SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
Amendment No. 1
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For fiscal year ended March 31, 2000
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 Offices) (Registrant's Telephone No.
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 X No
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 $118,460.
The aggregate market value of the voting and non-voting common stock held by
non-affiliates of the registrant, was not determinable.
At April 30, 2000, a total of 4,083,984 shares of common stock were outstanding.
<PAGE>
PART I
Item 1. 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.
Franchise Connection, Inc. was incorporated in Colorado in 1996 with
headquarters in Denver, Colorado. The Company planned to form strategic
partnerships with prospective or existing franchise operations
("Franchisers") 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. On August 31, 1999 the Company transferred
its holdings in Franchise Connection and Magna Dry, LLC to a stockholder in
exchange for the assumption of all debts of Franchise Connection and Magna-Dry,
USA, LLC.
Current Business of the Company
The Company now functions entirely as a US company engaged in the business
of residential home construction as general contractor.
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. Metro Denver's January 1998 home sales were the highest on record and
were up almost 10% over the previous year. March, 1998 home sales in the Denver
Metro area soared in which 3,730 homes were placed under contract in contrast
with February, 1992 in which there were 3,436 homes placed under contract. The
<PAGE>
monthly sales rate is currently 6.91% as compared to a 6.13% sales rate for
1997. 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.
Employees
The Company's only employees are its executive officers, who devote most of
their time to Company affairs.
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 2001.
Item 3. Legal Proceedings.
None
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, 2000.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
Market Information
The Company's outstanding Common Shares are publicly quoted and traded on
the OTC Bulletin Board with the symbol ISOB. There is no assurance that an
active market will arise in the Company's common shares.
Holders
The Company had 337 shareholders of record as of March 31, 2000, 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.
<PAGE>
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. 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. The weather
improved but the business climate in Germany did not. The construction industry,
in general, in Germany hit bottom in 1995.
The Company had operating losses for 1995 through 1998 of approximately
$2,861,000 of which the major amount was due to the very adverse business
climate in Germany as outlined above. The Company explored other business
opportunities in the United States. Management of the Company decided to cease
all operational activities in Germany. The better part of 1996 and 1997 was
spent winding down and closing the German operation.
Results of Operations Fiscal Year 2000
The Company realized a profit of $55,370 from operations on revenues of
$118,460 for the fiscal year ended March 31, 2000. The Company also recognized a
$86,378 gain on disposal of subsidiaries. As of March 31, 2000 the Company had
accumulated a deficit since inception of $3,026,867. The gain realized was
primarily due to the disposal of subsidiaries.
<PAGE>
Results of Operations Fiscal Year 1998
The Company realized a loss of $308,106 on total revenue of $286,000 for
the fiscal year ended March 31, 1999. As of March 31, 1999 the Company had
accumulated a deficit since inception of $3,168,615. The loss realized was
primarily due to an extra ordinary item, related to the non performance of the
"German Grundschulden" (mortgages) which are being presented for foreclosure,
the construction costs for the homebuilding activities and costs associated with
the beginning operations of Franchise Connection and the initial development of
Magna-Dry LLC.
Liquidity and Capital Resources
Cash totaled $458 at March 31, 2000 compared with $5,135 at March 31, 1999.
The $4,677 decrease in cash was from operating activities. The Company considers
its residential home construction as general contrctor to be dependent upon its
ability to raise money from the sale of its stock.
Income Taxes and Net Operating Losses
At March 31, 2000, the Company had net operating loss carryforwards for
United States and German income tax purposes totaling $3,026,417, which are
available to offset future taxable income. These NOL's expire through 2008.
Plan of Operation
The Company intends to continue its construction program as long as the
residential real estate business climate continues its intensity in Colorado and
capital becomes available. If the Company is not able to find the necessary
capital to grow its "general contractor" business, the Company will consider
either sale or merger. Every effort will continue to raise the necessary capital
or move into the industry with available capital to expand and grow the
business.
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.
The Company engaged Larry O'Donnell, CPA, PC as its independent auditor,
replacing R. Scott Hall CPA, who was dismissed as the Company's auditors
effective June 21, 1999, as reported on Form 8-K dated such date.
Mr. Larry O'Donnell, CPA, PC has reported on the Company's financial
statements for the fiscal years ended March 31, 2000 and 1999. 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 disclosure, or auditing scope or procedure in connection
with Mr. O'Donnell's audit 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 report on the subject matter of the disagreement.
