UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
x Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2003
¨ Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period _______________ to _______________
Commission file number 000-21753
ULTRAGUARD WATER SYSTEMS CORP.
( Name of Small Business Issuer in Its Charter)
NEVADA | 88-0263701 |
State of Incorporation | I.R.S. Employer |
Identification No. | |
2ndFLOOR, 5763 – 203 A STREET | |
LANGLEY B.C., CANADA | V3A 1W7 |
Address of Principal Executive Offices | Zip code |
Issuer's Telephone Number: 604-539-9398
Securities registered under Section 12(b) of the Act:
NONE
Securities registered under Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $0.001 PER SHARE
Title of class
APPLICABLE ONLY TO CORPORATE ISSURER
The number of shares outstanding of the issuer's only class of Common Stock $.001 par value was 18,053,565 on August 19, 2003.
1
PART I Financial Information | |
Item 1. CONSOLIDATED FINANCIAL STATEMENTS. | |
Consolidated Balance Sheets as of June 30, 2003 (unaudited) | |
and December 31, 2002 (audited) . | 3 |
Consolidated Statements of Operations for the six-month periods ended | |
June 30, 2003 and June 30, 2002 (unaudited) | 4 |
Consolidated Statements of Cash Flows for the three and six months periods ended | |
June 30, 2003 and June 30, 2002, and (unaudited) | 5 |
Notes to the Financial Statements | 6 to 9 |
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF | |
OPERATIONS AND FINANCIAL CONDITIONS | 10 to 13 |
Part II OTHER INFORMATION | |
1. LEGAL PROCEEDINGS | |
2. CHANGES IN SECURITIES | |
3. DEFAULT UPON SENIOR SECURITIES | |
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS | |
5. OTHER INFORMATION | |
6. EXHIBITS AND REPORTS ON FORM 8K | |
Signatures |
2
UltraGuard Water Systems Corp.
Consolidated Balance Sheets
(Expressed in US dollars)
June 30 | December 31, | |||
2003 | 2002 | |||
(Unaudited) | (Audited) | |||
$ | $ | |||
ASSETS | ||||
Current Assets | ||||
Cash and short-term investments | 8,994 | 40,206 | ||
Accounts receivable | 6,726 | 946 | ||
Inventory and contract work in progress | 6,234 | 6,638 | ||
Prepaid expenses and deposits | 16,424 | 14,039 | ||
Total Current Assets | 38,378 | 61,828 | ||
Property and Equipment (Note 5) | 245 | 286 | ||
Other Assets | ||||
Manufacturing Technology (Note 4) | 1,104,852 | 1,026,876 | ||
Total Assets | 1,143,475 | 1,088,990 | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||
Current Liabilities | ||||
Accounts payable | 152,600 | 123,947 | ||
Accrued liabilities | 36,671 | 40,157 | ||
Wages and vacation pay payable | 12,703 | 1,621 | ||
Customer deposits | - | 11,719 | ||
Loans payable (Note 6) | 499,166 | 439,124 | ||
Amounts owing to related parties (Note 7) | 97,743 | 19,087 | ||
Total Current Liabilities | 798,883 | 635,655 | ||
Stockholders’ Equity | ||||
Common stock, (Note 8) $.001 par value, | ||||
100,000,000 shares authorized, | ||||
16,397,565 and 10,852,565 issued and outstanding respectively | 16,398 | 10,853 | ||
Additional paid-in capital | 10,732,058 | 10,221,893 | ||
Donated capital (Note 7) | 31,928 | 31,928 | ||
Stock based compensation | 442,534 | 385,799 | ||
Deferred compensation | (349,853 | ) | - | |
Deficit | (10,528,473 | ) | (10,197,138 | ) |
Total Stockholders’ Equity | 344,592 | 453,335 | ||
Total Liabilities and Stockholders’ Equity | 1,143,475 | 1,088,990 | ||
Contingencies (Notes 1 and 10) | ||||
Subsequent Events (Note 11) |
(See Accompanying Notes to the Financial Statements)
UltraGuard Water Systems Corp.
Consolidated Statements of Cash Flows
(Expressed in US dollars)
(Unaudited)
Three months | Three months | Six months | Six months | |||||
ended | ended | ended | ended | |||||
June 30, | June 30, | June 30, | June 30, | |||||
2003 | 2002 | 2003 | 2002 | |||||
$ | $ | $ | $ | |||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||
Project Revenue | - | - | 23,438 | - | ||||
Project Costs | - | - | 18,812 | - | ||||
Total Gross Profit | - | - | 4,626 | - | ||||
Expenses | ||||||||
Foreign exchange | (223 | ) | - | (111 | ) | - | ||
General and administrative | 137,310 | 113,368 | 257,604 | 236,113 | ||||
Imputed interest | - | 29,123 | - | 29,123 | ||||
Interest | 9,296 | 25,771 | 21,733 | 51,085 | ||||
Stock based compensation expense | 28,367 | - | 56,735 | - | ||||
Total Expenses | 174,750 | 168,262 | 335,961 | 316,321 | ||||
Net Loss from Operations | 174,750 | 168,262 | 331,335 | 316,321 | ||||
Other: | ||||||||
Loss from discontinued operations (Note 3) | - | 129,494 | - | 306,414 | ||||
Net Loss for the Period | 174,750 | 297,756 | 331,335 | 622,735 | ||||
Net Loss per Share | (0.01 | ) | (0.55 | ) | (0.03 | ) | (1.15 | ) |
Weighted Average Number of Shares Outstanding | ||||||||
after giving retroactive effect to a 1:50 | ||||||||
consolidation of shares | 13,267,565 | 544,740 | 12,226,732 | 541,420 | ||||
(Diluted loss per share has not been presented as the result is anti-dilutive)
(See Accompanying Notes to the Financial Statements)
UltraGuard Water Systems Corp.
