SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
September 30, 1997
Date of Report (Date of earliest event reported)
D-LANZ DEVELOPMENT GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-5367 11-1717709
(State or other jur- (Commission (IRS Employer
isdiction of incor- File Number) Identification No.)
poration)
400 GROVE STREET, GLEN ROCK, NJ 07452
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (201) 457-1221
(Former name or former address, if changed since last report.) No change.
<PAGE>
Item 1. Change in Control of Registrant
(a) The Registrant has not had a change in control. However, the nature of that
control previously in place has changed. The President and sole director of the
Company, Roger Fidler, now owns over 60% of the voting stock of the Registrant
by virtue of the acquisition of certain assets described herein below. See Item
2. (b) There are no arrangements by which a change in control will occur in the
future.
Item 2. Acquisition of Assets
On September 30, 1997, the Registrant acquired the assets of Health
Technologies International, Inc. ("HTI"), a private New Jersey corporation, in
exchange for 8,448,606 shares of the Registrant's common stock. The primary
assets of HTI are two vehicles and an exclusive license to manufacture, market
and sell a breast abnormality indicator in Chile and Singapore. This product,
with FDA marketing clearance in place, is presently manufactured in the United
States by HumaScan, Inc., a NASDAQ listed corporation which has recently
announced a December, 1997 launch date. The Registrant and HumaScan are
unrelated. In the United States HumaScan has a marketing arrangement with
Physician Sales and Service, Inc., one of the largest medical product
distributors in the United States, which plans to sell the device under the
trademark "BreastAlert".
HTI was controlled by Roger Fidler, President of the Registrant.
The Asset Acquisition Agreement is attached hereto as Exhibit 1.
Item 3. Bankruptcy or Receivership
Not applicable.
Item 4. Changes in Registrant's Certifying Public Accountant.
Not applicable.
Item 5. Other events.
None reported.
Item 6. Resignations of Registrant's Directors
Not applicable.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
The financial statements giving effect to the acquisition are attached
hereto as Exhibit 2.
Item 8. Change in Fiscal Year
Not applicable
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf the undersigned
hereunto duly authorized.
Date: November 3, 1997
D-LANZ DEVELOPMENT GROUP, INC.
BY:_/s/ Roger L. Fidler_
Roger L. Fidler
President
<PAGE>
AGREEMENT OF BUSINESS COMBINATION
BY EXCHANGE OF ASSETS FOR
STOCK
AGREEMENT dated this 30th day of June, 1997, by and between D-LANZ DEVELOPMENT
GROUP INC., a Delaware corporation having its principal place of business at 400
Grove Street, Glen Rock NJ 07452 ("D-LANZ"), and HEALTH TECHNOLOGIES
INTERNATIONAL INC., a New Jersey corporation having its address at 400 Grove
Street, Glen Rock, NJ 07452 (the "COMPANY").
W I T N E S S E T H
WHEREAS, The Company is desirous of exchanging all or substantially all of
it's assets; and
WHEREAS, D-LANZ is desirous of acquiring all of the assets of the Company;
IT IS NOW THEREFORE AGREED that in consideration of the mutual covenants
and agreements hereinafter set forth, the parties hereto agree as follows:
1. Exchange of Assets.
1.1 Subject to the terms and conditions of this Agreement and the
performance by the parties hereto of their respective obligations hereunder,
then Company shall exchange, transfer, convey, assign and deliver to D-LANZ, and
D-LANZ shall receive, acquire and accept on the Closing Date (as such term is
hereinafter defined) all of the right, title and interest of the Company,
including all aspects to the business, assets, goodwill, and rights of Company
as shall exist on the Closing Date, including, without limitation, rights in
tradenames, trademarks and copyrights, all rights relating to or arising out of
the business conducted by the Company under express or implied warranty (as from
the suppliers of the Company with respect to the Assets being transferred to
D-LANZ), all books and records, correspondence, employment records and files of
or relating to the business or Assets of the Company being exchanged with D-LANZ
and all of the Company's right, title and interest in and to each lease,
contract, agreement, purchase order or commitment to which the Company is a
party or in which the Company has rights, except two vehicles (all of such
assets are collectively referred to hereinafter as the "Assets"), free and clear
of all liabilities, obligations, liens and encumbrances, except as expressly
assumed by D-LANZ under Section 2 below.
1.2 The transfer of the Assets as herein provided shall be effected by
bills of sale, endorsements, assignments, drafts, checks, deeds and other
instruments of transfer and conveyance delivered to D-LANZ on the Closing Date
in form sufficient to transfer the Assets as contemplated by this agreement and
as shall be reasonably requested by D-LANZ. Company covenants that (i) it will,
at any time and from time to time after the Closing Date, execute and deliver
such other instruments of transfer and conveyance and do all such further acts
and things as may be reasonably requested by D-LANZ to transfer and deliver to
D-LANZ or to aid and assist D-LANZ in collecting and reducing to possession, any
and all of the Assets; (ii) D-LANZ, after the Closing Date, shall have the right
and authority to collect, for the account of D-LANZ, all checks, notes and other
evidences of indebtedness or obligations to make payment of money and other
items which shall be transferred to D-LANZ as provided herein and to endorse
with the name of Company any such checks, notes or other instruments received
after the Closing Date; and (iii) Company will transfer and deliver to D-LANZ
any cash or other property that Company may receive after the Closing Date in
respect of or arising out of the business conducted by Company. After the
Closing Date, at reasonable times and upon reasonable notice, Company shall have
access to the books and records conveyed to D-LANZ hereunder, and D-LANZ shall
have access to any minute books, stock books and similar corporate records
retained by Company.
1.3 Company covenants that between the date hereof and the Closing Date
and, if reasonably requested by D-LANZ, after the Closing Date, Company shall
use its best efforts to obtain the consent of any parties to any contracts,
licenses, leases, commitments, sales orders, purchase orders or other agreements
being assigned by Company to D-LANZ hereunder as shall be reasonably requested
by D-LANZ. If any such required consent is not obtained, this agreement shall
not constitute an agreement to assign the instrument relating thereto, however
Company shall cooperate with D-LANZ in any reasonable arrangement to provide for
D-LANZ the benefits under any such contract, license, lease, commitment, sales
order, purchase order or other agreement, including enforcement, at the cost and
for the benefit of D-LANZ, of any and all rights of Company against the other
party thereto arising out of the breach or cancellation by such party or
otherwise.
2. Assumption of Liabilities. D-LANZ shall assume no liabilities of
Company, except as specified in the list of liabilities which is attached hereto
as Exhibit II.
3. Closing. The Closing hereunder (the "Closing") shall take place on or
about the 30th day of September, 1997 at the offices of Roger L. Fidler, Esq.
400 Grove street, Glen Rock, New Jersey 07452 or at such other time and place as
may be agreed by D-LANZ and the Company (the "Closing Date") .
4. Exchange Terms; Allocation.
4.1 In consideration of the exchange and transfer of the Assets herein
contemplated, on the Closing Date, D-LANZ shall deliver at Closing to certain
shareholders set forth in Exhibit 4.1 certificates for 8,448,606 shares of said
corporation's common stock. Of this shares 2,000,000 will be sold to Scantek
Medical, Inc. for par value to satisfy one of the terms of the license being
acquired. The balance shall be distributed to the HTI shareholders.
4.2 Upon the conclusion of this transaction, D-LANZ represents that in
addition to the above mentioned shares to be delivered to Company or its
nominees on its behalf, there shall remain outstanding, in addition thereto,
only the following shares held by other shareholders, to wit:
1,551,394.
5. Representations and Warranties of Company. Company hereby represents and
warrants as follows:
5.1 Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of New Jersey and has full power and
authority to own its properties and carry on its business as and in the places
where such properties are now owned or such business is now being conducted. On
or before closing Company shall establish to the satisfaction of D-LANZ that it
has title to the Assets and authority to convey the same in accordance with the
terms of this Agreement. Complete and correct copies of the Certificate of
Incorporation of Company and all amendments thereto, and of the By-Laws of
Company, and all amendments thereto, certified by the Secretary of Company, have
been or will be delivered to D-LANZ on or prior to the Closing Date by Company.
Company is duly qualified to do business and is in good standing in all
jurisdictions in which such qualification is necessary because of the character
of the properties owned by it or the nature of its activities. Company has taken
no action and has not failed to take any action, which action or failure would
preclude or prevent Company from conducting the business of Company in the
manner heretofore conducted.
5.2 Company has no subsidiaries.
5.3 Company has obtained written approval of over two-thirds of its
stockholders and is fully empowered by them to enter into this transaction.
5.4 Company has full power and authority, corporate and otherwise, to enter
into this agreement on behalf of Company and to cause Company to assume and
perform its, his or her obligations hereunder. The execution and delivery of
this agreement and the performance by Company of its obligations hereunder have
been duly authorized by the Board of Directors of Company and no further action
or approval, corporate or otherwise, is required in order to constitute this
agreement as a binding and enforceable obligation of Company. The execution and
delivery of this agreement and the performance by Company of its obligations
hereunder do not and will not violate any provision of the Certificate of
Incorporation or By-Laws of Company and do not and will not conflict with or
result in any breach of any condition or provision of, or constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any of the Assets by reason of the terms of any contract,
mortgage, lien, lease, agreement indenture, instrument, judgment or decree to
which Company is a party or which is or purports to be binding upon Company or
which affects or purports to affect any of the Assets.
5.4 No action, approval, consent or authorization, including but not
limited to any action, approval, consent or authorization by any governmental or
quasi-governmental agency, commission, board, bureau or instrumentality is
necessary as to Company in order to constitute this agreement as a binding and
enforceable obligation of Company in accordance with its terms.
5.5 Company has not incurred any obligation or liability (absolute or
contingent, liquidated or unliquidated, choate or inchoate) except current
obligations and liabilities incurred in the ordinary course of their businesses
which would act as a lien against the Assets.
