U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB/A
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
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Commission file number 0-24520
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IMSCO TECHNOLOGIES, INC.
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(Exact name of small business issuer as
specified in its charter)
Delaware 04-3021770
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
40 Bayfield Drive, North Andover, Massachusetts 01845
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(Address of principal executive offices)
(508) 689-2080
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(Issuer's telephone number)
IMSCO, INC.
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(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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 [ ]
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 6,167,424.
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IMSCO TECHNOLOGIES, INC.
a development stage enterprise
BALANCE SHEET
AT MARCH 31, 1997 AND MARCH 31, 1996
<TABLE>
<CAPTION>
March 31, 1997 March 31, 1996
-------------- --------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Equivalents $ 287,228 $ 2,990
Prepaid Advertising 0 0
------------------------------
TOTAL CURRENT ASSETS 287,228 2,990
FIXED ASSETS - Note 1
Property and Equipment 190,945 76,672
Leasehold Improvements 5,848 4,900
Accumulated Depreciation (78,246) (78,246)
------------------------------
NET FIXED ASSETS 118,544 3,326
ORGANIZATION COSTS net of amortization 0 100
DEPOSITS 21,650 390
DUE FROM OFFICERS 25,000 530
OTHER ASSETS 100 0
TOTAL ASSETS $ 452,522 $ 7,336
==============================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 27,377 $ 51,427
Accrued Expenses 38,456 8,372
Accrued Payroll Taxes 8 1,498
------------------------------
TOTAL CURRENT LIABILITIES 65,841 61,297
------------------------------
STOCKHOLDERS' EQUITY (DEFICIT)
Common Stock - authorized 15,000,000 shares at
$.001 par value; 2,994,839 and 6,192,425 shares
issued and outstanding at March 31, 1996 and 1997
respectively 6,192 2,995
Additional paid-in capital 3,768,769 1,814,004
Deficit Accumulated:
Development Stage (2,766,916) (1,550,052)
Discontinued Operations (620,908) (620,908)
------------------------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 387,137 (353,961)
------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 452,522 $ 7,336
==============================
</TABLE>
The following notes are an integral part of these statements.
IMSCO TECHNOLOGIES, INC.
a development stage enterprise
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
AND CUMULATIVE AMOUNTS FROM JULY 9, 1992
(inception of the current development stage) to MARCH 31, 1997
<TABLE>
<CAPTION>
Cumulative amounts
from current
1997 1996 development stage
--------- -------- ------------------
<S> <C> <C> <C>
DEVELOPMENT EXPENSES $ 37,320 $ 9,566 $ 234,183
SALARIES AND WAGES 55,250 0 301,099
OFFICER SALARIES 31,250 0 364,319
PAYROLL TAXES 12,083 0 67,353
OUTSIDE LABOR 0 0 120,350
PROFESSIONAL SERVICES 235,364 2,500 918,909
RENT 15,178 3,613 95,176
INSURANCE 7,481 3,267 62,319
TRAVEL AND BUSINESS MEETINGS 16,110 928 82,652
AUTO EXPENSE 441 448 24,733
TELEPHONE AND UTILITIES 6,163 1,482 39,860
OFFICE EXPENSES 7,662 619 47,909
EQUIPMENT RENTAL 7,949 0 16,294
CONTRIBUTIONS 0 375 410
CORPORATE FEES 9,648 802 50,253
ADVERTISING 39,050 0 40,475
-----------------------------------------
TOTAL GENERAL, ADMINISTRATIVE AND DEVELOPMENT EXPENSE 480,949 23,599 2,466,294
-----------------------------------------
OTHER INCOME (EXPENSE):
DIVIDEND AND INTEREST INCOME 3,245 0 9,337
INTEREST EXPENSE 0 (309,047)
LOSS BEFORE INCOME TAXES (477,704) (23,599) (2,766,004)
PROVISION FOR INCOME TAX 0 0 (912)
NET LOSS FROM DEVELOPMENT (477,704) (23,599) (2,766,916)
-----------------------------------------
LOSS FROM DISCONTINUED OPERATIONS (Note 1)
NET LOSS ($477,704) ($23,599) ($2,766,916)
=========================================
LOSS PER SHARE (Note 1) ($0.08) ($0.01)
</TABLE>
The accompanying notes are an integral part of these statements.