Consolidated Statements of Cash Flows
(Expressed in US dollars)
(Unaudited)
Six months | Six months | |||
ended | ended | |||
June 30 | June 30, | |||
2003 | 2002 | |||
$ | $ | |||
Cash Flows to Operating Activities | ||||
Net Loss | (331,335 | ) | (622,735 | ) |
Adjustments to reconcile net loss to cash | ||||
Depreciation and amortization | 41 | 29,219 | ||
Foreign exchange | (111 | ) | 26,729 | |
Common stock issued for expenses, net of cancellations | 94,657 | 1,656 | ||
Accrual of interest | 17,128 | 57,740 | ||
Imputed interest | - | 29,123 | ||
Stock based compensation | 56,735 | 73,188 | ||
Leasehold improvement written off | 63,856 | - | ||
Change in non-cash working capital items | ||||
(Increase) decrease in accounts receivable | (5,781 | ) | 164,262 | |
Decrease in inventory and contract work in progress | 404 | 56,524 | ||
(Increase) decrease in prepaid expenses and deposits | (2,385 | ) | 134,661 | |
Increase (decrease) in accounts payable, accrued liabilities, | ||||
wages and vacation pay payable and customers’ deposits | 24,641 | (147,044 | ) | |
Net Cash Used in Operating Activities | (146,006 | ) | (196,677 | ) |
Cash Flows (to) from Investing Activities | ||||
Acquisition of short-term investment - restricted | - | (854 | ) | |
Acquisition of manufacturing technology | (6,776 | ) | - | |
Net Cash Used in Investing Activities | (6,776 | ) | (854 | ) |
Cash Flows from (to) Financing Activities | ||||
Common stock issued | - | 35,000 | ||
Increase in loans payable | 42,914 | 70,558 | ||
Increase in amounts owing to related parties | 78,656 | 98,826 | ||
Decrease in shares subscriptions received | - | (1,209 | ) | |
Net Cash Provided by Financing Activities | 121,570 | 203,175 | ||
Increase (Decrease) in Cash | (31,212 | ) | 5,644 | |
Cash - Beginning of the Period | 40,206 | (4,539 | ) | |
Cash - End of the Period | 8,994 | (1,105 | ) | |
Non-Cash Financing Activities | ||||
400,000 shares were issued for asset purchase at $0.178 per share | 71,200 | - | ||
600,000 shares were issued for expenses at $0.189 per share | 113,400 | - | ||
16,564 shares were issued to settle debts at $0.10 per share | - | 1,656 | ||
1,845,000 shares were issued for expenses at $0.13 per share | 239,850 | - | ||
2,400,000 shares were issued for expenses at $0.0338 per share | 81,120 | - | ||
300,000 shares were issued for expenses at $0.0338 per share | 10,140 | |||
Supplementary Information | ||||
Cash paid for interest | 4,592 | 324 | ||
Cash paid for income taxes | - | - |
(See Accompanying Notes to the Financial Statements)
UltraGuard Water Systems Corp.
Notes to the Consolidated Financial Statements
1. Nature of Operations and Continuance of Business
Up to February 2002 the Company focused its activities on the manufacturing and marketing of its Ultra GuardÚ ultra violet based patented water treatment system through its wholly owned Canadian subsidiary, UV Systems Technology Inc. (“UVS”). These products and systems are sold primarily for municipal waste disinfection treatment.
During the period from acquiring UVS in August 1996 to February 2002, operating activities had not generated profitability. These consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles, on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. As at June 30, 2003, the Company has not recognized significant revenue, has a working capital deficit of $760,260, and has accumulated operating losses of $10,528,473 since its inception. The continuation of the Company is dependent upon the continuing financial support of creditors and stockholders and obtaining short-term and long-term financing, the completion of product development of its newly acquired technology and achieving profitability. These conditions raise substantial doubt about the Company's ability to continue as a going concern. These financial statements do not include any adjustments that might arise from this uncertainty. On February 5, 2002, the Company reached an agreement with the Clearwater Group (“Clearwater”) to assume the UVS manufacturing responsibilities of any new Ultra GuardÚ water treatment systems to be supplied to UVS’s strategic alliance partner, US Filter. Clearwater would also provide warranty services on any previously sold UltraGuardÚ water treatment systems. In anticipation of signing this agreement, the Company ceased manufacturing operations, reduced level of staff in production, engineering and support and moved its offices to Langley.
