U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the Quarter Ended Sept. 30, 1997 Commission file number 33-30476-D
ISO BLOCK PRODUCTS USA, INC.
(Exact name of small business issuer as specified in its charter)
COLORADO 84-1026503
(State of Incorporation) (I.R.S. Employer ID No.)
8037 South Datura Street
Littleton, Colorado 80120
(Address of Principal Executive (Zip Code)
Offices)
(303) 795-9729
(Registrant's Telephone No. incl. area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days.
YES __ NO X
The number of shares outstanding of each of the Registrant's class of common
equity, as of September 30, 1997 are as follows:
Class of Securities Shares Outstanding
------------------- ------------------
Common Stock, no par value 2,195,821
This quarterly report on Form 10-QSB contains 9 pages.
ISO BLOCK PRODUCTS USA, INC.
INDEX PAGE
PART 1
Item 1. FINANCIAL STATEMENTS
Consolidated Comparative Balance Sheet (unaudited)
as of September 30, 1997................................... 3
Consolidated Comparative Statement of Operations (unaudited)
for the periods ended September 30, 1997 and 1996.......... 4
Consolidated Comparative Statement of Cash Flows (unaudited)
for the three month period ended September 30, 1997 and
1996....................................................... 5
Notes to Unaudited Financial Statements...................... 6
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
8
PART 2
Item 6. Exhibits and Reports on Form 8-K........................... 9
Signatures.................................................... 9
ISO Block Products USA, Inc.
Consolidated Comparative Balance Sheet
(UNAUDITED
ASSETS Sept. 30, 1997 March 31, 1997
-------------- --------------
Current Assets:
Cash 17,944 302,931
Note receivable - Officer 2,300 2,000
Mortgage Receivable 1,170,136 1,176,590
Prepaid expenses 141,218 72,033
------------- -----------
Total current assets 1,331,598 1,553,554
Property and equipment:
Office equipment 5,656 2,860
Less: Accumulated depreciation (143) (179)
------------- ----------
Net property and equipment 5,513 2,681
Other 1,814 -
------------- ------------
TOTAL ASSETS 1,338,925 1,556,235
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable 19,899 8,780
Promissory note 20,000 -
------------- ------------
Total 39,899 8,780
Shareholders' equity:
Preferred stock, no par value,
10,000,000 shares authorized,
1,464,500 and 924,000 shares
outstanding, respectively. 1,440,412 1,427,700
Common stock, 50,000,000 shares
authorized, 2,195,821 and
3,185,821 shares outstanding,
respectively 1,522,055 1,472,556
Accumulated deficit (1,663,441) (1,357,440)
-------------- -------------
1,299,026 1,542,816
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY 1,338,925 1,556,235
============== =============
The accompanying notes are an integral part of these financial statements.
ISO BLOCK PRODUCTS USA, INC.
CONSOLIDATED COMPARATIVE STATEMENT OF OPERATIONS
For the Periods Ended September 30, 1997 and 1996
Six Months Ended Sept. 30, Three Months Ended Sept. 30,
1997 1996 1997 1996
---- ---- ---- ----
Income
- ------
Construction Sales 47,013 123,133 24,670 -
Interest Income 12,591 11,516 6,454 5,574
---------- ---------- ---------- ----------
Total Income 59,607 134,649 31,124 5,574
Cost Of Sales
- -------------
Cost of Goods Sold 128,270 - 41,698 -
Cost of Materials 160,882 162,128 126,091 -
Labor - 62,621 - 39,931
---------- ---------- ---------- ----------
Total Cost of Sales 289,152 224,749 167,789 39,931
Gross Profit (Loss) (229,545) (90,100) (136,665) (34,357)
Operating Expenses
- ------------------
General and Admin. 142,245 59,478 65,087 25,956
---------- ---------- ---------- ----------
Net Loss (371,790) (149,578) (201,752) (60,313)
Loss Per Common Share (.18) (.05) (.09) (.02)
Weighted Average
Shares Outstanding 2,112,071 3,185,821 2,154,154 3,185,821
The accompanying notes are an integral part of these financial statements.