IMSCO TECHNOLOGIES, INC.
a development stage enterprise
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
AND CUMULATIVE AMOUNTS FROM JULY 9, 1992
(inception of the current development stage)
<TABLE>
<CAPTION>
Cumulative Amounts
from current
1997 1996 development stage
---------- --------- ------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Cash received from dividends and interest 3,245 $ 9,337
Cash received from customers 57,004
Cash received from research and testing 8,187
Cash received from unemployment taxes 170
Cash received from travel reimbursements 0
and other rebates 938
Cash paid to suppliers and employees ($327,667) ($25,645) (2,130,175)
--------------------------------------------
Net cash provided by operating activities (324,422) (25,645) (2,054,539)
Cash flows from investing activities:
Prepaid research testing (7,734)
Purchase of Fixed Assets (39,229) (117,767)
---------- ------------
Net cash provided by investing activities (39,229) (125,501)
Cash flows from financing activities:
Cash flow for non-deductible expenses
Interim loan financing 385,000
Proceeds from issuance of common stock 20,000 1,896,376
-------------------------------------------
Net cash provided by financing activities 0 20,000 2,281,376
Net Increase in cash and cash equivalents (363,651) (5,645) 101,336
Cash and cash equivalents at beginning of period 450,879 8,634 (14,107)
Cash and cash equivalents at end of period $ 87,228 $ 2,990 $ 87,228
===========================================
RECONCILIATION OF NET LOSS TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Net Loss ($477,704) ($23,599) ($2,466,916)
--------------------------------------------
Decrease (Increase) in Prepaid Advertising 35,500 (1,464,500)
Increase in miscellaneous receivable (200,000)
Decrease in Due from Officers (25,000) (25,120)
Depreciation and Amortization 2,613
Stock issued to retire debt / services 155,280 2,092,325
Increase (Decrease) in Accounts Payable (1,500) (1,500) (37,074)
Increase (Decrease) in Accrued Payroll Taxes (10,542) (546) 8
Increase (Decrease) in Accrued Expenses (456) 38,000
Decrease (increase) in Deposits (16,973)
Decrease (increase) in Accounts Receivable 2,998
Decrease in Inventory and Assets 20,100
Total adjustments 153,282 (2,046) 412,377
--------------------------------------------
Net cash provided by operating activities ($324,422) ($25,645) ($2,054,539)
============================================
</TABLE>
The following notes are an integral part of these statements.
IMSCO TECHNOLOGIES, INC.
a development stage enterprise
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEAR ENDED DECEMBER 31, 1996 AND THE
THREE MONTHS ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
Total
Stock-
Additional holders'
Common Paid-in Accumulated Equity
Stock Capital Deficit (Deficit)
------ ---------- ----------- -----------
<S> <C> <C> <C> <C>
Balance at December 31 ,1995 2,995 1,794,004 (1,847,362) (50,363)
Issuance of DPI Additional Paid in Capital
for $2.00 per share 10 19,990 20,000
Issuance of subsidiary stock 10,000 10,000
Issuance of shares of $.001 par value 47 (47)
Issuance of shares of $.001 par value for
contract services 284 213,278 213,562
Issuance of shares of $.001 par value in
payment of loan 227 299,773 300,000
Issuance of shares of $.001 par value for
prepaid advertising 1,136 1,498,864 1,500,000
Reclassification of issuance of stock for
prepaid advertising as a reduction from
equity (1,464,500) ($1,464,500)
Issuance of shares of $.001 par value at
$1.32 per share 775 942,845 943,620
Issuance of shares of $.001 par value for
subsidiary stock 468 (468)
Issuance of shares of $.001 par value at
$2.00 per share 150 299,850 300,000
Loss from development for the year ended
December 31, 1996 (1,062,758) (1,062,758)
-------------------------------------------------
Balance at December 31, 1996 6,092 3,613,589 (2,910,120) 709,561
=================================================
Issuance of shares of $.001 par value in
consulting service $ 100 $ 149,900 150,000
Stock subscription receivable $ 5,280 5,280
Loss from development for the three months
ended March 31, 1997 (477,704) (477,704)
Balance at March 31, 1997 $6,192 3,768,769 (3,387,824) 387,137
=================================================
</TABLE>
The accompanying notes are an integral part of these statements.