5.6 Company has not leased or effected any transfer of any of the Assets;
6. Representations and Warranties of D-LANZ. D-LANZ hereby represents and
warrants that on the closing date all of the following will be true:
6.1 D-LANZ is a corporation duly organized, validly existing and in good
standing under the laws of the state of Delaware. D-LANZ is not conducting any
business in any location. Complete and correct copies of the Certificate of
incorporation of Company and all amendments thereto, certified in each case by
the Secretary of State of the State of Delaware, and of the By-Laws of D-LANZ,
and all amendments thereto, certified by the Secretary of D-LANZ, have been or
will be delivered to Company on or prior to the Closing Date by D-LANZ. D-LANZ
will present at closing a Certificate of good standing for the State of
Delaware. D-LANZ has taken no action and has not failed to take any action,
which action or failure would preclude or prevent Company from conducting the
business of Company in the manner heretofore conducted. D-LANZ is approved for
trading in the over-the-counter market with not less than two market makers.
6.2 D-LANZ has no subsidiaries.
6.3 D-LANZ has no authorized or outstanding securities other than its
common stock, $.001 par value per share (the "Common Stock"), which consists of
50,000,000 authorized shares of which not more than 1,551,394 shares are
currently outstanding. All outstanding Common stock is duly authorized, validly
issued, fully-paid and non-assessable (except for such statutory and
constitutional obligations as may be imposed notwithstanding full payment for
and valid issuance of such shares), and there are no presently issued or
outstanding securities of D-LANZ convertible into common stock nor are there any
outstanding options, warrants, agreements, rights or commitments of any kind
relating to the authorized but unissued Common Stock. All transfer taxes, if
any, with respect to transfers of securities of D-LANZ made prior to the date
hereof have been paid. All of the common stock is owned, both beneficially and
of record, free of any security interests, liens, pledges, claims, charges,
escrows encumbrances, options, rights of first refusal, mortgages, indentures,
security agreements or other contracts (whether or not relating in any way to
credit or the borrowing of money) and the designated owner thereof has the
unrestricted right to vote such Common Stock. D-LANZ also has authorized
50,000,000 shares of Preferred Stock having a par value of $.001 per share, none
of which are issued and/or outstanding.
6.4 D-LANZ's Board of Director's will recommend to certain controlling
shareholders, as soon as practicable after receipt of Company's certified
financial statements, approval of the transaction contemplated herein and obtain
written consent to take such acts and actions as may be deemed necessary or
advisable by counsel to Company to fully empower D-LANZ and its Board of
Directors to enter into and consummate this transaction, including the giving of
notice to D-LANZ shareholders as required by New York law.
6.5 D-LANZ has full power and authority, corporate and otherwise, to enter
into this agreement and to assume and perform its, his or her obligations
hereunder. The execution and delivery of this agreement and the performance by
D-LANZ of its obligations hereunder have been duly authorized by the Board of
Directors of D-LANZ and no further action or approval, except shareholder
approval, corporate or otherwise, is required in order to constitute this
agreement as a binding and enforceable obligation of D-LANZ. The execution and
delivery of this agreement and the performance by D-LANZ of its obligations
hereunder do not and will not violate any provision of the Certificate of
Incorporation or By-Laws of D-LANZ and do not and will not conflict with or
result in any breach of any condition or provision of, or constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any of its assets by reason of the terms of any contract,
mortgage, lien, lease, agreement indenture, instrument, judgment or decree to
which D-LANZ is a party or which is or purports to be binding upon Company or
which affects its assets.
6.6 No action, approval, consent or authorization, including but not
limited to any action, approval, consent or authorization by any governmental or
quasi-governmental agency, commission, board, bureau or instrumentality is
necessary as to D-LANZ in order to constitute this agreement as a binding and
enforceable obligation of D-LANZ in accordance with its terms.
6.7 D-LANZ has not during the last twelve months, except as may be required
to satisfy the terms of this Agreement:
6.7.1 authorized, issued, sold or converted any securities, or entered into
any agreement with respect
thereto;
6.7.2 declared, set aside or made any dividend or other distribution or
purchased, redeemed or reclassified any of their capital stock or effected any
stock split, stock dividend, exchange or recapitalization or entered into any
agreement in respect of the foregoing;
6.7.3 incurred any damage, destruction or similar loss, whether or not
covered by insurance, materially affecting their businesses or properties;
6.7.4 sold, assigned or transferred. any of their tangible assets or any
patent, trademark, trade name, copyright, license, franchise, design or other
intangible assets or properties;
6.7.5 mortgaged, pledged, granted or suffered to exist any lien or other
encumbrance or charge on any of their assets or properties, tangible or
intangible;
6.7.6 waived any rights of material value or canceled, discharged,
satisfied or paid any material debts or claims;
6.7.7 incurred any obligation or liability (absolute or contingent,
liquidated or unliquidated, choate or inchoate);
6.7.8 leased or effected any transfer of any of their assets or properties;
6.7.9 entered into, made any amendment of or terminated any lease, material
contract or license;
6.7.10 amended its Certificate of Incorporation or By-Laws;
6.7.11 effected any change in their accounting practices, procedures or
methods;
6.7.12 became obligated to make any payment to any shareholder of D-LANZ in
any capacity, or entered into any transaction of any nature with any shareholder
of D-LANZ in any capacity;
6.7.13 increased the compensation payable to any of their directors,
officers or employees or became obligated to increase any such compensation;
6.7.14 entered into any transaction other than in the ordinary course of
business, or changed in any way any of their business policies or practices.
6.8 D-LANZ is not a party to or has any contract or commitment of any kind
or nature whatsoever, written or oral, formal or informal, including, without
limitation, any lease, license, franchise, employment, maintenance, consultant
or commission agreement, pension, profit-sharing, bonus, stock purchase, stock
option, retirement, severance, hospitalization, accident, insurance or other
plan or arrangement involving employee benefits, contract with any labor union
or contract for services, materials, supplies, merchandise, inventory or
equipment, for the sale or purchase of any of its services, products or assets,
for the borrowing of money or for a line or letter of credit, with any current
or former director, officer or employee of D-LANZ which will be in effect on the
Closing Date, with any government or agency thereof, pursuant to which its right
to compete with any entity or person in the conduct of its business is
restrained or restricted for any reason or in any way, guaranteeing the
performance, liabilities or obligations of any Entity or person, for capital
improvements or expenditures or with any contractor or subcontractor for in
excess of $100.00, for charitable contributions aggregating in excess of
$100.00, or involving in excess of $100.00 in cash over its term (including any
periods covered by any options to renew by any party).
6.9. D-LANZ has no liabilities except as shown on its financial statements,
no contracts or other obligations whatsoever including any contingent
liabilities.
7. Financial Statements and Form 10.
Company shall deliver to D-LANZ, on or before the Closing Date, sufficient
financial information in a form acceptable to the United States Securities and
Exchange Commission for consolidation with D-LANZ's financial statements and
will be in compliance with generally accepted accounting principles and
Regulation SX promulgated under the Securities Act of 1933, as amended, and as
it applies to corporations which have registered securities upon Form 10 or Form
10SB under the 1934 Securities Exchange Act. After closing, the new management
represents that it will promptly update Company's Form 10SB and timely file the
same and all other forms required by the United States Securities and Exchange
Commission.
8. Miscellaneous.
a) This Agreement shall constitute the entire agreement of the parties
hereto and may not be amended, except by written consent of the parties hereto
in writing executed by them.
b) This Agreement shall be construed according to the laws of the State of
New York and shall be enforceable in any court of competent jurisdiction located
in the State of New York.
c) This Agreement shall inure to the benefit of the parties and their
successors in interest, if any, but shall not otherwise be assignable.
d) Where in this Agreement one gender or the other is used, of the singular
or the plural is used, and if to effect the intent of the parties hereto the use
of the other gender or number is needed then it is understood that such gender
or both or such number or both is implied.
e) This Agreement may be executed in counterparts and receipt of facsimile
transmission of signatures shall be sufficient to effect acceptance of this
Agreement, although the parties hereto agree to submit within a reasonable time
duplicate original signed copies of this Agreement to each other.
9. Indemnification.
Each party to this Agreement shall indemnify and hold harmless each other
party at all times after the date of closing against and in respect of any
liability, damage or deficiency, all actions, suits, proceedings, demands,
assessments, judgments, costs and expenses, including attorney's fees incident
to any of the foregoing, resulting from any misrepresentation, breach of
covenant or warranty for non-fulfillment of any agreement on the part of such
party under this Agreement, or from any misrepresentation in or omission from
any certificate furnished or to be furnished to a party hereunder. Subject to
the terms of this Agreement, the defaulting party shall reimburse the other
party or parties on demand for any reasonable payments made by said parties at
any time after the date of closing, in respect to any liability or claim to
which the foregoing indemnity relates, if such payment is made after reasonable
notice to the other party to defend or satisfy the same, and such party failed
to defend or satisfy the same.
10. Covenant Not to Disclose.
(a) I shall not at any time during or after the termination of my
employment by Company reveal, divulge, or make known to any person (other than
Company or its Affiliates) or use for my own account any confidential
information used by Company or any of its Affiliates during my employment by
Company before and during the term of this Agreement and made known to me by
reason of my employment by Company. I shall retain all such knowledge and
information which I may acquire during my employment by Company in trust for the
sole benefit of Company and its Affiliates and their successors and assigns.
(b) As used in this Agreement, the term "Affiliate" shall mean any
corporation, company, partnership or other person or entity that directly or
indirectly through one or more intermediaries, controls or is controlled by or
is under common control with the person of which such corporation, company,
partnership or other person or entity is an affiliate.
11. Brokers. No brokers have been utilized in connection with this
transaction. D-LANZ shall not be liable for the payment of any finder's or
consultant's fees except as specifically provided herein.
IN WITNESS WHEREOF THE PARTIES HERETO, CORPORATE PARTIES HAVING BEEN DULY
AUTHORIZED BY THEIR RESPECTIVE BOARDS OF DIRECTORS, HAVE SET THEIR HANDS AND
SEALS ON THE DATE FIRST ABOVE WRITTEN.
