U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For fiscal year ended March 31, 1996 Commission File No. 0-25810
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
Littleton, Colorado 80120 (303) 795-9729
(Address of Principal's Executive (Registrant's Telephone No.
Offices) incl. area code)
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: Common
Stock, $.0001 par value.
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
Indicate by check mark if no disclosure of delinquent filers in response
to Item 405 of Regulation S-B will be contained in this form, and no
disclosure will be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in
Part III of this Form 10-KSB or any amendment to this Form 10-KSB.
Yes No X
The registrant's revenues for its most recent fiscal year were
$620,739.
The aggregate market value of the 1,129,321 shares of common stock of
the registrant held by non-affiliates on February 28, 1997 was not
determinable.
At February 28, 1997, a total of 1,980,821 shares of common stock were
outstanding.
PART I
Item 1. Description of Business.
Background
Iso Block Products USA, Inc. ("Company") was incorporated under the
name Champion Computer Rentals, Inc. on April 28, 1986 under the laws
of the State of Colorado. From inception until March 31, 1992, the
Company engaged in the business of assembling and marketing computers
on a rent-to-own basis, renting computers and peripheral equipment on
a short-term basis and selling various types of computer supplies and
software to retail customers. In 1988, the Company registered its
common stock with the Securities and Exchange Commission on Form S-18
and completed an initial public offering of securities. As of March
31, 1992, the Company had ceased all such operations. Its current
business aims are described herein. Effective September 21, 1994,
the Company changed its name from Champion Computer Rentals, Inc. to
ISO BLOCK PRODUCTS USA, INC.
Prior Business
On March 28, 1994, the Company entered into an Agreement and Plan
of Reorganization ("Reorganization Agreement") with R-S Iso-Block
Produktions GmbH, a German limited liability company ("Iso-Block
GmbH"), Josef Ratey, an individual ("Ratey"), Helge Seidel, an
individual ("Seidel"), and R-S Plus Investment Corp., a Florida
corporation ("R-S PLUS"). Pursuant to the Reorganization Agreement,
on March 31, 1995 the Company purchased from Ratey and Seidel all
of the equity interest in Iso-Block GmbH, and purchased from
R-S Plus all of its right, title and interest in and to Iso-Block
GmbH, including all R-S Plus property heretofore contributed to
Iso-Block GmbH and all R-S Plus's rights to Iso-Block profits, in
exchange for the issuance of an aggregate of 2,000,000 shares of
the Company's authorized but heretofore unissued common stock, no
par value (the "Exchange Shares"). In addition, Mr. Ratey, Mr.
Seidel and R-S Plus were entitled to receive options for a two-year
period to purchase an aggregate of not more than 1,000,000 shares
of the Company at a nominal price in order too prevent their
aggregate equity interest in the Company from being diluted below
57%. In 1995, Iso-Block GmbH changed its name to R-S ISO-Block
Produktions und Bautrager GmbH, which permitted it to engage in
the business of constructing buildings as well as manufacture and
production of building materials.
In fiscal years ended 1995 and 1996, Iso-Block GmbH had certain
operations in Germany. The Company wound down such operations in
the closing months of 1996. See Part II, Item 6 below.
Current Business of the Company
The Company now functions entirely as an US company engaged in
the business of residential home construction as general contractor
as well as the holding company of Franchise Connection, Inc.,
("Franchise Connection") a strategic conglomerate of new and
emerging franchise companies and a team of franchise experts that
work together to match the aspirations of entrepreneurs with viable
analogous franchise concepts.
Residential Home Building.
The demand for housing in Colorado has exploded during the 1990s
because of the migration to Colorado of numerous large corporations
as well as the expansion of Colorado domiciled businesses due to
the current excellent economic climate. February, 1997 home sales
in the Denver Metro area was the second best on record in which
5,297 homes were placed under contract in contrast with February,
1992 in which there were 3,436 homes placed under contract. It is
estimated that the only factor which could slow home sales in the
Denver area would be rising mortgage interest rates. The
Company believes the strong housing market will allow it to build
custom homes very profitably.
Franchising Operations
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 business and legal
services in return for an equity interest in, and/or a portion
of their royalties. It is targeting private companies which are
seeking to franchise expertise or financial capacity to
successfully engage in franchising. The Company will offer
comprehensive franchise marketing and consulting services to its
Franchisors companies including operations, personnel,
management, training, legal and financial advice. In addition,
Franchise Connection will assume total responsibility for the
recruitment of franchisees.
This will include national media advertising, trade show attendance,
and other forms of promotion supported by a commissioned sales staff.
In the evaluation of a prospective Franchisor, the Company will
generally be guided by a number of factors, including analysis
of a prospect's financial position, the experience of its
management, the product, service and/or concept offered and the
identification of its competitors, as well as its ability to
show a profit at the franchisee level. To date, Franchise
Connection has established a strategic partnership with several
companies which will be the initial base franchises. Franchise
Connection receives a franchise sales commission plus has
varying interests in each company ranging from full ownership to
a royalty agreement. The initial base franchises include
Brilliant Marketing! Inc., a small business marketing and
training firm wholly owned by Franchise Connection which offers
a step-by-step, comprehensive, consistent marketing system that
is custom designed for each client; ENCORE NAILS, a nail salon
which offers women a nail covering which is attractive and
durable using a revolutionary, proprietary process;
HYDRO-PHYSICS, a pipe inspection service using video technology
to inspect or locate underground water or sewer pipe breakages;
and, FOOT LAB, a full service, compact, self contained, insole
"foot bed" manufacturing station which can produce a foot
platform that is custom shaped to a person's foot.
There are many firms engaged in the business of franchising small
companies, and competition is fierce. Franchise Connection believes
that its particular marketing orientation (the marketing of less
expensive franchises of low-entry cost businesses) combined with
Johnny Wilson's experience and background will enable it to be
successful.
Franchise Connection and its subsidiaries currently employ 2
people in full-time positions and employ others as needed. Staff
will be added only as needed, and there is a labor pool or
persons with experience in the business of Franchise Connection
available at a reasonable cost.
Employees
The Company 's only employees are its executive officers, who
devote most of their time to Company affairs, and the two employees
of Franchise Connection, Inc.
Item 2. Description of Property.
The Company occupies facilities provided at no charge by its
President, Mr. Egin Bresnig in his residence; these facilities are
expected to be adequate in the near term, through fiscal 1997.
Franchise connection leases from unaffiliated parties approximately
1,000 square feet of space in the Denver area. Management of
Franchise Connection believes that these facilities will be
sufficient for their needs for at least the next twelve months.
Item 3. Legal Proceedings.
The Company and its President, Egin Bresnig, have been named as
defendants in Texas Finance Incorporated v. Iso Block Products
USA, Inc., et al., filed in the United States District Court for
the District of Colorado, Civil Action No. 96-WM-1961. The suit
alleges among other things that the plaintiff purchased
securities of the Company in reliance upon misleading statements
knowingly made by the Company, Mr. Bresnig and others, and seeks
return of the price paid for the securities plus damages under
various federal and state securities laws. The Company has not
answered the lawsuit but has instead filed a motion to dismiss
the complaint upon various grounds, including among others that
plaintiff has sustained no damages and lacks standing to bring
the action. The Company intends to vigorously defend the action
if it does not prevail on its motion to dismiss. Management
believes that, should the action go to trial, the Company will
prevail on the merits. Otherwise, the Company is not subject to
any pending or threatened legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to the Company's security holders
during the fiscal year ended March 31, 1996.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
Market Information
The Company's outstanding Common Shares are not publicly quoted
or traded, nor were they traded during the two fiscal years
ended March 31, 1996. The Company intends to arrange in the
second calendar quarter of 1997 for the quotation and trading of
its shares in the over-the-counter markets. There is no
assurance that an active market will arise in the Company's
shares.
Holders
The Company had 325 shareholders of record as of February 28,
1997, which does not include shareholders whose shares are held
in street or nominee names.
Dividends
The Company does not expect to pay a cash dividend upon its
capital stock in the foreseeable future. Payment of dividends in
the future will depend on the Company's earnings (if any) and
its cash requirements at that time.
Item 6. Management's Discussion and Analysis or Plan of Operation.
Business Operations
The Company's principal business operations through March 31,
1992 consisted of leasing out computers, peripheral products and
software. The Company realized only nominal revenues through
March 31, 1992. Due to lack of significant revenues or
operations, the Company remained in the developmental stage, as
defined in Financial Accounting Standards Board Statement No. 7
until fiscal year ended March 31, 1994.
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.
Securing authorization to construct homes as a general contractor
and obtaining the necessary financing in Germany became a
bureaucratic nightmare. 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 projects. Not until the first 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 second 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. The weather in Germany in the
fall and winter of 1995 (third and fourth quarter 1995) did turn
so bad that it was practically impossible, under those circumstances,
to build anything for several months. Also a very negative
business climate developed in Germany with an abnormally high
unemployment rate, the highest since Word War II. We were,
however, successful in raising additional capital and hoped for
better weather and a better economy in Germany. The weather
improved but the business climate in Germany has not. The
construction industry, in general, in Germany hit bottom in 1995.
The financial statement section below discloses operating
losses the past two years of approximately $800,000 of which
the major amount was due to the very adverse business climate in
Germany as outlined above. However, in addition the previous
Chairman of the Board and CEO, Mr. Josef Ratey, resident of
Germany, and the Company's major shareholder did not provide
the required direction and guidance. Mr. Helge Seidel, manager
of Iso-Block GmbH continued fighting an uphill battle trying
to build houses in an ever more eroding construction business
environment. The US side of the Company, represented by Mr.
Egin Bresnig, was challenged with taking over the offices of
CEO and the presidency of the Company from Mr. Josef Ratey.
After this change of leadership, the Company and its new
management initiated drastic action to stop the financial
bleeding. The process of extraditing the Company from its
overseas operations was very costly because of the archaic
business practices still in place in Germany. Hourly wages for
an unskilled laborer in Germany with all the mandatory
financial benefits required by the government are so high that
the Company attempted importing labor from France. However, it
is expected in Europe that construction employees must be paid
even if the weather prohibits work. The Company faced poor
weather for weeks at time and the labor costs continued. We
found out the hard way that Germany is one of the most expensive
places in the world in which to do business. We could not leave
projects unfinished but rather completed them knowing that these
projects would lose money.
The Company explored other business opportunities in the United
States. Negotiations with one potential venture partner came
close to being completed but the Company withdrew from the
negotiations due to repeated delays. Management of the Company
decided to cease all operational activities in Germany. The
better part of 1996 was spent winding down and closing the
German operation.
During the current fiscal year, 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 ceased
operations in July, 1996. The Company incurred dissolution
expenses in ceasing operations of its two European subsidiaries
of $166,000. The Company retained assets of $126,000 consisting
of undeveloped property in Kehl, Germany and an account
receivable for completed construction of one residential
property in Germany. On December 9, 1996 the Company sold its
Iso-Block GmbH subsidiary, including all liabilities and assets,
to Big B Tex A.G. (CH), a Swiss company domiciled in Zurich,
and the Company paid $40,000 to the buyer in addition to
transferring its Iso-Block GmbH assets. Big B Tex A.G. assumed
all Iso-Block GmbH liabilities and future contingent
liabilities, if any.
Results of Operations
The Company's fiscal year end 1996 revenue was $618,421 against
costs and expenses of 1,302,875. The $682,136 loss was diverse and
was primarily due to adverse whether and economic conditions in
Germany. These activities included construction material, various
services, poor wether conditions and increased labor costs. During
1995 the Company wrote down mortgage receivables of $3,323,945 to
reflect the current fair market value.
Liquidity and Capital Resources
Cash on-hand on March 31,1996 was nominal in light of the
Company's home building and franchise plans. During the fiscal
year the Company issued 652,000 preferred shares in exchange for
cash of $521,600. The Company also issued 245,353 common shares. Of
which 200,000 shares, valued at $130,000, were issued for services
rendered, 35,000 shares were issued for employment incentive in
Germany and 10,353 common shares were issued as an incentive to the
issuance of preferred stock.
Cash totaled $10,296 at March 31, 1996 compared with $209,262
at March 31, 1995. The $198,966 decrease in cash was primarily
from operating activities. As of March 31, 1996 , the Company
had raised $31,136 from the sale of its common shares and
$527,470 in net proceeds from the sale of its Series A, Non-Voting
Convertible Preferred Stock, stated value $1.25 per share and
from the sale of its Series B and C, Non-Voting Convertible
Preferred Stock, stated value $1.50 per share, to a small number
of persons who are residents of Germany.
Income Taxes and Net Operating Losses
At March 31, 1996, the Company had net operating loss
carryforwards for United States and German income tax purposes
totaling $831,889, which are available to offset future taxable
income. These NOL's expire through 2003.