UNAUDITED INTERIM FINANCIAL INFORMATION
IMSCO TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
March 31, 1997 and 1996
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
In July 1996, IMSCO, Inc. was reincorporated in Delaware as IMSCO Technologies,
Inc. The Company filed a Certificate of Incorporation in Delaware incorporating
a new wholly-owned subsidiary, IMSCO Technologies, Inc. The Board of Directors
of the Company at a meeting held in May 1996 voted, subject to the adoption by
the stockholders, to merge into its wholly-owned subsidiary, IMSCO
Technologies, Inc., a Delaware corporation. On July 9, 1996, the stockholders
of IMSCO, Inc., voted to approve the change of corporate domicile from
Massachusetts to Delaware. Therefore, on July 18, 1996, there remained one
surviving corporation and the name surviving corporation become IMSCO
Technologies, Inc. As of the effective date of the merger, each stockholder of
the Company held one share of common stock, par value $.001 per share, of IMSCO
Technologies, Inc. for each one share of common stock, par value $.001 per
share, of IMSCO, Inc. previously held by him.
Imsco Technologies, Inc., a Delaware corporation, is currently a development
stage enterprise which has developed a core technology that achieves molecular
separation with innovative applications of electrostatics. Until July 7, 1992,
the Company was engaged in the sale of an automated luminometer and an
accompanying reagent system that measures raw material for microbiological
contamination. The Company discontinued operations and liquidated the remaining
inventory of reagents on April 16, 1993. Due to a lack of demand for the
technology developed, the Company changed its focus and began applying its
engineering and medical talents to the development of a separation system. No
revenue has been received from current products to date. The technology
developed has two prototypes. Tests of the Company's decaffeination technology
have successfully removed caffeine from coffee. In addition, The Plasma Pure
has been tested and can remove viruses from plasma.
There are 15,000,000 shares of common stock and 1,000,000 shares of preferred
stock authorized, of which 6,192,425 and 0, respectively are issued and
outstanding at March 31, 1997.
The Company's subsidiaries, Decaf Products, Inc. (DPI) and BioElectric
Separation and Testing , Inc.(BEST)(the subsidiaries) were formed in 1995. DPI
was formed to market a unique proprietary technologies to decaffeinate coffee.
BEST was founded to create systems to improve human therapy, by developing new
diagnostics and improved methods for production and use of drugs, biologics,
and extracorporeal devices. As of March 31, 1997 and March 31, 1996 the
subsidiaries had minimal activity, did not own any assets and are not liable
for any liabilities.
PRINCIPLES OF CONSOLIDATION:
The consolidated financial statements include the accounts of the Company and
its subsidiaries Decaf Products, Inc. (DPI) an BioElectric Separation and
Testing, Inc. (BEST). All significant intercompany accounts and transactions
have been eliminated in consolidation.
PROPERTY AND EQUIPMENT:
Property and equipment are stated at cost. Significant additions or
improvements extending asset lives are capitalized; normal maintenance and
repair costs are expended as incurred. Depreciation is provided on the
straight-line method over the estimated useful lives of the assets ranging from
five to ten years.
CASH EQUIVALENTS:
The Company considers all highly liquid investments with an original maturity
of less than three months to be cash equivalents.
ACCOUNTING METHOD
The Company's financial statements are prepared using the accrual method of
accounting.
EARNINGS (LOSS) PER SHARE
The computations of earnings (loss) per share of common stock is based on the
number of shares outstanding at the date of the financial statements.
