SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
Commission File Number 33-19584
INTERNATIONAL CRYOGENIC SYSTEMS CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 23-2582701
(State of Incorporation) (IRS Employer
Identification No.)
6626 Topper Parkway
San Antonio, Texas 78233
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: 210 659-8450
Securities registered pursuant to Sections 12(b) of the Act: NONE
Securities registered pursuant to Sections 12(g) of the Act: NONE
Common Stock, $0.001 Par Value Electronic Bulletin Board
Indicate by check mark whether the registrant (1) has filed all
reports required by Section 13 or 15(d) of the Securities and
Exchange Act of 1934 during the preceding 12 months and (2) has been
subject to such filing requirements for the past 90 days.
Yes X NO .
----- -----
As of March 24, 1996, 5,838,269 shares of Common Stock were
outstanding, and the aggregate market value of such shares held by
unaffiliated stockholders was approximately $3,741,970.
Documents incorporated herein by reference: NONE
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INTERNATIONAL CRYOGENIC SYSTEMS CORPORATION
FORM 10K/A
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
PART I
ITEM 1. BUSINESS
General Company Business
International Cryogenic Systems Corporation (ICSC) and its related companies
design, engineer, manufacture, market and support industrial refrigeration and
freezing systems for use world-wide. Innovative and unique industrial
refrigeration products and packages include evaporative heat exchange systems,
ammonia recovery and recycling systems, non-chemical water treating systems,
liquid recirculating packages, and merchant carbon dioxide plants. The most
advanced, cost-effective and environmentally safe "quick freeze" system has
been developed for the food freezing industry.
The current structure of ICSC is organized like a holding company with
independent and self sufficient subsidiaries related to the same industry. As
of year end there are three subsidiaries: RealCold Products, Inc., formally
RealCold Maintenance Systems, packaged refrigeration and freezer systems;
Nauticon Inc., refrigeration and evaporative heat exchange systems; Technicold
Services Inc., provides industry consulting and educational services. Included
is the sale of RealCold Systems, Inc. an ICSC subsidiary, whereas the Company
receives a long term royalty payment from Wittcold Systems. The two combined
companies provide world wide market support for refrigeration systems and
merchant CO2 plants. Details of the subsidiary sale follows.
In December 1996, the Company reached an agreement with Rotary Power
International, Inc. ("RPI") whereby the Company invested the sum of one million
dollars ($1,000,000) in exchange for two million shares (2,000,000) of RPI
common stock. Concurrent with the investment, ICSC and RPI have agreed in
principal to merge the two companies in a stock for stock acquisition, whereby
RPI would become a wholly owned subsidiary of ICSC. Each shareholder of RPI
will receive (.363) shares of ICSC common stock. The stock for stock
transaction will result in ICSC issuing a fixed total number (1,516,196) of
shares of common stock for all the issued and outstanding shares of RPI common
stock at the time of closing and execution of the stock purchase and merger
agreement. Subsequently, on March 21, 1997 the Company and RPI signed a Plan
and Agreement of Merger subject to stockholders approval. This transaction will
be accounted for as a purchase for Financial Accounting purposes.
The Company is forming alliances and distribution centers with agents,
distributors and synergistic companies world wide, building a comprehensive
industrial refrigeration and freezer business. ICSC is continually seeking
related acquisitions and joint venture partners that will compliment its
business and support its growth and goals. The Company has established a
relationship for a leasing program, leasing total turn key systems including
products, services, maintenance and supplies.
Management intends to continue to utilize and develop the intangible assets of
the Company. It is Management's opinion that the Company's cash flow generated
from intangible assets is not impaired, and that recovery of its intangible
assets, upon which profitable operations will be based, will occur.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL FINANCIAL ACTIVITY
Forward looking statements made herein are based on current expectations of the
Company that involves a number of risks and uncertainties and should not be
considered as guarantees of future performance. These statements are made under
the Safe Harbor Provisions of the Private Securities Litigation Reform Act of
1995. The factors that could cause actual results to differ materially include;
interruptions or cancellation of existing contracts, impact of competitive
products and pricing, product demand and market acceptance risks, the presence
of competitors with greater financial resources than the Company, product
development and commercialization risks and an inability to arrange additional
debt or equity financing.
RealCold Systems, Inc Sale - WittCold Systems, Inc., Palm Coast, Florida, a
Wittemann Company and wholly owned subsidiary of Dover Resources/Dover
Corporation purchased all of the issued and outstanding capital stock of
RealCold Systems, a wholly owned subsidiary of the Company. RealCold Systems
Inc. and The Wittemann Company previously signed a Joint Cooperative Agreement
in June 1995 for the manufacture and marketing of merchant carbon dioxide
plants and refrigeration products.
RealCold System engineers, manufactures and markets custom industrial
refrigeration systems. Wittemann is the world's leading manufacturer of carbon
dioxide systems and refrigeration accessories employed by brewers and other
fermentation processors. Wittemann has carbon dioxide systems operating in
almost every country in the world. The acquisition culminated after a
successful (50/50) cooperative joint venture between the two companies for the
manufacture and marketing of Merchant Carbon Dioxide Plants and Refrigeration
System Packages.