Plan of Operation
The Company intends to continue as general contractor in the
United States and has purchased two residential building sites
in the Outlook subdivision in Broomfield, Colorado, located
approximately five miles northwest of Denver, Colorado, The
Company has the capacity to build at least one speculative house
at a constructed retail price of $250,000 and a constructed cost
price of approximately $149,000 without incurring construction
debt. Construction is expected to begin in April 1997. Once the
first residential house is constructed and has passed all
building inspections and sold, the Company will immediately
begin construction on its second building site. The Company
expects to continue its construction program as long as the
residential real estate business climate continues its intensity
in Colorado. According to the March 7, 1997 issue of The Rocky
Mountain News "SunMicrosystems' $200 million planned research
and development campus in Broomfield, Colorado already has
helped jump-start the metro area's home building activity." In
January, there were 75 permits pulled for single-family homes in
Broomfield, compared with only 13 in January 1996. The
relatively healthy month for permit activity is a sign of the
"Goldilocks" economy according the Home Builders Association of
Metropolitan Denver. One of the strongest areas is expected to
be Broomfield, Colorado, thanks to SunMicrosystems, which will
create 4,000 jobs at an average salary of $70,000. The Company
is positioned correctly to take advantage of this growth by
establishing itself as general contractor in Broomfield. If the
Company realizes its profit goals by completing the first two
speculative homes then it intends to become a developer of
housing projects. Even though the current management of the
Company has limited building experience the availability of
professional construction consultants should provide the
necessary guidance to the Company. Management believes it will
be successful in raising additional capital required to become a
significant player in the Broomfield and Metro Denver housing
construction market.
The Company is very excited about its completion of ownership
of The Franchise Connection, Inc. because of the importance of
franchising in today's economy. Franchising has been
responsible for over 35% of the United State's total retail
sales in the 1990s and is projected too grow to over 50% of all
retail sales in the twenty-first century. Franchising has
proved to be an outstanding method of distribution and market
penetration. Established franchise organizations are growing by
11% annually and service related and business format franchises
are growing by 39% annually. Franchising has added two
million jobs to the US economy the past ten years. The
Franchise Connection, Inc. intends to capitalize on this
predominate and enormous growth trend by exploiting its
franchise expertise in conjunction with viable, talented
entrepreneurs who know and understand their business. These
business owners work diligently to insure that their business
will be successful and that it maintains its strong niche that
can be duplicated on a national and/or international scale
through franchising. By working in a "partnership" relationship
with The Franchise Connection, Inc., these entrepreneurs can
continue to make their business ever better while using The
Franchise Connection, Inc. to recruit franchises and expand
their concept globally. Using this strategic alliance,
marketing costs, administration costs, and legal expenses can be
controlled and, thus, general overhead can be reduced. The
Franchise Connection's corporate objective is to acquire
successful business concepts and via franchise sales to multiply
its revenues over the next three years. The Franchise
Connection, Inc. has formed alliances with the following
companies; each representing a successful prototype and
possessing an unique position in their industry. They all have
a proprietary product with the ability to dominate their market
if expanded rapidly. The concepts are very teachable, have a
universal consumer base and have very affordable entry
investment. Each one has management in place with the technical
expertise to operate the business. With the franchising
knowledge and marketing know-how of the Franchise Connection
they all have the ability to exceed five hundred units in a very
short time. The demand has never been higher to get into
business. The opportunity seeker is more knowledgeable and
seeking more than just buying a job.
Brilliant Marketing offers marketing and training services to
small businesses that is custom designed to fit the client and
his budget. Brilliant Marketing offers a proprietary product,"
The Living Marketing Manual" featuring an annualized marketing
blueprint that gets guaranteed results. With more than 22.5
million businesses currently operating the US and an additional
800,000 new businesses starting up every year the marketing
niche for this business is unlimited. Brilliant Marketing has a
letter of intent to provide marketing product to be made
available for distribution by a network of over 500
representatives. Encore Nails is an upscale nail studio in the
fast growing nail beautification industry. It uses a
revolutionary, proprietary process to offer clients attractive,
durable, environmentally safe, and technologically advanced nail
coverings. The product was tested for four years in a very
successful studio prior to being offered outside the control
market. A new unit will open in March, 1997 to serve as a
prototype unit. With the growth in the nail industry exploding,
Encore Nails is on the leading edge. Franchise Connection has
acquired the franchise rights which includes a 40% ownership of
Encore Nails and 50% of all franchise fees and has a letter of
intent to joint venture the franchising with financial partners
who will have day to day operation responsibility. Franchise
Connection projects opening 12 units in the next 12 months.
Hydro-Physics is the first of its kind, national video pipe
inspection service franchise that saves commercial and
residential customers thousands of dollars in unnecessary repair
cost. The company utilizes a self-contained portable state-of
-the-art video technology to identify, locate, and verify
underground pipeline problems. The market is wide-open with
limited competition. Hydro-Physics has a five year history of
profitability. By using technology in insure portability with
the ability to inspect 3 inch pipes by a one man crew the
concept has wide appeal. The company has contracted for two
franchises (Idaho and Missouri). Franchise Connection has the
exclusive marketing rights and receives 25% of royalty over five
years with a conversion factor to own 30% of the parent
company. It is expected that 10 units will be opened over the
next 12 months. Footlab is a full service, compact,
self-contained foot insole manufacturing station that produces
hand-make custom shaped foot support inserts from a variety of
materials depending on the intended use in less that five
minutes. Re-designed from a 25 year old invention from
Switzerland and in use in the winter ski industry for many years
this concept can be located in athletic footwear stores,
sporting good stores, golf pro shops, and department stores.
With approximately 90 % of the 275 million US and Canadian
population needing foot inserts the market is very large. The
operating units require less than 20 sq. feet which opens up
many avenues of opportunity. Franchise Connection is the
franchisor and owns 100% of Footlab with a contract to pay 10%
royalty fees to the founder who also has the responsibility to
provide all research and development of product.
Item 7. Financial Statements.
See index to financial statements at page F-1. The financial
statements included as part of this report immediately follow
that index. No supplementary financial data is required or
included.
Item 8. 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 LLP, who were
dismissed as the Company's auditors effective May 8, 1996, as
reported on Form 8-K dated such date.
Mr. Hall has reported on the Company's financial statements for
the fiscal years ended March 31, 1996 and 1995. Such reports did
not contain either an adverse opinion or a disclaimer of
opinion, and were not qualified or modified as to uncertainty,
audit scope or accounting principles. There were no
disagreements on any matters of accounting principle or
practices, financial statement disclosures, or auditing scope or
procedure in connection with Mr. Hall's audits of the Company's
financial statements for such fiscal years which, if not
resolved to his satisfaction, would have caused him to make
reference in his reports on the subject matter of the
disagreement.
BDO Seidman LLP reported on the Company's financial statements
for the fiscal year ended March 31, 1994. Such report did not
contain either an adverse opinion or a disclaimer of opinion,
and was not qualified or modified as to uncertainty, audit scope
or accounting principles. However, such report contained an
explanatory paragraph related to the Company's ability to
continue as a going concern. There were no disagreements on any
matters of accounting principle or practices, financial
statement disclosures, or auditing scope or procedure in
connection with such firm's audit of the Company's financial
statements for such fiscal year which, if not resolved to the
auditors' satisfaction, would have caused them to make reference
in their report on the subject matter of the disagreement.
PART III
Item 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the Exchange Act.
Identification of Directors and Executive Officers
The present directors and executive officers of the Company,
their ages, positions held in and tenure with the Company, are
listed below. Each director will serve until the next annual
meeting of shareholders, or until his respective successor has
been elected and duly qualified. Directors serve one-year terms.
Officers hold office at the pleasure of the Board of Directors,
absent any employment agreement, of which none currently exist
or are contemplated. There are no family relationships between
any director or executive officer.
Name Age Position Since
---- --- -------- -----
Egin Bresnig 61 Director (since Dec. 1993), June 1995
President June, 1995
Chief Executive Officer
Dean Wicker 57 Director and Secretary June 1995
(since Dec. 1993),
Chief Financial and
Accounting Officer
Johnny M. Wilson 54 Director Jan. 1997
The following is a brief account of the business experience
during at least the past five years of each director and
executive officer, indicating the principal occupation and
employment during that period, and the name and principal
business of the organization in which such occupation and
employment were carried out.
Egin Bresnig. Mr. Egin Bresnig was raised and educated in
Austria. He has a doctor degree in Physical Education and
Modern Languages from the Karl Franzens University in Graz,
Austria. He has been a resident in the USA for over 35 years.
Mr. Bresnig spent many years in the winter ski industry as a ski
school owner, business owner, importer of equipment and
clothing. He has been a real estate developer in Colorado ski
resort areas and has had 18 years experience in the financial
securities industry. He was a licensed securities broker,
branch manager, director of European operations, national sales
manager and the president of various investment banking firms.
For several years he owned his own branch office with up to 25
brokers. Mr. Bresnig was the successful owner and president of
a NASD member firm. He is fluent in several European languages.
He is an officer and director of East Slope Funding Corp., a
Colorado financial consulting firm, Eurous Funding, Inc., a
Colorado public relations company, Arista Corporation, a non-active
Colorado company and REWIPAC Worldwide Corporation, a non-active
Nevada company.
Dean Wicker. Dean Wicker has lived in the Denver, Colorado
area for 43 years. He graduated from the University of
Colorado, Boulder, CO in 1961 with a BA degree in American
History. He has done advanced degree work in financial
accounting and merger and acquisition negotiations. Mr. Wicker
began his career in investment banking in 1962 in which he was
the youngest Public Finance negotiator in the Rocky Mountain
region. He changed careers in 1967 by developing retail winter
sports and apparel operations until 1981. Mr. Wicker reentered
the security industry with the position of Senior Institutional
Sales with George K. Baum and Co., Member of the New York Stock
Exchange. In 1984 he became a vice-president and Partner of
Boettcher and Co., Inc., Member of the New York Stock Exchange
and then, the largest investment banking firm in the western
United States. In 1991 he became an independent financial
consultant specializing in merger and acquisitions. He is an
officer and director of East Slope Funding Corp., a Colorado
financial consulting firm, Eurous Funding, Inc., a Colorado
public relations company, Arista Corporation, a non-active
Colorado company, and REWIPAC Worldwide Corporation, a non-active
Nevada company.
Johnny Wilson. Johnny M. Wilson has 25 years experience in the
franchise industry. Mr. Wilson received a BA degree from the
University of Missouri, Columbia, Mo and a J.D. degree from the
Missouri School of Law in Columbia, MO. He served as Assistant
Prosecuting Attorney of Scott County, MO for two years and
became President of Missouri Health and Medical Organization, a
non-profit corporation to organize and structure a prepaid
health delivery system for rural areas in Missouri. From 1972
to 1976 he managed forty people and administrated a six million
dollar grant from the US Department of Health and Welfare. In
1976 Mr. Wilson started Savings Plus Systems combining Savings
and Loan associations, retail merchants and consumers into
automatic discount/savings programs. In four years the Company
grew to over 150 financial institutions, thousands of merchants
and hundred of thousands of consumers. Mr. Wilson initiated and
completed a private placement offering with investors
representing Massy Investment Group, ITT International, and
Citicorp Bank among others. Mr. Wilson sold his interest in the
company in 1979 to the investment partners. From 1980 until
1983 Mr. Wilson was in private law practice specializing in
franchise development. In 1983 he joined with investors in
Denver, CO to develop franchises in the packaging and shipping
industry. He formed Pack Mail Centers of America, Inc. He
served as President, Chairman of the Board until 1990. Under his
direction the company grew to over 250 franchises and 25
million dollars in gross sales. He guided the company through a
public offering in 1986 and completed a friendly buy-out by the
executives of Beatrice Foods in 1989. Mr. Wilson returned to
franchise consulting through his own company, The International
Franchise Company from 1990 to 1996. In 1996 Mr. Wilson formed
The Franchise Connection, Inc. in which he serves as President.
Compliance with Section 16(a).
Section 16(a) of the Securities Exchange Act of 1934, as
amended ("Exchange Act"), requires the Company's executive
officers, directors and persons who beneficially own more than
10% of a class of the Company's equity securities registered
under the Exchange Act to file reports of ownership and changes
in ownership with the Securities and Exchange Commission.
Because the Company was not subject to the reporting
requirements of the Exchange Act during the fiscal year ended
March 31, 1995, no filings under Section 16(a) were required.
Item 10. Executive Compensation.