ESTIMATES:
Management uses estimates and assumptions in preparing financial statements in
accordance with general accepted accounting principles. Those estimates and
assumptions affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that were assumed in
preparing the financial statements.
NOTE 2 LEASES:
In 1993, the Company entered into an operating lease for office space which
expired in August, 1996. The Company is currently leasing the premises as a
tenant-at-will. Rental expense for the operating lease was $3,612 and $3,613
for the three months ended March 1997 and 1996, respectively. Under the terms
of the lease the Company is responsible for all utilities.
In September 1996, the Company established an office at 950 Third Avenue, New
York, New York, consisting of approximately 2,500 square feet of space, with
the intention of conducting its sales, marketing and finance related
activities. The Company has decided that it will be more efficient and cost
effective to run all of its activities from the North Andover office for the
near future and is negotiating to sub-lease or assign the lease at 950 Third
Avenue to an unrelated party. The lease at 950 Third Avenue, New York, is for a
term of five years at an annual base rental of $32 per square foot. The lease
contains standard pass-throughs by the unaffiliated landlord of increase in
real estate taxes and operating expenses after the first year of occupancy. The
950 Third Avenue lease expires on January 31, 2002. Rental expense for the
above lease was $11,566 for the three months ended March 31, 1997.
Minimum future lease payments under these noncancelable operating leases as of
December 31, 1996 are as follows:
Year ending December 31:
1997 $78,757
1998 78,757
1999 78,757
2000 78,757
2001 78,757
2002 6,548
Rental expense for the above lease was $11,566 for the three months ended
March 31, 1997.
The Company entered into various leases for equipment during the
year ended December 31, 1996. Minimum future lease payments under these
noncancelable operating leases as of December 31, 1996 are as follows:
1997 $14,676
1998 14,676
1999 11,045
Rental expense for the above leases was $7,949 and $0 for the three months
ended March 31, 1997 and 1996, respectively.
NOTE 3 FEDERAL AND STATE INCOME TAXES:
As of December 31, 1996, the Company had net operating loss carryfowards for
federal income tax purposes which expire as follows:
2000 $ 4,180
2001 181,180
2002 233,280
2003 88,125
2004 70,850
Thereafter 2,023,140
----------
$2,609,755
==========
The deferred tax asset from the benefit of the losses is $391,460 and $277,050
for the year ending December 31, 1996 and 1995, respectively which is offset by
an equivalent reserve account each year.
As of December 31, 1996, the Company had net operating loss carry-forwards for
state income tax purposes which expire as follows:
1997 $ 259,185
1998 40,825
1999 513,690
2000 405,630
2001 762,300
----------
$1,981,630
The deferred tax asset from the benefit of the losses is $188,250 and $115,800
for the year ending December 31, 1996 and 1995, respectively which is offset by
an equivalent reserve account each year.
State excise tax expense amounted to $0 and $0 for the three months ended
March 31, 1997 and 1996, respectively.
NOTE 4 RELATED PARTY TRANSACTIONS:
In August 1996, Hampton Tech Partners, LLC acquired $300,000 in promissory
notes from the Company and 150,000 shares of Common Stock for the total
consideration of $300,000. On September 20, 1996, the Company entered into a
Purchase Agreement with Hampton Tech Partners II, LLC wherein Hampton Tech
Partners II, LLC acquired 761,000 shares of Common Stock for $1,004,520 in cash
or $1.32 per share. Private placement expenses of $77,400 were incurred during
this transaction, reducing net cash proceeds to $927,120. Hampton Tech Partners
II received 227,273 shares in repayment of the $300,000 promissory notes with
Hampton Tech Partners, LLC and 129,151 shares in payment of private placement
fees. Mr. Scott Robinson, a recently elected director of the Company, is a
member of Hampton Tech Partners and Hampton Tech Partners II, LLC. Mr.
Robinson's brother, Mr. Jeffrey Robinson is the sole shareholder of Hampton
Partners Investments, Inc., the Managing Member of Hampton Tech Partners and
Hampton Tech Partners II, LLC.