D-LANZ DEVELOPMENT GROUP, INC. HEALTH TECHNOLOGIES
INTERNATIONAL, INC.
BY:__/s/Roger Fidler___________ BY:_/s/Roger Fidler___________
ROGER L. FIDLER ROGER L. FIDLER
PRESIDENT PRESIDENT
<PAGE>
Exhibit I
List of Assets
From Health Technologies International, Inc.
To Be Exchanged for Stock From
D-Lanz Development Group, Inc.
License Agreement Between Health Technologies International, Inc. nd Scantek
Medical, Inc.
<PAGE>
Exhibit II
List of Liabilities
From Health Technologies International, Inc.
To Be Exchanged for Stock From
D-Lanz Development Group, Inc.
There are no liabilities being assumed to D-Lanz.
<PAGE>
Exhibit 4.2 List of Shareholders of Health Technologies International, Inc.
Roger Fidler 93%
Kilhan Management S.A. 7%
Pursuant to the License Agreement Health Technologies has the obligation to sell
to Scantek Medical, Inc. 20% of its total issued and outstanding common shares
at par value. To effect this requirement, the Company's shareholders have agreed
to the following division of the shares upon conclusion of the acquisition:
Roger Fidler 6,000,000
Kilhan Management S.A. 448,606
Scantek Medical, Inc. 2,000,000
<PAGE>
D-LANZ DEVELOPMENT GROUP, INC.
(A Development Stage Company)
Pro Forma Condensed Financial Statements
(Unaudited)
The following unaudited pro forma combined condensed financial statements
present a combined balance sheet and related statements of income of D-Lanz
Development Group, Inc. (a development stage company) giving effect to purchase
of a license agreement for certain patented technologies and using the purchase
method of accounting for the proposed purchase pursuant to an License Agreement
by exchange of assets for Stock which was dated on September 30, 1997.
The proposed purchase is reflected using the purchase method of accounting,
whereby D-Lanz Development Group, Inc. issued 6,448,606 shares of common stock
to purchase from Health Technologies International, Inc. the rights to
manufacture and market certain patented technologies and the sale of an
additional 2,000,000 shares of common stock to Health Technologies
International, Inc. for an aggregate of $2,000 or $.01 per share.
The pro forma combined condensed financial statements as of September 30,
1997 consists of the balance sheet of D-Lanz Development Group, Inc. as of
September 30, 1997 and the related statements of income for the nine months
ended September 30, 1997 give effect to the proposed transactions as if they had
been in effect throughout the periods presented. The information shown is based
upon numerous assumptions and estimates and is not necessarily indicative of the
results of future operations of the combined entities or the actual results that
would have occurred had the transaction been consummated during the periods
indicated . These statements should be read in conjunction with the consolidated
financial statements of D-Lanz Development Group, Inc. included herein.
<PAGE>
<TABLE>
<CAPTION>
D-LANZ DEVELOPMENT GROUP, INC.
(A Development Stage Company)
PRO FORMA BALANCE SHEET
SEPTEMBER 30, 1997
UNAUDITED
Assets
Colsolidated
D-Lanz Development Health Technologies D-Lanz Development
Group, Inc. International, Inc. Adjustments Group, Inc
Current assets
<S> <C> <C> <C>
Cash $-0- $2,000 $2,000
Other assets
License fees 252,500 252,500
Total other assets 252,500 252,500
Total assets $-0- $254,500 $254,500
Liabilities and Stockholders' Equity
Commitments and Contingencies $-0- $-0-
Capital stock
Preferred stock-authorized 50,000,000
shares $.001 par value. At September
30, 1997 the number of shares
outstanding was -0-
Common stock-authorized 100,000,000
shares, par value of $.001. At
September 30, 1997, there were
10,000,000 shares outstanding, which
includes 8,000,000 shares issued and
sold to Health Technologies
International, Inc. $1,551 $8,449 $10,000
Additional paid in capital 246,051 246,051
Deficit accumulated during
development stage (1,551) (1,551)
Total stockholders' equity -0- 254,500 254,500
Total liabilities and stockholders'
equity $-0- $254,500 $254,500
See accompanying notes to pro forma financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
D-LANZ DEVELOPMENT GROUP, INC.
(A Development Stage Company)
PRO FORMA STATEMENT OF OPERATIONS
SEPTEMBER 30, 1997
UNAUDITED
Colsolidated
D-Lanz Health D-Lanz
Development Technologies Development
Group, Inc. International, Adjustments Group, Inc
Inc.
<S> <C> <C> <C> <C>
Income $-0- $-0- $-0- $-0-
Less costs of goods sold -0- -0- -0- -0-
Gross profit -0- -0- -0- -0-
Operations:
General and administrative -0- -0- -0- -0-
Amortization -0- -0- -0- -0-
Total expense -0- -0- -0- -0-
Profit (loss) from operations and
before Corporate income tax expense
-0- -0- -0- -0-
Corporate income tax -0- -0- -0- -0-
Net profit or (Loss) $-0- $-0- $-0- $-0-
Net income per share $-0- $-0- $-0- $-0-
Total number of shares outstanding 10,000,000 10,000,000 10,000,000 10,000,000
See accompanying notes to financial statements.
</TABLE>
<PAGE>
D-LANZ DEVELOPMENT GROUP, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
SEPTEMBER 30, 1997
UNAUDITED
<TABLE>
<CAPTION>
Colsolidated
D-Lanz Health D-Lanz
Development Technologies Development
Group, Inc. International, Adjustments Group, Inc
Inc.
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C> <C>
Net profit (loss) $-0- $-0- $-0- $-0-
Depreciation and amortization -0- -0- -0- -0-
TOTAL CASH FLOWS FROM OPERATING ACTIVITIES -0- -0- -0- -0-
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of shares of common stock -0- 2,000 -0- 2,000
TOTAL CASH FLOWS FROM FINANCING ACTIVITIES -0- -0- -0- -0-
NET INCREASE (DECREASE) IN CASH -0- 2,000 -0- 2,000
CASH BALANCE BEGINNING OF PERIOD -0- -0- -0- -0-
CASH BALANCE END OF PERIOD $-0- $2,000 $-0- $2,000
</TABLE>
See accompanying notes to pro forma financial statements.
<PAGE>
D-LANZ DEVELOPMENT GROUP, INC.
(A Development Stage Company)
PRO FORMA STATEMENT OF STOCKHOLDERS' EQUITY
UNAUDITED
<TABLE>
<CAPTION>
Additional Deficit accumulated
Date Preferred Preferred Common Common paid during development stage
Stock Stock Stock Stock in capital Total
<S> <C> <C> <C> <C> <C> <C> <C>
12-31-1991 -0- $-0- 1,551,394 $1,551 $(1,551) $-0-
12-31-1992 -0- $-0- 1,551,394 $1,551 $(1,551) $-0-
12-31-1993 -0- $-0- 1,551,394 $1,551 $(1,551) $-0-
12-31-1994 -0- $-0- 1,551,394 $1,551 $(1,551) $-0-
12-31-1995 -0- $-0- 1,551,394 $1,551 $(1,551) $-0-
12-31-1996 -0- $-0- 1,551,394 $1,551 $(1,551) $-0-
9 -30-1997(1) 2,000,000 2,000 2,000
9-30-1997(2) 6,448,606 6,449 246,051 252,500
9-30-1997 -0- $-0- 10,000,000 $10,000 $246,051 $(1,551) $254,500
<FN>
(1) Sale of shares pursuant to Regulation D at $.001 per share.
(2) Issuance of shares for acquisition of License Rights valued at $.04 per share.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
D-LANZ DEVELOPMENT GROUP, INC.
(A Development Stage Company)
NOTES TO PROFORMA FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
Note 1. Organization of Company and Issuance of Common Stock
a. Creation of the Company
D-Lanz Development Group, Inc. (the "Company") was formed on June 28, 1972
under the laws of the State of Delaware under the name OSR Corporation. On May
17, 1988, the Company amended its certificate of incorporation changing its name
to Resort Connections, Inc. and changing the total shares authorized to issue to
55,000,000 of which 50,000,000 shares are common stock with a par value of $.001
per share and 5,000,000 shares of preferred stock with a par value of $.001 per
share. On January 30, 1990, the Company amended its certificate of incorporation
to change its name to D-Lanz Development Group, Inc. and change the aggregate
number of shares of stock the Company may issue to 100,000,000 shares of which
50,000,000 are common stock with a par value of $.001 per share and 50,000,000
shares are preferred with a par value of $.001 per share.
b. Description of the Company
The Company has purchased from Health Technologies International, Inc.
("Health Tech") the licensing rights to certain patented technology to
manufacture and market a temperature sensing device and diagnostic direct
reading, digital device to screen the female breast for abnormalities, including
cancer. The Company has the right to distribute its products to principal
countries of Chile and Singapore. The Company is considered to be a development
stage with no operating history. The Company is dependent upon principal
resources of principal Company's management for its continued existence. The
Company will also be dependent upon its ability to raise additional capital to
engage in this business.
c. Issuance of Capital Stock
On May 6, 1988, the Company restated the number of common stock outstanding
by reverse splitting the number of shares from 6,200,000 to 1,550,000.
On September 30, 1997, the Company issued 6,448,606 shares of common stock
to Health Technologies International, Inc. ("Health Tech") in consideration for
the purchase of certain patents valued at $252,500 or $.04 per share.
On September 30, 1997, the Company sold 2,000,000 shares of common stock to
Scantek Medical, Inc. ("Scantek") pursuant to Regulation D for $2,000.