Cash Compensation and Compensation Pursuant to Plans
For the fiscal year ended March 31, 1996, Mr. Egin Bresnig, CEO
and Mr. Dean Wicker, Secretary received cash compensation
annually of $47,000 each and reimbursement of out-of-pocket
expenses incurred on behalf of the Company. The Company does
not have in effect any pension, profit-sharing, stock
appreciation or bonus plans. The Board of Directors authorized
a Medical Insurance Plan for its President, Mr. Egin Bresnig,
effective January 3, 1997. Other benefit plans are described
below.
Employee Stock Compensation Plan. The Company has adopted the
1993 Employee Stock Compensation Plan for employees, officers,
directors of the Company and advisors to the Company (the "ESC
Plan"). The Company has reserved a maximum of 500,000 Common
Shares to be issued upon the grant of awards under the ESC Plan.
Employees will recognize taxable income upon the grant of Common
Stock equal to the fair market value of the Common Stock on the
date of the grant and the Company will recognize a compensating
deduction at such time. The ESC Plan will be administered by the
Board of Directors or Compensation Committee. No Common Stock
has been awarded under the ESC Plan.
Compensatory Stock Option Plan. The Company has adopted the
1993 Compensatory Stock Option Plan for officers, employees,
potential key employees, non-employee directors and advisors
(the "CSO Plan"). The Company has reserved a maximum of
1,000,000 Common Shares to be issued upon the exercise of
options granted under the CSO Plan. The CSO Plan is intended to
qualify as an "incentive stock option" plan under Section 422 of
the Internal Revenue Code of 1986, as amended. Options will be
granted under the CSO Plan at exercise prices to be determined
by the Board of Directors or other CSO Plan administrator. With
respect to options granted pursuant to the CSO Plan, optionees
will not recognize taxable income upon the grant of options, but
will realize income (or capital loss) at the time the options
are exercised to purchase Common Stock. The amount of income
will be equal to the difference between the exercise price and
the fair market value of the Common Stock on the date of the
exercise. The CSO Plan will be administered by the Board of
Directors or a Compensation Committee of directors. Subsequent
to year-end, an aggregate of 600,000 common shares subject to
purchase under options have been granted under the CSO Plan. See
Item 11 below.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information regarding compensation
paid to the Company's Chief Executive Officer and Secretary during
the last two fiscal years. The CEO's total annual salary and bonus
did not exceed $100,000, nor did that of any other executive officer.
SUMMARY COMPENSATION TABLE
Long-Term Compensation
----------------------
Annual Comp. Awards Payouts
-------------------- ---------------- -------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name and Rstrctd No. of ($) All
Principal ($) ($) ($) Stock Options LTIP Other($)
Position Year Salary Bonus Other Awards($) & SARs Payouts Comp.
- --------- ---- ------ ----- ----- --------- ------- ------- --------
Egin
Bresnig,
CEO 1996 $47,000 N/A -0-
1995 $15,000 N/A -0-
Dean
Wicker,
Sec. 1996 $47,000 N/A -0-
1995 $15,000 N/A -0-
OPTIONS GRANTED DURING THE 1996 FISCAL YEAR
Individual Grant
----------------------------------------------------------------
(a) (b) (c) (d) (e)
Number of % of Total
Securities Options
Underlying Granted to
Options Employees Exercise or Base
Name Granted in Fiscal Year Price ($/Share) Expiration Date
- ---- ---------- -------------- ---------------- ---------------
Egin
Bresnig 200,000 - 1.00 1999
Dean
Wicker 200,000 - 1.00 1999
OPTION EXERCISES IN LAST FISCAL YEAR
and FISCAL YEAR-END OPTION VALUES
-----------------------------------------------------------------
(a) (b) (c) (d) (e)
Number of
Securities ($) Value of
Underlying Unexercised
Unexercised In-the-Money
Options Options
Number of at FY End at FY End
Shares Acquired ($) Exercisable/ Exercisable/
Name on Exercise Value Realized Unexercisable Unexercisable
- ---- --------------- -------------- ------------- -------------
Egin
Bresnig None None 200,000/None None / None
Dean
Wicker None None 200,000/None None / None
The Company has no stock appreciation rights (SAR) plan in
place and has not awarded SAR's to any person. The Company has
no long-term incentive plans, as that term is defined in the
rules and regulations of the Securities and Exchange Commission.
During the fiscal year ended March 31, 1996, the Company did not
amend or reprice the exercise price of any stock options granted
to any executive officer.
Other Compensation.
Mr. Helge Seidel, the former General Manager of Iso-Block GmbH,
was issued 200,000 shares of common stock for services rendered
and other consideration valued at $130,000.
Compensation of Directors
No person was compensated by the Company for serving as a
director during the fiscal year ended March 31, 1996. While no
such compensation is currently anticipated, the Company believes
that directors in the future will be paid for serving on the
Board of Directors and on committees of directors.
Item 11. Security Ownership of Certain Beneficial Owners and
Management.
(a)(b) Security Ownership. The following table sets forth as
of February 28, 1997, the names of persons who own of record, or
were known by the Company to own beneficially, more than five
percent of its total issued and outstanding common stock and the
beneficial ownership of all such stock as of that date by
officers and directors of the Company and all such officers and
directors as a group. Except as otherwise noted, each person
listed below is the sole beneficial owner of the shares and has
sole investment and voting power as to such shares. No person
listed below has any option, warrant or other right to acquire
additional securities of the Company, except as may be otherwise
noted.
Name and Address Amount & Nature
of Beneficial of Beneficial
Title of Class Owner Ownership
---------------- -------------------------- ----------------
Common Stock * Egin Bresnig 356,500
no par value 8037 So. Datura Street
Littleton, Colorado 80120
SAME * Dean Wicker 367,500
5176 East Davis Drive
Littleton, Colorado 80122
SAME * Johnny M. Wilson 462,500
1885 S. Evanston
Aurora, Colorado 80012
SAME Josef Ratey 490,000
Albert-Kohler-Str. 23
77883 Ottenhoffen, Germany
SAME John D. Brasher Jr. 365,000
90 Madison Street, Suite 707
Denver, Colorado 80206
---------
* All officers and directors 1,186,500
as a group (3 persons)
Includes options to purchase 200,000 shares of common stock
pursuant to the Company's 1993 Compensatory Stock Option Plan.
Includes options to purchase 100,000 common shares pursuant to
an employment agreement.
Mr. Ratey retained 250,000 shares of common stock pursuant to a
Settlement Agreement dated November 22, 1996 and was granted
options to purchase 240,000 shares of the common stock of the
Company.
Item 12. Certain Relationships and Related Transactions.
Settlement Agreement
Effective November 22, 1996, the Company entered into a
Settlement Agreement (the "Settlement Agreement") with Ratey,
Seidel and R-S Plus. The Settlement Agreement provided for the
cancellation of certain shares issued pursuant to the
Reorganization Agreement dated March 28, 1994.
Pursuant to the Reorganization Agreement, the Exchange Shares
were issued in the following proportions: 1,000,000 shares to
R-S PLUS, 900,000 shares to Ratey, and 100,000 shares to Seidel,
and a total of 300,000 of the shares issued to R-S PLUS
subsequently were transferred to two individuals. In addition,
Ratey, Seidel and R-S PLUS received options pursuant to the
Exchange Agreement for a two-year period to purchase an
aggregate of not more than 1,000,000 shares of the Company.
Pursuant to the Settlement Agreement, such options were
cancelled and voided as if never issued.
Of the 2,000,000 Exchange Shares originally issued, an
aggregate of 1,737,500 shares were cancelled and voided, as
follows:
(i) all 100,000 of the Exchange Shares issued to Seidel
pursuant to the Exchange Agreement;
(ii) 650,000 shares (that is, all but 250,000) of the Exchange
Shares issued to Ratey pursuant to the Exchange Agreement; and
(iii) 987,500 shares (that is, all but 12,500) of the 1,000,000
Exchange Shares issued to R-S PLUS pursuant to the Exchange
Agreement.
A total of 787,500 of the 1,737,500 cancelable shares have been
physically cancelled. The 650,000 shares of Ratey to be
cancelled and the 300,000 shares transferred to two individuals
have by action of the Company's board of directors been
cancelled and are reflected as such on the Company's records of
stock transfer and registry, but have not yet been physically
cancelled. The certificates evidencing these shares will be
physically cancelled when received by the Company.
The Settlement Agreement provided for the full settlement and
release of all existing claims, if any, and all potential claims
of R-S PLUS, Ratey and Seidel against the Company and against
all persons now or formerly serving or acting as officers,
directors or employees of the Company or legal counsel,
accountants or other advisers or consultants to the Company.
Upon the effective date of the Agreement and the issuance of the
options, neither R-S PLUS, Ratey nor Seidel retained any further
claim of any kind against the Company or the enumerated persons.
The Settlement Agreement also provided for the issuance and
delivery to Ratey of options to purchase an aggregate of 240,000
shares of the common stock of the Company at the price of Eighty
Cents (US$0.80) per share, subject to customary adjustments, for
a period of two years from the effective date of the Agreement
(the "Settlement Options").
Exchange Agreement
In January, 1997 the Company completed an Exchange Agreement
and Plan of Reorganization for the purchase of 100% ownership
of Franchise Connection, Inc., a Colorado corporation and its
wholly owned subsidiary Brilliant Marketing, Inc. In full
payment for the control shares of Franchise Connection, Inc.,
and Brilliant Marketing, Inc. the Company issued and delivered
to the shareholders an aggregate of Five Hundred Thousand
(500,000) shares of the authorized but unissued shares of Iso
Block Products USA, Inc.'s common stock and One Million Five
Hundred Thousand (1,500,000) shares of the Series 1996
Non-Voting Convertible Preferred Stock subject to adjustment as
outlined below. The preferred Exchange Shares shall be
convertible into shares of the no-par value common stock of the
Company three (3) years from the date of issuance at the
following conversion rate:
(1) if Franchise Connection has by then sold an aggregate
of 150 franchises, consisting of all or any franchises marketed
by Franchise Connection, each preferred Exchange Share will be
convertible into one (1) Conversion share; or
(2) if Franchise Connection has by then sold an aggregate
of less than 150 franchises, the number of Conversion Shares
into which the preferred Exchange Shares are convertible will be
proportionally reduced.
(3) if Franchise Connection has sold an aggregate of less
than 100 franchises by the third anniversary of the closing
under the definitive agreement, then in addition to the
adjustment set forth above, the Company may at its election
demand the surrender and cancellation of and may unilaterally
cancel a percentage of the 500,000 common Exchange Shares.
Pursuant to the Letter of Intent, ISO BLOCK advanced to
Franchise Connection an aggregate of $50,000 to be used as
working capital. Additionally, under the terms of the Exchange
Agreement and Plan of Reorganization ISO BLOCK will over the
twelve months (12) following the Closing make available to
Franchise Connection an aggregate of an additional $300,000,
subject to adjustment, to be advanced monthly. Such funds will
be advanced within five (5) days prior to the month in which
needed upon written request of Franchise Connection, which
shall specify the amount needed and general use intended. Such
amounts shall be loaned to Franchise Connection on customary
commercial terms. As of February 16, 1997 a total of $99,000
had been advanced to Franchise Connection.
Employment Agreement
The Company entered into an Employment Agreement by and among
Franchise Connection, Brilliant Marketing Inc. ("BMI") and
Johnny M. Wilson for a three year period. Under the terms of
the Employment Agreement, Mr. Wilson will be employed by both
BMI and the Franchise Connection as Chief Executive Officer and
President and will serve as Chairman of the board of directors
of both companies. He also will serve in any other capacity as
designated by either company' board of directors. He will not
compete with Franchise Connection or BMI or any franchise
project now or later undertaken by Franchise Connection or BMI
or engage in any franchise-related business whatsoever, as
consultant, employee or otherwise, except those operated by
Franchise Connection and BMI.
Otherwise, there were no transactions, or series of
transactions, for the fiscal year ended March 31, 1996, nor are
there any currently proposed transactions, or series of
transactions, to which the Company is a party, in which the
amount exceeds $60,000, and in which to the knowledge of the
Company any director, executive officer, nominee, five percent
or greater shareholder, or any member of the immediate family of
any of the foregoing persons, have or will have any direct or
indirect material interest other than as described above or
elsewhere in this report.
ISO BLOCK PRODUCTS USA, INC.
CONSOLIDATED COMPARATIVE
FINANCIAL STATEMENTS
Years Ended
March 31, 1995 and 1996
TABLE OF CONTENTS PAGE
----------------- ----
INDEPENDENT AUDITORIS REPORT............................F-1
CONSOLIDATED COMPARATIVE FINANCIAL STATEMENTS
---------------------------------------------
Balance Sheet...........................................F-2
Statement of Operations.................................F-3
Statement of Shareholder's Equity.......................F-4
Statement of Cash Flows.................................F-5
Notes to Financial Statements...........................F-6
R. SCOTT HALL
407 LORIN LANE
CASTLE ROCK, COLORADO 80104
(303) 688-1622
INDEPENDENT AUDITOR'S REPORT
Board of Directors
ISO BLOCK PRODUCTS USA, INC.
