UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended June 30, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE
REQUIRED)
Commission file number 0-7655
LIFE RESOURCES, INCORPORATED
(Exact name of registrant as specified in its charter)
Oregon 93-0475404
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
101 East Redlands Boulevard, Suite 206
Redlands, California 92373
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (909) 793-3000
Securities registered pursuant to section 13(b) of the Act:
Name of each exchange
Title of each class on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
(Title of Class)
Indicate by check mark whether the registrant (1) has filed
all reports to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
and (2) has been subject to such filing requirements for the past
90 days.
Yes No X
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ( )
Registrant has 5,292,095 shares of Common Stock outstanding
as of June 30, 1996. Registrant is unaware of any brokerage firm
making a market in its common stock during the past five years.
<PAGE>
Part I
Item 1. Description of Business
Life Resources Incorporated (the "Registrant") was formed in
April 1970 through the merger of Fidelity Capital Corporation, a
California corporation incorporated in March 1970, and
Trailerdyne, Inc., an Oregon corporation incorporated in June
1959. Assets consisted of real estate holdings in San Bernardino
County, California.
In 1970, Registrant acquired Sam Andy Foods, Inc., which was
engaged in packaging and sales of dehydrated foods, and later
changed the name to United Commodities International, a wholly-
owned subsidiary. In 1971, Registrant acquired 81% of the
outstanding shares of Ski Park City West, Inc., a Utah
corporation, which owned and operated a ski resort in Park City,
Utah, and had several real estate holdings. Registrant disposed
of all of its interest in the stock and the ski resort operation
in December 1972.
In 1973, Registrant purchased the assets of the preformed
tumbling media division of Norton Industries, located in
Massachusetts, and all of the stock of Fortune Industries, a
Michigan corporation that manufactured preformed tumbling media
abrasive products, and combined the two operations into LRI
Industries, a wholly-owned subsidiary.
In October 1976, Registrant sold all of the assets of United
Commodities International.
Between 1976 and 1981, Registrant sold all of its remaining real
estate holdings.
In June 1983, Registrant sold all of the assets, properties, and
business of LRI Industries for cash and notes. On June 30, 1994,
the balance of the Note Receivable was $253,600, before deduction
of unamortized discount. On November 28, 1994 Registrant
accepted a reduced payment of $95,000 to settle the note.
During fiscal 1996, 1995, and 1994, Registrant had no ongoing
operating business. Operations consist of payment of its
liabilities.
At a meeting held on May 20, 1993, the Board of Directors agreed
to acquire two parcels of real property ("Parcel 1" and
"Parcel 2") located in Loma Linda, California, at the corner of
Barton Road and New Jersey (collectively, the Property) from J.
Robert West and Donna H. West, husband and wife.
<PAGE>
Part I, Continued
Item 1. Description of Business, Continued
On June 16, 1993, the Registrant acquired real property located
in Loma Linda, California, the Property from J. Robert West and
Donna H. West. In exchange for the Property, the Company issued
to J. Robert West and Donna H. West 100,000,000 shares of common
stock, valued at $.01 per share. After the transfer, J. Robert
West owned 103,568,298 shares, which represented a 94.5 percent
ownership interest in the Company's voting securities. At the
date of transfer, Registrant recorded the Property at J. Robert
West's historical cost basis of $1,855,029. At June 30, 1996 and
1995, the property was subject to outstanding obligations of
$1,035,269 and $1,115,329, respectively, including an obligation
of $372,000 owed to a company wholly owned by J. Robert West.
The Company plans to continue to develop the project on Parcel 1
of the Property by completing the mechanical and engineering
plans and obtaining permits from the City of Loma Linda. Funds
to complete this development and service the debt will be sought
from outside sources. J. Robert West, a director of the Company,
intends to continue to loan needed funds until additional sources
are obtained. Additional sources are expected to be derived from
possible partnerships, joint ventures, equity funding to the
Company, and/or financial institutions. Parcel 2 will be held
for later development. However, both parcels may be sold if
appropriate offers are received. A sale or joint venture
arrangement would be entertained either now or after completion
of the projects. This would be subject to market conditions and
terms.
In October 1994 the Board of Directors authorized, and the
Company effected, an issuance of 21,093,679 shares of Common
Stock to certain individuals (who later became Board members) who
will be important to the future success of the Company. This
issuance of stock represented 19.3 percent of the Company. Since
the equity book value of the Company was negative, and since the
Company has no ongoing operations, the compensatory value of the
stock was deemed to have no value. Consequently, no amounts were
booked to reflect the issuance of these shares.
In February 1995 the Company issued a private placement of
1,200,000 shares of Common Stock to a private investor. The
issuance was made for $120,000 and represented 0.9 percent of the
Company. The price paid for the stock was not representative of
any then measurable value of the Company. The issuance was made
pursuant to Regulation D, which is exempt from registration based
on Section 4(2) of the Federal Securities Act of 1933.
<PAGE>
Part I, Continued
Item 1. Description of Business, Continued
On March 1, 1996 the registrant purchased certain assets and
liabilities of J. Robert West M.D., Inc. dba Awest Dermatology
and Surgery Medical Group ("Awest"). This event was reported as
executed by the registrant in a Form 8-K filing dated March 1,
1996.