Note 2-Summary of Significant Accounting Policies
a. Basis of Financial Statement Presentation
The pro forma combined condensed financial statements as of September 30,
1997 consists of the balance sheet of D-Lanz Development Group, Inc. as of
September 30, 1997 and the related statements of income for the nine months
ended September 30, 1997 give effect to the proposed transactions as if they had
been in effect throughout the periods presented. The proposed purchase is
reflected using the purchase method of accounting, whereby D-Lanz Development
Group, Inc. issued 6,448,606 shares of common stock to purchase from Health
Technologies International, Inc. the rights to manufacture and market certain
patented technologies and the sale of an additional 2,000,000 shares of common
stock to Health Technologies International, Inc. for an aggregate of $2,000 or
$.01 per share.
b. Cash and cash equivalents
The Company treats temporary investments with a maturity of less than three
months as cash.
c. Earnings per share
Earnings per share have been computed on the basis of the total number
of shares outstanding at September 30, 1997. On that date, 10,000,000
Shares of common stock were outstanding.
d. Revenue recognition
Revenue is recognized when products are shipped or services are rendered
e. Concentration of Credit Risk
The Company sells its products primarily to United States
distributors. Credit is extended based on an evaluation of the customer's
financial condition, and generally collateral is not required. Credit
losses have been minimal and within Management's expectations.
The Company invests its excess cash in debt instruments of financial
institutions and corporations with strong credit ratings. The Company has
established guidelines relative to diversification and maturates that
maintain safety and liquidity. These guidelines are periodically reviewed
and modified to take advantage of trends in yields and interest rates. The
Company has not experienced any realized losses on its marketable
securities.
f. Patents and License Agreements
Certain costs incurred to acquire exclusive licenses of patentable
technology are capitalized and amortized over a five year period or the
term of the license, whichever is shorter. The portion of these amounts
determined to be attributable to patents is amortized over their remaining
lives and the remainder is amortized over the estimated period of benefit
but not more than 40 years
g. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect 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.
h. Unaudited financial information
In the opinion of Management, the accompanying unaudited financial
statements contain all adjustments (consisting only of normal recurring
items) necessary to present fairly the financial position of the Company as
of September 30, 1997 and the results of its operations and its cash flows
for the nine months ended September 30, 1997. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to the SEC's rules and regulations of the
Securities and Exchange Commission. The results of operations for the
periods presented are not necessarily indicative of the results to be
expected for the full year
Note 3 - Acquisition of License Rights
On September 30, 1997, the Company issued 6,448,606 shares of common stock
to purchase from Health Technologies International, Inc. ("Health Tech") the
rights to manufacture and market certain patented technologies. The License has
been valued at the historic cash purchase price of $252,500 paid by Health Tech
for the manufacturing and marketing rights.
Health Tech entered into an agreement on August 15, 1996 with Scantek, a
Delaware corporation located in Mountain Lakes, New Jersey for the licensing of
certain patented technology to manufacture and market for the countries of Chile
and Singapore. The patented technology consists of a temperature sensing device
and diagnostic direct reading, digital device to screen the breast for
abnormalities, including cancer.
As a result of the acquisition, the Company has been granted an
indivisible, exclusive right and license within the territories of Chile and
Singapore to assemble, use and sell the devices for a period of ending with the
expiration of the applicable patents in these countries.
If the Company fails to achieve for a period of 12 consecutive months the
minimum net sales of the devices with respect to each country, Scantek may upon
30 days written notice and at its option either terminate this agreement or
delete the country from the Company's territories. Minimum net sales as defined
is based upon market penetration. The size of the market in each of the three
countries will be computed using official government census information from
each country. The market is defined as the lesser of two pairs of the device for
each women between the ages of 25 and 70 or such usage as may be recommended by
the relevant medical association or government agency in each country in the
Territory. The percentage of market penetration by year is as follows: Year
Percentage of Market Penetration 1997 0% 1998 1% 1999 3% 2000 4% 2001 and after
5%
This schedule is based upon the scheduled delivery of an operational
assembly line, part of which will be installed in Scantek's facility, part of
which will be install in the Company's facility. In the event that completion of
installation of the turnkey manufacturing line is delayed beyond June 30, 1997,
then the above referenced years will be adjusted to appropriate calendar years
so as not to prejudice the Company's 365 day time period in which to achieve the
graduated market penetration.
As of September 30, 1997, Health Tech has paid to Scantek a nonrefundable
License Fees aggregating $252,500.
The Company is required to pay a royalty equal to 15% of Net Sales of
Licensed Devices in the Territories during each contract year during the term of
the agreement. The royalty paid, will in no instance be less than $1.00 per unit
or a guaranteed minimum royalty payable as follows:
$80,000 for the year 1997; $200,000 for the year 1998; $300,000 for the
year 1999 and $400,000 for each year thereafter.
Royalties are due and payable each quarter either for the actual amount due
or 25% of the minimum royalty payable for the year.
In the event that at any time during the term of this agreement, the
consumer price index in effect for the national government of the country of the
territory be increased by 10% over the index base as of the date of the
agreement. Then the minimum royalty payable and the minimum net sales for the
year will be increased by 10%.
The Company is required to sell to Scantek 2,000,000 shares of common
stock, representing 20% of the total issued and outstanding common shares of the
Company as of the date of the agreement for the aggregate sum of $2,000. or
$.001 per share. Under no circumstances will Scantek's common stock position be
diluted to less than 15% of the issued and outstanding common stock of the
Company. In the event the Company will receive at nominal cost warrants to
purchase sufficient shares of common stock to maintain its 20% ownership, such
warrants will allow the purchase of shares at $2.25 per share for five years
from the date of the agreement.
The Company is required to arrange to purchase a turnkey manufacturing
line. Upon completion of the line, that portion of the line that manufactures
Sensors for the licensed devices will be installed at the same location as
Scantek's own manufacturing facility. Scantek will operate that portion of the
line and to the extent of the lines manufacturing capacity, deliver the
Company's requirements for Sensors to the Company's plant location F.O.B. for
cost plus 25%. Scantek will maintain a purchase money security interest in the
sensors delivered pursuant to this agreement.
During each contract year, the Company is required to spend 5% of net sales
during the immediately preceding year on advertising and promotion.
Upon termination of this agreement, the Company agrees that neither the
Company's officers, directors, principals nor its shareholders will during a
period of 5 years from the date of termination manufacture Sensors or purchase
Sensors manufactured by any entity other than Scantek for use in the licensed
devices or any competing device or directly or indirectly manage, operation or
control of or be connected as an officer, director, shareholder, partner,
consultant, owner, employee, agent, lender, donor, vendor, or otherwise, or have
any financial interest in or aid assist anyone else in the conduct of any
competing entity which offers similar devices for sale.
The Company is required to maintain product liability insurance with a
limit of not less than $1,000,000.
Note 4 - Related Party transactions
a. Issuance of Common Shares
On September 30, 1997, the Company issued 6,448,606 shares of common stock
to Health Tech in consideration for the purchase of certain patents valued at
$252,500.
Mr. Roger Fidler is President of both the Company and of Health Tech
On September 30, 1997, the Company sold 2,000,000 shares of common stock to
Scantek Medical, Inc. ("Scantek") pursuant to Regulation D for $2,000.
b. Lease Commitment
The Company occupies office space rent free on a month to month basis from
Roger Fidler, President at 400 Grove Street, Glenn Rock, New Jersey.
c. Officer Salaries
No officer received salaries in excess of $100,000.
Note 5 - Preferred Stock
The Company is authorized to issue 50,000,000 shares of preferred stock
with a par value of $.001 per share. The board of directors of the Company is
granted the power to determine by resolution from time to time the power,
preferences, rights, qualifications, restrictions or limitations of the
preferred stock.
At December 31, 1995 and 1996 and September 30, 1997, the number of
preferred shares outstanding was -0-.
Note 6 - Marketable Securities, Available for Sale
The Company adopted Financial Accounting Standards Board ("FASB")
StatementNo. 115, "Accounting for Certain Investments in Debt and Equity
Securities",which requires that investments in equity securities that have
readilydeterminable fair values and investments in debt securities be classified
inthree categories: held-to-maturity, trading and available-for-sale. Based on
thenature of the assets held by the Company and Management's investment
strategy,the Company's investments have been classified as available-for-sale.
Management determines the appropriate classification of debt securities at the
time ofpurchase and reevaluates such designation as of each balance sheet date.
Securities classified as available-for-sale are carried at estimated fairvalue,
as determined by quoted market prices, with unrealized gains and losses,net of
tax, reported in a separate component of stockholders' equity.
At September 30, 1997, the Company had no investments that were classified
as trading orheld-to-maturity as defined by the Statement.
The following is a summary of cash, cash equivalents and
available-for-salesecurities by balance sheet classification at September 30,
1997:
Gross Gross Estimated
Unrealized Unrealized Fair
` Cost Gains Gains Value
------ ------------- ------------- -------------
Cash $2,000 $2,000
Total cash and
cash equivalents $2,000 $2,000
===== =====
Effective January 1, 1994 the Company adopted Financial Accounting
Standards Board ("FASB") Statement No. 115, "Accounting for Certain Investments
in Debt and Equity Securities", which requires that investments in equity
securities that have readily determinable fair values and investments in debt
securities be classified in three categories: held-to-maturity, trading and
available-for-sale. Based on the nature of the assets held by the Company and
Management's investment strategy, the Company's investments have been classified
as available-for-sale. Management determines the appropriate classification of
debt securities at the time of purchase and reevaluates such designation as of
each balance sheet date.
Note 7 - Income Taxes
The Company provides for the tax effects of transactions reported in the
financial statements. The provision if any, consists of taxes currently due plus
deferred taxes related primarily to differences between the basis of assets and
liabilities for financial and income tax reporting. The deferred tax assets and
liabilities, if any represent the future tax return consequences of those
differences, which will either be taxable or deductible when the assets and
liabilities are recovered or settled. As of September 30, 1997, the Company had
no material current tax liability, deferred tax assets, or liabilities to impact
on the Company's financial position because the deferred tax asset related to
the Company's net operating loss carry forward and was fully offset by a
valuation allowance.
