U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended June 30, 1996 Commission File No. 33-30476-D
ISO BLOCK PRODUCTS USA, INC.
(Exact name of registrant as specified in its charter)
COLORADO 84-1026503
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
8037 South Datura Street (303) 795-9729
Littleton, Colorado 80120 (Registrant's Telephone No. incl.
area code)
(Address of Principal's Executive
Offices)
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 February 28, 1997 are as follows:
Class of Securities Shares Outstanding
------------------- ------------------
Common Stock, No Par Value 3,185,821
Preferred Stock, No Par Value 1,448,610
ISO BLOCK PRODUCTS USA, INC.
TABLE OF CONTENTS PAGE
PART 1
Item 1. FINANCIAL STATEMENTS
Consolidated Balance Sheet as of June 30, 1996......... 3
Consolidated Statement of Operations for the three month
period ended June 30, 1996............................ 4
Consolidated Statement of Cash Flows for the three month
period ended June 30, 1996............................ 5
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS 7
PART 2
Item 6. Exhibits and Reports on Form 8-K......................... 10
Signatures............................................... 12
EX-27 Financial Data Schedule........................... 13
ISO BLOCK PRODUCTS USA, INC.
CONSOLIDATED COMPARATIVE BALANCE SHEET
ASSETS March 31, 1996 June 30, 1996
------
Current Assets
- --------------
Cash 10,296 71,828
Note Receivable - Officer 2,000 2,000
Mortgages Receivable 1,335,624 1,334,619
Accounts Receivable - 122,128
Prepaid Expenses - -
----------- -----------
Total Current Assets 1,347,920 1,530,575
Property & Equipment
- --------------------
Office Equipment 2,660 2,660
Less: Accumulated Depreciation (532) (754)
----------- -----------
Net Property & Equipment 2,128 1,906
----------- -----------
TOTAL ASSETS 1,350,048 1,532,481
----------- -----------
LIABILITIES & STOCKHOLDERS' EQUITY
----------------------------------
Current Liabilities
- --------------------
Accounts Payable 6,682 166,380
----------- ----------
Stockholders' Equity
- --------------------
Preferred Stock, No Par Value,
10,000,000 Shares Authorized,
728,610 and 1,448,610 Shares Outstand-
ing, Respectively. 739,200 851,200
Common Stock, 50,000,000 Shares
Authorized, 3,185,821 and 3,185,821
Shares Outstanding, Respectively. 1,436,055 1,436,055
----------- -----------
Accumulated Deficit (831,889) (921,154)
----------- -----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY 1,350,048 1,532,481
----------- -----------
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, 1995 and 1996
June 30,
1995 1996
---- ----
Income
- ------
Construction Sales 154,605 123,133
Interest Income 579 5,942
--------- ---------
Total Income 155,184 129,075
Cost Of Sales
- -------------
Cost of Materials 237,481 162,128
Labor 23,578 22,690
--------- ---------
Total Cost of Sales 261,059 184,818
Gross Profit (Loss) (105,875) (55,743)
Operating Expenses
- ------------------
General and Administrative 64,659 33,522
--------- ---------
Net Loss (170,534) (89,265)
Loss Per Common Share (.06) (.03)
Weighted Average Shares Outstanding 3,185,821 3,185,821
The accompanying notes are an integral part of these financial statements.
ISO BLOCK PRODUCTS USA, INC.