This transaction was not executed and, as such, both parties have
agreed to postpone this transaction to a future date. It is the
intent of the parties to reconsider the transaction in the
future.
Both parties, including the registrant, have agreed to continue
ongoing, separate operations until such time that final
arrangements for the transaction can be resolved.
Item 2. Description of Property
The corporate office of Registrant is located at 101 East
Redlands Boulevard, Suite 206, Redlands, California 92373. The
office is furnished by the Chairman of the Board at no cost to
the Company. Registrant believes that the facility is well
maintained and adequate for present operations.
In May of 1993, J. Robert West offered the Property to the
Company. The terms for the Company's acquisition of the Property
from J. Robert West were as follows:
1. The total purchase price for the Property was $2,722,000
(the "Purchase Price") and was based on the appraisal of
R.B. Broadbelt, M.A.I., dated January 15, 1993. The
appraiser was retained by J. Robert West and not by the
Board of Directors and is addressed to J. Robert West and
not to the Company, its board, or stockholders. The board
received no separate independent appraisal. The appraiser
was paid $7,500 by J. Robert West. According to the
Appraisal, Parcel 1 was valued at $1,292,000 and Parcel 2
was valued at $1,430,000 as of November 24, 1992, for a
combined fair market value of $2,722,000.
2. The Purchase Price was payable as follows:
a. Company issued to J. Robert West and Donna H. West a
total of 100,000,000 shares (4,000,000 post-split
shares) of its common stock valued at $.01 per share
for a total value of $1,000,000. Several factors were
considered by the Board of Directors in establishing
the value of the shares, including, but not limited to,
<PAGE>
Part I, Continued
Item 2. Description of Property, Continued
the fact that the shares to be issued would transfer
control to J. Robert West. As a practical matter,
however, J. Robert West already exerted substantial
control over the Company's operations given his 37.4%
interest as the largest stockholder. The Board of
Directors also determined that the value of the shares
offered to J. Robert West in return for the Property
was fair given the fact that the book value of the
shares was less than $.01 per share and the appraised
value of the Property, less liabilities, was
$1,000,000. Furthermore, the Board of Directors
determined that the acquisition was in the best
interests of the Company because it provided a
substantial contribution of a capital asset to the
Company and business opportunities for the Company in
the development and operation of the Property.
J. Robert West has been the sole supplier of funds
required from outside the Company. Such funds have
been loaned to the Company. The value of $.01 per
share was established by the Board of Directors, J.
Robert West abstaining, as the maximum then fair market
value of the Company's shares based on the following:
(i) the above-mentioned facts, (ii) the shares had a
book value of less than $.01 per share, and (iii) there
has been no active market or market price for the sale
of the stock.
b. The Company assumed existing mortgage liabilities
encumbering the Property totaling approximately
$1,722,000 (the balance of the Purchase Price). The
existing liabilities against the Property consisted of
three loans collateralized by Parcel 1 and two loans
collateralized by Parcel 2. The mortgage liability
balances at June 30, 1996 are as follows:
<PAGE>
Part I, Continued
Item 2. Description of Property, Continued
Description Loan Amount
(1) Note payable to bank, collateral-
ized by Parcel 1, interest and
principal due monthly at a variable
rate of 2.5% above the bank's prime
lending rate (an effective rate of
10.75% at June 30, 1996). The note
was due May 5, 1996. In September,
1996, the registrant refinanced with
the bank, interest and principal due
monthly at a variable rate of 2.5%
above the bank's prime lending rate,
with a final payment due in November,
1998. 279,846
(2) Note payable to bank, collateral-
ized by Parcel 2, interest and
principal due monthly at a variable
rate of 2.5% above the bank's prime
lending rate (an effective rate of
10.75% at June 30, 1996). The note
was due on May 5, 1996. In September,
1996, the registrant refinanced with
the bank, interest and principal due
monthly at a variable rate of 2.5%
above the bank's prime lending rate,
with a final payment due in
November, 1998. 308,423
(3) Note payable to an individual,
collateralized by Parcel 1,
interest only due monthly at 11%
per annum, due on demand or June 30,
1998. 75,000
(4) Subordinated note payable to a
director and controlling shareholder,
collateralized by Parcel 1, interest
(7% per annum) and principal payable
on June 14, 1998. 372,000
Total $1,035,269
Loan (4) was originally a loan from J. Robert West, M.D.,
Inc. to J. Robert West. These loans were
collateralized by trust deeds on the Property. The
Company assumed all obligations on the Property.
<PAGE>
Part I, Continued
Item 2. Description of Property, Continued
Offsite improvements as required by the City of Loma Linda
were completed for the two parcels prior to acquisition by
the Company, including water and sewer lines, street
improvements, curb and gutter, fire hydrants, sidewalks, and
storm drains. Perimeter block and retaining walls required
for the project were also completed. A precise plan of
design for a medical office building and parking lot for
Parcel 1 were completed and approved by the City of Loma
Linda. Mechanical and working drawings were in progress and
were submitted to the City for approval. During the Fiscal
year ended June 30, 1996, no development took place. The
Company would entertain a sale of the project either now or
after completion and/or consider joint venture arrangements.