ISO Block Products USA, Inc.
Consolidated Comparative Statement of Cash Flows
(UNAUDITED
Three Months Ended Sept. 30,
1997 1996
---- ----
Cash Flows From Operating Activities
Net Income (loss) (201,752) (60,313)
Adjustments to reconcile net loss to
cash used in operating activities:
Depreciation - 222
Note receivable - officer - -
Mortgage receivable (2,201) 3,558
Accounts receivable - 241
Prepaid expense (26,894) -
Accounts payable 23,983 (2,538)
Other (1,814) -
----------- -----------
Net cash used in operating activities (208,681) (58,830)
----------- ------------
Cash flows from investing activities:
----------- ------------
Purchase of propert and equipment - -
----------- ------------
Cash flows from financing activities:
Proceeds from sale of preferred stock 12,712 576,500
Proceeds from sale of common stock 50,000 -
Promissory note 20,000 -
Foreign exchange gain (loss) - -
------------ ------------
Net cash provided by (used in)
financing activities 82,712 576,500
------------ ------------
Net Increase (decrease) in cash (125,969) 517,670
------------ ------------
Cash, at beginning of period 143,913 71,829
------------ ------------
Cash, at end of period 17,944 589,499
------------ ------------
The accompanying notes are an integral part of these financial statements.
ISO BLOCK PRODUCTS USA, INC. NOTES TO
NOTES TO UNAUDITED FINANCIAL STATEMENTS
Note 1.
- ------
Company Description. Iso Block Products USA, Inc. ("Company") was
incorporated in the State of Colorado on April 28, 1986 under the name
Champion Computer Rentals, Inc. The Company was formed to obtain funding
from a public offering in order to engage in the sale and leasing of
computers and related equipment. As March 31, 1992, the Company ceased those
sale and leasing operations.
Note 2.
- -------
Summary of Significant Accounting Policies. The accompanying un-
audited financial statements of the Company have been prepared on the
accrual basis and in accordance with the instructions to Form 10-QSB and do
not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (considered necessary for a for a fair
presentation have been included. These financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's annual report on Form 10-KSB for the fiscal year ended March 31,
1997. Following is a summary of significant accounting policies.
Organization costs.
- -------------------
Certain costs incurred to set up the Company are capitalized and
were amortized over five years. These costs were fully amortized at March
31, 1994.
Income taxes.
- -------------
The Company accounts for income taxes under SFAS No. 109. Deferred
income taxes result from temporary differences. Temporary differences are
differences between the tax basis of assets and liabilities and their
reported amounts in the financial statements that will result in taxable or
deductible amounts in future years.
Foreign Currency Translation.
- -----------------------------
The functional currency for the Company's operations is the applic-
able local currency. The translation of the applicable foreign currency into
U.S. dollars is performed for balance sheet accounts using current exchange
rates in effect at the balance sheet date and for revenue and expense accounts
using a weighted average rate during the period. The gains or losses
resulting from such translation are included in stockholder's equity.
ISO BLOCK PRODUCTS USA, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(continued)
Income (Loss) Per Common Share.
- -------------------------------
Income (loss) per common share is based upon the weighted average
number of common shares outstanding during each period. Options and warrants
outstanding to purchase common stock are included as common stock equivalents
when diluted.
Concentrations of Credit Risk.
- ------------------------------
The Company's financial instruments that are exposed to concentrations
of credit risk consist primarily of mortgages receivable. These mortgages
receivable are concentrated in German real estate but are not concentrated in
a limited number of borrowers. The mortgages are from high quality entities
and secured by high value German real estate to limit the Company's
concentrations of credit risk.
Note 3.
- ------
During the fiscal year ended March 31, 1997, the Company incurred a
net loss of $348,921, and as of that date had accumulated a deficit of
$1,357,440. The Company had slight operations during the second fiscal
quarter covered by these statements but incurred a loss for the quarter
of $201,752.
Note 4.
- ------
Future working capital requirements are dependent on the Company's
ability to attain profitable operations and to obtain financing or new
capital as required. It is not possible at this time to predict the outcome
of future operations or whether the necessary financing or investment can be
arranged.
