U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 1O-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter ended September 30, 1999 Commission File No.33-30476-D
ISO BLOCK PRODUCTS USA, INC.
(Exact name of registrant as specified in its charter)
COLORADO
(State or other jurisdiction of
incorporation or organization)
8037 South Datura Street
Littleton, Colorado 80120
(Address of Principal's Executive Offices)
84-1O26503
(I.R.S. Employer Identification No.)
(303) 795-9729
(Registrant's Telephone No. Incl. area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the
registrant was required to file such reports), and (2) Has been subject to
such filing requirements for at least the past: 90 days.
Yes _X__ No ___
The number of shares outstanding of each of the Registrant's classes of
common equity, as of October 31, 1999, are as follows:
Class of Securities Shares Outstanding
------------------- ------------------
Common Stock, no par value 4,041,484
INDEX
Page of
Report
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets:
As of September 30, 1999 (unaudited) and March
31, 1999....................................................... 3
Consolidated Statements of Operations (unaudited)
For the three-month period and six-month period ended
September 30, 1999 and 1998................................... 4
Consolidated Statements of Cash Flows (unaudited)
For the six-month periods ended September 30, 1999 and
1998.......................................................... 5
Notes to Unaudited Financial Statements....................... 6
Item 2. Management's Discussion and Analysis or Plan of
Operation..................................................... 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.............................. 9
Signatures.................................................... 9
ISO BLOCK PRODUCTS USA, INC.
CONSOLIDATED COMPARATIVE BALANCE SHEET
September 30, March 31,
1999 1999
---------- ----------
ASSETS
------
Current Assets
--------------
Cash 914 5,135
Mortgages Receivable 16,200 16,200
Inventory-work in progress 34,540 34,540
---------- ----------
Total Current Assets 51,654 55,875
Property & Equipment
--------------------
Office Equipment - 9,071
Vehicle - 14,273
Less: Accumulated Depreciation - (4,333)
---------- ----------
Net Property & Equipment - 19,011
TOTAL ASSETS 51,654 74,886
========== ==========
LIABILITIES & STOCKHOLDERS' EQUITY
----------------------------------
Current Liabilities
-------------------
Accounts Payable 26,304 54,383
Notes payable 100,000 150,360
Accrued Interest payable - 26,304
---------- ----------
Total Current Liabilities 126,304 231,047
Stockholders' Equity
--------------------
Preferred Stock, No Par Value,
10,000,000 Shares Authorized,
116,370 and 116,370 Shares
Outstanding, Respectively. 114,690 114,690
Common Stock, 50,000,000 Shares
Authorized, 4,041,484 and
3,854,730 Shares Outstanding,
Respectively. 2,897,764 2,897,764
Accumulated Deficit (3,087,104) (3,168,615)
---------- ----------
(74,650) (156,161)
---------- ----------
TOTAL LIABILITIES &
STOCKHOLDERS EQUITY 51,654 74,886
========== ==========
The accompanying notes are an integral
part of these financial statements.
ISO BLOCK PRODUCTS USA, INC.
CONSOLIDATED COMPARATIVE STATEMENT OF OPERATIONS
------------------------------------------------
For the three and six months ended
Three Months Ended Six Months Ended
September 30, September 30,
1999 1998 1999 1998
---------- ---------- ---------- -----------
INCOME
------
Sales - 294,481 18,460 337,347
Interest Income 1 - 2 4
---------- ---------- ---------- -----------
Total Income 1 294,481 18,462 337,351
COST OF SALES
-------------
Cost of Materials - 249,383 20,866 282,200
Labor - - - -
---------- ---------- ---------- -----------
Total Cost of Sales - 249,383 20,866 282,200
GROSS PROFIT (LOSS) 1 45,098 (2,404) 55,151
OPERATING EXPENSES
------------------
General and Admin. 719 62,141 2,256 129,085
---------- ---------- ---------- -----------
NET ORDINARY LOSS (718) (17,043) (4,660) (73,934)
Discontinued
Operations, net 86,232 - 86,232 -
---------- ---------- ---------- -----------
NET LOSS 85,514 (17,043) 81,572 (73,934)
========== ========== ========== ===========
LOSS PER COMMON SHARE ( .01) ( -) ( .02)
Weighted Average
Shares Outstanding 4,041,484 3,914,730 4,041,484 3,884,730
The accompanying notes are an integral
part of these financial statement.
ISO BLOCK PRODUCTS USA, INC.
CONSOLIDATED COMPARATIVE STATEMENT OF CASH FLOWS
------------------------------------------------
For the six months ended
September 30,
Cash Flows From Operating Activities 1999 1998
------------------------------------ ---- ----
Net Income (Loss) 81,572 (17,043)
Depreciation (4,394) 500
Accrued interest (26,304) (14,349)
Inventory - 240,248
Office equipment & vehicle 23,344 -
Accounts Payable (28,079) (27,638)
----------- ----------
Net Cash Used in Operating Activities 46,139 181,718
CASH FLOWS FROM INVESTING ACTIVITIES
------------------------------------
Purchase of Property & Equipment - -
CASH FLOWS FROM FINANCING ACTIVITIES
------------------------------------
Proceeds from common stock - 20,000
Promissory notes (50,360) (227,879)
----------- ----------
Net Cash Provided by (Used In)
Financing Activities (50,360) (207,879)
NET INCREASE (DECREASE) IN CASH (4,221) 26,161
CASH - Beginning of Period 5,135 5,281
----------- ----------
CASH - End of Period 914 31,442
=========== ==========
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.