The 150,000 shares were reported on the Consolidated Statement of Stockholders'
Equity grouped with the 197,000 shares that were issued at par value. The
Company is evaluating the need to reclassify the shares previously issued at
par value and increase interest expense by the fair market value of the issue
date. Revised financial statements will be submitted.
On September 20, 1996, the Company entered into the Media Purchase Agreement
with Proxhill Marketing Ltd., wherein Proxhill Marketing Ltd. agreed to sell
$1,500,000 of media credits to the Company in consideration for the Company
issuing $1,136,364 shares of Comon Stock, representig a price of $1.32 per
share. In connection with the private placement of the Shares of Hampton Tech
Partners II, LLC,Hampton Tech Partners and Proxhil Marketing Ltd., First
Capital Investments, Inc. a broker-dealer which is a member of the National
Association of Securities Dealers, Inc. ("NASD"), received 242,272 Class A
Warrants entitling it to acquire Common Stock for the price of $1.45 per share
exercisable over a period ending July 31, 2001. For advertising and marketing
services rendered to the Company in 1996 and 1997, Proxhill marketing Ltd. Also
received 127,262 Class D Warrants, entitling it to acquire Common Stock for the
price of $1.32 per share for a period ending July 31, 2001. As of December 31,
1996, the registration statement for the Class A Warrant Common Stock and Class
D Warrant Common Stock had not been declared effective.
In 1996, Mr. Sol L. Berg, a Director and President of the Company, received
150,000 shares of Common Stock in exchange for shares of common stock in Decaf
Products, Inc. (DPI) based on a conversion of .60 IMSCO Technologies, Inc.
shares for 1.00 Decaf products, Inc. shares. In 1996, mr. James G. Yurak, a
Director and President of the DPI subsidiary, received 75,000 shares of Common
Stock in exchange for shares of common stock in Decaf Products, Inc. (DPI)
based on a conversion of .60 IMSCO Technologies, Inc. share for 1.00 Decaf
Products, Inc. share. Mr. Yurak received another 75,000 shares of Common Stock
in February 1997 upon the pne year Anniversary of his employment agreement with
DPI. In 1996, Dr. Alan Waldman entered into an understanding that he shall
receive 100,000 shares of Common Stock representing payment for services due
him under his consulting agreement through December 31,1996, with the shares
vesting and being issued on January 1, 1997. In 1996, David E. Fleming, a
member of Epstein, Becker & Green, P.C., counsel to the Company, was granted
90,000 shares of the Company's Common Stock in exchange for shares of Common
Stock in Decaf Products, Inc. (DPI) based on a conversion of .60 IMSCO
Technologies, Inc. shares for 1.00 DecafProducts, Inc. shares, which shares
will vest on January 1, 1997. In 1996, Mr. Vernon Oberholtzer, a former
Director of the Company who resigned in February 1997, received stock options
to acquire 10,000 shares for a price of $1.32, exercisable over a period ending
December 31,1999. In 1996, Universal Sales, Inc. ("Universal"), a sales and
marketing company of which Mr. Victor Bauer, a director of the Company, is
President and a 50% shareholder, received cash compensation in the amount of
$31,500 and 75,000 shares of Common Stock for services rendered to the Company,
including the recruitment of the services of Mr. Abramson for the Company.
During the year ended December 31, 1995, a director of the Company, David E.
Fleming, Esquire was also a partner with Campbell and Fleming , P.C., a law
firm which provides certain services for the Company. As of July 31, 1995,
David E. Fleming had resigned as director of the Company.
The total balance of the Due from officer account relates to advances paid to
corporate officers for expenses incurred not directly related to the operation
of the Company. The balance owed to the Company was $25,000 and $530 at March
31, 1997 and March 31, 1996, respectively.
NOTE 5 RESEARCH AND DEVELOPMENT COSTS:
During the three months ended March 31, 1997 and 1996, the Company charged
$37,320 and $9,556, respectively to research and development expense.
