U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 10-QSB
Quarterly Report Under
the Securities Exchange Act of 1934
For Quarter Ended: September 30, 1997
Commission File Number: 0-23208
IRON HOLDINGS CORP.
(Exact name of small business issuer as specified in its charter)
Nevada 84-1251553
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
88-09 103rd Ave.
Ozone Park, New York 11417
(Address of principal executive office) (Zip Code)
(718) 323-4537
(Issuer's Telephone Number)
Check whether the issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the past 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 X
No .
The number of shares of the registrant's only class of common stock
issued and outstanding, as of September 30, 1997, was 6,687,000
shares.
Page One of Eighteen Pages
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PART I
ITEM 1. FINANCIAL STATEMENTS.
The unaudited financial statements for the three month period
ended September 30, 1997 are attached hereto.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with
the Financial Statements and notes thereto included herein.
Overview
Iron Holdings Corp. f/k/a Comstock Tailings Company,
Incorporated, (the "Company"), was incorporated under the laws of
the State of Nevada on May 13, 1988. On March 31, 1997, pursuant
to the terms of an Agreement and Plan of Reorganization, the
Company acquired all of the issued and outstanding securities of
Iron Holdings Corp., a New York corporation, including its wholly
owned subsidiary company, Iron Eagle Contracting & Mechanical, Inc.
("IECM"), in exchange for 4,500,000 "restricted" common shares of
the Company. As a result, the Company was the surviving entity,
with one wholly owned subsidiary company, IECM, which is the sole
operating company as of the date of this report. As part of the
terms of the aforesaid transaction, the Company amended its
Articles of Incorporation, changing its name to its present name.
IECM is a construction contractor engaged in pipe work,
including gas and water mains, as well as steel installation,
primarily for city and state infrastructure construction. IECM
commenced operations in January 1996 and spent most of fiscal year
1996 bidding on potential jobs. It has also purchased and
developed a tract of real estate in Ozone Park, New York, on which
it built five (5) two-family homes. The final home was sold during
the three month period ended September 30, 1997.
On February 18, 1997, the Company incorporated a wholly owned
subsidiary, LW Plaza Realty Corp. The subsidiary is inactive and
has not engaged in any operations or generated any revenue.
However, it has entered into a contract to purchase a shopping
center.
During August 1997, the Company incorporated a wholly owned
subsidiary, Tahoe Realty Corp. This subsidiary is inactive and has
not engaged in any operations or generated any revenue. However,
it has entered into a contract to purchase land.
The following information is intended to highlight
developments in the Company's operations to present the results of
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<PAGE>
operations of the Company and its one active subsidiary, to
identify key trends affecting the Company's businesses and to
identify other factors affecting the Company's consolidated results
of operations for the three month period ended September 30, 1997.
Results of Operations
Comparison of Results of Operations for the three month period
ended September 30, 1997 and 1996.
The Company's predecessor company, IECM, was incorporated on
December 7, 1995, but did not commence operations until January,
1996. During the three month period ended September 30, 1996, IECM
generated revenues of $596,730, compared to the Company's revenues
for the three month period ended September 30, 1997, of $2,315,986,
an increase of $1,719,256 (288%). Of the aggregate revenues
generated by the Company during the three month period ended
September 30, 1997, $1,990,986 were from construction projects,
with the balance ($325,000) derived from the sale of the last of
the Company's five original residential homes. This significant
increase in revenues can also be explained by the fact that IECM
generated its revenues during the period ended September 30, 1996
only from contracting jobs, while the Company's revenues were
derived from both construction revenue and the sales of the
aforesaid developed residential real estate property. Further, it
should be noted that IECM was in the development stage immediately
subsequent to its inception, which required the Company to go out
and obtain bids for construction jobs and then thereafter, complete
each job. During the period ended September 30, 1997, the Company
had already been in existence for a period of time, had jobs lined
up to complete and had further developed a reputation within its
industry, which allowed management to generate additional revenues.
