U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
Commission file number 33-16757-D
MEDIZONE CANADA LIMITED
(Exact name of registrant as specified in its charter)
Nevada 87-0431771
(State of other jurisdiction of (I.R.S. employer identification No.)
Incorporation or organization)
(Address of principal executive offices)
55 West 200 North, Suite 2
Provo, UT 84601
(Previous Address of principal executive offices)
144 Buena Vista
P.O. Box 742
Stinson Beach, CA 94970
Registrant's telephone no., including area code: (801) 377-1758
Check whether the Issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes X No Yes X No
There were 2,250,178 common shares outstanding of the Registrant's common
stock at November 12, 1998.
<PAGE>
MEDIZONE CANADA LIMITED AND SUBSIDIARY
Index
September 30, 1998
PART I - FINANCIAL INFORMATION
Page Number
Item 1. Financial Statements
Unaudited Interim Consolidated Balance Sheets 3
Unaudited Interim Consolidated Statements of Operations 4-5
Unaudited Interim Consolidated Statement of Changes in
Stockholders' Equity 6-11
Notes to Unaudited Interim Consolidated Financial
Statements 11-14
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 14
PART II - OTHER INFORMATION
Item 2. Change in Securities 15
Item 4. Submission on Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 15
<PAGE>
Part 1 Financial Information
Item 1 Financial Statements
The Financial Statements of the Registrant required to be filed with this
10-QSB Quarterly Report were prepared by management together with Related
Notes. In the opinion of management, the Financial Statements fairly present
the financial condition of the Registrant.
Medizone Canada Limited
[Development Stage Company]
CONDENSED BALANCE SHEETS
[Unaudited]
<TABLE>
<CAPTION>
September 30, 1998 Dec. 31, 1997
<S> <C> <C>
CURRENT ASSETS:
Cash $ 29,461 $ 0.00
Accounts Receivable - -
Notes Receivable - -
Total Current Assets 29,461 $ 0.00
PROPERTY AND EQUIPMENT (NET) 0.00
OTHER ASSETS:
License Agreements 0 0.00
Organization cost (net of
accumulated amortization of
$5,520 and $5,520, respectively) 0 0.00
Total Other Assets 0 0.00
TOTAL ASSETS $29,461 $ 0.00
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
September 31, 1998 Dec. 31, 1997
CURRENT LIABILITIES:
Accounts payable $ 2,561 $ 9,498
Accrued expenses - 1,400
Total Current Liabilities $ 2,561 $10,898
Commitments and Contingencies (Note 1)
STOCKHOLDERS' DEFICIENCY:
Common stock; authorized
100,000,000 shares at 2,150 36,493
$0.001 par value; issued and
outstanding 2,150,178 as 9/30/98;
150,178 (post-split) as 12/31/97
Additional paid-in Capital 266,599 175,797
Deficit accumulated during the
development stage (241,849) (223,188)
Total Stockholders'Equity 26,900 (10,898)
TOTAL LIABILITIES & EQUITY $29,461 $0
</TABLE>
The accompanying notes are an integral part of these financial statements.
NOTE: The balance sheet at December 31, 1997 was taken from the audited
financial statements at that date and condensed.
<PAGE>
MEDIZONE CANADA LIMITED
[Development Stage Companies]
CONDENSED STATEMENTS OF OPERATIONS
[Unaudited]
<TABLE>
<CAPTION>
For the Three For the Three From Inception,
Months Ended Months Ended (Nov. 18, 1987)-
Sept. 30, 1998 Sept. 30, 1997 Sept. 30, 1998
<S> <C> <C> <C>
REVENUE $ 0 $ 0 $ 0
Cost of Goods Sold - - -
Total Revenue $ 0 $ 0 $ 0
EXPENSES
General & Admin. $ 7,850 $ 0 $204,445
Research & Development 0 0 29,554
Total Expenses $ 7,850 $ 0 $233,999
NET INCOME/LOSS ($ 7,850) $ 0 ($233,999)
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
MEDIZONE CANADA LIMITED
[Development Stage Companies]
CONDENSED STATEMENTS OF OPERATIONS
[Unaudited]
<TABLE>
<CAPTION>
For the Nine For the Nine From Inception,
Months Ended Months Ended Nov. 13, 1987 -
Sept. 30, 1998 Sept. 30, 1997 Sept. 30, 1998
<S> <C> <C> <C>
REVENUE $ 0 $ 0 $ 0
Cost of Goods Sold 0 0 0
Total Revenue $ 0 $ 0 $ 0
EXPENSES
General and Administrative 18,661 $ 0 204,445
Research and Development 0 0 29,554
Total Expenses $18,661 $ 0 $233,999
INCOME FROM OPERATION
($18,661) $ 0 ($233,999)
NET INCOME/LOSS ($18,661) $ 0 ($233,999)
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
MEDIZONE CANADA LIMITED
[A Development Stage Company]
Consolidated Statements of Stockholders' Equity
From the Date of Inception (November 18, 1987) through September 30, 1998
[Unaudited]
<TABLE>
<CAPTION>
Capital In Deficit Accumulated
Excess Of During The
Common Stock Par Value Development Stage
Shares Amount
<S> <C> <C> <C> <C>
Medizone Canada Ltd.