NOTE 6 NONMONETARY TRANSACTION:
During the three months ended March 31, 1997, the Company issued 100,000 shares
of common stock for consulting service received, valued at $150,000.
NOTE 7 COMMITMENTS:
In 1996, the Company entered into a collaborative Research Agreement with the
Polymer Sciences Division of the University of Akron, for further development
of the electrostatic decaffeination technology. The Company pays $10,000 per
month for the use of the University of Akron's facilities and the dedication of
certain professors to the Company's project.
On September 20, the Company entered into the Hughes marketing Agreement for
certain large institutional marketing of the Decaffeination System. Hughes is a
privately held corporation, based in Traverse City, Michigan, and is one of the
larger marketers of institutional coffee making equipment and supplies in North
America. The Company agreed that Hughes will have the exclusive reght to sell
the DECAFFOMATIC to so-called "large institution" coffeemaker market in North
American for a period of three years. The "large institutional" marketplace is
dominated by major hotel chains and major restaurant and fast-food chains. In
exchange for these exclusive rights, Hughes agreed to sell or purchase from the
Company a minimum $3 million worth of units for the first year, $5 million
worth of units for the second year and $7 million worth of units the third
year.
Under the Hughes Agreement, the Company sells units of the Decaffeination
System to Hughes' customers for a stated price of $199 per unit for the
institutional coffeemakers. If Hughes fails to sell the minimum amount it must
purchase the difference for its own account to maintain the agreement in force.
All servicing and customer calls will be performed by Hughes. In addition to
other legal remedies, the parties can terminate the Hughes Agreement if Hughes
fails to make the specified minimum amount of Decaffeination System purchases.
Under a media Purchase Agreement with Proxhill Marketing Ltd., it contractually
agreed to finance $1.5 million of media for the Company's public relations and
advertising campaign through Grow Marketing Services ("GROW"), an independent
marketing company. In exchange for the Company issuing 1,136,363 shares of its
common stock, representing a price of $1.5 million of prepaid, dedicated media
credits (the "Media Credits") and certain media services. The media Purchase
Agreement expires at the end of sixty (60) months or upon the depletion of the
prepaid media credits.
Grow Marketing Services ("GROW") is no longer involved with providing media
services to the Company. The Company owns the media credits and they can and
will be used to finance the introduction and initial product advertising and
marketing support for the Decaffomatic products in the United States and Canada
or sold by December 31, 1997. The prepaid media credits are a salable asset to
the Company. If the media credits are sold at a discount, the write-down will
be reflected in the period that it is determined.
On September 20, 1996, the Company entered into an agreement with NEWCO for
certain institutional manufacturing and marketing of the Decaffeination System.
NEWCO is a privately held corporation based in St. Charles, Missouri, and is
one of the larger manufacturers and distributors of institutional coffeemaking
equipment in North America. The Company agreed that NEWCO will have the
exclusive right to sell the DECAFFOMATIC to so-called "Office Coffee Supply"
("OCS") subsection of the institutional coffeemaker market and will be the
manufacturer of the DEFAFFOMATIC for the institutional marketplace in North
American for a period of three years. NEWCO further agreed to sell or purchase
from the Company for the OCS market a minimum of 25,000 units or the product
for the first year, 50,000 units for the second year and 100,000 units the
third year. Under the NEWCO Agreement, NEWCO has also agreed to pay the costs
of making final commercial model designs of the Decaffeination System which
will be the property of the Company.
Under the NEWCO Agreement, the Company sells units of the Decaffeination System
to NEWCO for a net price to the Company. The Company anticipates that the price
to be paid NEWCO, which is still being finalized until the final working and
commercial ready components are established, will be in the range of
approximately $20 per unit for small OCS type users, ranging to $200 for large,
high volume institutional coffee brewers. NEWCO takes the Decaffeination System
and in turn incorporates it into its coffeemakers and re-sells it to a variety
of end users in the OCS marketplace. The terms of the minimum purchase by NEWCO
are mandatory and are not subject to, or conditioned upon, NEWCO's ability to
sell the units acquired. All servicing and customer calls will be performed by
NEWCO. In addition to other legal remedies, the parties can terminate the NEWCO
Agreement if NEWCO ails to make the specified minimum number of Decaffeination
System purchases.