Cost of revenues was $472,506 at September 30, 1996, compared
to $1,995,146 at September 30, 1997, an increase of $1,522,640
(322%), due in part costs applicable to the residential home sold
($313,325), with the balance directly related to construction work.
During the three month period ended September 30, 1996, the
percentage of costs relevant to construction represented
approximately 79% of gross revenues. During the three month period
ended September 30, 1997, the percentage increased to approximately
84.5% of gross revenues. This was as a result of lower gross
profit contract work performed during 1997. Management does not
intend to bid on those lower gross profit contracts in the future.
Operating expenses for the three month period ended September
30, 1996 were $176,992, compared to $161,955 at September 30, 1997,
a decrease of $15,037 (8.5%), primarily due to management's efforts
to decrease general and administrative expense. The Company
decreased its administrative staff by one person during the three
months ended September 30, 1997. As a result, the Company had net
income for the three month period ended September 30, 1997, of
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<PAGE>
$48,890 ($.009 per share) as compared to a net loss for the same
period in 1996, of $(34,299), (a loss of $.008 per share) inclusive
of income tax liabilities.
Liquidity and Capital Resources
Relating to the Company's assets and liabilities, during the
three month period ended September 30, 1997, cash increased from
$164,977 at June 30, 1997, to $220,531 at September 30, 1997, as a
result of the profits generated from operations and exercise of the
last portion of an outstanding option to purchase shares of the
Company's common stock wherein an aggregate of 687,000 shares were
purchased at a price of $1.50 per share.
The Company has several outstanding notes to unaffiliated
parties. The Company has two notes collateralized by equipment,
with an interest rate of approximately 10% per annum. These notes
have monthly payments aggregating approximately $2,500 and are due
April 1998 and June 1999, respectively.
In addition, the Company has a loan agreement which provides
for up to $600,000 of financing for working capital and asset
acquisition. The 12% note payable is secured by substantially all
of the assets of the Company. At September 30, 1997, the Company
had $75,000 of borrowings against this loan.
Outstanding long term notes aggregating $1,135,142 are also
owed to unaffiliated parties, including a note payable which arose
from the assumption of debt related to Old IHC's acquisition of
IECM, which bears interest at the prime rate, plus 1%. Principal is
payable in five equal consecutive installments commencing January
1998 and ending January 2002. In the event the Company completes
a public or private offering of its securities during the principal
term of this note, it is obligated to prepay the lesser of $500,000
or the remaining balance. Upon completion of a second offering,
all balances would become due. As a result of the private
financing undertaken by the Company to date, the Company reached an
agreement with the holder of this note, wherein the Company paid
$212,500 towards the principal balance of this note. In addition,
$53,609 of interest accrued to date under the obligation was paid.
The holder of the note has indicated a willingness not to call the
remaining balance of $287,500 that would have been due upon
completion of the Company's initial private securities offering,
pending completion of a final financing plan. The note is secured
by all of the issued and outstanding shares of IECM, a wholly owned
subsidiary of the Company, as well as 150,000 shares of post-
recapitalization common stock of the Company. The Company is
current on all note payments, pending resolution of a revised
payment structure on the aforementioned note.
In August 1997, the Company also executed a contract to
purchase the Lindenwood Shopping Center located in Lindenwood,
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Queens. This contract was subsequently extended on September 29,
1997. The proposed purchase price is Eight Million Dollars
($8,000,000) and the Company has tendered a non-refundable deposit
of $400,000 pursuant to the terms of the relevant contract. The
balance of the closing price is scheduled to be tendered on or
about December 31, 1997. Management has recognized that the
Company does not have sufficient cash available to allow it to
close this acquisition. In response, management has met with
various non-affiliated parties in order to attempt to raise the
necessary cash, or alternatively, generate interest in the property
in order to allow the transaction to close by having these non-
affiliated parties acquire the shopping center for their own
account and allow the Company to recover its deposit. When
management entered into the contract, they had a verbal commitment
from investment bankers to raise up to $2 million in additional
equity capital. Unfortunately, these investment bankers advised
the Company of their inability to successfully raise this capital
subsequent to execution of the applicable contract. The Company
has a verbal commitment to provide funding of $6 million from
Holiday, Fenoglio & Monte, a leading NY based financial
institution, to allow for the consummation of this acquisition, so
management is optimistic of its ability to either close the
transaction for the account of the Company, or otherwise. However,
there can be no assurances that the Company will close this
acquisition.