I have audited the accompanying consolidated comparative balance
sheet of ISO Block Products USA, Inc., as of March 31, 1995 and
1996 and the related consolidated comparative - statements of
operations, shareholder's equity and cash flows for the years
then ended. These consolidated comparative financial statements
are the responsibility of the Company's management. My
responsibility is to express an opinion on these consolidated
comparative f inancial statements based on my audit.
I conducted my audit in accordance with generally accepted
auditing standards. These standards require that I plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are ree of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
the significant estimates made by management, as well as
evaluating the overall financial statement presentation. I
believe that my audit provides a reasonable basis for my opinion.
In my opinion, the consolidated comparative financial statements
referred to above, present fairly, in all material respects, the
financial position of ISO Block Products USA, Inc., at March 31,
1995 and 1996 and the results of its operations and cash flows
for the years then ended in conformity with generally accepted
accounting principles.
R. Scott Hall, CPA
December 23, 1996
Castle Rock, Colorado
Page F-1
ISO BLOCK PRODUCTS USA, INC.
CONSOLIDATED COMPARATIVE BALANCE SHEET
March 31,
1995 1996
---------- ----------
ASSETS
------
Current Assets
--------------
Cash 209,262 10,296
Note Receivable - Officer 2,000 2,000
Mortgages Receivable 1,400,531 1,335,624
Prepaid Expenses 5,011 -
---------- ----------
Total Current Assets 1,616,804 1,347,920
Property & Equipment
--------------------
Office Equipment 1,864 2,660
Less: Accumulated Depreciation - (532)
---------- ----------
Net Property & Equipment 1,864 2,128
---------- ----------
TOTAL ASSETS 1,618,668 1,350,048
========== ==========
LIABILITIES & STOCKHOLDERS' EQUITY
----------------------------------
Current Liabilities
-------------------
Accounts Payable 120,636 6,682
---------- ----------
Stockholders' Equity
--------------------
Preferred Stock, No Par Value,
10,000,000 Shares Authorized,
272,000 and 924,000 Shares
Outstanding, Respectively. 217,600 739,200
Common Stock, 50,000,000 Shares
Authorized, 2,940,468 and
3,185,821 Shares Outstanding,
Respectively. 1,436,055 1,436,055
Accumulated Deficit (155,623) (831,889)
---------- ----------
1,498,032 1,343,366
---------- ----------
TOTAL LIABILITIES &
STOCKHOLDERS EQUITY 1,618,668 1,350,048
========== ==========
The accompanying notes are an integral
part of these financial statements.
Page F-2
ISO BLOCK PRODUCTS USA, INC.
CONSOLIDATED COMPARATIVE STATEMENT OF OPERATIONS
------------------------------------------------
For the Years Ended March 31, 1995 and 1996
March 31,
1995 1996
---------- -----------
INCOME
------
Construction Sales 138,174 618,421
Interest Income 18 2,318
---------- -----------
Total Income 138,192 620,739
COST OF SALES
-------------
Cost of Materials and Services 100,799 949,925
Labor 53,412 94,313
---------- -----------
Total Cost of Sales 154,211 1,044,238
GROSS PROFIT (LOSS) (16,019) (423,499)
OPERATING EXPENSES
------------------
General and Administrative 103,803 258,637
---------- -----------
NET LOSS (119,822) (682,136)
========== ===========
LOSS PER COMMON SHARE ( .04) ( .21)
Weighted Average Shares Outstanding 2,940,468 3,185,827
The accompanying notes are an integral
part of these financial statement.
Page F-3
CONSOLIDATED COMPARATIVE STATEMENTS OF STOCKHOLDERS' EQUITY
For the Year Ended March 31, 1995 and 1996
Preferred Common
Stock Stock Accum.
----- ----- ------
Shares Amounts Shares Amounts Deficit Total
------ ------- ------ ------- ------- -----
Balance
at April
1, 1994 - - 2,940,468 4,760,000 (35,273) 4,724,727
- --------
Issue of
Preferred
Shares 272,000 217,600 217,600
Write-
Down
Mortgage
Receivable (3,323,945) (3,323,945)
Foreign
Exchange
(Loss) (528) (528)
Net (Loss)
of Year - - - - (119,822) (119,822)
-------- -------- ------- --------- --------- -----------
Balance
at March
31, 1995 272,000 217,600 2,940,468 1,436,055 (155,623) 1,498,032
- --------
Issue of
Preferred
Shares 652,000 521,600 521,600
Issue of
Common
Shares 245,353 - -
Foreign
Exchange
Gain 5,870 5,870
Net (Loss)
for Year - - - - (682,136) (682,136)
-------- --------- ----------- ---------- --------- ------------
Balance
at March
31, 1996 924,000 739,200 3,185,821 1,436,055 (831,889) 1,343,366
- -------- ========= ========= =========== ========== ========= ==========
The accompanying notes are an integral
part of these financial statements.
Page F-4
ISO BLOCK PRODUCTS USA, INC.
CONSOLIDATED COMPARATIVE STATEMENT OF CASH FLOWS
------------------------------------------------
For the Years Ended March 31, 1995 and 1996
March 31,
1995 1996
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
------------------------------------
Net Income (Loss) (119,822) (682,136)
Depreciation - 532
Note Receivable - Officer (2,000) -
Mortgages Receivable 3,273,369 64,907
Prepaid Expenses 601 5,011
Accounts Payable 99,686 113,954
----------- ----------
Net Cash Used in Operating Activities 3,251,834 (725,640)
CASH FLOWS FROM INVESTING ACTIVITIES
------------------------------------
Purchase of Property & Equipment (1,864) (796)
CASH FLOWS FROM FINANCING ACTIVITIES
------------------------------------
Proceeds From Preferred Stock 217,600 521,600
Proceeds From Common Stock - -
Write-down of Mortgage Receivable (3,323,945) -
Foreign Exchange Gains (Losses) (528) 5,870
----------- ----------
Net Cash Provided by (Used In)
Financing Activities (3,106,873) 527,470
NET INCREASE (DECREASE) IN CASH 143,097 (198,966)
CASH - Beginning of Year 66,165 209,262
----------- ----------
CASH - End of Year 209,262 10,296
=========== ==========
The accompanying notes are an integral
part of these financial statements.
Page F-5
ISO BLOCK PRODUCTS USA, INC.
NOTES TO CONSOLIDATED COMPARATVIE FINANCIAL STATEMENTS
------------------------------------------------------
For the Years Ended March 31, 1995 and 1996
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Company Description
-------------------
The Company was incorporated on April 28, 1986 under the laws
of the State of Colorado under the name of Champion Computer
Rentals, Inc. The Company's Articles of Incorporation were
amended to change the name of the corporation to ISO Block
Products USA, Inc. from Champion Computer Rentals, Inc.
effective on September 21, 1994.
Effective March 28, 1994, USA acquired 100% stock of R-S ISO
Block Produktions GmbH (ISO-Block GmbH), The acquisition was
accounted for as a purchase by ISO-Block GmbH of USA and the
accompanying financial statements present historical results of
ISO-Block GmbH since its formation and include USA's activities
from the effective date of the acquisition.
ISO-Block GmbH obtained from an affiliate the worldwide
ownership of a technology to develop, manufacture and sell a new
potential construction component for buildings.
Consolidation
-------------
The financial statements include the accounts of USA and its
wholly-owned subsidiary ISO-Block GmbH. All significant
intercompany balances and transactions have been eliminated in
consolidation.
Concentrations of Credit Risk
-----------------------------
The Company's financial instruments that are exposed to
concentrations of credit risk consist primarily of mortgages
receivable.
The Company's 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 real estate to limit the Company's
exposure to concentrations of credit risk.
The Company's mortgages receivable are classified as available
for sale as the Company does not have the positive intent to
hold to maturity or does not intend to trade actively. These
securities are reported at fair value with unrealized gains and
losses reported as a net amount as a separate component of
stockholders' equity. The Company had to write-down the value
of the mortgages receivable by $3,323,945 in 1995 to reflect the
current fair market value of the securities.
Page F-6
ISO BLOCK PRODUCTS USA, INC.
NOTES TO CONSOLIDATED COMPARATIVE FINANCIAL STATEMENTS
------------------------------------------------------
For the Years Ended March 31, 1995 and 1996
Cash
----
All amounts are stated in U.S. dollars.
Property & Equipment
--------------------
Property & equipment are recorded at cost. Depreciation is
provided over the estimated useful lives of the assets.
Income Taxes
------------
The Company has no current or deferred income tax liability due
to accumulated losses during the development stage. The Company
has net operating losses totaling $155,623 and $831,889,
respectively, which are available to offset future taxable
income. These NOL's expire through 2003.
Foreign Currency Translation
----------------------------
The functional currency for the Company's foreign operations is
the applicable local currency. The translation of the
applicable foreign currency into U.S. Dollars is performed for
the balance sheet accounts using current exchange rates in
effect at the balance sheet date and for revenue and expense
accounts using a weighted average exchange rate during the
period. The gains or losses resulting from such translation are
included in stockholders' equity.
Income (Loss) Per Common Share
------------------------------
Income (loss) per common share is based upon the weighted
average number of common shares outstanding during each period.
NOTE 2. STOCKHOLDERS' EQUITY
--------------------
Effective December 31, 1993, the Company adopted a 1993
Compensatory Stock Option Plan with 500,000 common shares
reserved for issuance and a 1993 Employee Stock Compensation
Plan with 1,000,000 common shares reserved for issuance. No
options or shares have been granted under either plan.
NOTE 3. NOTE RECEIVABLE - OFFICER
-------------------------
The Company loaned the President of the company, Egin Bresnig,
$2,000.00. The note bears interest at 6% per annum and is due on
March 1, 1997.
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 .................. 1
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 .................. 1
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................................................. 1
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 ................................................... 1
4.3 Specimen Series B, Non-Voting Convertible Preferred Stock
certificate ................................................... 1
4.4 Specimen Series C, Non-Voting Convertible Preferred Stock
certificate ................................................... 1
4.5 Specimen Series 1996, Non-Voting Convertible Preferred
Stock certificate ............................................. 1
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).......................................................... *
EX-27 FINANCIAL DATA SCHEDULE
* - 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.
(c) Financial Statements.
The index to the financial statements appears at page F-1.
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: March 28, 1997
ISO BLOCK PRODUCTS USA, INC.
/s/ Egin Bresnig
By.........................................
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, March 28, 1997
Egin Bresnig Chief Executive Officer
/s/ Dean Wicker..........Director, Secretary March 28, 1997
Dean Wicker
/s/ Johnny M. Wilson.....Director March 28, 1997
Johnny M. Wilson
EXHIBIT 3.6
RESOLUTION OF DIRECTORS
ESTABLISHING A SERIES OF SHARES OF PREFERRED STOCK
of
ISO BLOCK PRODUCTS USA, INC.
The undersigned, constituting the entire board of directors of
ISO BLOCK PRODUCTS USA, INC., a Colorado corporation
("Company"), hereby take the following actions by unanimous
written consent in lieu of a meeting, as authorized by Section
7-108-202 of the Colorado Business Corporation Act:
WHEREAS, the Board of Directors of the Company ("Board")
desires to establish and designate a series of shares of
Preferred Stock and to fix and determine the relative rights and
preferences thereof in accordance with the following resolution;
it is therefore
RESOLVED, FIRST, that the Board hereby establishes and
designates a series of Preferred Stock of the Company to consist
of 1,000,000 shares, with a stated value per share of US$1.25,
and hereby affixes the voting powers, designation, rights,
preferences, privileges and restrictions of the shares of such
series, as follows:
1. Designation and Consideration.
------------------------------
The designation of the series of Preferred Stock created by
this Resolution shall be "SERIES A, NON-VOTING CONVERTIBLE
PREFERRED STOCK", having a stated value of $1.25 per share.
Shares of this series are hereinbelow referred to as the "Series
A Preferred Stock." Each share of Series A Preferred Stock shall
be issued for such consideration as the Board may determine
(whether cash, property or other assets) at the issue price of
One Dollar and Twenty-Five Cents (US$1.25) per share. Once duly
issued for the consideration herein called for, shares of the
Series A Preferred Stock shall be deemed fully paid and
nonassessable.
2. Dividends.
----------
No dividends shall be payable on the Series A Preferred Stock.
3. Redemption.
-----------
The shares of Series A Preferred Stock shall not be subject to
redemption without the consent of the holders thereof.