The decision has not been made as to whether the Company
would manage the project or engage a management company
after completion. Market conditions will impact the
progress of the project. It is anticipated that funds for
the project will come from outside financing and a director
of the Company. The Company has no business operations
other than those related to the Property.
Should the Property be sold, proceeds received from such
liquidation of the Property will be used for working
capital, reduction of debt, mergers or acquisitions, or any
other purposes that the Board of Directors believes to be in
the best interests of the Company. It is not possible at
this time to determine the approximate amount of net
proceeds to be devoted to each purpose.
On June 30, 1995 the combined fair market value of the
properties was ascertained to be $1,635,029. The land was
written down to its fair market value as of that date.
On June 30, 1996 the combined fair market value of the
properties was ascertained to be $1,065,000. The land was
written down to its fair market value as of that date. The
write down of the land to fair market value does not include
any costs of disposal as the Company is still considering
development of the property.
Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
<PAGE>
Part II
Item 5. Market for Common Equity and Related Stockholder Matters
Registrant is unaware of any brokerage firm making a market in
its common stock during the past five years. The Company does
not have any stock option, stock purchase, or any other
compensation or incentive plan now in effect or in effect within
the last ten years.
Following is the approximate number of holders of record of each
class of equity securities of Registrant as of June 30, 1996,
determined from Registrant's records of stock transfers.
Number of Record
Title of Class Holders
Common stock, $.01 par value 1,200
Item 6. Management's Discussion and Analysis or Plan of Operation
In 1996, interest expense was relatively consistent with 1995.
In 1996, general and administrative expenses increased from 1995
primarily due to consulting and legal fees associated with
potential acquisitions of physician groups.
In 1995, the Company incurred a $100,899 loss on the early
settlement of a note receivable. In 1996 and 1995, the Company
incurred losses of approximately $570,000 and $220,000,
respectively, on the write down of the land to its fair market
value.
The net loss in 1996 increased by approximately 45% from the
prior year due primarily to the 1996 loss on the write down of
the land to its fair market value.
<PAGE>
Part II, Continued
Item 6. Management's Discussion and Analysis or Plan of Operation
Liquidity and Capital Resources
On June 30, 1996 and June 30, 1995, Registrant's liabilities
exceeded its assets by $1,358,388 and $482,474, respectively.
There were no capital expenditures during fiscal 1996.
The primary asset of the Company consists of the land held for
development or sale of $1,065,000 which will generate no positive
cash flow. The current and liquid assets of the Company consist
of cash of $118.
The primary liabilities of the Company consist of the loans from
Citizens Business Bank, Billy W. Simmons Family Trust dated 1990,
and J. Robert West, M.D., Inc. which total $2,120,093. Current
liabilities consist of accounts payable, accrued liabilities and
interest, and the current portion of long-term debt, which total
$209,996.
A director of the Company, J. Robert West, has been making loans
to the Company to fund Company activities. The Director is not
obligated to continue making these loans, although it is
anticipated that he will continue making these loans to the
Company. The loans are established under twelve-month term notes
with the accrued interest being added to principal at each
twelve-month renewal date.
Since the Registrant has had no ongoing business for the three
most recent fiscal years, there has been no impact of inflation
and changing prices on Registrant's income from continuing
operations.
The liquidity of the Registrant depends upon its ability to
continue to borrow funds from a director.
The Company's primary cash requirements for the twelve-month
period beginning July 1, 1996 and ending June 30, 1997 are to
service the debt owed to Citizens Business Bank and the Billy
Simmons Family Trust dated 1990. The cash requirement for these
debts, including principal and interest, is $200,430 for the
twelve months ending June 30, 1997.
<PAGE>
Part II, Continued
Item 6. Management's Discussion and Analysis or Plan of Operation
Additional sources of funds are expected to be derived from
possible partnerships, joint ventures, equity funding to the
Company and financial institutions.
The business plan of Registrant is discussed in Item 1.,Business.
<PAGE>
Part II, Continued
Item 7. Financial Statements
INDEX TO FINANCIAL STATEMENTS
PAGE
Report of Independent Accountants 13-14
Consolidated Balance Sheet, June 30, 1996. 15
Consolidated Statements of Operations for the Years
Ended June 30, 1996 and 1995. 16
Consolidated Statements of Shareholders' (Deficit)
Equity for the Years Ended June 30, 1996 and
1995. 17
Consolidated Statements of Cash Flows for the Years
Ended June 30, 1996 and 1995. 18-19
Notes to Consolidated Financial Statements 20-26
Report of Independent Accountants on Financial
Statement Schedule 27
Financial Statement Schedule - Schedule III 28
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of
Life Resources Incorporated
We have audited the accompanying consolidated balance sheet of
Life Resources Incorporated and subsidiaries (the "Company") as
of June 30, 1996, and the related consolidated statements of
operations, shareholders' (deficit) equity and cash flows for
each of the two years in the period ended June 30, 1996. 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 an 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Life Resources Incorporated and its
subsidiaries as of June 30, 1996, and the consolidated results of
their operations and their cash flows for each of the two years
in the period ended June 30, 1996, in conformity with generally
accepted accounting principles.
<PAGE>
The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going
concern. As discussed in Note 1 to the consolidated financial
statements, the Company's cash flows, which are dependent upon
the continued financial support of a director of the Company, and
its accumulated deficit raise substantial doubt about the
entity's ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 1.