At September 30, 1997, the Company has net operating loss carry forwards
for income tax purposes of $1,551. These carry forward losses are available to
offset future taxable income, if any, and expire in the year 2010. The Company's
utilization of this carry forward against future taxable income may become
subject to an annual limitation due to a cumulative change in ownership of the
Company of more than 50 percent.
The components of the net deferred tax asset as of September 30, 1997 are
as follows:
Deferred tax asset:
Net operating loss carry forward $ 527
Valuation allowance $( 527)
Net deferred tax asset $ -0-
The Company recognized no income tax benefit for the loss generated for the
SFAS No. 109 requires that a valuation allowance be provided if it is more
likely year ended September 30, 1997.
SFAS No. 109 requires that a valuation allowance be provided if it is more
likely than not that some portion or all of a deferred tax asset will not be
realized. The Company's ability to realize benefit of its deferred tax asset
will depend on the generation of future taxable income. Because the Company has
yet to recognize significant revenue from the sale of its products, the Company
believes that a full valuation allowance should be provided
Note 8 - Commitments and Contingencies
Liabilities, Commitments and Contingencies
At December 31, 1996 and September 30, 1997 the Company has no liabilities
or commitments or contingencies.
Note 9. Supplemental Cash Flow Information
The following is supplemental cash flow information for the year ended
December 31, 1995 and 1996 and for the nine months ended September 30, 1997.
Issuance of 6,448,606 shares for acquisition of
License rights $252,500
Common stock 252,500
Total $ -0-
======
Note 10 - Development Stage Company
The Company is considered to be a development stage company with little
operating history. The Company is dependent upon the resources of the Company's
management and its ability to raise or borrow additional funds to continue to
exist. The Company has purchased the License rights to manufacture and market
certain patented technologies from Scantek and will require additional funds to
complete the process of building manufacturing facilities and implement the
Company's marketing program.
<PAGE>
THOMAS P. MONAHAN
CERTIFIED PUBLIC ACCOUNTANT
208 LEXINGTON AVENUE
PATERSON, NEW JERSEY 07502
(201) 790-8775
Fax (201) 790-8845
To The Board of Directors and Shareholders
of D-Lanz Development Group, Inc.
(a development stage company)
I have audited the accompanying balance sheet of D-Lanz Development Group,
Inc. (a development stage company) as of December 31, 1996 and the related
statements of operations, cash flows and shareholders' equity for the years
ended December 31, 1995 and 1996. These financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I 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 and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of D-Lanz Development Group,
Inc. (a development stage company) as of December 31, 1996 and the results of
its operations, shareholders equity and cash flows for the year ended December
31, 1995 and 1996 in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that
D-Lanz Development Group, Inc. (a development stage company) will continue as a
going concern. As more fully described in Note 2, the Company has incurred
operating losses since the date of reorganization and requires additional
capital to continue operations. These conditions raise substantial doubt about
the Company's ability to continue as a going concern. Management's plans as to
these matters are described in Note 2. The financial statements do not include
any adjustments to reflect the possible effects on the recoverability and
classification of assets or the amounts and classifications of liabilities that
may result from the possible inability of D-Lanz Development Group, Inc. (a
development stage company) to continue as a going concern.
Thomas P. Monahan, CPA
March 16, 1997
Paterson, New Jersey
<PAGE>
<TABLE>
<CAPTION>
D-LANZ DEVELOPMENT GROUP, INC.
(A Development Stage Company)
BALANCE SHEET
Assets
September 30,
December 31, 1997
1996 Unaudited
Current assets
<S> <C> <C>
Cash $-0- 2,000
Other assets
License fees 252,500
Total other assets 252,500
Total assets $-0- 254,500
Liabilities and Stockholders' Equity
Commitments and Contingencies $-0- $-0-
Capital stock
Preferred stock-authorized 50,000,000 shares
$.001 par value. At December 31, 1996 and September
30, 1997 the number of shares outstanding was -0-
Common stock-authorized 100,000,000 shares, par
value of $.001. At December 31, 1996 and September
30, 1997, there were 1,551,394 and 10,000,000 $1,551
shares outstanding.
$10,000
Additional paid in capital -0- 246,051
Deficit accumulated during development stage (1,551) (1,551)
Total stockholders' equity -0- 254,500
Total liabilities and stockholders' equity $-0- 254,500
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
D-LANZ DEVELOPMENT GROUP, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the nine For the nine For the
For the year For the year months ended months ended period from
ended December ended December September 30, September 30, reorganization
31, 1995 31, 1996 1996 1997 (December 31, 1990)
Unaudited Unaudited to
September 30,
1997
<S> <C> <C> <C> <C> <C>
Income $-0- $-0- $-0- $-0- $-0-
Less costs of goods sold -0- -0- -0- -0- -0-
Gross profit -0- -0- -0- -0- -0-
Operations:
General -0- -0- -0- -0- -0-
and
administrative
Amortization -0- -0- -0- -0- -0-
Total expense -0- -0- -0- -0- -0-
Profit (loss) from -0-
operations and
before Corporate
income tax expense -0- -0- -0- -0-
Corporate income tax -0- -0- -0- -0- -0-
Net profit or (Loss) $-0- $-0- $-0- $-0- $-0-
Net income per share $-0- $-0- $-0- $-0- $-0-
Total number of shares 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000
outstanding
</TABLE>
See accompanying notes to financial statements.
<PAGE>
D-LANZ DEVELOPMENT GROUP, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
For the nine For the nine For the
For the year For the year months ended months ended period from
ended December ended December September 30, September 30, reorganization
31, 1995 31, 1996 1996 1997 December 31,
Unaudited Unaudited 1990 to October
31, 1997
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C> <C> <C>
Net profit (loss) $-0- $-0- $-0- $-0- $-0-
Depreciation and amortization -0- -0- -0- -0- -0-
TOTAL CASH FLOWS FROM OPERATING ACTIVITIES -0- -0- -0- -0- -0-
CASH FLOWS FROM FINANCING ACTIVITIES
Commitments and contingencies -0- -0- -0- -0- -0-
TOTAL CASH FLOWS FROM FINANCING ACTIVITIES -0- -0- -0- -0- -0-
NET INCREASE (DECREASE) IN CASH -0- -0- -0- -0- -0-
CASH BALANCE BEGINNING OF PERIOD -0- -0- -0- -0- -0-
CASH BALANCE END OF PERIOD $-0- $-0- $-0- $-0- $-0-
</TABLE>
See accompanying notes to financial statements.
<PAGE>
D-LANZ DEVELOPMENT GROUP, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Additional Deficit accumulated
Date Preferred Preferred Common Common paid during development stage
Stock Stock Stock Stock in capital Total
<S> <C> <C> <C> <C> <C> <C> <C>
12-31-1991 -0- $-0- 1,551,394 $1,551 $(1,551) $-0-
12-31-1992 -0- $-0- 1,551,394 $1,551 $(1,551) $-0-
12-31-1993 -0- $-0- 1,551,394 $1,551 $(1,551) $-0-
12-31-1994 -0- $-0- 1,551,394 $1,551 $(1,551) $-0-
12-31-1995 -0- $-0- 1,551,394 $1,551 $(1,551) $-0-
12-31-1996 -0- $-0- 1,551,394 $1,551 $(1,551) $-0-
Unaudited
9 -30-1997(1) 2,000,000 2,000 2,000
9-30-1997(2) 6,448,606 6,449 246,051 252,500
9-30-1997 -0- $-0- 10,000,000 10,000 246,051 -1,551 254,500
<FN>
(1) Sale of shares pursuant to Regulation D at $.001 per share.
(2) Issuance of shares for acquisition of License Rights valued at $.04 per share.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
D-LANZ DEVELOPMENT GROUP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
Note 1. Organization of Company and Issuance of Common Stock
a. Creation of the Company
D-Lanz Development Group, Inc. (the "Company") was formed on June 28, 1972
under the laws of the State of Delaware under the name OSR Corporation. On May
17, 1988, the Company amended its certificate of incorporation changing its name
to Resort Connections, Inc. and changing the total shares authorized to issue to
55,000,000 of which 50,000,000 shares are common stock with a par value of $.001
per share and 5,000,000 shares of preferred stock with a par value of $.001 per
share. On January 30, 1990, the Company amended its certificate of incorporation
to change its name to D-Lanz Development Group, Inc. and change the aggregate
number of shares of stock the Company may issue to 100,000,000 shares of which
50,000,000 are common stock with a par value of $.001 per share and 50,000,000
shares are preferred with a par value of $.001 per share.
b. Description of the Company
The Company has purchased the License rights to certain patented technology
to manufacture and market for the countries of Chile and Singapore a temperature
sensing device and diagnostic direct reading, digital device to screen the
breast for abnormalities, including cancer.
c. Issuance of Capital Stock
On May 6, 1988, the Company restated the number of common stock outstanding
by reverse splitting the number of shares from 6,200,000 to 1,550,000.
On September 30, 1997, the Company issued 6,448,606 shares of common stock
to Health Technologies International, Inc. ("Health Tech") in consideration for
the purchase of certain patents valued at $252,500 or $.04 per share.
On September 30, 1997, the Company sold 2,000,000 shares of common stock to
Scantek Medical, Inc. ("Scantek") pursuant to Regulation D for $2,000.
Note 2-Summary of Significant Accounting Policies
a. Basis of Financial Statement Presentation
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The Company has been dormant since
December 31, 1990. On September 30, 1997, the Company acquired the License
rights to certain patents. The Company has net generated any income and has been
dependent upon management to pay the expenses to maintain the Company's
existence and pay the costs of acquiring the License rights. These factors
indicate that the Company's continuation as a going concern is dependent upon
its ability to obtain adequate financing.