4. Conversion Right.
-----------------
4.1 Conversion Rate.
Each share of Series A Preferred Stock may, subject to the terms
hereof, be converted at the option of the holders thereof into one
(1) fully paid, nonassessable share of common stock of the Company,
$.0001 par value per share, subject to restrictions and limitations
set forth in this Resolution. The common shares of the Company into
which shares of Series A Preferred Stock are converted ("conversion
shares") will not be registered under the Securities Act of 1933, as
amended ("Act"), but shall be issued in reliance upon Regulation S
or other available exemption from registration under the Act.
Conversion shall be deemed to occur on the date a certificate or
certificates representing shares of Series A Preferred Stock being
converted is presented to the Company or to the Company's transfer
agent and registrar, properly endorsed and accompanied by the proper
fee payable to the transfer agent.
4.2 Limitation on Conversion Right.
Notwithstanding the provisions of paragraph 4.1 preceding,
the shares of Series A Preferred Stock may only be converted
into common shares of the Company commencing six (6) months
after the date on which the common shares of the Company are
first quoted on the Nasdaq National Market or Small-Cap System
or listed on a U.S. securities exchange.
4.3 Adjustments to Conversion Rate.
The conversion rate set forth in paragraph 4.1 above will be
subject to adjustment if the Company is reorganized, merged,
consolidated or party to a plan of exchange with another
corporation pursuant to which shareholders of the Company receive
any shares of stock or other securities, or in the event of any
sale or other transfer of all or substantially all of the Company's
assets, or in case of any reclassification of or reverse split or
split of the Common Stock, holders of shares of the Series A
Preferred Stock shall be entitled, after the occurrence of any
such event, to receive on conversion thereof the kind and amount
of shares of stock or other securities, cash or other property
receivable upon such event by a holder of the number of Common
Shares into which the shares of Series A Preferred Stock might
have been converted immediately prior to occurrence of the event.
For purposes of this paragraph, the term "shareholder" means a
holder of Common Stock.
4.4 Common Stock Authorized.
By adoption of this Resolution, the Board hereby specifically
authorizes the issuance of an aggregate of 1,000,000 Common Shares
upon conversion of the Series A Preferred Stock; provided, however,
that if any adjustment to the conversion rate established in
paragraph 4.1 should require the issuance of a greater number of
Common Shares, then the issuance of such greater number of Common
Shares hereby is authorized.
4.5 No Fractional Shares Issuable.
No fractional share of Common Stock, or scrip or other instrument
representing a fractional Common Share, shall be issued upon
conversion of any share of Series A Preferred Stock. If any such
conversion results in a fractional share of Common Stock being
issuable, the Company shall pay to the converting holder an amount,
in cash, equal to the market value of the fractional interest or,
if there is no market value or none is readily ascertainable,
then such amount as the Board determines is reasonable in the
circumstances.
5. Rights on Liquidation, Dissolution, or Winding Up.
--------------------------------------------------
5.1 Payment of Liquidation Preference.
In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company, the holders of shares
of Series A Preferred Stock then outstanding shall be subordinate
to all claims of the Company's creditors but otherwise entitled to
be paid out of the Company's assets available for distribution to
its shareholders, before any payment is made to the holders of any
class of Common Stock, the holders of the Series A Preferred Shares,
or other shares of capital stock ranking junior upon liquidation to
the Series A Preferred Stock, an amount equal to the $1.25 stated
value per share. In the event the holders of Common Stock are
entitled to a distribution on the remaining assets, then each
holder of Common Shares shall, subject to any existing preference of
other preferred shares, be entitled to share equally and ratably with
the holders of Series A Preferred Shares and other outstanding
preferred shares on a share-for-share basis in all further
distributions of assets.
5.2 Proportionate Distribution.
In the event the Company's assets available for distribution to
the holders of the shares of the Series A Preferred Stock and of
any other class or series of preferred shares ranking on a parity
therewith upon any voluntary or involuntary liquidation, dissolution
or winding up of the Company are insufficient to pay in full all
amounts to which such holders are entitled pursuant to paragraph 5.1,
then there shall be paid ratably to holders of the shares of the
Series A Preferred Stock their respective shares of the
aggregate amount or amounts to which the holders of the shares
of Series A Preferred Stock are entitled upon such liquidation,
dissolution or winding up.
5.3 Effective Reorganization.
Neither the consolidation or merger of the Company with or into
any other company nor the lease, exchange, sale or transfer of all
or substantially all of the Company's assets shall be deemed to be a
liquidation, dissolution or winding up of the Company's affairs,
whether voluntary or otherwise, within the meaning of this Section 5.
6. Voting Rights.
--------------
The shares of the Series A Preferred Stock shall not have the
right to vote in the election of directors of the Company or on
any other matters upon which shareholders of the Company may or
must vote, except matters specifically, directly and adversely
affecting their rights as holders of Series A Preferred Stock
and shall have only such voting rights as a class as are
unequivocally conferred in this Resolution, by the Colorado
Business Corporation Act or other controlling corporation law
statute. Any matter which requires the approval of the holders
of the Series A Preferred Stock shall require only the
affirmative vote of a majority of the votes cast by the holders
of such shares, voting as a separate class, at any lawful
meeting of such holders which commences with a quorum. Whenever
such shares are entitled to vote, each share of Series A
Preferred Stock shall be entitled to one vote.
7. Certain Corporate Actions.
--------------------------
The Company shall not amend its articles or certificate of
incorporation without the prior approval of the holders of the
Series A Preferred Stock, voting as a separate class, if such
amendment would directly or indirectly effect any adverse change
in any of the rights, preferences or privileges of, or
limitations provided for herein for the benefit of, the holders
of Series A Preferred Stock. Without limiting the generality of
the foregoing, no such amendment may be effected without such
approval if such amendment would:
(a) Reduce the amount payable to the holders of Series A
Preferred Stock upon the voluntary or involuntary liquidation,
dissolution or winding up of the Company, or change the
seniority of the liquidation preferences of the holders of
Series A Preferred Stock relative to the rights upon
liquidation, dissolution or winding up of the holders of any
other class or series of the Company's shares; OR
(b) Cancel or modify the right of holders of Series A
Preferred Stock to convert such shares to Common Shares of the
Company, all as set forth in this Resolution.
8. Rank of Series A Preferred Stock.
---------------------------------
The shares of the Series A Preferred Stock shall rank prior as
to dividends, redemption and upon liquidation to the shares of
the Common Stock and other shares of preferred stock of the
Company issued and outstanding as of the date of this
Resolution. The Company may issue other shares of another class
or series of preferred stock after the date of this Statement of
Resolution which rank on a parity with or senior to the Series A
Preferred Stock.
9. Investment Intent Required.
---------------------------
The shares of Series A Preferred Stock shall not be registered
under the Act but will be offered and sold in reliance upon one
or more exemptions from such registration. Every person
acquiring shares of Series A Preferred Stock shall be required
to affirmatively set forth his, her or its intention to acquire
such shares for investment purposes only (or in the case of
sales made in reliance upon Regulation S, other appropriate
representations) and intention not to effect any distribution of
such shares in the United States of America and shall execute an
investment letter or similar document satisfactory in form and
content to the Company's counsel. Shares of Series A Preferred
Stock may not be offered, sold or otherwise transferred, pledged
or hypothecated unless and until registered under the Act, or
such offer, sale or transfer, pledge or hypothecation is, in the
opinion of Company counsel, exempt from the registration
provisions of the Act.
Appropriate representations also may be required of any holder
of Series A Preferred Shares at the time of requesting
conversion of those shares into shares of the Company's common
stock.
10. Tax Matters.
------------
The holders of Series A Preferred Stock shall be solely liable
for and shall pay any and all taxes and other governmental
charges, of every kind, that may be imposed in respect of the
issue or delivery of Common Shares upon redemption or conversion
of Series A Preferred Stock. The Company may withhold certain of
such Common Shares in order to satisfy the Company's tax
withholding obligations or take similar steps to ensure that
such taxes and charges are duly paid. If the Company becomes
liable for or pays any such taxes due to acts of a Series A
Preferred Stock holder, it may, in order to recoup the amount of
such tax or tax liability:
(i) withhold the amount of such tax or tax liability from any
funds whatever in or coming into the Company's possession and
belonging to such holder, including dividends declared on the
Series A Preferred Stock and payable to such holder; and/or
(ii) cancel and reissue in the Company's name such number of
shares of Series A Preferred Stock, based upon the original
issue price per share, as will equal the amount of the tax paid
or tax liability incurred.
11. Offer and Sale of Series A Preferred Shares.
--------------------------------------------
The Company hereby is authorized to offer any or all of the shares
of Series A Preferred Stock for sale to potential investors. Such
sales are to be made in compliance with applicable laws, rules and
regulations, and each subscriber for such shares shall execute a
subscription agreement satisfactory in form and content to
Company counsel.
IN WITNESS WHEREOF, the undersigned directors have duly
approved the foregoing resolution effective as of February 20,
1995.
...............................
Josef Ratey
...............................
Egin Bresnig
...............................
Dean Wicker
(SEAL)
EXHIBIT 3.7
RESOLUTION OF BOARD OF DIRECTORS
AMENDING THE TERMS AND DESIGNATION
OF THE SERIES B NON-VOTING CONVERTIBLE PREFERRED STOCK
of
ISO BLOCK PRODUCTS USA, INC.
The undersigned, constituting the entire board of directors of
ISO BLOCK PRODUCTS USA, INC., a Colorado corporation
("Company"), hereby take the following actions by unanimous
written consent in lieu of a meeting, as authorized by Section
7-108-202 of the Colorado Business Corporation Act:
WHEREAS, the Board of Directors of the Company ("Board") on
May 1, 1995 established and designated a series of shares of
preferred stock as the SERIES B, NON-VOTING CONVERTIBLE
PREFERRED STOCK, stated value $0.80 per share, and fixed and
determined the relative rights and preferences thereof in
accordance with a resolution of the Board of Directors; and
WHEREAS, the Board of Directors now desires to amend the terms
thereof by increasing the stated value from $0.80 per share to
$1.50 per share; and
WHEREAS, none of the shares of the Series B, Non-Voting
Convertible Preferred Stock having been issued, the Board of
Directors has the power to amend the terms of such series of
preferred stock pursuant to Section 7-106-102(1) of the Colorado
Business Corporation Act without action by shareholders; it is
therefore
RESOLVED, that the terms of the series of preferred stock
heretofore established by the Board of Directors and designated
as the SERIES B, NON-VOTING CONVERTIBLE PREFERRED STOCK, hereby
are amended to increase the stated value of such series of
shares from $0.80 per share to $1.50 per share. The filing of an
amendment to the Certificate of Designation previously filed
with the Secretary of State of Colorado, reflecting the
amendment of the stated value of shares of such series, hereby
is authorized.
IN WITNESS WHEREOF, the undersigned directors have duly
approved the foregoing resolution effective as of June 15, 1995.
(SEAL)
.............................
Josef Ratey
.............................
Egin Bresnig
............................
Dean Wicker
EXHIBIT 3.8
RESOLUTION OF DIRECTORS
ESTABLISHING A SERIES OF SHARES OF PREFERRED STOCK
of
ISO BLOCK PRODUCTS USA, INC.
The undersigned, constituting the entire board of directors of
ISO BLOCK PRODUCTS USA, INC., a Colorado corporation
("Company"), hereby take the following actions by unanimous
written consent in lieu of a meeting, as authorized by Section
7-108-202 of the Colorado Business Corporation Act:
WHEREAS, the Board of Directors of the Company ("Board")
desires to establish and designate a series of shares of
Preferred Stock and to fix and determine the relative rights and
preferences thereof in accordance with the following resolution;
it is therefore
RESOLVED, FIRST, that the Board hereby establishes and
designates a series of Preferred Stock of the Company to consist
of 1,000,000 shares, with a stated value per share of US$1.50,
and hereby affixes the voting powers, designation, rights,
preferences, privileges and restrictions of the shares of such
series, as follows:
1. Designation and Consideration.
------------------------------
The designation of the series of Preferred Stock created by
this Resolution shall be "SERIES C, NON-VOTING CONVERTIBLE
PREFERRED STOCK", having a stated value of One Dollar and Fifty
Cents ($1.50) per share. Shares of this series are hereinbelow
referred to as the "Series C Preferred Stock." Each share of
Series C Preferred Stock shall be issued for such consideration
as the Board may determine (whether cash, property or other
assets) at the issue price of One Dollar and Fifty Cents
(US$1.50) per share. Once duly issued for the consideration
herein called for, shares of the Series C Preferred Stock shall
be deemed fully paid and nonassessable.
2. Dividends.
----------
No dividends shall be payable on the Series C Preferred Stock.
3. Redemption.
-----------
The shares of Series C Preferred Stock shall not be subject to
redemption without the consent of the holders thereof.