Franchising Operations
On January 24, 1997, ISO acquired 100% stock of Franchise
Connection, Inc. and its wholly owned subsidiary Brilliant Marketing,
Inc. On August 31, 1999, ISO, Franchise Connection and Brilliant
Marketing entered into a Unwiding Agreement.
Note 2.
- --------
Summary of Significant Accounting Policies. The accompanying un-
audited financial statements of the Company have been prepared on
the accrual basis and in accordance with the instructions to Form
10-QSB and do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
considered necessary for a for a fair presentation have been in-
cluded. These financial statements should be read in conjunction with
the financial statements and notes thereto included in the Company's
annual report on Form 10-KSB for the fiscal year ended March 31, 1999.
Following is a summary of significant accounting policies.
Consolidation
The financial statements include the accounts of ISO and its unwound
wholly-owned subsidiaries Franchise Connection, Inc., Brilliant
Marketing, Inc., and Magna Dry, Inc. All significant inter-company
balances have been eliminated in consolidation.
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 $3,087,104 which is available to offset
future taxable income. These NOL's expire through 2009. Since
realization of the tax benefits of these net operating losses is
not assured beyond any reasonable doubt, no recognition has been
given to possible future tax benefits in the financial statements.
A deferred tax benefit is of $1,170,000 has been offset by a
valuation allowance.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results differ from those estimates.
Note 3.
- -------
During the quarter ended September 30, 1999, the Company incurred a
net gain of $85,514, (substantially from discontinued operations, see
Note 5) and as of that date had accumulated a deficit of $3,087,104.
The Company had slight operations during the second fiscal quarter
covered by these statements and incurred a small loss for the quarter
of $718.
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.
Note 5.
- -------
On August 31, 1999 the Company, Franchise Connection, Magna Dry,
Brilliant Marketing and certain individuals entered into a Unwiding
Agreement due to lack of cash on hand and lack of operating income
of the Company, Franchise Connection, Magna Dry and Brilliant
Marketing. The discontinued operations resulted in $86,232 of
liabilities no longer a responsibility of the Company.
Item 2. Management's Discussion and Analysis or Plan of Operation
---------------------------------------------------------
Business Operations
The Company's principal operations through September 30, 1999
consisted of residential home construction as general contractor.
The Company is currently reviewing other potential lines of business
obtained either from a purchase, merger or acquisition transaction.
Results of Operations.
----------------------
During the second fiscal quarter ended September 30, 1999, the Company
had nominal revenue and engaged in limited operations in comparison to
revenues of $294,481 in the second fiscal quarter of 1998. The Company
realized a loss of $718 from operations in the second quarter of 1999
compared to a loss of $17,043 in the second quarter of 1998. The
Company has accumulated a deficit since inception totaling $3,087,104.
The loss realized was primarily due to general and administrative
expenses.
Liquidity and Capital Resources.
--------------------------------
The Company has total assets of $51,654 including cash or cash
equivalents at the end of the second fiscal quarter 1999 of $914
compared to total assets of $218,977 including cash or cash
equivalents of $31,442 at the end of the second fiscal quarter of 1998.
Income Taxes and Net Operating Losses
-------------------------------------
At September 30, 1999, the Company had net operating loss carryforwards
for United States and German income tax purposes totaling $3,087,104,
which are available to offset future taxable income. These NOL's
expire through 2009.
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 had the capacity to build
at least one speculative house at a constructed retail price of
$270,000. Construction was started June 1997 and was complete and sold
in the second fiscal quarter of 1998. The Company will begin
construction on its second building site when funds become available.
The Company expects to continue its construction program as long as
the residential real estate business climate continues its intensity
in Colorado.
The Company will also continue reviewing potential lines of business
obtained either from a purchase, merger or aquisition transaction.
Year 2000 Compliance
--------------------
General Description of the Year 2000 Issue and the Nature and Effects
of the Year 2000 on Information Technology (IT) and Non-IT Systems
The Year 2000 issue is the result of computer programs being written
using two digits rather than four digits to define the applicable
year. Any of the Company's computer programs or hardware that have
date-sensitive software or embedded chips may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a
system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process
transactions, send invoices, or engage in similar normal business
activities.
The Company presently has no computer hardware or related
software. The Company also does not use any services from other
company's.
Nature and Level of Importance of Third Parties and Their Exposure to
the Year 2000
The Company continues to conduct surveys of its banking and other
vendor relationships to asses risks regarding their Year 2000
readiness. The Company has banking relationships all of which have
indicated their compliance efforts are completed.
The Company does not rely heavily on any single vendor for goods and
services, and does not have significant suppliers and subcontractors
who share information systems with the Company (external agents). To
date, the Company is not aware of any external agent with a Year 2000
compliance issue that would materially impact the Company's results of
operations, liquidity, or capital resources. However, the Company has
no means of ensuring that external agents will be Year 2000 compliant.
Management does not believe that the inability of external agents to
complete their Year 2000 remediation process in a timely manner will
have a material impact on the financial position or results of
operations of the Company. However, the effect of non-compliance by
external agents is not readily determinable.
Costs to Address Year 2000
--------------------------
The total cost of the Year 2000 project is $0. To date, the Company
has incurred $0 related to all phases of the Year 2000 project. Of
the total remaining project costs, approximately $0 is attributable
to the purchase of new software and operating equipment.
Risks Associated with the Year 2000
-----------------------------------
Management believes it has no risk associated with the Year 2000.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. NONE
(b) Reports on Form 8-K
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 29, 1999
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
FORM 10-QSB FOR THE PERIOD ENDED SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FORM 10-QSB.
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114,690
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