The financial statements presented at September 30, 1997 consist of the
balance sheet of the Company as at December 31, 1996 and the unaudited balance
sheet as at September 30, 1997, and the related statements of operations,
retained earnings and cash flows for the year ended December 31, 1997 and the
unaudited related statements of operations, retained earnings and cash flows for
the nine months ended September 30, 1996 and 1997.
b. Cash and cash equivalents
The Company treats temporary investments with a maturity of less than three
months as cash.
c. Earnings per share
Earnings per share have been computed on the basis of the total number of
shares outstanding at September 30, 1997. On that date, 10,000,000 Shares of
common stock were outstanding.
d. Revenue recognition
Revenue is recognized when products are shipped or services are rendered
e. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect 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.
f. Unaudited financial information
In the opinion of Management, the accompanying unaudited financial
statements contain all adjustments (consisting only of normal recurring items)
necessary to present fairly the financial position of the Company as of
September 30, 1997 and the results of its operations and its cash flows for the
nine months ended September 30, 1997. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to the SEC's rules and regulations of the Securities and Exchange
Commission. The results of operations for the periods presented are not
necessarily indicative of the results to be expected for the full year
Note 3 - Acquisition of License Rights
On September 30, 1997, the Company issued 6,448,606 shares of common stock
to purchase from Health Technologies International, Inc. ("Health Tech") the
rights to manufacture and market certain patented technologies. The License has
been valued at the historic cash purchase price of $252,500 paid by Health Tech
for the manufacturing and marketing rights.
Health Tech entered into an agreement on August 15, 1996 with Scantek, a
Delaware corporation located in Mountain Lakes, New Jersey for the licensing of
certain patented technology to manufacture and market for the countries of Chile
and Singapore. The patented technology consists of a temperature sensing device
and diagnostic direct reading, digital device to screen the breast for
abnormalities, including cancer.
As a result of the acquisition, the Company has been granted an
indivisible, exclusive right and license within the territories of Chile and
Singapore to assemble, use and sell the devices for a period of ending with the
expiration of the applicable patents in these countries.
If the Company fails to achieve for a period of 12 consecutive months the
minimum net sales of the devices with respect to each country, Scantek may upon
30 days written notice and at its option either terminate this agreement or
delete the country from the Company's territories. Minimum net sales as defined
is based upon market penetration. The size of the market in each of the three
countries will be computed using official government census information from
each country. The market is defined as the lesser of two pairs of the device for
each women between the ages of 25 and 70 or such usage as may be recommended by
the relevant medical association or government agency in each country in the
Territory. The percentage of market penetration by year is as follows: Year
Percentage of Market Penetration 1997 0% 1998 1% 1999 3% 2000 4% 2001 and after
5%
This schedule is based upon the scheduled delivery of an operational
assembly line, part of which will be installed in Scantek's facility, part of
which will be install in the Company's facility. In the event that completion of
installation of the turnkey manufacturing line is delayed beyond June 30, 1997,
then the above referenced years will be adjusted to appropriate calendar years
so as not to prejudice the Company's 365 day time period in which to achieve the
graduated market penetration.
As of September 30, 1997, Health Tech has paid to Scantek a nonrefundable
License Fees aggregating $252,500.
The Company is required to pay a royalty equal to 15% of Net Sales of
Licensed Devices in the Territories during each contract year during the term of
the agreement. The royalty paid, will in no instance be less than $1.00 per unit
or a guaranteed minimum royalty payable as follows:
$80,000 for the year 1997; $200,000 for the year 1998; $300,000 for the
year 1999 and $400,000 for each year thereafter.
Royalties are due and payable each quarter either for the actual amount due
or 25% of the minimum royalty payable for the year.
In the event that at any time during the term of this agreement, the
consumer price index in effect for the national government of the country of the
territory be increased by 10% over the index base as of the date of the
agreement. Then the minimum royalty payable and the minimum net sales for the
year will be increased by 10%.
The Company is required to sell to Scantek 2,000,000 shares of common
stock, representing 20% of the total issued and outstanding common shares of the
Company as of the date of the agreement for the aggregate sum of $2,000. or
$.001 per share. Under no circumstances will Scantek's common stock position be
diluted to less than 15% of the issued and outstanding common stock of the
Company. In the event the Company will receive at nominal cost warrants to
purchase sufficient shares of common stock to maintain its 20% ownership, such
warrants will allow the purchase of shares at $2.25 per share for five years
from the date of the agreement.
The Company is required to arrange to purchase a turnkey manufacturing
line. Upon completion of the line, that portion of the line that manufactures
Sensors for the licensed devices will be installed at the same location as
Scantek's own manufacturing facility. Scantek will operate that portion of the
line and to the extent of the lines manufacturing capacity, deliver the
Company's requirements for Sensors to the Company's plant location F.O.B. for
cost plus 25%. Scantek will maintain a purchase money security interest in the
sensors delivered pursuant to this agreement.
During each contract year, the Company is required to spend 5% of net sales
during the immediately preceding year on advertising and promotion.
Upon termination of this agreement, the Company agrees that neither the
Company's officers, directors, principals nor its shareholders will during a
period of 5 years from the date of termination manufacture Sensors or purchase
Sensors manufactured by any entity other than Scantek for use in the licensed
devices or any competing device or directly or indirectly manage, operation or
control of or be connected as an officer, director, shareholder, partner,
consultant, owner, employee, agent, lender, donor, vendor, or otherwise, or have
any financial interest in or aid assist anyone else in the conduct of any
competing entity which offers similar devices for sale.
The Company is required to maintain product liability insurance with a
limit of not less than $1,000,000.
Note 4 - Related Party transactions
a. Issuance of Common Shares
On September 30, 1997, the Company issued 6,448,606 shares of common stock
to Health Tech in consideration for the purchase of certain patents valued at
$252,500.
Mr. Roger Fidler is President of both the Company and of Health Tech
On September 30, 1997, the Company sold 2,000,000 shares of common stock to
Scantek Medical, Inc. ("Scantek") pursuant to Regulation D for $2,000.
b. Lease Commitment
The Company occupies office space rent free on a month to month basis from
Roger Fidler, President at 400 Grove Street, Glenn Rock, New Jersey.
c. Officer Salaries
No officer received salaries in excess of $100,000.
Note 5 - Preferred Stock
The Company is authorized to issue 50,000,000 shares of preferred stock
with a par value of $.001 per share. The board of directors of the Company is
granted the power to determine by resolution from time to time the power,
preferences, rights, qualifications, restrictions or limitations of the
preferred stock.
At December 31, 1995 and 1996 and September 30, 1997, the number of
preferred shares outstanding was -0-.
Note 6 - Marketable Securities, Available for Sale
The Company adopted Financial Accounting Standards Board ("FASB")
StatementNo. 115, "Accounting for Certain Investments in Debt and Equity
Securities",which requires that investments in equity securities that have
readilydeterminable fair values and investments in debt securities be classified
inthree categories: held-to-maturity, trading and available-for-sale. Based on
thenature of the assets held by the Company and Management's investment
strategy,the Company's investments have been classified as available-for-sale.
Management determines the appropriate classification of debt securities at the
time ofpurchase and reevaluates such designation as of each balance sheet date.
Securities classified as available-for-sale are carried at estimated fairvalue,
as determined by quoted market prices, with unrealized gains and losses,net of
tax, reported in a separate component of stockholders' equity.
At September 30, 1997, the Company had no investments that were classified
as trading orheld-to-maturity as defined by the Statement.
The following is a summary of cash, cash equivalents and
available-for-salesecurities by balance sheet classification at September 30,
1997:
Gross Gross Estimated
Unrealized Unrealized Fair
` Cost Gains Gains Value
------ ------------- ------------- -------------
Cash $2,000 $2,000
Total cash and
cash equivalents $2,000 $2,000
===== =====
Effective January 1, 1994 the Company adopted Financial Accounting
Standards Board ("FASB") Statement No. 115, "Accounting for Certain Investments
in Debt and Equity Securities", which requires that investments in equity
securities that have readily determinable fair values and investments in debt
securities be classified in three categories: held-to-maturity, trading and
available-for-sale. Based on the nature of the assets held by the Company and
Management's investment strategy, the Company's investments have been classified
as available-for-sale. Management determines the appropriate classification of
debt securities at the time of purchase and reevaluates such designation as of
each balance sheet date.
Note 7 - Income Taxes
The Company provides for the tax effects of transactions reported in the
financial statements. The provision if any, consists of taxes currently due plus
deferred taxes related primarily to differences between the basis of assets and
liabilities for financial and income tax reporting. The deferred tax assets and
liabilities, if any represent the future tax return consequences of those
differences, which will either be taxable or deductible when the assets and
liabilities are recovered or settled. As of September 30, 1997, the Company had
no material current tax liability, deferred tax assets, or liabilities to impact
on the Company's financial position because the deferred tax asset related to
the Company's net operating loss carry forward and was fully offset by a
valuation allowance.
At September 30, 1997, the Company has net operating loss carry forwards
for income tax purposes of $1,551. These carry forward losses are available to
offset future taxable income, if any, and expire in the year 2010. The Company's
utilization of this carry forward against future taxable income may become
subject to an annual limitation due to a cumulative change in ownership of the
Company of more than 50 percent.
The components of the net deferred tax asset as of September 30, 1997 are
as follows:
Deferred tax asset:
Net operating loss carry forward $ 527
Valuation allowance $( 527)
Net deferred tax asset $ -0-
The Company recognized no income tax benefit for the loss generated for the
SFAS No. 109 requires that a valuation allowance be provided if it is more
likely year ended September 30, 1997.
SFAS No. 109 requires that a valuation allowance be provided if it is more
likely than not that some portion or all of a deferred tax asset will not be
realized. The Company's ability to realize benefit of its deferred tax asset
will depend on the generation of future taxable income. Because the Company has
yet to recognize significant revenue from the sale of its products, the Company
believes that a full valuation allowance should be provided
Note 8 - Commitments and Contingencies
Liabilities, Commitments and Contingencies
At December 31, 1996 and September 30, 1997 the Company has no liabilities
or commitments or contingencies.
Note 9. Supplemental Cash Flow Information
The following is supplemental cash flow information for the year ended
December 31, 1995 and 1996 and for the nine months ended September 30, 1997.