4. Conversion Right.
-----------------
4.1 Conversion Rate.
Each share of Series C Preferred Stock may, subject to the terms
hereof, be converted at the option of the holders thereof into one
(1) fully paid, nonassessable share of common stock of the Company,
no par value per share, subject to restrictions and limitations set
forth in this Resolution. The common shares of the Company into which
shares of Series C Preferred Stock are converted ("conversion shares")
will not be registered under the Securities Act of 1933, as amended
("Act"), but shall be issued in reliance upon Regulation S or other
available exemption from registration under the Act. Conversion
shall be deemed to occur on the date a certificate or
certificates representing shares of Series C Preferred Stock
being converted is presented to the Company or to the Company's
transfer agent and registrar, properly endorsed and accompanied
by the proper fee payable to the transfer agent.
4.2 Limitation on Conversion Right.
Notwithstanding the provisions of paragraph 4.1 preceding, the
shares of Series C Preferred Stock may only be converted into
common shares of the Company commencing three (3) months after the
date on which the common shares of the Company are first quoted
on the Nasdaq National Market or Small-Cap System or listed on a
U.S. securities exchange.
4.3 Adjustments to Conversion Rate.
The conversion rate set forth in paragraph 4.1 above will be
subject to adjustment if the Company is reorganized, merged,
consolidated or party to a plan of exchange with another corporation
pursuant to which shareholders of the Company receive any shares
of stock or other securities, or in the event of any sale or other
transfer of all or substantially all of the Company's assets, or in
case of any reclassification of or reverse split or split of the
Common Stock, holders of shares of the Series C Preferred Stock
shall be entitled, after the occurrence of any such event, to receive
on conversion thereof the kind and amount of shares of stock or
other securities, cash or other property receivable upon such
event by a holder of the number of Common Shares into which the
shares of Series C Preferred Stock might have been converted
immediately prior to occurrence of the event. For purposes of
this paragraph, the term "shareholder" means a holder of Common
Stock.
4.4 Common Stock Authorized.
By adoption of this Resolution, the Board hereby specifically
authorizes the issuance of an aggregate of 1,000,000 Common Shares
upon conversion of the Series C Preferred Stock; provided, however,
that if any adjustment to the conversion rate established in
paragraph 4.1 should require the issuance of a greater number of
Common Shares, then the issuance of such greater number of Common
Shares hereby is authorized.
4.5 No Fractional Shares Issuable.
No fractional share of Common Stock, or scrip or other instrument
representing a fractional Common Share, shall be issued upon
conversion of any share of Series C Preferred Stock. If any such
conversion results in a fractional share of Common Stock being
issuable, the Company shall pay to the converting holder an amount,
in cash, equal to the market value of the fractional interest or,
if there is no market value or none is readily ascertainable,
then such amount as the Board determines is reasonable in the
circumstances.
5. Rights on Liquidation, Dissolution, or Winding Up.
--------------------------------------------------
5.1 Payment of Liquidation Preference.
In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company, the holders of shares
of Series C Preferred Stock then outstanding shall be subordinate
to all claims of the Company's creditors but otherwise entitled to
be paid out of the Company's assets available for distribution to its
shareholders, before any payment is made to the holders of any class
of Common Stock, the holders of the Series C Preferred Shares, or
other shares of capital stock ranking junior upon liquidation to the
Series C Preferred Stock, an amount equal to the $1.25 stated
value per share. Upon receiving such liquidation preference, the
holders of shares of Series C Preferred Stock shall not
thereafter be entitled to share in any further distributions of
remaining assets of the Company.
5.2 Proportionate Distribution.
In the event the Company's assets available for distribution to
the holders of the shares of the Series C Preferred Stock and of
any other class or series of preferred shares ranking on a parity
therewith upon any voluntary or involuntary liquidation, dissolution
or winding up of the Company are insufficient to pay in full all
amounts to which such holders are entitled pursuant to paragraph 5.1,
then there shall be paid ratably to holders of the shares of the
Series C Preferred Stock their respective shares of the
aggregate amount or amounts to which the holders of the shares
of Series C Preferred Stock are entitled upon such liquidation,
dissolution or winding up.
5.3 Effective Reorganization.
Neither the consolidation or merger of the Company with or into
any other company nor the lease, exchange, sale or transfer of all
or substantially all of the Company's assets shall be deemed to be
a liquidation, dissolution or winding up of the Company's affairs,
whether voluntary or otherwise, within the meaning of this Section 5.
6. Voting Rights.
--------------
The shares of the Series C Preferred Stock shall not have the
right to vote in the election of directors of the Company or on
any other matters upon which shareholders of the Company may or
must vote, except matters specifically, directly and adversely
affecting their rights as holders of Series C Preferred Stock
and shall have only such voting rights as a class as are
unequivocally conferred in this Resolution, by the Colorado
Business Corporation Act or other controlling corporation law
statute. Any matter which requires the approval of the holders
of the Series C Preferred Stock shall require only the
affirmative vote of a majority of the votes cast by the holders
of such shares, voting as a separate class, at any lawful
meeting of such holders which commences with a quorum. Whenever
such shares are entitled to vote, each share of Series C
Preferred Stock shall be entitled to one vote.
7. Certain Corporate Actions.
--------------------------
The Company shall not amend its articles or certificate of
incorporation without the prior approval of the holders of the
Series C Preferred Stock, voting as a separate class, if such
amendment would directly or indirectly effect any adverse change
in any of the rights, preferences or privileges of, or
limitations provided for herein for the benefit of, the holders
of Series C Preferred Stock. Without limiting the generality of
the foregoing, no such amendment may be effected without such
approval if such amendment would:
(a) Reduce the amount payable to the holders of Series C
Preferred Stock upon the voluntary or involuntary liquidation,
dissolution or winding up of the Company, or change the
seniority of the liquidation preferences of the holders of
Series C Preferred Stock relative to the rights upon
liquidation, dissolution or winding up of the holders of any
other class or series of the Company's shares; OR
(b) Cancel or modify the right of holders of Series C
Preferred Stock to convert such shares to Common Shares of the
Company, all as set forth in this Resolution.
8. Rank of Series C Preferred Stock.
---------------------------------
The shares of the Series C Preferred Stock shall rank prior as
to dividends, redemption and upon liquidation to the shares of
the Common Stock and other shares of preferred stock of the
Company issued and outstanding as of the date of this
Resolution. The Company may issue other shares of another class
or series of preferred stock after the date of this Statement of
Resolution which rank on a parity with or senior to the Series C
Preferred Stock.
9. Investment Intent Required.
---------------------------
The shares of Series C Preferred Stock shall not be registered
under the Act but will be offered and sold in reliance upon one
or more exemptions from such registration. Every person
acquiring shares of Series C Preferred Stock shall be required
to affirmatively set forth his, her or its intention to acquire
such shares for investment purposes only (or in the case of
sales made in reliance upon Regulation S, other appropriate
representations) and intention not to effect any distribution of
such shares in the United States of America and shall execute an
investment letter or similar document satisfactory in form and
content to the Company's counsel. Shares of Series C Preferred
Stock may not be offered, sold or otherwise transferred, pledged
or hypothecated unless and until registered under the Act, or
such offer, sale or transfer, pledge or hypothecation is, in the
opinion of Company counsel, exempt from the registration
provisions of the Act. Appropriate representations also may be
required of any holder of Series C Preferred Shares at the time
of requesting conversion of those shares into shares of the
Company's common stock.
10. Tax Matters.
------------
The holders of Series C Preferred Stock shall be solely liable
for and shall pay any and all taxes and other governmental
charges, of every kind, that may be imposed in respect of the
issue or delivery of Common Shares upon redemption or conversion
of Series C Preferred Stock. The Company may withhold certain of
such Common Shares in order to satisfy the Company's tax
withholding obligations or take similar steps to ensure that
such taxes and charges are duly paid. If the Company becomes
liable for or pays any such taxes due to acts of a Series C
Preferred Stock holder, it may, in order to recoup the amount of
such tax or tax liability:
(i) withhold the amount of such tax or tax liability from any
funds whatever in or coming into the Company's possession and
belonging to such holder, including dividends declared on the
Series C Preferred Stock and payable to such holder; and/or
(ii) cancel and reissue in the Company's name such number of
shares of Series C Preferred Stock, based upon the original
issue price per share, as will equal the amount of the tax paid
or tax liability incurred.
11. Offer and Sale of Series C Preferred Shares.
--------------------------------------------
The Company hereby is authorized to offer any or all of the shares
of Series C Preferred Stock for sale to potential investors. Such
sales are to be made in compliance with applicable laws, rules and
regulations, and each subscriber for such shares shall execute a
subscription agreement satisfactory in form and content to
Company counsel.
IN WITNESS WHEREOF, the undersigned directors have duly
approved the foregoing resolution effective as of August 1, 1995.
............................
Josef Ratey
...........................
Egin Bresnig
...........................
Dean Wicker
(SEAL)
EXHIBIT 4.2
ISO BLOCK PRODUCTS USA, INC.
Organized under the laws of the State of Colorado
Series A, Non-Voting Convertible Preferred Stock
No. PA- SHARES
THIS CERTIFIES that or registered assigns, is the registered
owner of fully paid and nonassessable shares of the Series A,
Non-Voting Convertible Preferred Stock, US$1.25 stated value (the
"Preferred Stock" or "Preferred Shares"), of ISO BLOCK PRODUCTS
USA, INC., a corporation organized in the United States of
America under the laws of the State of Colorado ("Company"),
transferable on the books of the Company by the holder hereof in
person or by duly authorized attorney, upon surrender of this
certificate properly endorsed. This Certificate and the
Preferred Shares represented hereby are issued and shall be
subject to all of the provisions of the Company's Articles of
Incorporation and all amendments thereto (copies of which are on
file with the Transfer Agent and in the office of the Secretary
of State of Colorado) to all of which the holder, by acceptance
hereof, assents.
DIVIDENDS. No dividends are payable on the Preferred Shares.
REDEMPTION. The Preferred Shares are not redeemable except by
the mutual consent of the Company and the holder of the
Preferred Shares.
ASSIGNMENT. These Preferred Shares may be assigned or
transferred by the registered holder or by attorney duly
authorized in writing, in whole or in part, at the offices of
the Company with the Assignment form on the reverse side duly
completed. Any assignment or transfer is subject to restrictions
evidenced in the Application for Shares pursuant to which these
shares have been issued.
CONVERSION. Subject to adjustment as hereinafter provided, the
holder of this Certificate is entitled to convert each of the
Preferred Shares evidenced hereby into ONE (1) fully paid and
nonassessable share of the Company's common stock, $.0001 par
value ("Common Stock" or "Common Shares"). Conversion shall be
deemed to occur on the date a certificate or certificates
representing Preferred Stock being converted is presented to the
Company's transfer agent and registrar, properly endorsed and
accompanied by the proper fee payable to the transfer agent. No
fractional Common Shares will be issued. The Preferred Shares
may only be converted into common shares of the Company
commencing six (6) months after the date on which the common
shares of the Company are first quoted on the Nasdaq National
Market or Small-Cap System or listed on a U.S. securities
exchange.
ADJUSTMENTS. The conversion rate set forth above will be
subject to adjustment if the Company is reorganized, merged,
consolidated or party to a plan of exchange with another
corporation pursuant to which shareholders of the Company
receive any shares of stock or other securities, or in the event
of any sale or other transfer of all or substantially all of the
Company's assets, or in case of any reclassification of or split
or reverse split of the Common Stock.
RIGHTS ON LIQUIDATION. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the
Company, the holders of Preferred Stock then outstanding will be
subordinate to all claims of the Company's creditors but
otherwise entitled to be paid out of the Company's assets
available for distribution to its shareholders, before any
payment is made to the holders of any class of Common Stock or
any other class or series of stock ranking junior upon
liquidation to the Preferred Stock, an amount equal to the $1.25
stated value per share.
VOTING RIGHTS. Holders of Preferred Stock do not have the
right to vote in the election of directors of the Company or,
generally, on any other matters upon which shareholders of the
Company may or must vote and shall have only such voting rights
as a class as are conferred by the Colorado Business Corporation
Act. Whenever the Preferred Stock is entitled to vote, each
share of Preferred Stock shall be entitled to one vote.
CONVERSION AND ASSIGNMENT FEES. Whenever these Preferred
Shares are converted into Common Shares, or are assigned or
transferred, there shall be paid to the Transfer Agent therewith
the appropriate fee for every Preferred or Common Share
certificate to be issued.
STATUS OF HOLDER. The Company and the Transfer Agent may deem
and treat the registered holder of this Certificate as the
absolute owner hereof for all purposes, and neither the Company
nor the Transfer Agent shall be affected by any notice to the
contrary.