The consolidated financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Los Angeles, California
September 27, 1996, except for Note 1,
as to which the date is December 12, 1996.
<PAGE>
<TABLE>
LIFE RESOURCES INCORPORATED
CONSOLIDATED BALANCE SHEET
June 30, 1996
<CAPTION>
ASSETS:
<S> <C>
Current:
Cash $ 118
Loan cost 400
___________
Total current assets 518
Land held for development or sale 1,065,000
___________
Total assets $ 1,065,518
===========
LIABILITIES:
Current:
Accounts payable and
accrued liabilities $ 71,896
Accrued interest 9,231
Current portion of long-term debt 128,869
___________
Total current liabilities 209,996
Accrued interest, shareholder 222,686
Long-term debt 534,400
Long-term debt, shareholder 1,456,824
___________
Total liabilities 2,423,906
SHAREHOLDERS' DEFICIT:
Common stock, $.01 par value, 200,000,000
authorized; 5,292,095 shares issued
and outstanding 52,921
Additional paid-in capital 4,180,865
Deficit (5,592,174)
____________
Total shareholders'
deficit (1,358,388)
____________
Total liabilities and
shareholders'
deficit $ 1,065,518
===========
The accompanying notes are an integral part of these consolidated
financial statements.
</TABLE>
<PAGE>
<TABLE>
LIFE RESOURCES INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
For the Years Ended
June 30,
1996 1995
<S> <C> <C>
Revenues:
Interest income $ 0 $ 7,704
_________ ___________
Expenses:
General and administrative 130,515 108,170
Interest 78,874 97,445
Interest, shareholder 95,696 86,507
Loss on settlement of
notes receivable 100,899
Loss on write down of land
to fair market value 570,029 220,000
_________ _________
875,114 613,021
_________ __________
Loss before income
taxes (875,114) (605,317)
Income taxes:
State 800 800
_________ __________
Net loss ($875,914) ($606,117)
========== ==========
Loss per common share:
Net loss ($ .17) ($ .12)
========== ==========
The accompanying notes are an integral part of these consolidated
financial statements.
</TABLE>
<PAGE>
<TABLE>
LIFE RESOURCES INCORPORATED
CONSOLIDATED STATEMENTS OF SHAREHOLDERS'(DEFICIT) EQUITY
For The Years Ended June 30, 1996 and 1995
<CAPTION>
Additional Shareholders'
Number of Paid-In (Deficit)
Shares Amount Capital Deficit Equity
<S> <C> <C> <C> <C> <C>
Balance, June 30, 1994 109,541,815 1,095,418 3,018,368 (4,110,143) 3,643
Shares issued to
individuals, October 1994 21,093,679 210,937 (210,937)
Private Placement,
February 1995 1,200,000 12,000 108,000 120,000
Reverse stock split 25:1 (126,543,399) (1,265,434) 1,265,434
(See Note 6)
Net loss (606,117) (606,117)
____________ __________ __________ ____________ ____________
Balance, June 30, 1995 5,292,095 52,921 4,180,865 (4,716,260) (482,474)
Net loss (875,914) (875,914)
____________ __________ __________ ____________ ____________
Balance, June 30, 1996 5,292,095 $52,921 $4,180,865 ($5,592,174) ($1,358,388)
============= ========== ========== ============ ============
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
LIFE RESOURCES INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
For The Years Ended June 30,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net loss ($875,914) ($606,117)
Adjustments to reconcile net loss
for items currently not
affecting operating cash flows:
Amortization of loan costs 5,050 5,050
Loss on settlement of
note receivable 100,899
Loss on write down of land 570,029 220,000
Changes in operating assets
and liabilities:
Interest receivable 7,488
Accounts payable and accrued
liabilities 47,457 14,718
Accrued interest 100,037 86,799
__________ _________
Net cash used for operating
activities (153,341) (171,163)
__________ _________
Cash flows from investing activities:
Note receivable collections 95,000
__________ _________
Net cash provided by
investing activities 95,000
__________ _________
Cash flows from financing activities:
Principal payments on
long-term debt (80,060) (187,910)
Proceeds from issuance of
long-term debt, shareholder 264,150 265,000
Principal payments on long-
term debt, shareholder (77,113) (75,000)
Proceeds from issuance of
common stock 120,000
___________ _________
Net cash provided by
financing activities 106,977 122,090
__________ _________
Net (decrease) increase in cash (46,364) 45,927
Cash at beginning of year 46,482 555
_________ _________
Cash at end of year $ 118 $ 46,482
========= =========
The accompanying notes are an integral part of these consolidated
financial statements.
</TABLE>
<PAGE>
<TABLE>
LIFE RESOURCES INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS, Continued
<CAPTION>
Supplemental disclosure of cash
flow information: For The Years Ended June 30,
1996 1995
<S> <C> <C>
Cash paid during the year for:
Interest $74,533 $135,040
Taxes 800 800
The accompanying notes are an integral part of these consolidated
financial statements.
</TABLE>
<PAGE>
LIFE RESOURCES INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary Of Significant Accounting Policies:
Principles Of Consolidation:
The consolidated financial statements include the accounts
of Life Resources Incorporated (the "Company") and its
wholly-owned subsidiaries, LRI Industries and United
Commodities International. All significant intercompany
accounts and transactions have been eliminated.
