U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 1O-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter ended June 30, 1997 Commission File No.33-30476-D
ISO BLOCK PRODUCTS USA, INC.
(Exact name of registrant as specified in its charter)
COLORADO
(State or other jurisdiction of
incorporation or organization)
8037 South Datura Street
Littleton, Colorado 80120
(Address of Principal's Executive Offices)
84-1O26503
(I.R.S. Employer Identification No.)
(303) 795-9729
(Registrant's Telephone No. Incl. area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the
registrant was required to file such reports), and (2) Has been subject to
such filing requirements for at least the past: 90 days.
Yes ___ No X
The number of shares outstanding of each of the Registrant's classes of
common equity, as of June 30, 1997 are as follows:
Class of Securities Shares Outstanding
------------------- ------------------
Common Stock, no par value 2,070,821
INDEX
Page of
Report
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets:
As of June 30, 1997 (unaudited) and March
31,1997....................................................... 3
Consolidated Statements of Operations (unaudited)
For the three-month periods ended June 30, 1997 and
1996.......................................................... 4
Consolidated Statements of Cash Flows (unaudited)
For the three-month periods ended June 30, 1997 and
1996.......................................................... 5
Notes to Unaudited Financial Statements....................... 6
Item 2. Management's Discussion and Analysis or Plan of
Operation..................................................... 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.............................. 9
Signatures.................................................... 9
ISO BLOCK PRODUCTS USA, INC.
CONSOLIDATED COMPARATIVE BALANCE SHEET
June 30, March 31,
1997 1997
---------- ----------
ASSETS
------
Current Assets
--------------
Cash 143,913 302,931
Note Receivable - Officer 2,300 2,000
Mortgages Receivable 1,172,340 1,176,590
Prepaid Expenses 92,094 72,033
---------- ----------
Total Current Assets 1,410,647 1,553,554
Property & Equipment
--------------------
Office Equipment 5,656 2,860
Less: Accumulated Depreciation (143) (179)
---------- ----------
Net Property & Equipment 5,513 2,681
---------- ----------
TOTAL ASSETS 1,416,160 1,556,235
========== ==========
LIABILITIES & STOCKHOLDERS' EQUITY
----------------------------------
Current Liabilities
-------------------
Accounts Payable 43,882 8,780
---------- ----------
Stockholders' Equity
--------------------
Preferred Stock, No Par Value,
10,000,000 Shares Authorized,
1,448,610 and 924,000 Shares
Outstanding, Respectively. 1,427,700 1,427,700
Common Stock, 50,000,000 Shares
Authorized, 2,070,821 and
3,185,821 Shares Outstanding,
Respectively. 1,472,055 1,472,556
Accumulated Deficit (1,527,477) (1,357,440)
---------- ----------
1,372,278 1,542,816
---------- ----------
TOTAL LIABILITIES &
STOCKHOLDERS EQUITY 1,416,160 1,556,235
========== ==========
The accompanying notes are an integral
part of these financial statements.
ISO BLOCK PRODUCTS USA, INC.
CONSOLIDATED COMPARATIVE STATEMENT OF OPERATIONS
------------------------------------------------
For the three months ended June 30, 1997 and 1996
Jume 30,
1997 1996
---------- -----------
INCOME
------
Construction Sales - 123,133
Interest Income 28,483 5,942
---------- -----------
Total Income 28,483 129,075
COST OF SALES
-------------
Cost of Materials and Services 86,572 162,128
Labor - 22,690
---------- -----------
Total Cost of Sales 86,572 184,818
GROSS PROFIT (LOSS) (58,089) (55,743)
OPERATING EXPENSES
------------------
General and Administrative 111,948 33,522
---------- -----------
NET LOSS (170,037) (89,265)
========== ===========
LOSS PER COMMON SHARE ( .05) ( .03)
Weighted Average Shares Outstanding 3,519,431 3,185,827
The accompanying notes are an integral
part of these financial statement.
ISO BLOCK PRODUCTS USA, INC.