<PAGE>
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 64 Director, (since Dec. 1993) June 1995
President,
Chief Executive Officer
Dean Wicker 60 Director and Secretary June 1995
(since Dec. 1993),
Chief Financial and
Accounting Officer
Karin S. Kuhbander 52 Director July 1999
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 37
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 firm, Eurous
Investments Holding Company, a non-active Colorado corporation , Arista
Corporation, a non-active Colorado company and REWIPAC Worldwide Corporation, a
non-active Nevada company.
<PAGE>
DEAN WICKER. Dean Wicker has lived in the Denver, Colorado area for 44
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 was the youngest
Public Finance negotiator in the Rocky Mountain region with the New York Member
firm, J.A. Hogle and CO. 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, Eurous Investments Holding Company a non-active Colorado
corporation, Arista Corporation, a non-active Colorado company, and REWIPAC
Worldwide Corporation, a non-active Nevada company.
KARIN KUHBANDER. After completing her primary schooling in her native
Dayton, Ohio and graduating from high school there, Karin attended art school in
Chicago, but eventually ended up in the securities industry. She was until
recently a fully licensed Series 7, NASD stockbrocker, who worked over the last
22 years for many firms, including several New York Stock Exchange Member Firms,
mostly in the Greater Denver Area. Ms. Kuhbander who is 52 years young has
extensive experience in the operation of brokerage firms, but has also worked as
a trader, been a partner in an OTC firm, was a registered representative and for
many years the back office manager for several OTC firms. Besides being a board
member of ISO Block Products USA, Inc. Ms. Kuhbander is now spending most of her
time as an active investor and venture capitalist.
Item 10. Executive Compensation.
Cash Compensation and Compensation Pursuant to Plans
For the fiscal years ended March 31, 2000 and March 31, 1999, Mr. Egin
Bresnig, CEO and Mr. Dean Wicker, Secretary received cash compensation of $0
plus reimbursement of out-of-pocket expenses incurred on behalf of the Company
in 1999 and 2000. The Company does not have in effect any pension,
profit-sharing, stock appreciation or bonus plans.
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
<PAGE>
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 Board of Directors or a
Compensation Committee of directors will administer the CSO Plan. No options
were granted in our outstanding as of the fiscal Year ended March 31, 2000.
Grant of Non-Plan Options
At the Closing, resigning Company officers and directors Egin Bresnig and
Dean Wicker, and Iso Block's counsel John D. Brasher Jr., will cease to be
affiliates of the Company, as defined in Rule 144(a) under the Act. Egin Bresnig
and Dean Wicker will be, at any time commencing three months after the Closing,
will be entitled to remove of all restrictive legends from and stop transfer
orders affecting the certificate(s) evidencing their outstanding shares of the
Company at any time upon request without need of legal opinion. On February 12,
2000, the Company issued to Egin Bresnig, Dean Wicker and John Brasher options
exercisable for a five-year period to purchase an aggregate of 1,500,000 common
shares of the Company at a price of $0.125 per share (the "Options"), as shown
below:
Egin Bresnig 500,000
Dean Wicker 500,000
John D. Brasher Jr. 500,000
---------
TOTAL 1,500,000
=========
The shares of the Company's stock that may be issued to Bresnig, Wicker and
Brasher upon their exercise of the options are registered under the Act under
the cover of a registration statement on Form S-8, and when the 1,500,000 shares
are purchased by exercise of the options, the shares will be unrestricted and
freely tradable.
Compensation of Directors
No person was compensated by the Company for serving as a director during
the fiscal year ended March 31, 2000. While no such compensation is currently
anticipated, the Company believes it is possible that in the future directors
may be paid for serving on the Board of Directors and on committees of
directors.
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. No officer received a salary or bonus for the fiscal year ended March 31,
2000.
<PAGE>
SUMMARY COMPENSATION TABLE
Long-Term Compensation
--------------------------------
Annual Compensation Awards Payouts
(a) (b) (c ) (d) (e) (f) (g) (h) (i)
Name and Restricted No. Of $ All
Principal Stock Ops & LTIP Other ($)
Position Year Salary Bonus Other Awards ($) SARs Payouts Comp.