WITNESS the seal of the Company and the original signatures of
its duly authorized officers.
Dated: ISO BLOCK PRODUCTS USA, INC.
President Secretary or Assistant Secretary
ISO BLOCK PRODUCTS USA, INC.
The Company is authorized to issue shares of more than one
class, namely 50,000,000 shares of Common Stock and 20,000,000
shares of Preferred Stock. Pursuant to the Colorado Business
Corporation Act, the Company will furnish to any shareholder
upon request (addressed to the attention of the Company
Secretary) and without charge a full statement of the
designations, preferences, limitations and relative rights of
the shares of each class authorized to be issued by the Company
and of variations in the relative rights and preferences between
the shares of each series of preferred stock of the Company
insofar as any such series has been fixed and determined, and a
statement of the authority of the Board of Directors of the
Company to fix and determine the relative rights and preferences
of subsequent series of preferred stock.
CONVERSION TO COMMON STOCK
I or we hereby irrevocably elect to exercise the right of
conversion represented by this certificate to convert
_______________ of the shares of Preferred Stock evidenced by
this certificate into shares of the Company's Common Stock and
request that certificates for the Common Shares be issued in the
name of:
Please insert social security or EIN number Name and address,
including zip code:
or other identifying number:
____________________________
____________________________
____________________________
____________________________
and, if the number of Preferred Shares being converted to Common
Shares is less than all of the Preferred Shares evidenced by
this certificate, that a new certificate of like tenor for the
balance of the remaining Preferred Shares not converted
hereunder be delivered to the undersigned at the address below.
IMPORTANT: The name of the person converting Preferred Shares
must correspond with the name of the Registered Holder written
on the face of this Certificate in every particular, without
alteration or any change whatever, unless it has been assigned
by completing the Assignment form below.
CERTIFICATION OF STATUS. I/We hereby certify that I am/we are
not a "U.S. Person" as defined in Regulation S under the U.S.
Securities Act of 1933 and that I am/we are not converting these
shares to acquire common shares for or on behalf of any U.S.
Person. I/We understand that the term "U.S. Person" includes,
among other persons, an individual resident in the United
States, any corporation, partnership or other entity organized
under United States law, any agency or branch of a corporation,
partnership or other entity organized under the laws of a
country other than the United States which is located in the
United States, any trust or estate of which any trustee,
administrator or executor is a U.S. Person, and any account held
for the benefit of a U.S. Person.
DATED: ______________________, 19_____
X.............................................
Signature of Preferred Stock Holder
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
Please insert social security or EIN number Name and address,
including zip code:
or other identifying number:
___________________________
___________________________
___________________________
___________________________
________________ of the Preferred Shares evidenced by this
Certificate, and does hereby irrevocably constitute and appoint
any officer of the Company as lawful Attorney to transfer such
shares on the books of the Company with full power of
substitution in the premises. I/We hereby certify that, to the
best of my/our knowledge, the person or persons to whom these
shares are being assigned is NOT a "U.S. Person" as defined in
Regulation S under the U.S. Securities Act of 1933. I/We
understand that the term "U.S. Person" includes, among other
persons, an individual resident in the United States, any
corporation, partnership or other entity organized under United
States law, any agency or branch of a corporation, partnership
or other entity organized under the laws of a country other than
the United States which is located in the United States, any
trust or estate of which any trustee, administrator or executor
is a U.S. Person, and any account held for the benefit of a U.S.
Person.
DATED: ______________________, 19_____
X..............................................
Signature of Preferred Stock Holder
IMPORTANT: The name of the person assigning Preferred Shares
must correspond with the name of the Registered Holder written
on the face of this Certificate in every particular, without
alteration or any change whatever.
SIGNATURE GUARANTEE:
EXHIBIT 4.3
ISO BLOCK PRODUCTS USA, INC.
Organized under the laws of the State of Colorado
Series B, Non-Voting Convertible Preferred Stock
No. PB- SHARES
THIS CERTIFIES that or registered assigns, is the registered
owner of fully paid and nonassessable shares of the Series B,
Non-Voting Convertible Preferred Stock, US$1.50 stated value (the
"Preferred Stock" or "Preferred Shares"), of ISO BLOCK PRODUCTS
USA, INC., a corporation organized in the United States of
America under the laws of the State of Colorado ("Company"),
transferable on the books of the Company by the holder hereof in
person or by duly authorized attorney, upon surrender of this
certificate properly endorsed. This Certificate and the
Preferred Shares represented hereby are issued and shall be
subject to all of the provisions of the Company's Articles of
Incorporation and all amendments thereto (copies of which are on
file with the Transfer Agent and in the office of the Secretary
of State of Colorado) to all of which the holder, by acceptance
hereof, assents.
DIVIDENDS. No dividends are payable on the Preferred Shares.
REDEMPTION. The Preferred Shares are not redeemable except by
the mutual consent of the Company and the holder of the
Preferred Shares.
ASSIGNMENT. These Preferred Shares may be assigned or
transferred by the registered holder or by attorney duly
authorized in writing, in whole or in part, at the offices of
the Company with the Assignment form on the reverse side duly
completed. Any assignment or transfer is subject to restrictions
evidenced in the subscription agreement pursuant to which these
shares were sold.
CONVERSION. Subject to adjustment as hereinafter provided, the
holder of this Certificate is entitled to convert each of the
Preferred Shares evidenced hereby into ONE (1) fully paid and
nonassessable share of the Company's common stock, no par value
("Common Stock" or "Common Shares"). Conversion shall be deemed
to occur on the date a certificate or certificates representing
Preferred Stock being converted is presented to the Company,
properly endorsed. No fractional Common Shares will be issued.
The Preferred Shares may only be converted into common shares of
the Company commencing three (3) months after the date on which
the common shares of the Company are first quoted on the Nasdaq
National Market or Small-Cap System or listed on a U.S.
securities exchange.
ADJUSTMENTS. The conversion rate set forth above will be
subject to adjustment if the Company is reorganized, merged,
consolidated or party to a plan of exchange with another
corporation pursuant to which shareholders of the Company
receive any shares of stock or other securities, or in the event
of any sale or other transfer of all or substantially all of the
Company's assets, or in case of any reclassification of or split
or reverse split of the Common Stock.
RIGHTS ON LIQUIDATION. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the
Company, the holders of Preferred Stock then outstanding will be
subordinate to all claims of the Company's creditors but
otherwise entitled to be paid out of the Company's assets
available for distribution to its shareholders, before any
payment is made to the holders of any class of Common Stock or
any other class or series of stock ranking junior upon
liquidation to the Preferred Stock, an amount equal to the $0.80
stated value per share.
VOTING RIGHTS. Holders of Preferred Stock do not have the
right to vote in the election of directors of the Company or,
generally, on any other matters upon which shareholders of the
Company may or must vote and shall have only such voting rights
as a class as are conferred by the Colorado Business Corporation
Act. Whenever the Preferred Stock is entitled to vote, each
share of Preferred Stock shall be entitled to one vote.
CONVERSION AND ASSIGNMENT FEES. Whenever these Preferred
Shares are converted into Common Shares, or are assigned or
transferred, there shall be paid to the Transfer Agent therewith
the appropriate fee for every Common Share certificate to be
issued.
STATUS OF HOLDER. The Company may deem and treat the
registered holder of this Certificate as the absolute owner
hereof for all purposes, and the Company shall not be affected
by any notice to the contrary.
WITNESS the seal of the Company and the original signatures of
its duly authorized officers.
Dated: ISO BLOCK PRODUCTS USA, INC.
President Secretary or Assistant Secretary
ISO BLOCK PRODUCTS USA, INC.
The Company is authorized to issue shares of more than one
class, namely 50,000,000 shares of Common Stock and 20,000,000
shares of Preferred Stock. Pursuant to the Colorado Business
Corporation Act, the Company will furnish to any shareholder
upon request (addressed to the attention of the Company
Secretary) and without charge a full statement of the
designations, preferences, limitations and relative rights of
the shares of each class authorized to be issued by the Company
and of variations in the relative rights and preferences between
the shares of each series of preferred stock of the Company
insofar as any such series has been fixed and determined, and a
statement of the authority of the Board of Directors of the
Company to fix and determine the relative rights and preferences
of subsequent series of preferred stock.
CONVERSION TO COMMON STOCK
I or we hereby irrevocably elect to exercise the right of
conversion represented by this certificate to convert
_______________ of the shares of Preferred Stock evidenced by
this certificate into shares of the Company's Common Stock and
request that certificates for the Common Shares be issued in the
name of:
Please insert social security or EIN number Name and address,
including zip code:
or other identifying number:
___________________________
___________________________
___________________________
___________________________
and, if the number of Preferred Shares being converted to Common
Shares is less than all of the Preferred Shares evidenced by
this certificate, that a new certificate of like tenor for the
balance of the remaining Preferred Shares not converted
hereunder be delivered to the undersigned at the address below.
IMPORTANT: The name of the person converting Preferred Shares
must correspond with the name of the Registered Holder written
on the face of this Certificate in every particular, without
alteration or any change whatever, unless it has been assigned
by completing the Assignment form below.
CERTIFICATION OF STATUS. I/We hereby certify that I am/we are
not a "U.S. Person" as defined in Regulation S under the U.S.
Securities Act of 1933 and that I am/we are not converting these
shares to acquire common shares for or on behalf of any U.S.
Person. I/We understand that the term "U.S. Person" includes,
among other persons, an individual resident in the United
States, any corporation, partnership or other entity organized
under United States law, any agency or branch of a corporation,
partnership or other entity organized under the laws of a
country other than the United States which is located in the
United States, any trust or estate of which any trustee,
administrator or executor is a U.S. Person, and any account held
for the benefit of a U.S. Person.
DATED: ______________________, 19_____
X.............................................
Signature of Preferred Stock Holder
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
Please insert social security or EIN number Name and address,
including zip code:
or other identifying number:
___________________________
___________________________
___________________________
___________________________
________________ of the Preferred Shares evidenced by this
Certificate, and does hereby irrevocably constitute and appoint
any officer of the Company as lawful Attorney to transfer such
shares on the books of the Company with full power of
substitution in the premises. I/We hereby certify that, to the
best of my/our knowledge, the person or persons to whom these
shares are being assigned is NOT a "U.S. Person" as defined in
Regulation S under the U.S. Securities Act of 1933. I/We
understand that the term "U.S. Person" includes, among other
persons, an individual resident in the United States, any
corporation, partnership or other entity organized under United
States law, any agency or branch of a corporation, partnership
or other entity organized under the laws of a country other than
the United States which is located in the United States, any
trust or estate of which any trustee, administrator or executor
is a U.S. Person, and any account held for the benefit of a U.S.
Person.
DATED: ______________________, 19_____
X................................................
Signature of Preferred Stock Holder
IMPORTANT: The name of the person assigning Preferred Shares
must correspond with the name of the Registered Holder written
on the face of this Certificate in every particular, without
alteration or any change whatever.
SIGNATURE GUARANTEE:
EXHIBIT 4.4
ISO BLOCK PRODUCTS USA, INC.
Organized under the laws of the State of Colorado
Series C, Non-Voting Convertible Preferred Stock
No. PC- SHARES
THIS CERTIFIES that or registered assigns, is the registered
owner of fully paid and nonassessable shares of the Series C,
Non-Voting Convertible Preferred Stock, US$1.50 stated value (the
"Preferred Stock" or "Preferred Shares"), of ISO BLOCK PRODUCTS
USA, INC., a corporation organized in the United States of
America under the laws of the State of Colorado ("Company"),
transferable on the books of the Company by the holder hereof in
person or by duly authorized attorney, upon surrender of this
certificate properly endorsed. This Certificate and the
Preferred Shares represented hereby are issued and shall be
subject to all of the provisions of the Company's Articles of
Incorporation and all amendments thereto (copies of which are on
file with the Transfer Agent and in the office of the Secretary
of State of Colorado) to all of which the holder, by acceptance
hereof, assents.
DIVIDENDS. No dividends are payable on the Preferred Shares.
REDEMPTION. The Preferred Shares are not redeemable except by
the mutual consent of the Company and the holder of the
Preferred Shares.
ASSIGNMENT. These Preferred Shares may be assigned or
transferred by the registered holder or by attorney duly
authorized in writing, in whole or in part, at the offices of
the Company with the Assignment form on the reverse side duly
completed. Any assignment or transfer is subject to restrictions
evidenced in the subscription agreement pursuant to which these
shares were sold.
CONVERSION. Subject to adjustment as hereinafter provided, the
holder of this Certificate is entitled to convert each of the
Preferred Shares evidenced hereby into ONE (1) fully paid and
nonassessable share of the Company's common stock, no par value
("Common Stock" or "Common Shares"). Conversion shall be deemed
to occur on the date a certificate or certificates representing
Preferred Stock being converted is presented to the Company,
properly endorsed. No fractional Common Shares will be issued.