CONSOLIDATED COMPARATIVE STATEMENT OF CASH FLOWS
------------------------------------------------
For the three months ended June 30, 1997 and 1996
June 30,
Cash Flows From Operating Activities 1997 1996
------------------------------------ ---- ----
Net Income (Loss) (170,037) (89,265)
Depreciation - 222
Note Receivable - Officer 300 -
Mortgages Receivable (4,250) 1,005
Accounts Receivable - (122,128)
Prepaid Expenses (20,061) -
Accounts Payable 37,826 159,698
----------- ----------
Net Cash Used in Operating Activities (156,222) (725,640)
CASH FLOWS FROM INVESTING ACTIVITIES
------------------------------------
Purchase of Property & Equipment (2,796) -
CASH FLOWS FROM FINANCING ACTIVITIES
------------------------------------
Proceeds From Preferred Stock - 112,000
Proceeds From Common Stock - -
Write-down of Mortgage Receivable - -
Foreign Exchange Gains (Losses) - -
----------- ----------
Net Cash Provided by (Used In)
Financing Activities - 112,000
NET INCREASE (DECREASE) IN CASH (159,018) 61,532
CASH - Beginning of Year 302,931 10,296
----------- ----------
CASH - End of Year 143,913 71,828
=========== ==========
The accompanying notes are an integral
part of these financial statements.
ISO BLOCK PRODUCTS USA, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
Note 1.
- ------
Company Description. Iso Block Products USA, Inc. ("Company") was
incorporated in the State of Colorado on April 28, 1986 under the
name Champion Computer Rentals, Inc. The Company was formed to
obtain funding from a public offering in order to engage in the sale
and leasing of computers and related equipment. As March 31, 1992,
the Company ceased those sale and leasing operations.
Note 2.
- -------
Summary of Significant Accounting Policies. The accompanying un-
audited financial statements of the Company have been prepared on
the accrual basis and in accordance with the instructions to Form
10-QSB and do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(considered necessary for a for a fair presentation have been in-
cluded. These financial statements should be read in conjunction with
the financial statements and notes thereto included in the Company's
annual report on Form 10-KSB for the fiscal year ended March 31, 1997.
Following is a summary of significant accounting policies.
Organization costs.
-------------------
Certain costs incurred to set up the Company are capitalized and were
amortized over five years. These costs were fully amortized at March
31, 1994.
Income taxes.
-------------
The Company accounts for income taxes under SFAS No. 109. Deferred
income taxes result from temporary differences. Temporary differences
are differences between the tax basis of assets and liabilities and
their reported amounts in the financial statements that will result
in taxable or deductible amounts in future years.
Foreign Currency Translation.
-----------------------------
The functional currency for the Company's operations is the applic-
able local currency. The translation of the applicable foreign
currency into U.S. dollars is performed for balance sheet accounts
using current exchange rates in effect at the balance sheet date and
for revenue and expense accounts using a weighted average rate during
the period. The gains or losses resulting from such translation
are included in stockholder's equity.
ISO BLOCK PRODUCTS USA, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(continued)
Income (Loss) Per Common Share.
-------------------------------
Income (loss) per common share is based upon the weighted average
number of common shares outstanding during each period. Options and
warrants outstanding to purchase common stock are included as common
stock equivalents when diluted.
Concentrations of Credit Risk.
------------------------------
The Company's financial instruments that are exposed to concentrations
of credit risk consist primarily of mortgages receivable. These
mortgages receivable are concentrated in German real estate but are
not concentrated in a limited number of borrowers. The mortgages are
from high quality entities and secured by high value German real estate
to limit the Company's concentrations of credit risk.
Note 3.
- ------
During the fiscal year ended March 31, 1997, the Company incurred a
net loss of $348,921, and as of that date had accumulated a deficit
of $1,357,440. The Company had slight operations during the first
fiscal quarter covered by these statements but incurred a loss for
the quarter of $170,037.
Note 4.
- ------
Future working capital requirements are dependent on the Company's
ability to attain profitable operations and to obtain financing or
new capital as required. It is not possible at this time to predict
the outcome of future operations or whether the necessary financing
or investment can be arranged.
Item 2. Management's Discussion and Analysis or Plan of Operation
---------------------------------------------------------
Current Business of the Company. During the current fiscal year, the
Company begin construction of one of two speculative residential houses in
the Outlook subdivision in Broomfield, Colorado. Each house will be priced
at approximately $250,000. The Company plans to continue its construction
program as long as the residential real estate business climate remains at
its present intensity in Colorado.