CONSOLIDATED COMPARATIVE STATEMENT OF CASH FLOWS
For the Three Months Ended June 30, 1995 and 1996
June 30,
1995 1996
---- ----
Cash Flows From Operating Activities
- ------------------------------------
Net Income (Loss) (170,534) (89,265)
Depreciation - 222
Note Receivable - Officer (2,000) -
Mortgages Receivable 3,323,945 1,005
Account Receivable - (122,128)
Prepaid Expenses 601 -
Accounts Payable (9,645) 159,698
----------- ----------
Net Cash Used in Operating Activities 3,142,367 (50,468)
Cash Flow From Investing Activities
- -----------------------------------
Purchase From Preferred Stock - -
Cash Flow From Financing Activities
- -----------------------------------
Proceeds From Preferred Stock 130,400 112,000
Proceeds From Common Stock - -
Write-down of Mortgage Receivable (3,323,945) -
Foreign Exchange Gains (Losses) 1,437 -
------------ ----------
Net Cash Provided by (Used in)
Financing Activities (3,192,108) 112,000
Net Increase (Decrease) In Cash (49,741) 61,532
- -------------------------------
Cash - Beginning of the Period 209,262 10,296
- ------------------------------ ------------ ----------
Cash - End of the Period 159,521 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.
A change of control of the Company occurred effective March 31,
1994, in which the former officers and directors resigned and
were replaced by the current officers and directors. In
connection with this change in the members of the board, an
aggregate of 2,000,000 common shares of the Company were issued
to previously unaffiliated persons pursuant to the Company's
acquisition of all of the equity interest in and to, and all
profits of, R-S ISO-Block Produktions GmbH, a German limited
liability company ("ISO-Block GmbH").
Note 2. Summary of Significant Accounting Policies.
- -----------------------------------------------------
The accompanying unaudited 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 included. 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, 1996.
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
applicable 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)
Consolidation.
--------------
The financial statements include the accounts of the Company
and its wholly owned German subsidiary, ISO-Block GmbH. All
significant intercompany balances and transactions have been
eliminated in consolidation.
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 dilutive.
Concentrations of Credit Risk.
------------------------------
The Company's financial instruments that are exposed to
concentrations of credit risk consist primarily of mortgages
receivable.
Note 3.
- -------
During the fiscal year ended March 31, 1996, the Company
incurred a net loss of $682,136, and as of that date had
accumulated a deficit of $831,889. The Company had slight
operations during the first fiscal quarter covered by these
statements but incurred a loss for the quarter of $89,265.
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
- ------------------------------------------------------------------
Background.
-----------
ISO Block Products USA, Inc., is a Colorado corporation
("Company"). The Company originally was operational from
inception through March 31, 1992, and was not operational from
such date until the Company's acquisition on March 31, 1994 of
R-S ISO-Block Producktions GmbH, a German limited liability
company located in Frankenstein, Germany ("ISO-Block GmbH').
The Company has, since March 31, 1994, engaged in operations in
Germany through ISO-Block GmbH, as described below. On March 28,
1994, the Company entered into an
Agreement and Plan of Reorganization("Reorganization Agreement")
with ISO-Block GmbH, Josef Ratey, an individual, Helge Seidel,
an individual, and R-S Plus Investment Corp., A Florida
corporation ("R-S Plus"). Pursuant to the Reorganization
Agreement, on March 31, 1994, the Company purchased from Ratey
and Seidel all of the equity interest in Iso-Block GmbH, and
purchased from R-S Plus property (mortgages receivable)
heretofore contributed to ISO-Block GmbH and all R-S Plus'
rights to ISO-Block GmbH profits, all in exchange for the
issuance of an aggregate of 2,000,000 shares of the Company's
authorized but heretofore unissued stock, no par value.
In connection with these transactions under the Reorganization
Agreement, the interest owners of ISO-Block GmbH (Ratey and
Seidel) and R-S Plus (Ratey) acquired ownership of a majority of
the Company's common stock. As a result, the transaction has
been accounted for as a purchase by the Company.
Business.
---------
The first half of the business year of 1994 was occupied in
establishing the infra structure to gear up for the planned
operational activities of the German subsidiary, Iso-Block GmbH.
The Company had a very difficult time trying to raise capital to
start single-family and multi-family developmental projects as a
general contractor. The Company decided to begin building single
family custom homes at first, using the Company's proprietary
building system, before attempting larger and more aggressive
project. Not until the first fiscal quarter of 1995 was the
Company able to raise sufficient additional capital to begin
operations.