Issuance of 6,448,606 shares for acquisition of
License rights $252,500
Common stock 252,500
Total $ -0-
======
Note 10 - Development Stage Company
The Company is considered to be a development stage company with little
operating history. The Company is dependent upon the resources of the Company's
management and its ability to raise or borrow additional funds to continue to
exist. The Company has purchased the License rights to manufacture and market
certain patented technologies from Scantek and will require additional funds to
complete the process of building manufacturing facilities and implement the
Company's marketing program.
<PAGE>
THOMAS P. MONAHAN
CERTIFIED PUBLIC ACCOUNTANT
208 LEXINGTON AVENUE
PATERSON, NEW JERSEY 07502
(201) 790-8775
To The Board of Directors and Shareholders
of Health Technologies International, Inc. (a development stage company)
I have audited the accompanying balance sheet of Health Technologies
International, Inc. (a development stage company) as of December 31, 1996 and
the related statements of operations, cash flows and shareholders' equity for
the years ending December 31, 1995 and 1996. These financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I 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 and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Health Technologies
International, Inc. (a development stage company) as of December 31, 1996 and
the related statements of operations, cash flows and shareholders' equity for
the years ending December 31, 1995 and 1996 in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that
Health Technologies International, Inc. (a development stage company) will
continue as a going concern. As more fully described in Note 2, the Company is
dependent upon the resources of the Company's management for its continued
existence. The Company will also be dependent upon its ability to raise
additional capital to engage in any business activity. Since its reorganization,
the Company's activities have been limited to the seeking of a new business
purpose and the sale of shares of common stock in connection with its
reorganization. These conditions raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans as to these matters
are described in Note 2. the financial statements do not include any adjustments
to reflect the possible effects on the recoverability and classification of
assets or the amounts and classifications of liabilities that may result from
the possible inability of Health Technologies International, Inc. (a development
stage company) to continue as a going concern.
Thomas P. Monahan, CPA
October 25, 1997
<PAGE>
HEALTH TECHNOLOGIES INTERNATIONAL, INC.
(A Development Stage Company)
BALANCE SHEET
September 30,
<TABLE>
<CAPTION>
December 31, 1997
1996 Unaudited
Assets
<S> <C> <C>
Cash $1,000 $2,727
Current assets 1,000 2,727
Capital assets-net 24,535
Other assets
License fees 2,500 252,500
Organization expense 150 75
Total other assets 2,650 252,575
Total assets $3,650 $278,637
Liabilities and Stockholders Equity
Current liabilities
Loan payable-officer $276,432
276,432
Capital stock
Common Stock -without par value, authorized
10,000,000 shares. The number of shares outstanding at
December 31, 1996 and September 30, 1997 is 2,500,016
and 2,500,016 respectively. $4,000 $4,000
Accumulated deficit during development stage (350) (1,795)
Total stockholders equity 3,650 2,205
Total liabilities and stockholders equity $3,650 $278,637
</TABLE>
See accompanying notes to financial statements.
<PAGE>
HEALTH TECHNOLOGIES INTERNATIONAL, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Period from
For the nine For the nine inception
For the year For the year months ended months ended March 30, 1992
ended ended December September 30, September 30, to
December 31, 31, 1996 1996 1997 September 30,
1995 Unaudited Unaudited 1997
<S> <C> <C> <C> <C> <C>
Income $-0- $-0- $-0- $-0- $-0-
Operations:
General -0- -0- -0- 170 170
and
administrative
Amortization 100 100 75 1,275 1,550
Total expense 100 100 75 1,445 1,720
Net Profit (Loss) from $(100) $(100) $(75) $(1,445) $(1,720)
operations
Net income per share $-0- $-0- $-0- $-0- $-0-
Total number of shares 2,500,016 2,500,016 2,500,016 2,500,016 2,500,016
outstanding
</TABLE>
See accompanying notes to financial statements.
<PAGE>
HEALTH TECHNOLOGIES INTERNATIONAL, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Period from
For the nine For the nine inception
For the year For the year months ended months ended March 30, 1992
ended ended December September 30, September 30, to
December 31, 31, 1996 1996 1997 September 30,
1995 Unaudited Unaudited 1997
<S> <C> <C> <C> <C> <C>
Income $-0- $-0- $-0- $-0-
Operations:
General -0- -0- -0- 170 170
and
administrative
Amortization 100 100 75 1,275 1,550
Total expense 100 100 75 1,445 1,720
Net Profit (Loss) from $(100) $(100) $(75) $(1,445) $(1,720)
operations
Net income per share $-0- $-0- $-0- $-0- $-0-
Total number of shares 2,500,016 2,500,016 2,500,016 2,500,016 2,500,016
outstanding
</TABLE>
See accompanying notes to financial statements.
<PAGE>
HEALTH TECHNOLOGIES INTERNATIONAL, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS EQUITY
<TABLE>
<CAPTION>
Accumulated
Common Stock deficit during
Date Common Stock development stage Total
<S> <C> <C> <C> <C> <C>
4- 8-1992(1) 1,500,000 $300 $300
12-31-1992 1,500,000 300 300
7-14-1993(2) 100,000 200 200
12-31-1993 Net loss (50) (50)
12-31-1993 1,600,000 500 (50) 450
12-31-1994 Net loss (100) (100)
12-31-1994 1,600,000 500 (150) (350)
12-11-1995(3) 16
12-31-1995 Net loss (100) (100)
12-31-1995 16 500 (250) 250
12-11-1996(4) 2,500,000 3,500 2,500
12-31-1996 Net loss (100) (100)
12-31-1996 2,500,016 $4,000 $(350) $3,650
9-30-1997 (1,445) (1,445)
9-30-1997 2,500,016 $4,000 (1,795) $2,205
<FN>
(1) Sale of common shares for $300 in organization expense.
(2) Sale of common shares for $200 in legal fees.
(3) Reverse split common shares outstanding by 100,000 to 1.
(4) Sale of Common shares for $2,500 or $.001 per share.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
HEALTH TECHNOLOGIES INTERNATIONAL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
Note 1. Organization of Company and Issuance of Common Stock
a. Creation of the Company
Health Technologies International, Inc. (the "Company") was formed under
the laws of the State of New Jersey on March 30, 1992 as Materials Technologies
International, Inc. The Company was authorized to issue 2,500 shares of common
stock, no par value each. On November 18, 1992, the Company amended its
certificate of incorporation to change its name to Medbag, Inc. In December,
1996, the Company amended its certificate of incorporation, changing its name to
Health Technologies International, Inc. and change the number of shares of
common stock authorized to issue to 10,000,000, no par value each.
b. Description of the Company
The Company has purchased from Scantek Medical, Inc. ("Scantek"), a
Delaware corporation located in Mountain Lakes, New Jersey the licensing rights
to certain patented technology to manufacture and market a temperature sensing
device and diagnostic direct reading , digital device to screen the female
breast for abnormalities, including cancer. The Company has the right to
distribute its products to principal countries of Chile and Singapore. The
Company is considered to be a development stage with no operating history. The
Company is dependent upon principal resources of principal Company's management
for its continued existence. The Company will also be dependent upon its ability
to raise additional capital to engage in this business.
c. Issuance of Common Stock
On April 8, 1992, principal Company issued 500,000 shares of common stock
to Mr. Roger Fidler, 500,000 shares of common stock to Mr. James Wright and
500,000 shares of common stock to Brooks Adam in consideration of $300 in
organization expense.
On July 14, 1993, the Company issued 100,000 shares of common stock to Mr.
Gerhard Krahn in consideration for $200 in legal fees related to the
organization of the Company.
On December 11, 1995, the Company reverse split the number of shares of
common stock outstanding in a ratio of 100,000 to 1. Restating the number of
shares of common stock outstanding from 1,600,000 to 16.
On October 2, 1996, the Company issued an aggregate of 2,500,000 shares of
common stock as follows: 125,000 shares to Jim Wright, 100,000 shares to Gerhard
Krahn and 2,275,000 shares to Roger Fidler in consideration for $3,500.
Note 2-Summary of Significant Accounting Policies
a. Basis of Financial Statement Presentation
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The Company incurred net losses of
$1,795 for period from inception, March 30, 1992 to September 30, 1997. These
factors indicate that the Company's continuation as a going concern is dependent
upon it ability to obtain adequate financing. The Company's President has
advanced the Company $276,432 to sustain existence and purchase the license
agreement from Scantek. The Company will require substantial additional funds to
finance its business activities on an ongoing basis and will have a continuing
long-term need to obtain additional financing. The Company's future capital
requirements will depend on numerous factors including, but not limited to,
continued progress developing its digital production and output process and the
acquisition of additional digital equipment and processes. The Company plans to
engage in such ongoing financing efforts on a continuing basis. The accompanying
financial statements for the years ended December 31, 1995 and 1996 and for the
nine months ended September 30, 1997 do not reflect any adjustments relating to
the recoverability and classifications of recorded assets or the amounts and
classifications of liabilities which might be necessary in the event the Company
cannot continue in existence.
The financial statements presented consist of the balance sheet of as of
December 31, 1996 and September 30, 1997 and the related statements of
operations, retained earnings and cash flows for the years ended December 31,
1995 and 1996 and the related unaudited statements of operations, retained
earnings and cash flows for the nine months ended September 30, 1996 and 1997.
b. Earnings Per Share
Earnings per share have been computed on the basis of the total number of
Shares of Common Stock outstanding on September 30, 1997. On that date,
2,500,016 Shares of common stock were outstanding.
c. Organization Expense
The cost of organizing the Company will be charged to operations on a
straight line basis over a five year period.
d. Revenue recognition
Revenue is recognized when products are shipped or services are rendered.
e. Cash and Cash Equivalents
Cash and cash equivalents consist of cash and highly liquid investments
with a maturity of three months or less. Excess cash balances are primarily
invested in U.S. treasury bills with lesser amounts invested in high quality
commercial paper and time deposits.
f. Research and Development Expenses
Research and development costs are charged to operations when incurred.
g. Patents and License Agreements
Certain costs incurred to acquire exclusive licenses of patentable
technology are capitalized and amortized over a five year period or the term of
the license, whichever is shorter. The portion of these amounts determined to be
attributable to patents is amortized over their remaining lives and the
remainder is amortized over the estimated period of benefit but not more than 40
years.
h. Concentration of Credit Risk
The Company sells its products primarily to United States distributors.