Business Operations:
The Company's financial statements have been prepared on a
going concern basis which contemplates the realization of
assets and liquidation of liabilities in the ordinary course
of business.
The Company has few remaining assets and liabilities as of
June 30, 1996, and has no continuing revenue-producing
activities. In addition, at June 30, 1996, the Company has
a substantial accumulated deficit. Also, the Company has
received substantial financial assistance from a director
and controlling shareholder, the continuation of which
cannot be assured. These conditions raise substantial doubt
about the Company's ability to continue as a going concern.
The consolidated financial statements do not include any
adjustments that might be necessary should the Company be
unable to continue in existence.
Reclassification:
Certain amounts in the 1995 financial statements have been
reclassified to conform to the 1996 presentation.
Loan Cost:
The cost incurred in conjunction with the notes payable to
the bank have been capitalized and are being amortized over
the life of the debt using the straight-line method. The
straight-line method approximates the interest method.
Management's Estimates:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
<PAGE>
LIFE RESOURCES INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
1. Summary Of Significant Accounting Policies, Continued
Management's Estimates: Continued
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 for each reporting period. While management
believes that these estimates are adequate as of June 30,
1996 and 1995, it is reasonably possible that actual results
could differ from those estimates.
Management's Plans:
As discussed in Note 4, the Company acquired real property
(the "Property"), consisting of two parcels, in Loma Linda,
California during 1993. The Company plans to develop Parcel
1 by completing the mechanical and engineering plans and
obtaining permits from the City of Loma Linda. Funds to
complete this development and service the debt will be
sought from outside sources. Moreover, it is anticipated
that J. Robert West, a director and controlling shareholder
of the Company, would continue to loan needed funds until
additional sources are obtained. However, Dr. West has no
formal agreement with the Company to do so. Additional
sources are expected to be derived from possible
partnerships, joint ventures, equity funding to the Company
and/or financial institutions, although there is no
assurance that such sources will materialize. Parcel 2 will
be held for later development. However, both parcels may be
sold if appropriate offers are received. Should the project
be sold, proceeds received from such a sale would be used
for working capital, reduction of debt, mergers or
acquisitions, or any other purposes that the Board of
Directors believes to be in the best interests of the
Company.
The Company has no business operations other than those
related to the Property.
On March 1, 1996 the registrant purchased certain assets and
liabilities of J. Robert West M.D., Inc. d.b.a. Awest
Dermatology and Surgery Medical Group ("Awest"). This event
was reported as executed by the registrant in a Form 8-K
filing dated March 1, 1996.
<PAGE>
LIFE RESOURCES INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
1. Summary Of Significant Accounting Policies, Continued
Management's Plans: Continued
This transaction was not executed and, as such, both parties
have agreed to postpone this transaction to a future date.
It is the intent of the parties to reconsider the
transaction in the future.
Both parties, including the registrant, have agreed to
continue ongoing, separate operations until such time that
final arrangements for the transaction can be resolved.
Income Taxes:
The Company accounts for income taxes under the provisions
of Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes". Under this method, deferred
income taxes are recognized for the tax consequences in
future years of differences between the tax basis of assets
and liabilities and their financial reporting amounts at
each year-end based on enacted tax laws and statutory rates
applicable to the periods in which the differences are
expected to affect taxable income. Valuation allowances are
established. when necessary, to reduce deferred tax assets
to the amount expected to be realized. Income tax expense
is the tax payable for the period and the change during the
period in deferred tax assets and liabilities.
Future Accounting Requirements
In March 1995, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards ("SFAS")
No. 121, which establishes standards to account for the
impairment of long-lived assets.
Required adoption of SFAS No. 121 is for fiscal years
beginning after December 15, 1995. As a result, the Company
has not elected early application of the provisions of this
statement. The Company believes that SFAS No. 121, when
adopted, will not have a material effect on its financial
position.
<PAGE>
LIFE RESOURCES INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
2. Loss on Settlement of Notes Receivable:
At June 30, 1994 the Company had notes receivable which
resulted from the sale of assets, properties and business of
LRI Industries to a nonaffiliated company in June 1983. The
purchaser assumed outstanding debt of the business, agreed
to pay $40,000 cash, and issued the Company two notes
totaling $360,000. On November 28, 1994, LRI settled the
remaining amounts due under the notes for $95,000, resulting
in a recognized loss on settlement of notes receivable of
$100,899.
3. Long-Term Debt:
Long-term debt consists of the following at June 30, 1996:
Note payable to bank, collateralized by Parcel 1,
interest and principal due monthly at a variable
rate of 2.5% above the bank's prime lending rate
(an effective rate of 10.75% at June 30, 1996).
