000)(1) (1,744,151)
Accounts receivable 417,329 5,697 - 423,026
Inventory 1,834,018 7,495 - 1,841,513
Other assets 288,146 4,087 - 292,233
--------- ---------- ----------- ---------
5,298,560 32,363 (1,030,000) 4,300,923
PROPERTY, PLANT and
EQUIPMENT,net 6,691,923 625,998 - 7,317,930
OTHER ASSETS
Notes receivable 898,900 - - 898,900
Goodwill - - 5,308,335 (2) 5,308,335
Other 91,908 272,715 (262,970)(3) 101,653
--------- ---------- ----------- ---------
$12,981,300 $ 931,076 $ 4,015,365 $17,927,741
========== ========== =========== ==========
CURRENT LIABILITIES
Accounts Payable $ 646,535 $ 26,627 $ - $ 673,162
Debenture Payable 3,301,280 - - 3,301,280
Notes Payable - 246,380 3,350,000 (4) 3,596,380
Current portion of
long-term debt 128,698 324,999 - 453,697
Other liabilities 333,965 36,404 - 370,369
---------- ---------- ----------- ----------
4,410,478 634,410 3,350,000 8,394,888
LONG-TERM DEBT 2,697,099 975,001 - 3,672,100
UNRELATED INVESTORS
INTEREST IN SUBSIDIARY 1,409,647 - - 1,409,647
STOCKHOLDERS'EQUITY
(DEFICIT) 4,464,076 (678,335) 665,365 (5) 4,451,106
---------- ---------- ----------- ---------
$12,981,300 $ 931,076 $ 4,015,365 $17,927,741
========== ========== =========== ==========
(1) Cash payments in connection with acquisition
(2) Goodwill in connection with acquisition
(3) Net balance of ICTI organization costs
(4) Notes payable issued in connection with acquisition
(5) Net deficiency in assets of ICTI and stock issued in
connection with acquisition
<PAGE>
Unaudited Pro Forma Condensed Consolidated
Statement of Operations
For the Year Ended December 31, 1997
International
Biocontrol Chemical Pro Forma
Technology, Technologies, Combined
Inc. Inc.
Revenues
Sales $ 1,155,907 $ 8,319 $ 1,164,226
Interest income 165,977 - 165,997
Other income 104,250 500 104,750
----------- ------- -----------
1,426,134 8,819 1,434,953
Costs and expenses
Cost of products sold 641,331 12,964 654,295
Research and develop 6,977,590 - 6,977,590
General and admin 12,704,146 586,486 13,290,632
Debt issue costs 3,306,812 - 3,306,812
Warrant extensions-sub 4,046,875 - 4,046,875
Interest expense 315,624 89,704 405,328
Beneficial convertible
debt feature 6,278,853 - 6,278,853
----------- ------- -----------
34,271,231 689,154 34,960,385
=========== ======= ===========
Loss before unrelated
investors' interest (32,845,097) (680,335) (33,525,432)
Unrelated investors'
interest in net loss of
subsidiary 2,411,920 - 2,411,920
----------- ------- -----------
Net loss $ (30,433,177) $(680,335) $(31,113,512)
=========== ======= ===========
Loss per common share $ (0.43) $ (0.44)
=========== ===========
