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 March 31, 1999
Commission file number 33-16757-D
MEDIZONE CANADA LIMITED
-------------------------
(Exact name of registrant as specified in its charter)
Nevada 87-0411771
--------- -------------
(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
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 April 8, 1999.
<PAGE>
MEDIZONE CANADA LIMITED AND SUBSIDIARY
Index
March 31, 1999
PART I - FINANCIAL INFORMATION Page Number
Item 1. Financial Statements
Unaudited Interim Consolidated Balance Sheets 3
Unaudited Interim Consolidated Statements of Operations 4
Unaudited Interim Consolidated Statement of Changes in
Stockholders' Equity 5-9
Notes to Unaudited Interim Consolidated Financial
Statements 10-12
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12-13
PART II - OTHER INFORMATION
Item 2. Change in Securities 13
Item 4. Submission on Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 13
<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>
March 31, 1999 Dec. 31, 1998
---------------- ---------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 16,323 $ 21,639
Accounts Receivable 857 -
--------- ---------
Total Current Assets 17,180 $21,639
PROPERTY AND EQUIPMENT (NET) - -
OTHER ASSETS:
License Agreements - -
Organization cost (net of
accumulated amortization of $5,520
And $5,520, respectively) - -
Total Other Assets - -
TOTAL ASSETS $17,180 $21,639
-------- ---------
-------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
March 31, 1999 Dec. 31, 1998
---------------- ---------------
CURRENT LIABILITIES:
Accounts payable $ 438 $ 387
Accrued expenses - 794
--------- ----------
Total Current Liabilities $ 438 $ 1,181
Commitments and Contingencies (Note 1)
STOCKHOLDERS' DEFICIENCY:
Common stock; authorized 100,000,000 2,250 2,250
$0.001 par value; issued and outstanding
2,250,178 as of 3/31/99;
150,178(post-split) as of 12/31/97
Additional paid-in Capital 261,093 261,093
Deficit accumulated during the
development stage (246,601) (242,885)
--------- ---------
Total Stockholders' Equity 16,742 20,458
TOTAL LIABILITIES & EQUITY $ 17,180 $ 21,639
--------- ----------
--------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
NOTE: The balance sheet at December 31, 1998 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>
For the Three For the Three From Inception,
Months Ended Months Ended (Nov. 18,
1987)-
March 31, 1999 March 31, 1998 March 31, 1999
---------------- ----------------
- ----------------
<S> <C> <C> <C>
REVENUE $0.00 $0.00 $0.00
Cost of Goods Sold $ - - -
------- ------
- ------
Total Revenue $0.00 $0.00 $0.00
EXPENSES
Gen. and Admin. Expenses $3,717.00 $1,053.00 $217,048.00
Research & Develop. Expenses 0.00 0.00 $ 29,554.00
--------- ---------
- ------------
Total Expenses $3,717.00 $0.00 $246,602.00
NET INCOME/LOSS ($3,717.00) ($1,053.00)
($246,602.00)
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
MEDIZONE CANADA LIMITED
[A Development Stage Company]
Consolidated Statements of Stockholders' Equity
>From the Date of Inception (November 18, 1987) through March 31, 1999
(restated)
<TABLE>
Capital In Deficit
Accumulated
Common Stock Excess Of During the
Shares Amount Par Value Development Stage
-------- ------- --------- --------------------
<S> <C> <C> <C> <C>
Medizone Canada Ltd.
- Canadian
Initial issuance of
shares exchanged for
license agreement, 11/87
($.000003 per share) 3,000,000 $ 1 -- --
Common stock issued for
cash at $1/share 11/87 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 -- $(1,000)
--------- -------- --------- -------------
--------- -------- --------- -------------
KPC Investments
Initial capitalization
of KPC Investments
($.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 March 31, 1999
(restated)
[Unaudited]
<TABLE>
Shares Capital In Deficit
Accumulated
Common Stock To Be Excess Of During the
Shares Amount Issued Par Value Development Stage
--------- -------- ------- ---------- -------------------
<S> <C> <C> <C> <C> <C>
Medizone Canada Ltd.