--------- ---- ------ ----- ----- ---------- ---- ------- ------
Egin
Bresnig
CEO 2000 $0 -0- N/A -0- 500,000 $0 $0
1999 $0 -0- N/A -0- $0 $0 $0
Dean
Wicker
CFO,
Sec. 2000 $0 -0- N/A -0- 500,000 $0 $0
1999 $0 -0- N/A -0- $0 $0 $0
OPTIONS GRANTED DURING THE 2000 FISCAL YEAR
Individual Grants
-----------------
(a) (b) (c ) (d) (e)
Number of % of Total Options
Securities Granted To
Underlying Employees Exercise or Base
Name Options Granted in Fiscal Year Price ($ / Share) Expiration Date
---- --------------- --------------- ----------------- ---------------
Egin
Bresnig 500,000 50% $0.125 02-11-2005
Dean
Wicker 500,000 50% $0.125 02-11-2005
OPTIONS EXERCISED IN LAST FISCAL YEAR and FISCAL YEAR-END OPTION VALUES
(a) (b) (c) (d) (e)
Number of $
Securities Value of
Underlying Unexercised In-
Unexercised The-money
Number of Options at FY Options at FY
Shares Acquired $ End Exercisable/ End Exercisable/
Name on Exercise value Realized Unexercisable Unexercisable
---- ----------- -------------- ------------- -------------
Egin
Bresnig None None 500,000 / None $437,500.00 / None
Dean
Wicker None None 500,000 / None $437,500.00 / None
<PAGE>
Mr. Bresnig and Mr. Wicker each were granted options for a 5-year period on
February 12, 2000, to purchase 500,000 shares of the Company's common stock at a
price of $0.125 cents, which exceeded the fair value of the common shares on the
date of grant.
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, 2000, the Company
did not amend or re-price the exercise price of any stock options granted to any
executive officer.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
(a)(b) Security Ownership.
The following table sets forth as of April 30, 2000, 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.
<PAGE>
Name and Address Amount & Nature of Percent
Title of Class Of Beneficial Owner Beneficial Ownership of Class
-------------- ------------------- -------------------- --------
Common Stock * Egin Bresnig 656,500 (1) 11.75%
no par value 8037 So. Datura Street
Littleton, CO 80120
SAME * Dean Wicker 667,500 (1) 11.95%
5176 East Davis Drive
Littleton, Colorado 80122
SAME * Karin S. Kuhbander -0- ----
8037 South Datura Street
Littleton, CO 80120
SAME Johnny M. Wilson 462,500 8.28%
1885 S. Evanston
Aurora, Colorado 80012
SAME Cilla Berndt 291,128 5.21%
Mering, Germany
SAME Paul Schneider 600,000 10.75%
Klingstepen 12
D-31688 Wipperfurth,
Germany
SAME John D. Brasher Jr. 665,000 (1,2) 11.91%
90 Madison Street, Ste 707
Denver, Colorado 80206
* All officers and directors 1,324,000 23.71%
as a group (3 persons)
(1) Includes 500,000 shares subject to purchase pursuant to an option granted
on February 12, 2000, which is exercisable for a five-year period at a
price of $0.125 per share.
(2) Includes 165,000 shares owned by Yakima Corp., as to which Mr. Brasher
shares beneficial ownership with his spouse.
Item 12. Certain Relationships and Related Transactions.
No officer, director or employee of the Company received a salary of
$60,000 or more in the fiscal year ended March 31, 2000 or 1999. There were no
transactions, or series of transactions, for the fiscal years ended March 31,
2000 or 1999, 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.
<PAGE>
Table of Contents
INDEPENDENT AUDITOR'S REPORT F-2
Financial Statements
Balance Sheets F-3
Statements of Operations F-4
Statements of Shareholder's Equity F-5
Statement of Cash Flows F-6
Notes to Financial Statements F-7-F-10
F-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Directors
IDO BLOCK PRODUCTS USA, INC.
I have audited the accompanying balance sheets of ISO Block Products USA Inc.,
as of March 31, 2000 and 1999 and the related statements of operations,
shareholder's equity and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial 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 free of material
misstatement. An audit includes examining, on test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basic for my opinion.
In my opinion, the financial statements referred to above, present fairly, in
all material respects, the financial position of ISO Block Products USA, Inc.,
at March 31, 2000 and 1999 and the results of its operations and cash flows for
the years then ended in conformity with generally accepted accounting
principles.
/s/ Larry O'Donnell, CPA, PC
----------------------------
Larry O'Donnell, CPA, PC
April 28, 2000
Aurora, Colorado
F-2
<PAGE>
ISO BLOCK PRODUCTS USA, INC.