The note was due May 5, 1996. In September,
1996, the registrant refinanced with
the bank, interest and principal due
monthly at a variable rate of 2.5% above
the bank's prime lending rate, with a
final payment due in November, 1998. $279,846
Note payable to bank, collateralized
by Parcel 2, interest and principal
due monthly at a variable rate of
2.5% above the bank's prime lending
rate (an effective rate of 10.75% at
June 30, 1996). The note was due
May 5, 1996. In September, 1996, the
registrant refinanced with the bank,
interest and principal due monthly
at a variable rate of 2.5% above the
bank s prime lending rate, with a
final payment due in November, 1998. 308,423
Note payable to an individual, col-
lateralized by Parcel 1 (Note 4),
interest only due monthly at 11% per
annum, due on demand or June 30, 1998. 75,000
<PAGE>
LIFE RESOURCES INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
3. Long-Term Debt, Continued:
Subordinated note payable to a di-
rector and controlling shareholder,
collateralized by Parcel 1 (Note 4),
interest (7% per annum) and principal
payable on June 14, 1998. 372,000
Unsecured note payable to a director
and controlling shareholder, interest
(7% per annum) and principal payable
on June 30, 1998. 987,924
Unsecured note payable to a director
and controlling shareholder, interest
(9% per annum) and principal
due and payable on June 30, 1998. 96,900
___________
2,120,093
Less, current portion (128,869)
___________
$1,991,224
==========
Maturities of long-term debt at June 30, 1996 are as follows:
Fiscal Year Ending June 30,
1997 128,869
1998 1,514,592
1999 476,632
__________
$2,120,093
==========
4. Related Party Transactions:
On June 16, 1993, the Company acquired real property located
in Loma Linda, California, from a director and controlling
shareholder. In exchange for the property, the Company
issued to the director 4,000,000 shares (100,000,000 pre-
split shares) of the Company's common stock. After the
transfer, the director owned 4,142,772 shares (103,569,298
pre-split shares) for a 94.5 percent ownership interest in
the Company's voting securities. At the date of transfer,
the Company recorded the property at the director's
historical cost basis of $1,855,029.
On June 30, 1995 the combined fair market value of the
properties was ascertained to be $1,635,029. The land was
written down to its fair market value as of that date.
<PAGE>
LIFE RESOURCES INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
4. Related Party Transactions: Continued
In September, 1996, the combined fair market value of the
properties was ascertained to be $1,065,000. The land was
written down to its fair market value as of that date. The
write down of the land does not include any costs of
disposal as the Company is still considering development of
the property.
5. Income Taxes:
Deferred taxes consist of the
following at June 30, 1996:
Deferred tax asset:
Net operating loss 523,130
Valuation allowance (523,130)
__________
Net deferred taxes $ -
==========
The difference between the federal statutory tax rate of 34%
and the Company's effective rate of 0% is the result of
incurring net operating losses without current tax benefit
for all years presented.
Net operating loss carryforwards for federal and state
income tax purposes at June 30, 1996 were approximately
$1,439,000 and $366,000, respectively. These carryforwards
expire beginning in 1997.
The Company experienced an ownership change as defined in
Internal Revenue Code ("IRC") Section 382. Therefore, the
utilization of net operating loss carryforwards may be
limited, subject to the provisions of IRC Section 382.
6. Common Stock:
On June 30, 1995, the Company's Board of Directors approved
a twenty five-for-one reverse stock split of the Company's
common stock. A total of 126,543,399 shares of common stock
were retired in connection with the reverse stock split.
The stated par value of each share was not changed from
$.01. A total of $1,265,434 was reclassified from the
Company's common stock account to the Company's additional
paid-in capital account. The detail of the reverse stock
split is shown in the Consolidated Statements of
Shareholders' (Deficit) Equity. All share and per share
amounts in the consolidated financial statements have been
restated to retroactively reflect the reverse stock split.
<PAGE>
LIFE RESOURCES INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
6. Common Stock: (Continued)
In October 1994 the Board of Directors authorized, and the
Company effected, an issuance of 843,747 shares (21,093,679
pre-split shares) of Common Stock to certain individuals
(who later became Board members) who will be important to
the future success of the Company. This issuance of stock
represented 16.1 percent ownership of the Company. Since
the equity book value of the Company was negative, and since
the Company has no ongoing operations, the compensatory
value of the stock was deemed to have no value.
Consequently, no amounts were booked to reflect the issuance
of these shares.
In February 1995 the Company issued a private placement of
48,000 shares (1,200,000 pre-split shares) of Common Stock
to a private investor. The issuance was made for $120,000
and represented 0.9 ownership percent of the Company. The
price paid for the stock was not representative of any then
measurable value of the Company. The issuance was made
pursuant to Regulation D, which is exempt from registration
based on Section 4(2) of the Federal Securities Act of 1933.
Loss per share of common stock is based on the restated
weighted average number of shares outstanding, which were
5,292,095 and 5,034,483 for the years ended 1996 and 1995
respectively. There were no common stock equivalents.
7. Fair Value Of Financial Instruments:
The carrying amounts of the notes payable to the bank and to
the individual are a reasonable estimate of their fair
value. It was not practicable to estimate the fair value of
the interest and notes payable to a director and controlling
shareholder as the payments are not based on fixed payment
terms.
8. Commitments and Contingencies:
At June 30, 1996, the Company is contingently liable for
guarantees of indebtedness owed by a director and
controlling shareholder of $108,000. The fair value of this
contingent liability is material to the Company's financial
statements. In the opinion of management, it is not
probable that the Company will be required to satisfy this
guarantee.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
To the Shareholders and Board of Directors of
Life Resources, Inc.