- Canadian
Initial issuance of
shares exchanged for
license agreement,
Nov. 1987
($.000003 per share) 3,000,000 $ 1 -- --
Common stock issued for
cash at $1/share
Nov. 1987 1 $ 1 -- --
Net loss for the year
ended 12/31/87 -- -- -- $(1,000)
BALANCE, Dec. 31,1987 3,000,001 $ 2 -- $(1,000)
Sale of shares for
cash ($.7692 per
share, no par value) 130,000 $100,000 -- --
3,130,001 $100,002 -- $(1,000)
KPC Investments
Initial capitalization
of KPCInvestments
($.001 par value)
July 1984 ($.003/share) 590,000 $ 590 $ 910 --
Shares issued for cash
Apr.1985 ($.003/share) 3,000,000 $ 3,000 $ 6, 819 --
Shares & warrants
issued for cash
June 1988 2,000,000 $ 2,000 $ 82,089 --
5,590,000 $ 5,590 $89,818 --
</TABLE>
<PAGE>
MEDIZONE CANADA LIMITED
[A Development Stage Company]
Consolidated Statements of Stockholders' Equity
From the Date of Inception (November 18, 1987) through September 30, 1998
[Unaudited]
<TABLE>
<CAPTION>
Capital In Deficit Accumulated
Common Stock Excess Of During the
Shares Amount Par Value Development Stage
<S> <C> <C> <C> <C>
Medizone Canada Ltd.
- - Utah
Existing shares of MCL
Utah (formerly KPC
Investments) 5,590,000 $ 5,590 $ -- --
Exchange of 3,130,001
shares of Medizone
Canada Ltd. -
Canadian for shares
of MCL-Utah-resulting
in a reverse merger
December 1988 27,132,000 $ 27,132 $ 66,551 --
Shares reserved for
issuance to Minority
shareholder (1,126,888) $ (1,127) -- --
Shares issued for
services
($.005)/share) 1,938,000 1,938 8,062 --
Return of capital to
majority Shareholder -- -- (50,851) --
Net loss for the year
ended Dec. 31, 1988 -- -- -- $ (106,392)
BALANCE, 33,533,112 33,533 113,580 $ (107,392)
December 31, 1988
Return of capital to
majority Shareholder -- -- (58,056) --
Net loss for the year
ended Dec. 31, 1989 -- -- -- $ ( 26,179)
BALANCE,
Dec. 31, 1989 33,533,112 33,533 55,524 $ (133,571)
Sale of shares for
cash ($.05 to
$.075/share) 983,333 983 56,517 --
</TABLE>
<PAGE>
MEDIZONE CANADA LIMITED
[A Development Stage Company]
Consolidated Statements of Stockholders' Equity
From the Date of Inception (November 18, 1987) through September 30, 1998
[Unaudited]
<TABLE>
<CAPTION>
Capital In Deficit Accumulated
Common Stock Excess Of During the
Shares Amount Par Value Development Stage
<S> <C> <C> <C> <C>
Shares issued for
services ($.05/share) 850,000 $ 850 $ 41,650 --
Shares issued to
minority shareholder
which had been reserved 1,126,888 1,127 -- --
Return of capital to
majority Shareholder -- -- (42,480) --
Net loss for the year
ended Dec. 31, 1990 -- -- -- $ (28,561)
BALANCE, Dec. 31, 1990 36,493,333 36,493 $ 111,211 $(162,132)
Capital received from
majority Shareholder -- -- $ 9,100 --
Net loss for the year
ended Dec. 31, 1991 -- -- -- $ (8,150)
BALANCE, Dec. 31, 1991 36,493,333 36,493 $ 120,311 $ (170,282)
Capital received from
majority shareholder -- -- $ 6,314 --
Net loss for the year
ended Dec. 31, 1992 -- -- -- $ (8,334)
Balance, Dec. 31, 1992 36,493,333 $36,493 $ 126,625 $ (178,616)
Capital received from
majority shareholder -- -- $ 25,936 --
Net loss for the year
ended Dec. 31, 1993 -- -- -- $ (32,357)
Balance, Dec. 31, 1993 36,493,333 $36,493 $ 152,561 $ (210,973)
</TABLE>
<PAGE>
MEDIZONE CANADA LIMITED
[A Development Stage Company]
Consolidated Statements of Stockholders' Equity
From the Date of Inception (November 18, 1987) through September 30, 1998
[Unaudited]
<TABLE>
<CAPTION>
Capital In Deficit Accumulated
Common Stock Excess Of During the
Shares Amount Par Value Development Stage
<S> <C> <C> <C> <C>
Capital received from
majority shareholder -- -- $ 12,038 --
Net loss for the year
ended Dec. 31, 1994 -- -- -- $ (3,617)
Balance, Dec. 31, 1994 36,493,333 36,493 $164,599 $ (214,590)
Capital received from
majority shareholder -- -- $ 5,553 --
Net loss for the year
ended Dec. 31, 1995 -- -- -- $ (3,553)
Balance, Dec. 31, 1995 36,493,333 36,493 $170,152 $ (218,143)
Capital received from
majority shareholder -- -- 3,301 --
Net loss for the year
ended Dec. 31, 1996 -- -- -- $ (3,301)
Balance, Dec. 31, 1996 36,493,333 36,493 $173,453 $ (221,444)
Capital received from
majority shareholder -- -- 2,334 --
Net loss for the year
ended Dec. 31, 1997 -- -- -- $ (1,744)