CONSOLIDATED COMPARATIVE BALANCE SHEET
ASSETS
March 31,
Current Assets 2000 1999
-------------- ---- ----
Cash $ 458 $ 5,135
Mortgage receivable 16,200 16,200
Inventory-work in progress -- 34,540
----------- -----------
Total Current Assets 16,658 55,875
Property & Equipment
--------------------
Office equipment -- 9,071
Vehicle -- 14,273
Less: accumulated depreciation -- (4,333)
----------- -----------
Net Property & equipment -- 19,011
TOTAL ASSETS $ 16,658 $ 74,886
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities
-------------------
Accounts payable 26,304 54,383
Notes payable -- 150,360
Accrued interest payable -- 26,304
----------- -----------
Total Current Liabilities 26,304 231,047
Stockholders' Equity
--------------------
Preferred Stock, No Par Value,
10,000,000 Shares Authorized,
116,370 Shares Outstanding 114,690 114,690
Common Stock, 50,000,000 Shares
Authorized, 4,083,984 and
4,041,484 Shares Outstanding,
respectively 2,898,306 2,897,764
Contributed capital 4,225 --
Accumulated deficit (3,026,867) (3,168,615)
----------- -----------
Total Stockholders' Equity (9,646) 156,161
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY 16,658 74,886
The accompanying notes are an integral part of these financial statements.
Page F-3
<PAGE>
ISO BLOCK PRODUCTS USA, INC.
CONSOLIDATED COMPARATIVE
STATEMENT OF OPERATIONS
March 31,
INCOME 2000 1999
------ ---- ----
Sales $ 118,460 $ 286,000
Operating Expenses
------------------
Cost of Goods Sold 55,406 254,440
General and Administrative 7,684 32,365
----------- -----------
63,090 286,805
----------- -----------
Income (Loss) From Operations 55,370 (805)
Loss from operations of
discontinued subsidiariesOther -- (307,301)
Gain on disposal of subsidiaries 86,378 --
----------- -----------
Net Income (Loss) $ 141,748 $ (308,106)
Earnings (Loss) Per Common Share $ 0.04 $ (0.08)
Weighted Average Shares 4,046,457 3,996,292
The accompanying notes are an integral part of these financial statements.
Page F-4
<PAGE>
<TABLE>
<CAPTION>
ISO BLOCK PRODUCTS USA, INC.
CONSOLIDATED COMPARATIVE STATEMENT OF
STOCKHOLDERS' EQUITY
Preferred Common Contr- Accumu-
Stock Stock ibuted lated
Shares Amount Shares Amount Capital Deficit Total
------ ------ ------ ------ ------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
March 31, 1998 116,370 $ 114,690 3,854,730 $ 2,867,464 -- $(2,860,509) $ 121,645
Issue of
Common
Shares 186,754 30,300 30,300
Net (loss)
for Year -- -- -- -- -- (308,106) (308,106)
Balance at
March 31, 1999 116,370 $ 114,690 4,041,484 $ 2,897,764 -- $(3,168,615) $ 156,161
Common
Stock
issued for
Services 42,500 542 542
Services
paid by
Officer 4,225 4,225
Net income
for Year -- -- -- -- -- 141,748 141,748
Balance at
March 31, 2000 116,370 $ 114,690 4,083,984 $ 2,898,306 $ 4,225 $(3,026,867) $ (9,646)
The accompanying notes are an integral part of these financial statements.
Page F-5
</TABLE>
<PAGE>
ISO BLOCK PRODUCTS USA, INC.
CONSOLIDATED COMPARATIVE
STATEMENT OF CASH FLOWS
March 31,
Cash Flow From Operating Activities 2000 1999
----------------------------------- ---- ----
Net Income (loss) $ 141,748 $(308,106)
Depreciation 500 2,000
Write down of investment franchise -- 114,233
Gain on discontinued operations (86,378) --
Services paid by officer 4,225 --
Common stock issued for expenses 542 30,300
(Increase) Decrease in:
Accounts receivable- trade -- 135,850
Accounts receivable- officer -- 2,000
Inventory-work in process 34,540 200,954
Deposits -- 2,551
Increase (Decrease) in:
Accounts payable 146 (26,998)
Accrued interest-payable -- 8,117
--------- ---------
Net Cash Used in Operating
Activities 95,323 160,901
Cash Flows From Financing Activities
------------------------------------
Proceeds From Notes Payable -- 24,300
Payments on Notes Payable (100,000) (184,300)
--------- ---------
Net Cash Provided by (used in)
Financing activities (100,000) (160,000)
Net Increase (decrease) in Cash (4,677) 901
Cash-Beginning of Year $ 5,135 $ 4,234
Cash-End of Year $ 458 $ 5,135
Supplemental disclosure of cash flow information
Cash paid during the year for Interest $ -- $ 16,101
Noncash investing and financing activities:
Common stock issued for expenses $ 542 $ 30,300
Service paid by capital contributions $ 4,225 $ --
The accompanying notes are an integral part of these financial statements.