- Utah
Existing shares of
MCL Utah (formerly
KPC Investments) 5,590,000 $ 5,590 $89,818 --
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 $66,551 --
Shares reserved for
issuance to
Minority share-
holder (1,126,888)$ (1,127) 1,127 -- --
Shares issued for
services
($.005)/share) 1,938,000 $ 1,938 -- 8,062 --
Return of capital
to majority share-
holder -- -- -- (50,851) --
Net loss for the
year-ended 12/31/89 -- -- -- -- $ (106,392)
----------- -------- ------- --------- ------------
BALANCE, 12/31/89 33,533,112 $ 33,533 1,127 $113,580 $ (107,392)
---------- --------- ------ ---------- -------------
---------- --------- ------ ---------- -------------
Return of capital to
majority Share-
holder -- -- -- (58,056) --
Net loss for the
year ended 12/31/89 -- -- -- -- $ ( 26,179)
BALANCE, 12/31/89 33,533,112 $ 33,533 1,127 55,524 $ (133,571)
---------- -------- ------- ------- ------------
---------- -------- ------- ------- ------------
Sale of shares for
cash (From $.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 March 31, 1999
(restated)
[Unaudited]
<TABLE> Shares Capital In Deficit
Accumulated
Common Stock To Be Excess Of During the
Shares Amount Issued Par Value Development Stage
------- ------- ------ ------------------------------
<S> <C> <C> <C> <C> <C>
Shares issued for
services
($.05 per share) 850,000 850 -- $ 41,650 --
Shares issued to
minority share-
holder which had
been reserved 1,126,888 1,127 (1,127) -- --
Return of capital
to majority
Shareholder -- -- -- $ (42,480) --
Net loss for the
year ended
12/31/90 -- -- -- -- $
(28,561)
----------- ------- ------ ------------- ---------------
BALANCE, 12/31/90 36,493,333 36,493 -- $ 111,211 $ (162,132)
Capital received
from majority
Shareholder -- -- -- 9,100 --
Net loss for the
year ended
December 31, 1991 -- -- -- -- $
(8,150)
----------- ------- ------- ----------- ---------------
BALANCE, 12/31/91 36,493,333 36,493 -- $ 120,311 $ (170,282)
Capital received
from majority
Shareholder -- -- -- $ 6,314 --
Net loss for the
year ended
December 31, 1992 -- -- -- -- $ (8,334)
----------- -------- ------- ------------ -------------
Balance, 12/31/92 36,493,333 $36,493 -- $126,625 $ (178,616)
Capital received
from majority
Shareholder -- -- -- $ 25,936 $ --
Net loss for the
year ended 12/31/93 -- -- -- -- $ (32,357)
---------- --------- ------ --------------------------
Balance, 12/31/93 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 March 31, 1999
(restated)
[Unaudited]
<TABLE>
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)
----------- -------- ---------- -------------
----------- -------- ---------- -------------
Adjust beginning shares
for reverse stock
split at 1 share for
243 shares (36,343,157) (36,343) 36,343 --
effective 6/10/98
Contributed capital
from majority
shareholder -- -- 3,301 --
Net loss for the year
ended Dec. 31, 1996 -- -- -- $ ( 3,301)
----------- -------- --------- -------------
Balance, Dec. 31, 1996 150,176 150 $209,796 $ (221,444)
----------- ------- --------- -------------
----------- ------- --------- -------------
Capital received from
majority shareholder -- -- 2,334 --
Net loss for the year
ended Dec. 31, 1997 -- -- -- $ (1,744)
---------- ------- --------- ------------
Balance, Dec. 31, 1997 150,176 $ 150 $212,140 $ (223,188)
---------- ------- ----------- ------------
---------- ------- ----------- ------------
</TABLE>
<PAGE>
MEDIZONE CANADA LIMITED
[A Development Stage Company]
Consolidated Statements of Stockholders' Equity
>From the Date of Inception (November 18, 1987) through March 31, 1999
(restated)
[Unaudited]
<TABLE>
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 -- -- $ 1,053 --
Sale of Shares for Cash
June 10, 1998 1,000,000 $ 1,000 $ 19,000 --
Sale of Share for Cash 1,000,000 $ 1,000 $ 24,000 --
August, 1998
Shares issued for
services
($.05 per share) 100,000 $ 100 $ 4,900 --
Net loss for the year
ended Dec. 31, 1998 -- -- -- $ (19,697)
Balance, Dec. 31, 1998 2,250,176 $ 2,250 $ 261,093 $ (242,885)
---------- -------- ---------- --------------
---------- -------- ---------- --------------
Net loss for the period
ended Mar. 31, 1999 -- -- -- $ ( 3,717)
---------- -------- ---------- --------------
Balance, Mar. 31, 1999 2,250,176 $ 2,250 $ 261,093 $ (246,602)
---------- -------- ---------- --------------
---------- -------- ---------- --------------
</TABLE>
<PAGE>
MEDIZONE CANADA LIMITED
(A Development Stage Company)
Notes to Unaudited Consolidated Financial Statements
March 31, 1999
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 at March 31,
1999, 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, 1998,
audited financial statements. The results of operations for the period ended
March 31, 1999, 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 first quarter of 1999, the Company did
not pay any wages to the sole officer or director of the Company.