The effective closing date of all financial accounting transactions, between
the two companies, was as of June 30, 1996, the end of the Registrant's second
quarter reporting period. Closing date of the Acquisition Agreement was on July
23, 1996. Terms and conditions of the acquisition agreement between WittCold
Systems, Inc. and the Registrant, are as follows:
The purchase price for the common shares was the aggregate sum of Three Million
Dollars ($3,000,000) plus five percent (5 %) of the Net Sales of Refrigeration
Systems for the ten (10) full calendar years 1996 through 2005 and two and one
half (2 1/2%) of Net Sales of Merchant C02 Systems for the nine (9) full
calendar years 1997 through 2005 (the "Percentage Amount").
If the aggregate Percentage Amount paid to Registrant, as set forth above,
through the year 2005 is not at least Two Million Dollars ($2,000,000), the
Purchaser agrees to pay to Registrant no later than April 30, 2006, the
difference between the aggregate Percentage Amount paid to Registrant and Two
Million Dollars ($2,000,000). Notwithstanding the foregoing, in the event that
George Briley, a Director and major shareholder of the Registrant, is not
employed by and actively engaged in the Company's business for a period of
three full years after the date of Closing, then the foregoing obligation to
pay a minimum Percentage Amount of Two Million Dollars ($2,000,000) is null and
void and Registrant shall be entitled only to the Percentage Amount based on
Actual Net Sales as set forth above.
"Net Sales", as used herein, means payments received from customers less
commissions to non-employee agents, export preparation, inland freight and
forwarding fees, ocean freight, insurance, discounts and all warranty work
performed during the relevant period. The Percentage Amount will be determined
each calendar quarter and any amount due Registrant shall be paid to the
Registrant within thirty days after the end of each calendar quarter starting
January 1, 1997.
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Rotary Power International, Inc. Stock Purchase - Per an "Agreement" dated
December 24, 1996 International Cryogenic Systems Corporation (ICSC") agreed to
invest in Rotary Power International, Inc. ("RPI") the sum of one million
dollars ($1,000,000) in exchange for two million shares (2,000,000) of RPI
common stock. The $1,000,000 investment by ICSC is secured and subject to the
following conditions per the "Agreement".
ICSC has been invoiced (No. 122396) for $1,000,000 by RPI for certain good
inventory, serviceable by ICSC, and other tangible assets valued in excess
of $1,000,000, all to be delivered by February 1, 1997. And, all supported
by UCC Forms filed with the State. The invoice is to be canceled upon
fulfillment of the following two conditions:
If there is no equal matching funds of $1,000,000 and/or RPI Board of
Directors do not approve the stock purchase and merger agreement with ICSC
by January 30, 1997.
ICSC will have the first right to purchase (per invoice) RPI's interest in
Mars-Trans Affiliates LLC and all RPI engines (Masda, RPI and RMI) and
related engine parts and supplies for the aforesaid sum of $1,000,000.
Concurrent with the investment, ICSC and RPI have agreed in principal to merge
the two companies in a stock for stock acquisition, whereby RPI would become a
wholly owned subsidiary of ICSC. Upon completion of a definitive transaction
agreement and approval by the companies Board of Directors and stockholders,
each shareholder of RPI will receive (.363) shares of ICSC common stock. The
stock for stock transaction will result in ICSC issuing a fixed total number of
(1,516,196) shares of common stock for all the issued and outstanding shares of
RPI common stock at the time of closing and execution of the stock purchase and
merger agreement. January 1, 1997 is the proposed effective closing date of
the stock purchase and merger agreement for consolidated accounting and
financial reporting purposes.
Subsequently, on March 21, 1997 the Company and RPI signed a Plan and Agreement
of Merger subject to stockholders approval. In March 1997 $1,000,000 in
matching funds was received from RPI bondholders.
New Facilities - The Registrant and subsidiaries recently moved to another
location near San Antonio, Texas, and leased a 32,000 square foot facility for
administration, engineering and manufacturing operations. WittCold Systems,
Inc. has subleased 50% of the facility from the Registrant for their
engineering and manufacturing operations.
New Corporate Address and Phone Number of the Company: PO Box 1027, 103
Guadalupe Drive, Cibolo, Texas 78108, Phone 210-659-8450, Fax 210-659-8250.
Status of Operations - Management intends to continue to utilize and develop
the intangible assets of the Company. It is Management's opinion that the
Company's cash flow generated from intangible assets is not impaired, and that
recovery of its intangible assets, upon which profitable operations will be
based, will occur.
RESULTS OF OPERATIONS - 1996
The following tables sets forth the company's results of operation as a
percentage of net sales for the periods indicated below:
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SIGNATURES
Pursuant to the requirements of Section 13 of 15(d) of the Securities and
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
INTERNATIONAL CRYOGENIC SYSTEMS CORPORATION
Dated: March 2, 1998
By: /s/Francis L. Simola
---------------------------------------
Francis L. Simola
President and (Chief Executive Officer)
Pursuant to the requirements of the Securities and Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
Dated: March 2, 1998
By: /s/Francis L. Simola
------------------------------
Francis L. Simola
Director
By: /s/Terrence J. Dunne
------------------------------
Terrence J. Dunne
Director
By: /s/George C. Briley
------------------------------
George C. Briley
Director
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