In September 1997, Tahoe Realty Corp. ("Tahoe"), a wholly
owned subsidiary of the Company, entered into a contract to
purchase vacant land in Queens, N.Y. consisting of approximately
two acres. The purchase price is $400,000 and closing is
anticipated to occur within sixty (60) days from the date of this
report. Upon closing of the purchase, it is the intention of the
Company to build, rent and manage a 45 unit apartment complex on
this property. As of the date of this report, management is
attempting to secure financing for the construction of this
project, but the Company has not received any commitment therefor;
however it is anticipated that such a commitment will be obtained
prior to the proposed closing date. Construction of these rental
income properties are anticipated to commence in March 1998. No
assurances can be provided that this transaction will be
consummated, or that the Company will obtain the necessary
construction financing necessary to construct the apartment
complex. Further, if the complex is so completed, there can be no
assurances that the project will be profitable.
Trends
Management of the Company intends to continue to seek bids for
city and state sewer and gas main construction contracting work,
as well as seek out opportunities in the home building industry.
Additionally, management also intends to seek out acquisition
opportunities of shopping centers and property management, as
5
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discussed hereinabove under "Liquidity and Capital Resources."
However, in order to do so, it will be necessary for the Company to
raise additional capital, either debt or equity, in order to
successfully acquire these additional assets. Management has had
preliminary discussions with various investment bankers concerning
this issue, but as of the date of this report no commitments to
raise additional funds have been provided to the Company. While
management is optimistic of the Company's ability to expand as
discussed, there can be no assurances that the Company will expand
as described herein in the future, as there can be no assurances
that the Company will be successful in obtaining the necessary
financing with which to effect this expansion.
Additionally, relevant to the Company's real estate
development activities, management anticipates that the Company's
revenues and earnings will experience various "peaks and valleys"
as a result of project development costs. During the period when
construction begins on a project the Company will incur significant
costs applicable to such construction, without receiving any
revenues to offset these costs until such time as the project is
completed and revenues from the sale of interests in these projects
occur, of which there can be no assurance.
Inflation
Although the operations of the Company are influenced by
general economic conditions, the Company does not believe that
inflation had a material effect on the results of operations during
the three month period ended September 30, 1997.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS - None
ITEM 2. CHANGES IN SECURITIES - NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES - NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS -
NONE
ITEM 5. OTHER INFORMATION - NONE.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K -
(a) Exhibits
EX-27 Financial Data Schedule
(b) Reports on Form 8-K - NONE
6
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the
Securities and Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
IRON HOLDINGS CORP.
(Registrant)
Dated: November 18, 1997 By: s/Anthony E. Gurino
Anthony E. Gurino, President
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IRON HOLDINGS CORP.
AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
---------
Consolidated balance sheets as of
September 30, 1997 and June 30, 1997 F-2 - F-3
Consolidated statements of operations and
accumulated deficit for the three-month period
ended September 30, 1997, and of its predecessor,
Iron Eagle Contracting and Mechanical, Inc. for
the three-month period ended September 30, 1996 F-4
Consolidated statements of cash flows for the
three-month period ended September 30, 1997 and
of its predecessor, Iron Eagle Contracting and
Mechanical, Inc. for the three-month period ended
September 30, 1996 F-5
Notes to consolidated financial statements F-6 - F-10
F-1
8
<PAGE>
<TABLE>
IRON HOLDINGS CORP.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
ASSETS
(unaudited)
September 30, June 30,
1997 1997
----------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 220,531 $ 164,977
Contract receivables 1,566,822 1,075,425
Costs and estimated earnings in
excess of billings on
uncompleted contracts 836,422 262,204
Real estate under development - 274,138
Prepaid expenses and other assets - 88,264
Deferred income taxes 76,006 25,000
----------- -----------
Total current assets 2,699,781 1,890,008
----------- -----------
Property and equipment, at cost:
Construction and transportation
equipment 310,210 310,210
Office furniture and equipment 34,794 34,794
----------- -----------
345,004 345,004
Less accumulated depreciation 103,100 86,488
----------- -----------
241,904 258,516
----------- -----------
Other assets:
Intangibles 512,347 573,482
Deposits 432,505 12,505
Deferred income taxes, net
of current portion - 121,255
----------- -----------
944,852 707,242
----------- -----------
$ 3,886,537 $ 2,855,766
=========== ===========
<FN>
See notes to consolidated financial statements
</TABLE>
F-2
9
<PAGE>
<TABLE>
IRON HOLDINGS CORP.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' DEFICIT
(unaudited)
September 30, June 30,
1997 1997
----------- -----------
<S> <C> <C>
Current liabilities:
Notes payable $ 275,000 $ 425,000
Current portion of long-term debt
from business combination 287,500 262,500
Current portion of long-term debt 22,572 25,032
Accounts payable and accrued expenses 1,404,879 989,983
Deposits 62,244 73,000
Billings in excess of costs and
estimated earnings on
uncompleted contracts - 11,453
Officer's loan payable 26,500 66,500
----------- -----------
Total current liabilities 2,078,695 1,853,468
----------- -----------
Long-term debt from business
combination, net of current portion 812,500 1,050,000
Long-term debt, net of current portion 12,570 17,864
----------- -----------
825,070 1,067,864
----------- -----------
Stockholders' deficit:
Common stock, par value $ .001 per
share, 500,000,000 shares
authorized, 6,687,000 shares issued
and outstanding in 1997 6,687 -
5,000,000 shares issued and
outstanding in 1996 - 5,000
Additional paid-in capital 1,025,761 28,000
Accumulated deficit (49,676) (98,566)
----------- ------------
982,772 (65,566)
----------- ------------
$ 3,886,537 $ 2,855,766
=========== ============
<FN>
See notes to consolidated financial statements
</TABLE>
F-3
10
<PAGE>
<TABLE>
IRON HOLDINGS CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
AND ACCUMULATED DEFICIT
(Unaudited)
Predecessor
Three-month three-month
period ended period ended
September 30, September 30,
1997 1996
----------- -----------
<S> <C> <C>
Revenues:
Construction revenues earned $ 1,990,986 $ 596,730
Sales of developed real estate 325,000 -
----------- -----------
2,315,986 596,730
----------- -----------
Cost of revenues:
Construction costs 1,681,821 472,506
Costs of developed real estate 313,325 -
----------- -----------
1,995,146 472,506
----------- -----------
Gross profit 320,840 124,224
Operating expenses 161,955 176,992
----------- -----------
Income (loss) from operations 158,885 (52,768)
Interest expense (32,952) (1,676)
----------- -----------
Income (loss) before income taxes 125,933 (54,444)
----------- -----------
Other taxes:
Current 6,794 -
Deferred 70,249 (20,145)
----------- -----------
77,043 (20,145)
----------- -----------
Net income (loss) 48,890 (34,299)
Accumulated deficit,
beginning of period (98,566) (167,932)
----------- -----------
Accumulated deficit, end of period $ (49,676) $ (202,231)
=========== ===========
Income (loss) per share $ .009 $ (.008)
=========== ===========
<FN>
See notes to consolidated financial statements
</TABLE>
F-4
11
<PAGE>
<TABLE>
IRON HOLDINGS CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Predecessor
Three-month three-month
period ended period ended
September 30, September 30,
1997 1996
----------- -----------
<S> <C> <C>
Net income (loss) $ 48,890 $ (34,299)
----------- -----------
Adjustments to reconcile net income