Item 2. Management's Discussion and Analysis or Plan of Operation
---------------------------------------------------------
Current Business of the Company. During the current fiscal year, the
Company begin construction of one of two speculative residential houses in
the Outlook subdivision in Broomfield, Colorado. Each house will be
priced at approximately $250,000. The Company plans to continue its
construction program as long as the residential real estate business climate
remains at its present intensity in Colorado.
The Company has formed a Colorado Limited liability Company
"Magna-Dry USA LLC" of which it is the sole member. Magna-Dry USA has
purchased the license to operate and franchise the Magna-Dry concept in total
cleaning throughout North and South America. The Company has executed a
five-year license agreement with continuous two-year renewal options. The
Company contracted to pay One Hundred thousand ( $100,000) US dollars and
will pay an ongoing license fee throughout the agreement. The Company paid
Ten thousand ($10,000) dollars down and agreed to pay Ninety thousand
($90,000) dollars within 120 days. The Company through its subsidiary will
offer Area and individual franchises for the proprietary system of cleaning
included in the license. It will also offer equipment and chemicals
involved with the process.
Magna-Dry has over one thousand (1,000) units operating internationally
and has captured over sixty (60%) of the market in some areas. The Company
will operate within its existing structure for the sale of franchises through
its Franchise Connection, Inc. subsidiary. With the success of Magna-Dry
International and its history, it is expected that the growth in the US
market will be successful.
Franchise Connection, Inc. was incorporated in Colorado in 1996 with
headquarters in Denver,. Colorado. The Company plans to form strategic
partnerships with prospective or existing franchise operations ("Franchisors")
under which it will provide them with marketing and sales services plus
business and legal services in return for an equity interest in, and/or a
portion of their royalties. It is targeting private companies that are seeking
franchise expertise or financial capacity to successfully engage in
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
franchises.
Results of Operations.
- ----------------------
During the second fiscal quarter ended September 30, 1997, the
Company had revenues of $31,124 and engaged in limited operations primarily
those of preparation for a construction program as general contractor in the
State of Colorado in comparison to revenues of $5,574 in the second fiscal
quarter of 1996. The Company realized a loss of $201,752 in the second quarter
of 1997 compared to a loss of $60,313 in the second quarter of 1996. The
Company has accumulated a deficit since inception totaling $1,663,441. The
loss realized was primarily due to $126,091 spent for materials as general
contractor.
Liquidity and Capital Resources.
- --------------------------------
The Company has total assets of $1,338,925 including cash or cash
equivalents at the end of the second fiscal quarter 1997 of $17,944 compared
to total assets of $1,350,048 including cash or cash equivalents of $10,296
at the end of the second fiscal quarter of 1996. The Company also owned
approximately US$1,170,136 of mortgages receivable affecting German real
estate. While there is a commercial market for these mortgages receivable,
the Company does not intend to sell them.
During the second quarter, the Company raised additional funding
through preferred stock, common stock, and a promissory note. The Company
sold 15,890 preferred shares at $0.80 raising $12,712, sold 125,000 common
shares at $0.40 raising $50,000, and signed a 9 month $20,000 promissory
note bearing 15% interest.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits. NONE
(b) Reports on Form 8-K NONE
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this Report on Form 10-QSB to be signed on its behalf by the under-
signed thereunto duly authorized.
Dated: November 14, 1997
ISO BLOCK PRODUCTS USA, INC.
By: /s/ Egin Bresnig
--------------------
Egin Bresnig
By: /s/ Dean Wicker
--------------------
Dean Wicker
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
10-QSB FOR THE PERIOD ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFEERENCE TO SUCH FORM 10-QSB.
</LEGEND>
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<RECEIVABLES> 1,172,436
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<CURRENT-ASSETS> 1,331,598
<PP&E> 5,656
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<CURRENT-LIABILITIES> 39,899
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1,440,412
<COMMON> 1,522,055
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<SALES> 24,670
<TOTAL-REVENUES> 31,124
<CGS> 41,698
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