Page F-6
<PAGE>
ISO BLOCK PRODUCTS USA, INC.
NOTES TO FINANCIAL STATEMENTS
For the Years ended March 31, 2000 and 1999
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.
Franchising Operations
Effective January 24, 1997, ISO acquired 100% stock of Franchise Connection,
Inc. and its wholly owned subsidiary Brilliant Marketing, Inc. The Acquisition
was accounted for as a purchase by ISO and the accompanying financial statements
present historical results of ISO and include Franchise Connection, Inc. and
Brilliant Marketing, Inc. activities from the effective date of the acquisition.
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 (Franchisers)
under which it will provide them with marketing and sales services plus business
and legal services in return for an equity interests in, and/or a portion of
their royalties. On August 31, 1999, the Company transferred all of its
subsidiaries to a shareholder for relief of their debt.
Consolidation
The financial statements include the accounts of ISO and its wholly-owned
subsidiaries Franchise Connection, Inc., Brilliant Marketing, Inc., and Magna
Dry, Inc. All significant inter-company balances 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 and
are 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.
During 1998, the Company began foreclosure proceedings in Germany on most of its
mortgages receivable. Although legal counsel handling the case for the Company
believes that a favorable outcome will be reached, no one can say when or if all
of the approximately $1,153,000 will be recovered. Therefore the Company has
decided to treat the mortgages as bad debts until such time as the foreclosure
has been settled.
Page F-7
<PAGE>
ISO BLOCK PRODUCTS USA, INC.
NOTES TO FINANCIAL STATEMENTS
For the Years ended March 31, 2000 and 1999
Cash
All amounts are stated in U.S. dollars. For purposes of statement of cash flows,
the Company considers all short term debt securities purchased with a maturity
of three months on loss to be cash equivalents.
Property & Equipment
Property & equipment are recorded at cost. Depreciation is provided over the
estimated useful lives of the assets.
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 shareholders, equity.
Income (Loss) Per Common Stock
Income (loss) per common share is based upon the weighted average number of
common shares outstanding during each period.
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 2. STOCKHOLDERS' EQUITY
Effective December 31, 1993, the Company adopted a 1993 Compensatory Stock
Option Plan with 1,000,000 common shares reserved for issuance and a 1993
Employee Stock Compensation Plan with 500,000 common shares reserved for
issuance. As of March 31, 2000, the Compensatory Stock Option Plan has 600,000
shares outstanding.
NOTE 3. NOTE RECEIVABLE -OFFICER
The Company loaned the President of the Company, Egin Bresnig, $2,000 The note
bears interest at 6% per annum and was retired on March 1, 1999.
NOTE 4. INVENTORY WORK IN PROCESS
Inventory is recorded at cost, on a first-in, first-out basis. Inventory
consists of lots and construction costs located in Broomfield, Colorado where
the Company has constructed and sold one home.
Page F-8
<PAGE>
ISO BLOCK PRODUCTS USA, INC.
NOTES TO FINANCIAL STATEMENTS
For the Years ended March 31, 2000 and 1999
NOTE 5. NOTES PAYABLE
The Company had notes payable with interest at 15% per annum payable to Mr. Hal
Schavet. The notes were due upon completion of the house constructed by the
Company in Broomfield, Colorado, The notes were secured by property and house.
The balance outstanding at March 31, 1998 was $135,000. The note was retired
during the year ended March 31, 1999.
On December 1, 1997 The Company executed a promissory note payable with interest
at 3.5% per annum payable to Mr. Hal Schavet and Phillis Schavet. The Company
commits to the payment of $50,000 of the first $125,000 received from the sale
of any country, area or local Magna Dry franchises as principle payment. The
Company also commits to the payment to the payee of 10% of the net proceeds
received from the sale of any country, area or local Magna-Dry franchise until
these payments total 20% or $20,000 which shall be designated as interest
payments. After such event, the Promisor commits to the payment of 5% of the net
proceeds received from the sale of any country area or local Magna-Dry franchise
until these payments total 10% of $10,000 which shall be designated as interest
payments. The note was due in full on November 30, 1998.