(loss) to net cash used in operating
activities:
Amortization 19,584 12,916
Depreciation 16,612 15,702
Changes in assets and liabilities:
Decrease (increase) in contract
receivables (491,397) (323,476)
Decrease (increase) in costs and
estimated earnings in excess of
billings on uncompleted contracts (574,218) 41,000
Decrease (increase) in real estate
under development 88,264 (167,846)
Decrease (increase) in prepaid
expenses and other assets 274,138 (23,948)
Decrease (increase) in deferred
income taxes 70,249 (20,145)
Decrease (increase) in deposits (420,000) 27,500
Increase (decrease) in accounts
payable and accrued expenses 414,895 99,603
Increase (decrease) in billings in
excess of costs and estimated
earnings on uncompleted contracts (11,453) -
Increase (decrease) in deposi (10,756) -
----------- -----------
Total adjustments (624,082) (338,694)
----------- -----------
Net cash used in
operating activities (595,192) (372,993)
----------- -----------
Cash flow from investing activities:
Capital expenditures - (10,085)
----------- -----------
Net cash used in investing
activities - (10,085)
----------- -----------
Cash flows from financing activities:
Principal payments under loan
agreements (220,254) (5,949)
Principal payments on notes
payable (300,000) -
Proceeds from notes payable 150,000 -
Capital contribution from
parent company - 250,000
Proceeds from issuance of
common stock 1,041,000 -
Advances from officer (40,000) -
----------- -----------
Net cash provided by
financing activities 630,746 244,051
----------- -----------
Net increase (decrease) in cash
and cash equivalents 55,554 (139,027)
Cash and cash equivalents,
beginning of period 164,977 195,668
----------- -----------
Cash and cash equivalents,
end of period $ 220,531 $ 56,641
=========== ===========
<FN>
See notes to consolidated financial statements
</TABLE>
F-5
12
<PAGE>
IRON HOLDINGS CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the three-month period ended September 30, 1997, and of its
predecessor, Iron Eagle Contracting and Mechanical, Inc.,
for the three-month period ended September 30, 1996
1. Unaudited interim financial statements
The accompanying unaudited financial statements have been prepared in
accordance with the instructions for Form 10-QSB and do not include all
of the information and footnotes required by generally accepted accounting
principles for the complete financial statements. In the opinion of
management, all adjustments, consisting only of normal recurring
adjustments considered necessary for a fair presentation, have been
included. Operating results for any quarter are not necessarily
indicative of the results for any other quarter or for the full year.
Basis of presentation
On March 31, 1997, pursuant to the terms of a plan of merger, Comstock
Tailings Company, Incorporated ("Comstock") acquired all of the outstanding
common stock of Iron Holdings Corp. ("Old IHC") and its wholly-owned
subsidiary, Iron Eagle Contracting & Mechanical, Inc. ("Iron Eagle"), in
exchange for 4,500,000 unregistered shares of Comstock's common stock. As
a result of the transaction, the former shareholders of Old IHC received
shares representing an aggregate of 90% of Comstock's outstanding common
stock, resulting in a change in control of Comstock. As a result of the
merger, Comstock was the surviving entity, Old IHC (a holding company)
ceased to exist and Iron Eagle (the operating company) became the wholly-
owned subsidiary of Comstock. Simultaneously therewith, Comstock amended
its articles of incorporation to reflect a change in Comstock's name to
Iron Holdings Corp. ("IHC"). References to the "Company" refer to IHC
together with the predecessor companies, Old IHC and Iron Eagle.
The acquisition of Iron Eagle has been accounted for as a reverse
acquisition. Under the accounting rules for a reverse acquisition, Iron
Eagle is considered the acquiring entity. As a result, historical
financial information for periods prior to the date of the transaction
are those of Iron Eagle or of Old IHC and Iron Eagle, its wholly-owned
subsidiary. However, the capital structure of Iron Eagle has been
retroactively restated to reflect the number of shares received by Old
IHC shareholders in the acquisition and the Company's par value. Under
purchase method accounting, balances and results of operation of IHC will
be included in the accompanying consolidated financial statements from
the date of the transaction, March 31, 1997. The Company recorded the
assets and liabilities (excluding intangibles) at their historical cost
bases which was deemed to approximate fair market value. The reverse
acquisition is treated as a non-cash transaction except to the extent of
cash acquired, since all consideration given was in the form of stock.