Credit is extended based on an evaluation of the customer's financial condition,
and generally collateral is not required. Credit losses have been minimal and
within Management's expectations.
The Company invests its excess cash in debt instruments of financial
institutions and corporations with strong credit ratings. The Company has
established guidelines relative to diversification and maturates that maintain
safety and liquidity. These guidelines are periodically reviewed and modified to
take advantage of trends in yields and interest rates. The Company has not
experienced any realized losses on its marketable securities.
i. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect 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.
j. Unaudited financial information
In the opinion of management, the accompanying unaudited financial
statements contain all adjustments (consisting only of normal recurring items)
necessary to present fairly the financial position of the Company as of
September 30, 1997. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the SEC's rules
and regulations. the results of operations for the periods presented are not
necessarily indicative of the results to be expected for the full year.
Note 3 - Related Party transactions
a. Issuance of stock
On April 8, 1992, the Company issued 500,000 shares of common stock to Mr.
Roger Fidler, 500,000 shares of common stock to Mr. James Wright and 500,000
shares of common stock to Brooks Adam in consideration of $300 in organization
expense.
On July 14, 1993, the Company issued 100,000 shares of common stock to Mr.
Gerhard Krahn in consideration for $200 in legal fees related to the
organization of the Company.
On October 2, 1996, the Company issued an aggregate of 2,500,000 common
shares as follows: 125,000 common shares to Jim Wright, 100,000 common shares to
Gerhard Krahn and 2,275,000 to Roger Fidler in consideration for 3,500.
b. Loan Payable-Officer
The Company is obligated to repay the balance of monies advanced by Roger
Fidler, President, amounting to $276,432 with interest at 8%.
Note 4 - Commitments and Contingencies
a. Leased Office Space
The Company occupies office space rent fee on a month to month basis at 400
Grove Street, Glenn Rock, New Jersey
b. Licensing agreement
On August 15, 1996, the Company entered into a licensing agreement with
Scantek for the licensing of certain patented technology for the countries of
Chile and Singapore. The patented technology consists of a temperature sensing
device and diagnostic direct reading, digital device to screen the breast for
abnormalities, including cancer.
The Company has been granted an, indivisible, exclusive right and license
within the territories of Chile and Singapore to assemble, use and sell the
devices for a period of ending with the expiration of the applicable patents in
these countries.
If the Company fails to achieve for a period of 12 consecutive months the
minimum net sales of the devices with respect to each country, Scantek may upon
30 days written notice and at its option either terminate this agreement or
delete the country from the Company's territories. Minimum net sales as defined
is based upon market penetration. The size of the market in each of the three
countries will be computed using official government census information from
each country. The market is defined as the lesser of two pairs of the device for
each women between the ages of 25 and 70 or such usage as may be recommended by
the relevant medical association or government agency in each country in the
Territory. The percentage of market penetration by year is as follows: Year
Percentage of Market Penetration 1997 0% 1998 1% 1999 3% 2000 4% 2001 and after
5%
This schedule is based upon the scheduled delivery of an operational
assembly line, part of which will be installed in Scantek's facility, part of
which will be installed in the Company's facility. In the event that completion
of installation of the turn-key manufacturing line is delayed beyond June 30,
1997, then the above referenced years will be adjusted to appropriate calendar
years so as not to prejudice the Company's 365 day time period in which to
achieve the graduated market penetration.
The Company is required to pay to Scantek a nonrefundable License Fee of
$250,000 to be paid as follows: $75,000 on or before January 31, 1997; $175,000
on or before January 31, 1998 unless Zigmed, Inc. is unable to supply the
manufacturing line even though the Company has made payment. If such nondelivery
occurs then payment of the license fee will not be required until 6 months after
the actual delivery of a manufacturing line to the Company meeting all operating
specifications.
As of September 30, 1997, the Company as paid $250,000 towards the
licensing fee.+
The Company is required to pay a royalty equal to 15% of Net Sales of
Licensed Devices in the Territories during each contract year during the term of
the agreement. The royalty paid, will in no instance be less than $1.00 per unit
or a guaranteed minimum royalty payable as follows:
$80,000 for the year 1997; $200,000 for the year 1998; $300,000 for the
year 1999 and $400,000 for each year thereafter.
Royalties are due and payable each quarter either for the actual amount due
or 25% of the minimum royalty payable for the year.
In the event that at any time during the term of this agreement, the
consumer price index in effect for the national government of the country of the
territory be increased by 10% over the index base as of the date of the
agreement. Then the minimum royalty payable and the minimum net sales for the
year will be increased by 10%.
The Company is required to sell to Scantek 400,000 shares of common stock,
representing 20% of the total issued and outstanding common shares of the
Company as of the date of the agreement for the aggregate sum of $40. or $.0001
per share. Under no circumstances will Scantek's common stock position be
diluted to less than 15% of the issued and outstanding common stock of the
Company. In the event the Company will receive at nominal cost warrants to
purchase sufficient shares of common stock to maintain its 20% ownership, such
warrants will allow the purchase of shares at $2.25 per share for five years
from the date of the agreement.
The Company is required to arrange to purchase a turnkey manufacturing
line. Upon completion of the line, that portion of the line that manufactures
Sensors for the licensed devices will be installed at the same location as
Scantek's own manufacturing facility. Scantek will operate that portion of the
line and to the extent of the lines manufacturing capacity, deliver the
Company's requirements for Sensors to the Company's plant location F.O.B. for
cost plus 25%. Scantek will maintain a purchase money security interest in the
sensors delivered pursuant to this agreement.
During each contract year, the Company is required to spend 5% of net sales
during the immediately preceding year on advertising and promotion.
Upon termination of this agreement, the Company agrees that neither the
Company's officers, directors, principals nor its shareholders will during a
period of 5 years from the date of termination manufacture Sensors or purchase
Sensors manufactured by any entity other than Scantek for use in the licensed
devices or any competing device or directly or indirectly manage, operation or
control of or be connected as an officer, director, shareholder, partner,
consultant, owner, employee, agent, lender, donor, vendor, or otherwise, or have
any financial interest in or aid assist anyone else in the conduct of any
competing entity which offers similar devices for sale.
The Company is required to maintain product liability insurance with a
limit of not less than $1,000,000.
As of September 30, 1997, the Company has paid an aggregate of $252,500 in
licensing fees to Scantek.
c. Litigation
For the years ended December 31, 1994, 1995 and 1996, the Company had no
litigation pending.
Note 5 - Income Taxes
The Company provides for the tax effects of transactions reported in the
financial statements. The provision if any, consists of taxes currently due plus
deferred taxes related primarily to differences between the basis of assets and
liabilities for financial and income tax reporting. The deferred tax assets and
liabilities, if any represent the future tax return consequences of those
differences, which will either be taxable or deductible when the assets and
liabilities are recovered or settled. As of December 31, 1996, the Company had
no material current tax liability, deferred tax assets, or liabilities to impact
on the Company's financial position because the deferred tax asset related to
the Company's net operating loss carryforward and was fully offset by a
valuation allowance.
At September 30, 1997, the Company has net operating loss carry forwards
for income tax purposes of $1,795. This carryforward is available to offset
future taxable income, if any, and expire in the year 2010. The Company's
utilization of this carryforward against future taxable income may become
subject to an annual limitation due to a cumulative change in ownership of the
Company of more than 50 percent.
The components of the net deferred tax asset are as follows:
Deferred tax asset:
September 30,
1997
Net operating loss carry forward $ 610
Valuation allowance $ (610)
Net deferred tax asset $ -0-
The Company recognized no income tax benefit from the loss generated in the
year ended December 31, 1996 and for the nine months ended September 30, 1997.
SFAS No. 109 requires that a valuation allowance be provided if it is more
likely than not that some portion or all of a deferred tax asset will not be
realized. The Company's ability to realize benefit of its deferred tax asset
will depend on the generation of future taxable income. Because the Company has
yet to recognize significant revenue from the sale of its products, the Company
believes that a full valuation allowance should be provided.
Note 6 - Marketable Securities, Available for Sale
Effective January 1, 1994 the Company adopted Financial Accounting
Standards Board ("FASB") Statement No. 115, "Accounting for Certain Investments
in Debt and Equity Securities", which requires that investments in equity
securities that have readily determinable fair values and investments in debt
securities be classified in three categories: held-to-maturity, trading and
available-for-sale. Based on the nature of the assets held by the Company and
Management's investment strategy, the Company's investments have been classified
as available-for-sale. Management determines the appropriate classification of
debt securities at the time of purchase and reevaluates such designation as of
each balance sheet date.
Note 7 - Sale of Assets
On September 30, 1997. the Company entered into an agreement with D-Lanz
Development Group, Inc., ("D-Lanz") for the sale of certain assets consisting of
the Licensing agreement and related asset invested costs amounting to $252,500
with Scantek to D-Lanz in exchange for 8,448,606 shares of D-Lanz's common
stock.
Note 8 - Development Stage Company
The Company is considered to be a development stage company since
inception, with no operating history. The Company is dependent upon the
resources of the Company's management for its continued existence. The Company
will also be dependent upon its ability to raise additional capital to build
manufacturing facilities, hire staff and begin marketing of the Company's
products.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
financial statements for the nine month period ended September 30, 1997 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 2,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,000
<PP&E> 0
<DEPRECIATION> (41,934)
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
1
<COMMON> 10,000
<OTHER-SE> 246,051
<TOTAL-LIABILITY-AND-EQUITY> 254,500
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