Our report on the financial statements of Life Resources, Inc. is
included on pages 13 and 14 of this Form 10-KSB and contains an
explanatory paragraph regarding the Company s ability to continue
as a going concern. In connection with our audits of such
financial statements, we have also audited the related financial
statement schedule listed in the index on page 34 of this Form
10-KSB.
In our opinion, the financial statement schedule referred to
above, when considered in relation to the basic financial
statements taken as a whole, presents fairly, in all material
respects, the information required to be included therein.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Los Angeles, California
September 27, 1996
<PAGE>
<TABLE>
LIFE RESOURCES INCORPORATED
FINANCIAL STATEMENT SCHEDULE
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
<CAPTION>
Capitalized
Subsequent to
Initial Cost Acquisition
Building
and Carrying
Description Encumbrances Land Improvements Improvements Costs
<S> <C> <C> <C> <C> <C>
Unimproved Land Chino Valley Bank $1,855,029
Billy Simmons
J. Robert West
Note to Schedule III
Balance at June 30, 1994 $1,855,029
Acquisitions 0
Deductions 0
Write Down of Land ($220,000)
___________
Balance at June 30, 1995 $1,635,029
Acquisitions
Deductions
Write Down of Land ($570,029)
___________
Balance at June 30, 1996 $1,065,000
===========
</TABLE>
<TABLE>
LIFE RESOURCES INCORPORATED
FINANCIAL STATEMENT SCHEDULE
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
<CAPTION>
Amount at Close of Period
Building and Accumulated Date of Date Depreciation
Description Encumbrances Land Improvements Total Depreciation Construction Acquired Life
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Unimproved Land Chino Valley Bank $1,065,000 $1,065,000 June 16,1993
Billy Simmons
J. Robert West
Note to Schedule III
Balance at June 30, 1994
Acquisitions
Deductions
Write Down of Land
Balance at June 30, 1995
Acquisitions
Deductions
Write Down of Land
Balance at June 30, 1996
</TABLE>
<PAGE>
Part II, Continued
Item 8. Changes In And Disagreements With Accountants on
Accounting And Financial Disclosure
None.
Part III
Item 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance With Section 16(a)of the Exchange
Act
A. Identification of Directors. The following information is
furnished concerning each director of the Registrant:
<TABLE>
<CAPTION>
Date On Which
Other Positions Director The Term As
And Offices Continuously Director
Name Age With Registrant Served Since Expires
<S> <C> <C> <C> <C>
J. Robert West 67 Chairman of the
Board of Directors (1)
and President April 1970 June 1997
Mark L. Ashlock 38 None May 1995 June 1997
Tad R. Callister 50 None May 1995 June 1997
C. Rick Foster 46 None May 1993 June 1997
Brad Hainsworth 62 None May 1995 June 1997
Milton M. Miner 37 Secretary May 1995 June 1997
Richard A. Pierce 49 None May 1995 June 1997
(1) J. Robert West was a director of Fidelity Capital
Corporation, a California corporation, since its
organization in January 1970. Subsequently, Fidelity
Capital Corporation merged into Registrant.
There are no arrangements or understandings between the
current directors and any other person pursuant to which
such individual was selected as a director.
</TABLE>
Continued
<PAGE>
Part III, Continued
Item 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance With Section 16(a) of the Exchange
Act (Continued)
B. Identification of Executive Officers - The following
information is furnished concerning each executive officer
of Registrant and certain other significant personnel, as of
June 30, 1996:
<TABLE>
<CAPTION>
Position And Held Position Term of
Offices Continuously Office
Name Age With Registrant Since Expires
<S> <C> <C> <C> <C>
J. Robert West 67 Chairman of the April 1970 June 1997
Board, President May 1971 June 1997
Milton M. Miner 37 Secretary May 1993 June 1997
</TABLE>
C. Identification of Certain Significant Employees. There are
no employees of the Registrant.
D. Family Relationships. Milton M. Miner is a member of J.
Robert West's immediate family.
E. Business Experience of Directors and Officers. The following
is a table indicating the business experience during the
past five years of each director and executive officer and
certain other significant personnel, including their
principal occupations and employment during that period:
Principal Occupation And Employment
Name During Last Five Years
J. Robert West Chairman of the Board and President
of Registrant; Dermatologist
Mark L. Ashlock CPA in private practice
Tad R. Callister Attorney in private practice
C. Rick Foster CPA in private practice
Brad Hainsworth Professor of public relations at
Brigham Young University
Milton M. Miner CPA; Controller of AWest
Dermatology
Richard A. Pierce Health care consultant in private
practice
<PAGE>
Item 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance With Section 16(a) of the Exchange
Act (Continued)
The By-Laws of Registrant and Oregon Business Corporation
Act Sections 57.255 and 57.260 provide that directors and
officers of the Registrant shall be indemnified for all
costs incurred by or caused by them in connection with
settlements or lawsuits arising from their actions as
officers or directors, except for their own negligence,
knowing unauthorized acts, or defalcations not ratified,
confirmed or adopted or the benefit thereof received by
Registrant.
F. Involvement in Certain Legal Proceedings.
None of the following events have occurred during the past
five years as, against, or to any director or officer of
Registrant.