F-6
13
<PAGE>
1. Unaudited interim financial statements (continued)
Basis of presentation (continued)
Effective October 3, 1996, Old IHC acquired Iron Eagle Contracting and
Mechanical, Inc. ("Iron Eagle") in a business combination accounted for
as a purchase. The results of operations of Iron Eagle is included in
the accompanying consolidated financial statements since the date of
acquisition. The total cost of the acquisition was $1,312,500, which
exceeded the fair value of the net assets of Iron Eagle by $239,576.
The excess is being amortized on the straight-line method over ten
years. As the predecessor company, the results of operations of Iron
Eagle have also been presented for the period prior to its acquisition
by Old IHC.
Principles of consolidation
The accompanying consolidated financial statements include the accounts
of Iron Holdings Corp. ("IHC") and of its wholly-owned subsidiaries, Iron
Eagle Contracting and Mechanical, Inc. ("Iron Eagle"), LW Plaza Realty
Corp. and Tahoe Realty Corp., for the three-month period ended September
30, 1997. Intercompany transactions and balances have been eliminated in
consolidation.
History and business activity
IHC was originally incorporated as Comstock Tailings Company Incorporated
on May 13, 1988, under the laws of the State of Nevada. The name was
changed to Iron Holdings Corp. concurrent with the business combination
described above. Prior to such business combination, IHC had not engaged
in any operations or generated any revenue.
Old IHC was incorporated in the State of New York on October 3, 1996.
Effective October 3, 1996, it acquired all the shares of Iron Eagle in a
business combination described above. Iron Eagle Contracting and
Mechanical, Inc. was incorporated on December 7, 1995, and began
operations on December 29, 1995.
Old IHC was a holding company which had no operations and conducted
business solely through its wholly-owned construction subsidiary, Iron
Eagle Contracting and Mechanical, Inc. Old IHC ceased to exist as a
result of its merger with Comstock.
Iron Eagle is a construction contractor engaged in pipe work including
gas and water mains as well as steel installation. The subsidiary
operates in the New York City metropolitan area. The Company has also
developed a tract of real estate in Ozone Park, New York, on which it
built five two-family homes. The final home was sold during the three-
month period ended September 30, 1997.
On February 18, 1997, Iron Holdings Corp. incorporated a wholly-owned
subsidiary, LW Plaza Realty Corp. The subsidiary is inactive and has not
engaged in any operations or generated any revenue. However, it has
entered into a contract to purchase a shopping center as discussed in
Note 4.
During August 1997, Iron Holdings Corp. incorporated a wholly-owned
subsidiary, Tahoe Realty Corp. The subsidiary is inactive and has not
engaged in any operations or generated any revenue. However, it has
entered into a contract to purchase land as discussed in Note 4.
F-7
14
<PAGE>
1. Unaudited interim financial statements (continued)
Earnings (loss) per share
Earnings (loss) per share has been computed based on the weighted average
number of common shares outstanding. For the period prior to the reverse
acquisition discussed in the basis of presentation section above, the
number of common shares outstanding used in computing earnings per share
is the number of common shares received by the shareholders of Old IHC in
connection with such reverse acquisition (4,500,000 shares). For the
three-month period ended September 30, 1997, and the three-month period
ended September 30, 1996, the weighted average number of shares used in
the calculation was 5,247,261 and 4,500,000, respectively.
2. Stockholders' equity
Stock option plan
During May 1997, the Company established a non-qualified stock option
plan (the "Plan") to attract and retain qualified and competent persons
who are key employees, consultants, representatives, officers and
directors of the Company upon whose efforts and judgment the success of
the Company is largely dependent.
During May 1997, the Company awarded a total of 1,000,000 stock options
to purchase common stock at an option price of $.01 per share. All such
options vest upon execution of the consulting agreement and shall be
exercisable for one year from such date. These options were awarded to
companies which are providing public relations service and assistance in
creating a secondary market for the Company's stock. All options were
exercised in July 1997 and 1,000,000 shares of the Company's common
stock were issued.