The Company has formed a Colorado Limited Liability Company " Magna-Dry
USA LLC" of which it is the sole member. Magna-Dry USA has purchased the
license to operate and franchise the Magna-Dry concept in total cleaning
throughout North and South America. The Company has executed a five-year
license agreement with continuous two-year renewal options. The Company
contracted to pay One Hundred thousand ( $100,000) US dollars and will pay
an ongoing license fee throughout the agreement. The Company paid Ten
thousand ($10,000) dollars down and agreed to pay Ninety thousand ($90,000)
dollars within 120 days. The Company through its subsidiary will offer Area
and individual franchises for the proprietary system of cleaning included in
the license. It will also offer equipment and chemicals involved with the
process.
Magna-Dry has over one thousand (1000) units operating internationally and
has captured over sixty (60%) of the market in some areas. The Company will
operate within its existing structure for the sale of franchises through its
Franchise Connection, Inc. subsidiary. With the success of Magna-Dry
International and its history, it is expected that the growth in the US
market will be successful.
Franchise Connection, Inc. was incorporated in Colorado in 1996 with
headquarters in Denver,. Colorado. The Company plans to form strategic
partnerships with prospective or existing franchise operations ("Franchisors")
under which it will provide them with marketing and sales services plus busi-
ness and legal services in return for an equity interest in, and/or a portion
of their royalties. It is targeting private companies that are seeking
franchise expertise or financial capacity to successfully engage in franchis-
ing. The Company will offer comprehensive franchise marketing and consulting
services to its Franchisors companies including operations, personnel, manage-
ment, training, legal and financial advice. In addition, Franchise Connection
will assume total responsibility for the recruitment of franchises.
Results of Operations.
----------------------
During the first fiscal quarter ended June 30, 1997, the Company had
revenues of $28,483 and engaged in limited operations primarily those
of preparation for a construction program as general contractor in the State
of Colorado in comparison to revenues of $129,075 in the first fiscal
quarter of 1996. The Company realized a loss of $170,037 in the first
quarter of 1997 compared to a loss of $89,265 in the first quarter
of 1996. The Company has accumulated a deficit since inception totaling
$1,527,477. The loss realized was primarily due to $111,948 spent
for general and administrative expenses.
Liquidity and Capital Resources.
--------------------------------
The Company has total assets of $1,410,647 including cash or cash
equivalents at the end of the first fiscal quarter 1997 of $143,913
compared to total assets of $1,532,481 including cash or cash equivalents
of $71,828 at the end of the first fiscal quarter of 1996. The Company
also owned approximately US$1,172,340 of mortgages receivable affecting
German real estate. While there is a commercial market for these mortgages
receivable, the Company does not intend to sell them.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. NONE
(b) Reports on Form 8-K NONE
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this Report on Form 10-QSB to be signed on its behalf by the under-
signed thereunto duly authorized.
Dated: August 14, 1997
ISO BLOCK PRODUCTS USA, INC.
By /S/ Egin Bresnig
------------------------------
Egin Bresnig,
Chief Executive Officer
By /S/ Dean Wicker
-------------------------------
Dean Wicker,
Chief Financial Officer
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FORM 10-QSB FOR THE PERIOD ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FORM 10-QSB.
</LEGEND>
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> JUN-30-1997
<CASH> 143,913
<SECURITIES> 0
<RECEIVABLES> 1,174,640
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,410,647
<PP&E> 5,656
<DEPRECIATION> (143)
<TOTAL-ASSETS> 1,416,160
<CURRENT-LIABILITIES> 43,882
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1,427,700
<COMMON> 1,472,055
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<TOTAL-LIABILITY-AND-EQUITY> 1,416,160
<SALES> 28,483
<TOTAL-REVENUES> 28,483
<CGS> 86,572
<TOTAL-COSTS> 86,572
<OTHER-EXPENSES> 111,948
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<INCOME-CONTINUING> (170,037)
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<NET-INCOME> (170,037)
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<EPS-DILUTED> (.05)
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