The Company had a difficult but promising start, and the wholly
owned subsidiary Iso-Block GmbH began custom home construction
in Germany in the first fiscal quarter of 1995. A
proof-of-concept home was built to demonstrate the Company's
proprietary building system, several homes were completed for
customers and others were initiated. Bigger projects were
planned, some with partial financing from local governments.
During the first fiscal quarter, 1996 the Company decided to
discontinue its European operations because of the continuing
recession in Germany and the difficulty in managing its European
subsidiaries from Denver, Colorado. Iso-Block GmbH will cease
operations in July 1996. The Company will incur dissolution
expenses in ceasing operations of its two European subsidiaries
of $166,000.
Current Business of the Company
-------------------------------
The Company will function entirely as an US company planning to
engage in the business of residential home construction as
general contractor in the State of Colorado. Additionally, the
Company will pursue investment opportunities subject to
availability of capital.
Results of Operations.
----------------------
During the quarter ended June 30, 1996 (the first fiscal
quarter of this year), the Company had revenues of $129,133 and
engaged in limited operations primarily those of winding down
its European operations compared to the first fiscal quarter of
1995 in which the Company had revenues of $155,184. The Company
realized a loss of $89,265 as of June 30, 1996, in comparison
to a loss of $170,534 in the first fiscal quarter of 1995. The
loss realized in the first quarter of 1996 was primarily due to
$184,818 spent for materials, services and labor and $33,522
for general and administrative expenses incurred in completing
all construction projects in progress and the dissolution of its
European operations.
As of June 30, 1996, the Company had raised $112,000 from the
sale of 140,000 shares of its Series B, Non-Voting Convertible
Preferred Stock, stated value $0.80 per share.
Liquidity and Capital Resources.
--------------------------------
The Company has total assets at the end of the first fiscal
quarter, 1996 of $1,532,481 including cash of $71,828.
Changes in and Disagreements with Accountants or Accounting and
---------------------------------------------------------------
Financial Disclosure.
---------------------
On April 29, 1996, the Company engaged R. Scott Hall, CPA, as
its independent auditor, replacing BDO Seidman L.L.P, who were
dismissed as the Company's auditors effective May 8, 1996, as
reported on Form 8-K dated such date.
The remaining balance of this page is intentionally left blank.
PART IV
Item 13. Exhibits and Reports on Form 8-K.
- -------------------------------------------
(a) Exhibits. The following exhibits are filed with this
report, except those indicated as having previously been filed
with the Securities and Exchange Commission and which are
incorporated by reference to another report, registration
statement or form. As to any shareholder of record requesting a
copy of this report, the Company will furnish any exhibit
indicated in the list below as filed with this report (not
incorporated by reference) upon payment to the Company of its
expenses in furnishing the information. References to the
"Company" mean ISO-BLOCK PRODUCTS USA, INC. (formerly named
Champion Computer Rentals, Inc.).
2.0 Plan of Acquisition, Reorganization, Arrangement, Liquidation
- -------------------------------------------------------------------
or Succession
--------------
2.1 Agreement and Plan of Reorganization dated March 28, 1994
(incorporated by reference to Exhibit 2.1 to Form 8-K dated
March 28, 1994)................................................... *
3.0 Articles and Bylaws
- ------------------------
3.1 Articles of Incorporation of the Company (incorporated by
reference to Exhibit 3.1 to registration statement on Form
S-18 of Champion Computer Rentals, Inc., file no. 33-23257-D)..... *
3.3 Bylaws of the Company (incorporated by reference to Exhibit
on Form 10-KSB for fiscal year ended 1993)........................ *
3.4 Certificate of Amendment and Restatement to Articles of
Incorporation (incorporated by reference to Exhibit 3.4 to
Form 8-K dated February 10, 1994)................................. *
3.5 Certificate of Amendment to Articles of Incorporation,
changing the Company's name to Iso-Block Products USA, Inc.