Balance, Dec. 31, 1997 36,493,333 $36,493 $175,797 $ (223,188)
Capital received from
majority shareholder -- -- $ 11,469 --
Reverse Stock Split 1:243
retaining 100,000,000
shares at a par value
$.001; June 10, 1998 (36,343,154) ($36,343) 36,343 --
</TABLE>
<PAGE>
MEDIZONE CANADA LIMITED
[A Development Stage Company]
Consolidated Statements of Stockholders' Equity
From the Date of Inception (November 18, 1987) through September 30, 1998
[Unaudited]
<TABLE>
<CAPTION>
Capital In Deficit Accumulated
Common Stock Excess Of During the
Shares Amount Par Value Development Stage
<S> <C> <C> <C> <C>
Sale of Shares for
Cash; June 10, 1998 1,000,000 $ 1,000 $ 19,000 --
Sale of Shares for
Cash; August, 1998 1,000,000 $ 1,000 $ 24,000
Net loss for the nine
months ended 9/30/98 -- -- -- $ (18.661)
Balance,
September 30, 1998 2,150,178 $ 2,150 $266,599 $ (241,849)
</TABLE>
<PAGE>
MEDIZONE CANADA LIMITED
(A Development Stage Company)
Notes to Unaudited Consolidated Financial Statements
September 30, 1998
Note 1 - Summary of Significant Accounting Policies
Condensed Financial Statements- The accompanying financial statements have
been prepared by the Company without audit. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position, results of operations, cash flows at
September 30, 1998, and for all the periods presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
condensed financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's December 31, 1997,
audited financial statements. The results of operations for the period ended
September 30, 1998, are not necessarily indicative of the operation results for
the full year.
Organization - Medizone Canada Limited, a Nevada corporation (the "Company" or
the "Registrant") was organized in 1987 and is a development stage company.
The company was a majority owned subsidiary of Medizone International, Inc.
("MII") until June, 1998. MII is a Nevada corporation, organized in 1986,
whose objective is to (1) gain regulatory approval for its drug, a precise
mixture of ozone and oxygen called MEDIZINE (R), and its process of
inactivating lipid enveloped viruses for the intended purpose of
decontaminating blood and blood products and assisting in the treatment of
certain diseases; and (ii) develop the related technology and equipment for
the medical application of its products, including its drug production and
delivery system (the "Medizone Technology"). The Company is not currently
engaged in any business activity, but is seeking potential investments or
business acquisitions and consequently is considered a developmental stage
company as defined in SFAS No. 7. The Company has, at the present time, not
paid any dividends and any dividends that may be paid in the future will
depend upon the financial requirements of the Company and other relevant
factors.
Accounting Estimates - The preparation of the financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities, the disclosures of contingent assets and liabilities at the
date of the financial statements and the reported amount of revenues and
expenses during the reporting period. Actual results could differ from those
estimated.
Stock Split - On June 10, 1998 the Board of Directors ratified a resolution to
reverse split the Company's outstanding common voting stock on a basis of one
for 243, while retaining the authorized shares at 100,000,000 and the par
value at $0.001.
Note 2 - Related Party Transactions
Management Compensation - During the periods presented the Company paid Brenda
M. Hall, the company's director and president $1,000 per month. The Company
paid Paul Finlayson, director, $250 for the quarter and Pamela Price, director,
$500 for the quarter.
<PAGE>
NOTE 3 - DISCONTINUED OPERATIONS
None
Note 4 - Common Stock
Unless otherwise stated, all transactions shown below were with unrelated
parties and the securities issued were restricted:
In July 1984, KPC initially issued 590,000 shares in a private transaction to
shareholders no longer affiliated with the Company for proceeds of $1,500.
In April 1985, KPC issued 3,000,000 shares of common stock in a public
offering for net proceeds after offering costs of $9,819.