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 M. Hall, the Company's sole director and officer, bought
250,000 shares of the private offering.
On October 1, 1998, the Company issued 100,000 S-8 common shares to its
attorney pursuant to a "Consultant Compensation Agreement No.1." The shares
were registered on Form S-8 with the Securities Exchange Commission on October
2, 1998.
<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 - Contengencies
-------------
None.
NOTE 7 - Subsequent Events
-----------------
None.
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Plan of Operation
-------------------
The Company's plan of operation for the next 12 months is to continue to
seek the acquisition of assets, properties or businesses that may benefit the
Company and its stockholder. Management anticipates that to achieve any such
acquisition, the Company will issue shares of its common stock as the sole
consideration for such acquisition.
During the next 12 months, the Company's only foreseeable cash
requirements will relate to maintaining the Company in good standing or the
payment of expenses associated with reviewing or investigating any potential
business venture, which the Company expects to pay from advances from
management.
Results of Operations
-----------------------
Three-month Periods ended March 31, 1999, and March 31, 1998
The Company did not engage in any business activities during the quarters
ended March 31, 1999 and 1998, nor the year ended December 31, 1998. No
research and development expenses were incurred in 1999 or 1998. For the
three month period ending March 31, 1999, nominal general and administrative
expenses totaling $3,717 were incurred for shareholder costs, legal and
accounting fees. General and administrative expenses for the three month
period ending March 31, 1998, were $1,053. The increased expenses in 1999
related primarily to the change of control of the Company and the reverse
stock
split in June.
Liquidity and Capital Resources
---------------------------------
For the three-month period ending March 31, 1999, the Company had assets
of $17,179.55 and liabilities totaling $438. The Company had no assets for the
three-month period ending March 31, 1998 and liabilities totaling 1,053.
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
-----------------
None.
ITEM 2. Change in Securities
--------------------
None.
ITEM 3. Defaults on Senior Securities
-----------------------------
None.
ITEM 4. Submission on Matters to a Vote of Security Holders
---------------------------------------------------
None.
ITEM 5. Other Information
-----------------
None.
ITEM 6 Exhibits and Reports on Form 8-K
--------------------------------
None.
SIGNATURES
Pursuant to the requirements of the Securities 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)
Date: April 7, 1999 /s/ Brenda M. Hall
-------------------------
Brenda M. Hall, Sole Officer & Director
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000821172
<NAME> MEDIZONE CANADA LIMITED
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 16,323
<SECURITIES> 0
<RECEIVABLES> 857
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 17,180
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 17,180
<CURRENT-LIABILITIES> 438
<BONDS> 0
0
0
<COMMON> 2,250
<OTHER-SE> 14,492
<TOTAL-LIABILITY-AND-EQUITY> 17,180
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,717
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,717)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,717)
<EPS-PRIMARY> .00
<EPS-DILUTED> 0
</TABLE>