The Preferred Shares may only be converted into common shares of
the Company commencing three (3) months after the date on which
the common shares of the Company are first quoted on the Nasdaq
National Market or Small-Cap System or listed on a U.S.
securities exchange.
ADJUSTMENTS. The conversion rate set forth above will be
subject to adjustment if the Company is reorganized, merged,
consolidated or party to a plan of exchange with another
corporation pursuant to which shareholders of the Company
receive any shares of stock or other securities, or in the event
of any sale or other transfer of all or substantially all of the
Company's assets, or in case of any reclassification of or split
or reverse split of the Common Stock.
RIGHTS ON LIQUIDATION. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the
Company, the holders of Preferred Stock then outstanding will be
subordinate to all claims of the Company's creditors but
otherwise entitled to be paid out of the Company's assets
available for distribution to its shareholders, before any
payment is made to the holders of any class of Common Stock or
any other class or series of stock ranking junior upon
liquidation to the Preferred Stock, an amount equal to the $1.50
stated value per share.
VOTING RIGHTS. Holders of Preferred Stock do not have the
right to vote in the election of directors of the Company or,
generally, on any other matters upon which shareholders of the
Company may or must vote and shall have only such voting rights
as a class as are conferred by the Colorado Business Corporation
Act. Whenever the Preferred Stock is entitled to vote, each
share of Preferred Stock shall be entitled to one vote.
CONVERSION AND ASSIGNMENT FEES. Whenever these Preferred
Shares are converted into Common Shares, or are assigned or
transferred, there shall be paid to the Transfer Agent therewith
the appropriate fee for every Common Share certificate to be
issued.
STATUS OF HOLDER. The Company may deem and treat the
registered holder of this Certificate as the absolute owner
hereof for all purposes, and the Company shall not be affected
by any notice to the contrary.
WITNESS the seal of the Company and the original signatures of
its duly authorized officers.
Dated: ISO BLOCK PRODUCTS USA, INC.
President Secretary or Assistant Secretary
ISO BLOCK PRODUCTS USA, INC.
The Company is authorized to issue shares of more than one
class, namely 50,000,000 shares of Common Stock and 20,000,000
shares of Preferred Stock. Pursuant to the Colorado Business
Corporation Act, the Company will furnish to any shareholder
upon request (addressed to the attention of the Company
Secretary) and without charge a full statement of the
designations, preferences, limitations and relative rights of
the shares of each class authorized to be issued by the Company
and of variations in the relative rights and preferences between
the shares of each series of preferred stock of the Company
insofar as any such series has been fixed and determined, and a
statement of the authority of the Board of Directors of the
Company to fix and determine the relative rights and preferences
of subsequent series of preferred stock.
CONVERSION TO COMMON STOCK
I or we hereby irrevocably elect to exercise the right of
conversion represented by this certificate to convert
_______________ of the shares of Preferred Stock evidenced by
this certificate into shares of the Company's Common Stock and
request that certificates for the Common Shares be issued in the
name of:
Please insert social security or EIN number Name and address,
including zip code:
or other identifying number:
___________________________
___________________________
___________________________
___________________________
and, if the number of Preferred Shares being converted to Common
Shares is less than all of the Preferred Shares evidenced by
this certificate, that a new certificate of like tenor for the
balance of the remaining Preferred Shares not converted
hereunder be delivered to the undersigned at the address below.
IMPORTANT: The name of the person converting Preferred Shares
must correspond with the name of the Registered Holder written
on the face of this Certificate in every particular, without
alteration or any change whatever, unless it has been assigned
by completing the Assignment form below.
CERTIFICATION OF STATUS. I/We hereby certify that I am/we are
not a "U.S. Person" as defined in Regulation S under the U.S.
Securities Act of 1933 and that I am/we are not converting these
shares to acquire common shares for or on behalf of any U.S.
Person. I/We understand that the term "U.S. Person" includes,
among other persons, an individual resident in the United
States, any corporation, partnership or other entity organized
under United States law, any agency or branch of a corporation,
partnership or other entity organized under the laws of a
country other than the United States which is located in the
United States, any trust or estate of which any trustee,
administrator or executor is a U.S. Person, and any account held
for the benefit of a U.S. Person.
DATED: ______________________, 19_____
X.................................................
Signature of Preferred Stock Holder
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
Please insert social security or EIN number Name and address,
including zip code:
or other identifying number:
___________________________
___________________________
___________________________
___________________________
________________ of the Preferred Shares evidenced by this
Certificate, and does hereby irrevocably constitute and appoint
any officer of the Company as lawful Attorney to transfer such
shares on the books of the Company with full power of
substitution in the premises. I/We hereby certify that, to the
best of my/our knowledge, the person or persons to whom these
shares are being assigned is NOT a "U.S. Person" as defined in
Regulation S under the U.S. Securities Act of 1933. I/We
understand that the term "U.S. Person" includes, among other
persons, an individual resident in the United States, any
corporation, partnership or other entity organized under United
States law, any agency or branch of a corporation, partnership
or other entity organized under the laws of a country other than
the United States which is located in the United States, any
trust or estate of which any trustee, administrator or executor
is a U.S. Person, and any account held for the benefit of a U.S.
Person.
DATED: ______________________, 19_____
X...................................................
Signature of Preferred Stock Holder
IMPORTANT: The name of the person assigning Preferred Shares
must correspond with the name of the Registered Holder written
on the face of this Certificate in every particular, without
alteration or any change whatever.
SIGNATURE GUARANTEE:
EXHIBIT 4.5
ISO BLOCK PRODUCTS USA, INC.
Organized under the laws of the State of Colorado
Series 1996, Non-Voting Convertible Preferred Stock
*****SEE RESTRICTIVE LEGEND ON REVERSE SIDE*****
THIS CERTIFIES that or registered assigns, is the registered owner
of fully paid and nonassessable shares of the Series 1996,
Non-Voting Convertible Preferred Stock, US$1.50 stated value
(the "Preferred Stock" or "Preferred Shares"), of ISO BLOCK
PRODUCTS USA, INC., a corporation organized in the United States
of America under the laws of the State of Colorado ("Company"),
transferable on the books of the Company by the holder hereof in
person or by duly authorized attorney, upon surrender of this
certificate properly endorsed. This Certificate and the
Preferred Shares represented hereby are issued and shall be
subject to all of the provisions of the Company's Articles of
Incorporation and all amendments thereto (copies of which are on
file with the Transfer Agent and in the office of the Secretary
of State of Colorado) to all of which the holder, by acceptance
hereof, assents.
DIVIDENDS. No dividends are payable on the Preferred Shares.
REDEMPTION. The Preferred Shares are not redeemable except by
the mutual consent of the Company and the holder of the
Preferred Shares.
ASSIGNMENT. These Preferred Shares may be assigned or
transferred by the registered holder or by attorney duly
authorized in writing, in whole or in part, at the offices of
the Company with the Assignment form on the reverse side duly
completed. Any assignment or transfer is subject to restrictions
evidenced in the subscription agreement pursuant to which these
shares were sold.
CONVERSION. Subject to adjustment as hereinafter provided, the
holder of this Certificate is entitled at any time on or after
January 24, 2000, to convert each Preferred Share evidenced
hereby into ONE (1) fully paid and nonassessable share of the
Company's common stock, no par value ("Common Stock" or "Common
Shares"). Conversion shall be deemed to occur on the date a
certificate or certificates representing Preferred Stock being
converted is presented to the Company, properly endorsed. No
fractional Common Shares will be issued. Such conversion rate is
subject to adjustment if the Company is reorganized, merged,
consolidated or party to a plan of exchange with another
corporation pursuant to which shareholders of the Company
receive any shares of stock or other securities, or in the event
of any sale or other transfer of all or substantially all of the
Company's assets, or in case of any reclassification of or split
or reverse split of the Common Stock.
OTHER ADJUSTMENTS. In addition to any such adjustments, the
number of Common Shares issuable upon conversion is subject to
reduction based upon the economic performance of certain
subsidiaries of the Company.
RIGHTS ON LIQUIDATION. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the
Company, the holders of Preferred Stock then outstanding shall
be subordinate to all claims of the Company's creditors and to
all claims of the holders of every other series of the Company's
preferred stock then issued and outstanding (unless such a
series is expressly made subordinate to or of a parity with the
Preferred Stock) but otherwise are entitled to share ratably
with the holders of the Company's common stock in the Company's
assets available for distribution to its shareholders.
VOTING RIGHTS. Holders of Preferred Stock do not have the
right to vote in the election of directors of the Company or,
generally, on any other matters upon which shareholders of the
Company may or must vote and shall have only such voting rights
as a class as are conferred by the Colorado Business Corporation
Act. Whenever the Preferred Stock is entitled to vote, each
share of Preferred Stock shall be entitled to one vote.
CONVERSION AND ASSIGNMENT FEES. Whenever these Preferred
Shares are converted into Common Shares, or are assigned or
transferred, there shall be paid to the Transfer Agent therewith
the appropriate fee for every Common Share certificate to be
issued.
STATUS OF HOLDER. The Company may deem and treat the
registered holder of this Certificate as the absolute owner
hereof for all purposes, and the Company shall not be affected
by any notice to the contrary.
WITNESS the seal of the Company and the original signatures of
its duly authorized officers.
Dated: ISO BLOCK PRODUCTS USA, INC.
President Secretary or Assistant Secretary
The Preferred Shares evidenced by this certificate and the
common shares into which the Preferred Shares may be converted
have not been registered under the Securities Act of 1933, as
amended ("Act"), and may not be resold, hypothecated or
transferred in any manner unless first registered under the Act
or except pursuant to an available exemption from the
registration requirements of the Act.
ISO BLOCK PRODUCTS USA, INC.
The Company is authorized to issue shares of more than one
class, namely 50,000,000 shares of Common Stock and 20,000,000
shares of Preferred Stock. Pursuant to the Colorado Business
Corporation Act, the Company will furnish to any shareholder
upon request (addressed to the attention of the Company
Secretary) and without charge a full statement of the
designations, preferences, limitations and relative rights of
the shares of each class authorized to be issued by the Company
and of variations in the relative rights and preferences between
the shares of each series of preferred stock of the Company
insofar as any such series has been fixed and determined, and a
statement of the authority of the Board of Directors of the
Company to fix and determine the relative rights and preferences
of subsequent series of preferred stock.
CONVERSION TO COMMON STOCK
I or we hereby irrevocably elect to exercise the right of
conversion represented by this certificate to convert
_______________ of the shares of Preferred Stock evidenced by
this certificate into shares of the Company's Common Stock and
request that certificates for the Common Shares be issued in the
name of:
Please insert social security or EIN number Name and address,
including zip code:
or other identifying number:
___________________________
___________________________
___________________________
___________________________
and, if the number of Preferred Shares being converted to Common
Shares is less than all of the Preferred Shares evidenced by
this certificate, that a new certificate of like tenor for the
balance of the remaining Preferred Shares not converted
hereunder be delivered to the undersigned at the address below.
IMPORTANT: The name of the person converting Preferred Shares
must correspond with the name of the Registered Holder written
on the face of this Certificate in every particular, without
alteration or any change whatever, unless it has been assigned
by completing the Assignment form below.
DATED: ______________________, 19_____
X..................................................
Signature of Preferred Stock Holder
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
Please insert social security or EIN number Name and address,
including zip code:
or other identifying number:
___________________________
___________________________
___________________________
___________________________
______________ of the Preferred Shares evidenced by this
Certificate, and does hereby irrevocably constitute and appoint
any officer of the Company as lawful Attorney to transfer such
shares on the books of the Company with full power of
substitution in the premises.
DATED: ______________________, 19_____
X....................................................
Signature of Preferred Stock Holder
IMPORTANT: The name of the person assigning Preferred Shares
must correspond with the name of the Registered Holder written
on the face of this Certificate in every particular, without
alteration or any change whatever.
SIGNATURE GUARANTEE:
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
10-KSB FOR THE PERIOD ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FORM 10-KSB.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 10,296
<SECURITIES> 0
<RECEIVABLES> 1,337,624
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,347,920
<PP&E> 2,660
<DEPRECIATION> 532
<TOTAL-ASSETS> 1,350,048
<CURRENT-LIABILITIES> 6,682
<BONDS> 0
0
739,200
<COMMON> 1,436,055
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,350,048
<SALES> 618,421
<TOTAL-REVENUES> 620,739
<CGS> 1,044,238
<TOTAL-COSTS> 1,302,875
<OTHER-EXPENSES> 258,637
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (682,136)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (682,136)
<EPS-PRIMARY> (.21)
<EPS-DILUTED> (.21)
</TABLE>