Offshore securities offering
On April 21, 1997, the Company entered into an Offshore Securities
Subscription Agreement with Anchor Capital Management, Ltd. ("Anchor"), a
corporation organized under the laws of Turks and Caicos, British West
Indies. Under the terms of the agreement, Anchor paid $28,000 for the
option to purchase up to 2,800,000 shares of the Company's common stock
at $1.50 per share. The options expire October 21, 1997.
During August 1997, pursuant to the Offshore Securities Subscription
Agreement described above, Anchor Capital Management, Ltd. exercised
options to purchase 687,000 shares of the Company's common stock at $1.50
per share, thereby providing the Company with $1,030,500 in proceeds from
the exercise of options.
In connection with the above securities offering, the Company prepaid
$212,500 of its obligation due under the terms of its long-term debt from
business combination. In addition, $53,609 interest accrued to-date
under the obligation was paid. The holder of the note has indicated a
willingness not to call the remaining balance of $287,500 that would be
due upon completion of the securities offering, pending completion of a
final financing plan.
F-8
15
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4. Commitments
Shopping center acquisition
The Company has negotiated the purchase of a shopping center located in
Queens, New York, and designated as the "Lindenwood Shopping Center".
The Company has executed a Contract of Sale for a purchase price of
$8,000,000 and has tendered a non-refundable deposit of $400,000. The
balance of $7,600,000 is payable at closing which is scheduled on or
about December 31, 1997. Management has recognized that the Company does
not have sufficient cash available to allow it to close this acquisition.
In response, management has met with various non-affiliated parties in
order to attempt to raise the necessary cash, or alternatively, generate
interest in the property in order to allow the transaction to close by
having these non-affiliated parties acquire the shopping center for
their own account and allow the Company to cover its deposit. When
management entered into the contract, they had a verbal commitment from
investment bankers to raise up to $2 million in additional equity
capital. Unfortunately, these investment bankers advised the Company
of their inability to successfully raise this capital subsequent to
execution of the applicable contract. The Company has a verbal
commitment to provide funding of $6 million from a leading NY based
financial institution, to allow for the consummation of this
acquisition, so management is optimistic of its ability to either
close the transaction for the account of the Company, or otherwise.
However, there can be no assurances that the Company will close this
acquisition.
Land purchase contract
In August 1997, the Company incorporated a wholly-owned subsidiary, Tahoe
Realty Corp. ("Tahoe"). In September 1997, Tahoe entered into a contract
to purchase vacant land in Queens, N.Y. for approximately $400,000.
F-9
16
<PAGE>
IRON HOLDINGS CORP.
Exhibit Index to Quarterly Report on Form 10-QSB
For the Quarter Ended September 30, 1997
EXHIBITS Page No.
EX-27 Financial Data Schedule . . . . . . . . . . . . 18
17
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS FINANCIAL INFORMATION EXTRACTED FROM THE UNAUDITED
FINANCIAL STATEMENTS FOR THE QUARTER ENDED SEPTEMBER 30, 1997, AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> SEP-30-1997
<CASH> 220,531
<SECURITIES> 0
<RECEIVABLES> 1,566,822
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,669,781
<PP&E> 345,004
<DEPRECIATION> 103,100
<TOTAL-ASSETS> 3,886,537
<CURRENT-LIABILITIES> 2,078,695
<BONDS> 0
0
0
<COMMON> 6,687
<OTHER-SE> 976,085
<TOTAL-LIABILITY-AND-EQUITY> 3,886,537
<SALES> 2,315,986
<TOTAL-REVENUES> 2,315,986
<CGS> 1,995,146
<TOTAL-COSTS> 1,995,146
<OTHER-EXPENSES> 161,955
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (32,952)
<INCOME-PRETAX> 125,933
<INCOME-TAX> 77,043
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 48,890
<EPS-PRIMARY> .009
<EPS-DILUTED> 0
</TABLE>