The total principal outstanding at March 31, 1999 was $100,000. On March 1, 2000
the Company transferred its lot to Hal and Phillis Schavet, plus 40,000 common
shares, to retire this note.
On October 6, 1997, the Company signed a promissory note payable to Elaine
Wicker with interest payable at 20% Per annum. The note is secured by the house
and lot the Company constructed in Broomfield, Colorado. The note was due upon
the completion and sale of the house. The balance outstanding at March 31, 1998
was $25,000. The note was retired during the year ended March 31, 1999.
On October 1, 1997, the Company signed a letter of agreement payable to Elaine
Wicker. The letter of agreement provides that for advance sum of $25,000 to
Magna-Dry, USA, LLC, Magna-Dry USA, LLC will be obligated to paying to Elaine
Wicker 50% of any franchise fees received by Magna Dry USA, LLC until the amount
of $25,000 is repaid.
Magna-Dry, USA, LLC also grants to Elaine Wicker an interest equal to 50% in any
franchise operated by Magna-Dry, USA, LLC in the greater Denver Metro Area. This
obligation was assumed by the shareholder who acquired the subsidiaries.
The Company has executed two notes payable to Ada Wilson totaling $50,360
payable with interest at 15% per annum. These notes were assumed by the
shareholder who acquired the subsidiaries.
Page F-9
<PAGE>
ISO BLOCK PRODUCTS USA, INC.
NOTES TO FINANCIAL STATEMENTS
For the Years ended March 31, 2000 and 1999
Note 6. DISCONTINUED OPERATIONS, DISPOSAL OF SUBSIDIARIES
On August 31, 1999 the Company transferred its holdings in Franchise Connection
and Magna Dry, LLC to a stockholder in exchange for the assumption of all debts
of Franchise Connection and Magna-Dry, USA, LLC.
Since the Company had consolidated these subsidiaries, its recognized a gain for
the excess of the liabilities over the assets of the subsidiaries of $86,378.
Note 7. 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 $3,026,417 which are available to offset future taxable income. These
NOL's expire through 2008. 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.
During the year ended March 31, 2000, the Company utilized a portion of its net
operating loss carryover recognizing a benefit of approximately $40,000 which
reduced the entire amount of its income tax expense.
F-10
<PAGE>
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.).
2.1 Agreement and Plan of Reorganization dated March 28, 1994
(incorporated by reference to Exhibit 2.1 to Form 8-K dated
March 28, 1994)............................................... *
2.2 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)....................................... *
2.3 Unwinding and Stock Exchange Agreement dated Aug. 31, 1999,
among the Company, Brasher & Company, Johnny M. Wilson,
Franchise Connection, Inc., and Magna Dry LLC ................ *
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 to registration
statement on Form 8-A, file no. 0-25810)...................... *
3.6 Certificate of Designation Establishing Series A, Non-Voting
Convertible Preferred Stock (incorporated by reference to
Exhibit 3.6 to Form 10-KSB for fiscal year ended March 31,
1996.......................................................... *
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 (incorporated by reference to Exhibit 4.2 to Form
10-KSB for fiscal year ended March 31, 1996) ................. *
<PAGE>
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)....................................................... *
27.1 FINANCIAL DATA SCHEDULE
99.1 Common Stock Option dated Feb. 12, 2000, granted to Egin
Bresnig (incorporated by reference to Exhibit 99.1 to
registration statement on Form S-8, file no. 333-41558)..... *
99.2 Common Stock Option dated Feb. 12, 2000, granted to Dean
Wicker (incorporated by reference to Exhibit 99.2 to
registration statement on Form S-8, file no. 333-41558)..... *
99.3 Common Stock Option dated Feb. 12, 2000, granted to John
Brasher (incorporated by reference to Exhibit 99.3 to
registration statement on Form S-8, file no. 333-41558)..... *
* - 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.
<PAGE>
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.
ISO BLOCK PRODUCTS USA, INC.
By: /s/ Egin Bresnig
--------------------
Egin Bresnig, President
and 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,
Egin Bresnig Chief Executive Officer Aug. 11, 2000
/s/ Dean Wicker Director,
Dean Wicker Chief Financial Officer Aug. 11, 2000
Karin S. Kuhbander Director
