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 Dec. 31, 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 2,273,249
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 December 31, 1997...................................... 3
Consolidated Comparative Statement of Operations (unaudited)
for the periods ended December 31, 1997 and 1996............. 4
Consolidated Comparative Statement of Cash Flows (unaudited)
for the three month period ended December 31, 1997 and
1996......................................................... 5
Notes to Unaudited Financial Statements...................... 6
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS... 7
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 Dec. 31, 1997 March 31, 1997
------------- --------------
Current Assets:
Cash 4,321 302,931
Note receivable - Officer 2,762 2,000
Mortgage Receivable 1,170,136 1,176,590
Prepaid expenses 141,218 72,033
Other 2,000 -
------------- -----------
Total current assets 1,320,437 1,553,554
Property and equipment:
Office equipment 5,996 2,860
Less: Accumulated depreciation (143) (179)
------------- ----------
Net property and equipment 5,853 2,681
Other 62,696 -
------------- ------------
TOTAL ASSETS 1,388,986 1,556,235
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable 47,425 8,780
Promissory note 204,000 -
------------ ------------
Total 251,425 8,780
Shareholders' equity:
Preferred stock, no par value,
10,000,000 shares authorized,
1,464,500 and 924,000 shares
outstanding, respectively. 1,457,198 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 (1,841,692) (1,357,440)
-------------- -------------
1,137,561 1,542,816
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY 1,355,986 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 December 31, 1997 and 1996
Nine Months Ended Dec. 31, Three Months Ended Dec. 31,
1997 1996 1997 1996
---- ---- ---- ----
Income
------
Sales 55,376 123,133 8,363 -
Interest Income 12,839 24,056 245 12,540
---------- ---------- ---------- ----------
Total Income 68,215 147,189 8,608 12,540
Cost Of Sales
-------------
Cost of Goods Sold 152,953 162,128 24,683 -
Cost of Materials 174,747 - 13,865 -
Labor - 62,621 - -
---------- ---------- ---------- ----------
Total Cost of Sales 327,700 224,749 38,548 -
Gross Profit (Loss) (259,485) (77,560) (29,940) 12,540
Operating Expenses
------------------
General and Admin. 224,767 127,281 82,522 67,803
---------- ---------- ---------- ----------
Net Loss (484,252) (204,841) (112,462) (55,263)
Loss Per Common Share (.23) (.14) (.05) (.04)
Weighted Average
Shares Outstanding 2,145,792 1,480,821 2,222,335 1,480,821
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 Dec. 31,
1997 1996
---- ----
Cash Flows From Operating Activities
Net Income (loss) (112,462) (55,263)
Adjustments to reconcile net loss to
cash used in operating activities:
Depreciation - 222
Note receivable - officer (462) (50,000)
Mortgage receivable - 2,992
Accounts receivable - 121,887
Prepaid expense - -
Accounts payable (27,526) (162,207)
Other (73,619) -
----------- -----------
Net cash used in operating activities (214,069) (142,369)
----------- ------------
Cash flows from investing activities:
----------- ------------
Purchase of propert and equipment (340) -
----------- ------------
Cash flows from financing activities:
Proceeds from sale of preferred stock 16,786 -
Proceeds from sale of common stock - -
Promissory note 184,000 -
Foreign exchange gain (loss) - -
------------ ------------
Net cash provided by (used in)
financing activities 200,786 -
------------ ------------
Net Increase (decrease) in cash (13,623) (142,369)
------------ ------------
Cash, at beginning of period 17,944 589,499
------------ ------------
Cash, at end of period 4,321 447,130
------------ ------------
The accompanying notes are an integral part of these financial statements.
ISO BLOCK PRODUCTS USA, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
Note 1.
Company Description. ISO Block Products USA, Inc. ("Company") was
incorporated in the State of Colorado on April 28, 1986 under the name
Champion Computer Rentals, Inc. The Company was formed to obtain funding
from a public offering in order to engage in the sale and leasing of
computers and related equipment. As March 31, 1992, the Company ceased
those sale and leasing operations.
Note 2.
Summary of Significant Accounting Policies. The accompanying unaudited
financial statements of the Company have been prepared on the accrual basis
and in accordance with the instructions to Form 10-QSB and do not include all
of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (considered necessary for a for a fair presentation have
been included. These financial statements should be read in conjunction with
the financial statements and notes thereto included in the Company's annual
report on Form 10-KSB for the fiscal year ended March 31, 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 applicable local
currency. The translation of the applicable foreign currency into U.S.
dollars is performed for balance sheet accounts using current exchange rates
in effect at the balance sheet date and for revenue and expense accounts
using a weighted average rate during the period. The gains or losses
resulting from such translation are included in stockholder's equity.
ISO BLOCK PRODUCTS USA, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(continued)
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 outstand-
ing 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 third fiscal quarter covered by
these statements but incurred a loss for the quarter of $112,462.
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 $270,000. 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
the United States. The Company has executed a five-year license agreement
with continuous two-year renewal options. 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.
To date, Magna-Dry has signed four franchise agreements, located in Reno,
NV, Memphis, TN, Denver, CO, and Canada.
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 franchis-
ing. 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 third fiscal quarter ended December 31, 1997, the Company had
revenues of $8,608 and engaged in limited operations primarily those of a
general contractor in the state of Colorado in comparison to revenues of
$12,540 in the third fiscal quarter of 1996. The Company realized a loss of
$112,462 in the third quarter of 1997 compared to a loss of $55,263 in the
third quarter of 1996. The loss realized was primarily due to $82,522 spent
for general and administrative fees. The Company has accumulated a deficit
since inception totaling $1,841692.
Liquidity and Capital Resources.
- --------------------------------
The Company has total assets of $1,388,986 including cash or cash
equivalents at the end of the third fiscal quarter 1997 of $4,321 compared to
total assets of $1,828,660 including cash or cash equivalents of $447,130 at
the end of the third fiscal quarter of 1996. The Company also owned approx-
imately 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 third quarter, the company raised additional funding through
preferred stock, and promissory notes. The company sold 13,480 preferred
shares at $1.25 raising $16,850, and signed several 1 year notes totaling
$184,000 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: February 17, 1998
ISO BLOCK PRODUCTS USA, INC.
By /S/ Egin Bresnig
-----------------------------
Egin Bresnig,
Chief Executive Officer
By /S/ Dean Wicker
-----------------------------
Dean Wicker,
Chief Financial Officer
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
10-QSB FOR THE PERIOD ENDED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFEERENCE TO SUCH FORM 10-QSB.
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<RECEIVABLES> 1,170,136
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1,457,198
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