(1) A petition under the Bankruptcy Act or any state
insolvency law was filed by or against, or a receiver,
fiscal agent or similar officer was appointed by a
court for the business or property of such person or
any partnership in which he was a general partner at or
within two years before the time of such filing, or any
corporation or business association of which he was an
executive officer at or within two years before the
time of such filing;
(2) Such person was convicted in a criminal proceeding
(excluding traffic violations and other minor offenses)
or is the subject of a criminal proceeding which is
presently pending;
(3) Such person was the subject of any order, judgment, or
decree of any court of competent jurisdiction
permanently or temporarily enjoining him from acting as
an investment adviser, underwriter, broker, or dealer
in securities, or as an affiliated person, director, or
employee of any investment company, bank, savings and
loan association, or insurance company, or from
engaging in or continuing any conduct or practice in
connection with any such activity or in connection with
the purchase or sale of any security, or was the
subject of any order of a Federal or State authority
barring or suspending, for more than 60 days, the right
of such person to be engaged in any such activity or to
be associated with persons in any such activity, which
order has not been reversed or suspended.
<PAGE>
Part III, Continued
Item 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance With Section 16(a) of the Exchange
Act (Continued)
The following person was a beneficial owner of more than ten
percent of the equity securities of the Registrant at any
time during the fiscal year:
J. Robert West
1540 Marion Road
Redlands, CA 92374
Item 10. Executive Compensation
No Director or Officer of Registrant was paid direct or
indirect remuneration during registrant's last fiscal year.
It is not anticipated that any officer or director will
receive any remuneration directly or indirectly for
Registrant's current fiscal year.
The Registrant does not have an annuity, pension,
profit sharing, or other deferred compensation plan.
Accordingly, no annuity, pension, profit sharing, or
other retirement benefits have been paid or are
proposed to be paid to any officer of the Registrant.
As of June 30, 1996, Registrant did not have a
Qualified or Unqualified Stock Option Plan for any
officers, directors, or key employees to purchase
Registrants' $.01 par value Common Stock.
Item 11. Security Ownership of Certain Beneficial Owners and
Management
A. Principal Security Holders. The following information is
furnished as of June 30, 1996, as to the voting securities
of the Registrant owned of record or beneficially by each
person who owns of record, or is known by the Registrant to
own beneficially more than 10% of its securities:
Name and Title of Type of Shares % of
Address Class Ownership Owned Class
J. Robert West Common Record and 4,295,319 81.2%
1540 Marion Rd. Beneficial
Redlands, CA
<PAGE>
Part III, Continued
Item 11. Security Ownership of Certain Beneficial Owners and
Management, Continued
B. Management - The following information is furnished as to
each class of equity securities of the Registrant
beneficially owned directly or indirectly by all directors
and officers of the Registrant as a group on June 30, 1996:
Amount
Title of Beneficially % of
Class Owned Class
Common 4,980,867 94.1%
Item 12. Certain Relationships and Related Transactions
Related transactions between Registrant and J. Robert West,
Chairman of the Board and President, are described in
Item 1.
As of June 30, 1994, the Company has a loan outstanding to
J. Robert West of $707,787. The loan bears interest at 7%
per annum, with principal and interest due on June 30, 1996.
As of June 30, 1995, the Company has a loan outstanding to
J. Robert West of $795,287. The loan bears interest at 7%
per annum, with principal and interest due on June 30, 1998.
As of June 30, 1995, the Company is contingently liable for
guarantees of indebtedness by J. Robert West of $108,000.
As of June 30, 1996, the Company has a loan outstanding to
J. Robert West of $987,924. The loan bears interest at 7%
per annum, with principal and interest due on June 30, 1988.
As of June 30, 1996, the Company has a loan outstanding to
J. Robert West of $372,000. The loan bears interest at 7%
per annum, with principal and interest payable June 14,
1998.
As of June 30, 1996, the Company is contingently liable for
guarantees of indebtedness owed by J. Robert West of
$108,000.
<PAGE>
Part IV
Item 13. Exhibits and Reports on Form 8-K
A. (1) Financial statements - The financial statements
required to be filed hereunder are listed on page
12 hereof.
(2) Documents filed as part of this report include the
following financial statement schedule:
Page No.
III. Real Estate And Accumulated
Depreciation 28
(3) Exhibits
Exhibit Number Description of Documents
3* Articles of Incorporation
and bylaws
27 Financial Data Schedule
(4) Reports on Form 8-K
On December 12, 1996 an 8-K/A was filed by Life
Resources Incorporated.
* Incorporated by reference to the Life Resources Incorporated
1975 form 10-K.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
LIFE RESOURCES INCORPORATED
(Registrant)
BY: /s/ J. Robert West
J. Robert West
Chairman of the
Board and President
DATE: October 12, 1996
BY: /s/ Milton M. Miner
Milton M. Miner
Secretary
DATE: October 12, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<CASH> 118
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 518
<PP&E> 1,065,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,065,518
<CURRENT-LIABILITIES> 209,996
<BONDS> 0
0
0
<COMMON> 52,921
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,065,518
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 700,544
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 174,570
<INCOME-PRETAX> (875,114)
<INCOME-TAX> 800
<INCOME-CONTINUING> (875,914)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (875,914)
<EPS-PRIMARY> (.17)
<EPS-DILUTED> 0
</TABLE>