NOTE 8 GOING CONCERN:
As shown in the accompanying financial statements, the Company incurred a net
Loss of $477,704 during the three month ended March 31, 1997. The significant
operating loss as well as the uncertainty conditions that the Company faces
regarding sources of financing, create an uncertainty about the Company's
ability to continue as a going concern. Management of the Company has developed
a business plan to finance the Company through licensing of its technology and
individual patent rights to its subsidiaries. The plan calls for the
subsidiaries to seek partners for manufacturing and marketing. The subsidiaries
will also seek financing through a public offering. The financial statements do
not include any adjustments that might be necessary if the Company is unable to
continue as a going concern.
NOTE 9 DEVELOPMENT STAGE ENTERPRISE:
On July 7, 1992, the Company discontinued regular operations relating to the
sale of an automated luminometer. On July 22, 1992, the company and The General
Hospital Corporation, doing business as Massachusetts General Hospital, entered
a research agreement for $45,100, to perform the research and evaluation using
the Company's electro-static filter. As defined by the Financial Accounting
Standards board Statement No. 7, the Company is now a development stage
enterprise and it has been devoting substantially all of its efforts to
developing, engineering and obtaining patents for new technologies relating to
separation technologies for the medical and consumer product sectors. The
Company applied for United States Patents covering its decaffeination and
Plasma Pure separation technologies in 1993. With a prototype, marketing of
this product began in December, 1993. Although no income has been received,
letters of interest and royalty agreement negotiations have begun. The
cumulative deficit during the development stage is $2,766,916 for the period
July 7, 1992 through March 31, 1997.
NOTE 10 ADVERTISING:
The costs of advertising are expensed the first time the advertising takes
place. For the three months ended March 31, 1997 and 1996, the advertising
expense was $39,050 and $0, respectively.
NOTE 11 EMPLOYEE INCENTIVE STOCK OPTIONS:
On May 21, 1996, the Board of Directors adopted the Employee Incentive Stock
Option Program (the "Option Program"), which provides for the issuance of up to
the lesser of 24% of the issued and outstanding Common Stock or 1,500,000
shares of Common Stock through the grant of incentive and non-qualified stock
options. Stock options will be issued by action of the Board of Directors or
its Compensation Committee (the "Administrator") to key employees of the
Company as a long-term incentive. Key employees will be designated by the
Administrator in its sole discretion; there are currently three employees so
designated. Stock Options under the Option Program will provide for an exercise
price per share determined by the Administrator (but not less than the par
value of $.001), subject to tax requirements in connection with incentive stock
options. No payment will be required from participants in connection with
grants. The options will be execisable as specified by the Administrator at the
time of grant, although the tax benefits of incentive stock options described
below will be unavailable if the options is exercised less than one year after
grant. Options will be exercisable for a period determined by the Administrator
but not in excess of 10 years after grant. As of March 31, 1997, an option to
purchase 100,000 shares of common stock at $1.5 per share was issued and
outstanding.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
IMSCO TECHNOLOGIES, INC.
By: /s/ Sol L. Berg
Sol L. Berg, President
Date April 28, 1997
Pursuant to the requirements of 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.
/s/ Sol L. Berg
Sol L. Berg, President and Director
Date: April 28, 1997
/s/ Alan Waldman
Dr. Alan Waldman, Vice President and Director
Date: April 28, 1997
/s/ Gloria Berg
Gloria Berg, Secretary-Treasury
Date: April 28, 1997
- ----------------------------------
James G. Yurak, Director
Date: April 28, 1997
/s/ Scott Robinson
Scott Robinson, Director
Date: April 28, 1997
- ----------------------------------
Victor, Bauer, Director
Date: April 28, 1997
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