In June 1988, KPC issued 2,000,000 units consisting of one share of common
stock and two warrants which allow the holder to purchase one share of common
stock per warrant. The warrants were exercisable at $.125 per share and
expired on December 31, 1997. The net proceeds of this offering were $84,089.
In December 1988, KPC reserved 27,200,000 shares for issuance to the
stockholders of MedCan in exchange for all the shares of MedCan. Of this
amount, 26,005,112 shares were so exchanged and 1,126,888 shares were
reserved. Also during 1988, 1,938,000 shares were issued to a consultant for
services rendered with a value of $10,000.
In 1990, the Company issued 983,333 shares of common stock at prices ranging
from $.05 to $.075 in private offerings to two individuals unrelated to the
Company for proceeds of $57,400. The Company also issued, for services
rendered, 850,000 shares to five individuals, 550,000 shares to the three
directors of the Company, 50,000 shares to an employee, and 250,000 shares to
a consultant, to which it assigned the value of $.05 per share for an
aggregate of $42,500.
During 1990, the 1,126,888 shares reserved in December 1988 for issuance to
the remaining stockholder of MedCan in exchange for the shares of MedCan were
issued.
On June 10, 1998, the Board of Directors effectuated a reverse split on a
basis of one for 243, while retaining the authorized shares at 100,000,000 and
the par value at $0.001. Additionally, on June 10, 1998, the Company issued
1,000,000 post-split shares of its "unregistered" and "restricted" common
stock to the appointed Director and President, Brenda M. Hall, in
consideration of the sum of $20,000 cash, effectively passing control (87%) to
the new officer.
During the end of August, 1998, the Company issued 1,000,000 shares of common
stock at $.025 per share in a private offering to 5 individuals for proceeds of
$25,000. Four of the individuals were unrelated to the Company. The fifth
individual, Brenda Hall, the company's sole director and officer, bought
250,000 shares of the private offering.
<PAGE>
NOTE 5 - GOING CONCERN
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles which contemplate continuation of the
Company as a going concern. However, the Company has incurred losses since
inception, has expended most of its working capital and has not yet been
successful in establishing profitable operations. These factors raise
substantial doubt about the ability of the Company to continue as a going
concern. In this regard, management is proposing to raise additional funds
through loans and/or through additional sales of it common stock or through
the acquisition of another company by issuing common stock. There is no
assurance that the Company will be successful in raising this additional
capital.
The financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the amounts and
classification of liabilities that might be necessary should the company be
unable to obtain additional financing or establish profitable operation.
NOTE 6 - CONTINGENCIES
NONE
NOTE 7 - SUBSEQUENT EVENTS
On October 1, 1998, the company issued 100,000 S-8 common shares to consultants
pursuant to "Consultant Compensation Agreement No.1" The shares were registered
on Form S-8 with the Securities Exchange Commission on October 2, 1998.
On October 30, 1998, Paul Finlayson tendered his resignation as secretary/
treasurer and director of the company. This action leaves Brenda M. Hall as
sole officer and director of the company.
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Nine-month Periods ended September 30, 1998, and September 30, 1997
No research and development expenses were incurred in 1998 or 1997. For
the nine month period ending September 30, 1998, nominal general and
administrative expenses totaling $18,661 were incurred for shareholder costs,
legal fees and taxes. General and administrative expenses during the nine month
period ending September 30, 1997, were $0.
Liquidity and Capital Resources
For the three month period ending September 30, 1998, the Company had a
working capital deficiency of ($7,850) and a shareholders' deficiency of
($7,850). The Company had a working capital deficiency of ($18,661) and
shareholders' deficiency of ($18,661) for the nine month period ending September
30, 1998. At December 31, 1997, the Company had a working capital deficiency
of($0.00) and a shareholders' deficiency of ($0.00).
PART II - OTHER INFORMATION
ITEM 1 Legal Proceedings
None
ITEM 2 Change in Securities
During the end of August the company successfully completed a private
offering of 1,000,000 common shares for $25,000 cash.
ITEM 3 Defaults on Senior Securities
None
ITEM 4 Submission on Matters to a Vote of Security Holders
ITEM 5 Other Information
On August 28, 1998, Pamela Price resigned as Vice-President and Director of
the company.
ITEM 6 Exhibits and Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MEDIZONE CANADA LIMITED
(Registrant)
/s/ Brenda M. Hall
President and Director
November 13, 1998
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 29,641
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 29,641
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 29,641
<CURRENT-LIABILITIES> 2,561
<BONDS> 0
0
0
<COMMON> 2,150
<OTHER-SE> 26,900
<TOTAL-LIABILITY-AND EQUITY> 29,641
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 18,661
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (18,661)
<EPS-PRIMARY> ($0.008)
<EPS-DILUTED> ($0.008)
</TABLE>