(incorporated by reference to Exhibit 2(c) to registration
statement on Form 8-A, file no. 0-25810).......................... *
3.6 Certificate of Designation Establishing Series A, Non-Voting
Convertible Preferred Stock, as filed with the Colorado
Secretary of State on May 19, 1995................................ *
3.7 Certificate of Designation Establishing Series B, Non-Voting
Convertible Preferred Stock, as filed with the Colorado
Secretary of State on May 26, 1995................................ *
3.8 Certificate of Amendment to Certificate of Designation
Establishing Series C, Non-Voting Convertible Preferred Stock,
as filed with the Colorado Secretary of State on June 26,
1995.............................................................. *
3.9 Certificate of Designation Establishing Series 1996,
Non-Voting Convertible Preferred Stock (incorporated by
reference to Exhibit 3.1 to Form 8-K dated January 24, 1997)..... *
4.0 Instruments Establishing Rights of Security Holders
- --------------------------------------------------------
4.1 Specimen common stock certificate of the Company
(incorporated by reference to Exhibit 4.1 to registration
statement on Form S-18 of Champion Computer Rentals, Inc.,
file no. 33-23257-D)............................................... *
4.2 Specimen Series A, Non-Voting Convertible Preferred Stock
certificate........................................................ *
4.3 Specimen Series B, Non-Voting Convertible Preferred Stock
certificate ....................................................... *
4.4 Specimen Series C, Non-Voting Convertible Preferred Stock
certificate ....................................................... *
4.5 Specimen Series 1996, Non-Voting Convertible Preferred Stock
certificate ....................................................... *
10.0 Material Exhibits
- -----------------------
10.1 1993 Compensatory Stock Option Plan (incorporated by
reference to Exhibit 10.1 to Form 8-K dated February 10,
1994)............................................................. *
10.2 1993 Employee Stock Compensation Plan (incorporated by
reference to Exhibit 10.2 to Form 8-K dated February 10,
1994)............................................................. *
10.3 Settlement Agreement dated November 19, 1996 (incorporated
by reference to Exhibit 10 to Form 8-K dated November 22,
1996)............................................................. *
10.4 Stock Option dated November 19, 1996 (incorporated by
reference to Exhibit 4 to Form 8-K dated November 22,
1996)............................................................. *
10.5 Exchange Agreement and Plan of Reorganization dated
December 27, 1996 (incorporated by reference to Exhibit 2.1
to Form 8-K dated January 24, 1997)............................... *
10.6 Employment Agreement dated December 27, 1996 (incorporated
by reference to Exhibit 10.1 to Form 8-K dated January 24,
1997)............................................................. *
* - Incorporated by reference to another registration
statement, report or document.
1 - Includes Exhibits filed as part of this Report.
(b) Reports on Form 8-K.
None.
EX-27 Financial Data Schedule
SIGNATURES
In accordance with section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant caused this Annual Report
on Form 10-KSB to be signed on its behalf by the undersigned,
thereto duly authorized individual.
Date: April 7, 1997 ISO BLOCK PRODUCTS USA, INC.
/s/ Egin Bresnig
Egin Bresnig, Chief Executive Officer
In accordance with the Securities 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 dates
indicated.
Name Title Date
---- ----- ----
/s/ Egin Bresnig Director, President, April 7, 1997
Egin Bresnig Chief Executive Officer
/s/ Dean Wicker Director, Secretary April 7, 1997
Dean Wicker
/s/ Johnny M. Wilson Director April 7, 1997
Johnny M. Wilson
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
10-QSB FOR THE PERIOD ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FORM 10-QSB.
</LEGEND>
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<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> JUN-30-1996
<CASH> 71,828
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<RECEIVABLES> 1,458,747
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<CURRENT-ASSETS> 1,530,575
<PP&E> 2,660
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<TOTAL-ASSETS> 1,532,481
<CURRENT-LIABILITIES> 166,380
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851,200
<COMMON> 1,436,055
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<SALES> 123,133
<TOTAL-REVENUES> 129,075
<CGS> 162,128
<TOTAL-COSTS> 184,818
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