At a special meeting held on November 15, 2002 the Company reorganized. Its shares were consolidated on a 1:50 basis, the authorized capital increased to 100,000,000 shares and the name of the Company was changed to UltraGuard Water Systems Corp. In December 2002, the Company divested itself of the UVS operations (see Note 3) while retaining any and all royalty or other revenues that may be received from the sale or use of the UVS patented Ultra GuardÚ technology.
During fiscal 2002, the Company commenced designing and developing the home use Point of Use and Point of Entry UV disinfection systems for drinking water. Point of Use systems are installed under a sink; Point of Entry units are installed at the water supply entry into the building. This UV product may include dual filtration cartridges in advance of the UV system.
In December 2002, the Company purchased Innovative Fuel Cell Technologies Inc. (“IFCT”) (see Note 4), the holder of an option to purchase worldwide rights to manufacture and market a Magnesium Air Fuel Cell to power UV drinking water and ancillary systems. IFTC owns 100% of the shares of an Austrian company, UltraGuard Water Systems GmbH (“UG GmbH”). UG GmbH will manufacture and market the UV and Fuel Cell products for the European and African market; UV products and fuel cell products will be manufactured through subcontractors and will be marketed in North America through the Internet, wholesalers and sales representatives.
Funds were provided to the Company on February 19, 2003 through an agreement entered into with a Germany resident. Under the agreement the German resident provided a US$50,000 loan bearing interest at 10%, payable within 6 months or convertible into the Company’s common stock at $0.30 per share.
2. Significant Accounting Policies
Consolidated financial statements
These financial statements include the accounts of the Company, its wholly owned Nevada based subsidiary, Innovative Fuel Cell Technologies Inc. and, its Austrian based UltraGuard Water Systems GmbH (UG GmbH). All significant intercompany transactions and balances have been eliminated.
Cash and cash equivalents
Cash and cash equivalents include cash on hand, in banks and all highly liquid investments with maturity of three months or less when purchased. Cash equivalents are stated at cost, which approximates market.
UltraGuard Water Systems Corp.
Notes to the Consolidated Financial Statements
2. Significant Accounting Policies (continued)
Property and equipment
Property and equipment are recorded at cost. Depreciation is computed on a straight-line method using an estimated useful life of five years.
Revenue recognition
Product sales are recognized at the time goods are shipped. System and project revenue are recognized utilizing the percentage of completion method that recognizes project revenue and profit during construction based on expected total profit and estimated progress towards completion during the reporting period. All related costs are recognized in the period in which they occur.
Estimates and assumptions
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and accompanying notes. Actual results could differ from these estimates.
Foreign currency
i) | Translation of foreign currency transactions and balances: |
Revenue, expenses and non-monetary balance sheet items in foreign currencies are translated into US dollars at the rate of exchange prevailing on the transaction dates. Monetary balance sheet items are translated at the rate prevailing at the balance sheet date. The resulting exchange gain or loss is included in general and administration expenses. | |
ii) | Translation of foreign subsidiary balances: |
Monetary balance sheet items of IFCT and UG GmbH are translated into US dollars at the rate of exchange on the balance sheet date. Non-monetary balance sheet items are translated into US dollars at the rate of exchange prevailing on the transaction dates. The foreign subsidiary’s operating results are translated into US dollars using the average exchange rate for the year with any translation gain or loss and are included separately in operations. |
Basic and Diluted Net Income (Loss) Per Share
The Company computes net income (loss) per share in accordance with SFAS No. 128, "Earnings per Share". This statement requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of common shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options, using the treasury stock method, and convertible preferred stock, using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential common shares if their effect is anti dilutive.
Accounting for Stock-Based Compensation
The Company accounts for stock based compensation in accordance with SFAS No. 123, “Accounting for Stock-Based Compensation.” This statement requires that stock awards granted subsequent to January 1, 1995, be recognized as compensation expense based on their fair value at the date of grant. Alternatively, a company may account for granted stock awards under Accounting Principles Board Opinion (APB) No. 25, “Accounting for Stock Issued to Employees,” and disclose pro forma income amounts which would have resulted from recognizing such awards at their fair value. The Company has elected to account for stock-based compensation for employees under APB No. 25 and make the required pro forma disclosures for compensation expense in accordance with SFAS No. 123. The Company accounts for stock issued for services to non-employees in accordance with SFAS No. 123. Compensation expense is based on the fair market value of the stock award or fair market value of the goods and services received whichever is more reliably measurable.
UltraGuard Water Systems Corp.
Notes to the Consolidated Financial Statements
2. | Significant Accounting Policies (continued) Interim Financial Statements These interim unaudited financial statements have been prepared on the same basis as the annual financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period. Comprehensive Loss SFAS No. 130, “Reporting Comprehensive Income,” establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at June 30, 2003, the Company has no items that represent comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements. Recent Accounting Pronouncements In June 2002, FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities". The provisions of this Statement are effective for exit or disposal activities that are initiated after December 31, 2002, with early application encouraged. This Statement addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)". This Statement requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. The Company adopted SFAS No. 146 on January 1, 2003 and its impact did not have a material effect on its financial position or results of operations. FASB has also issued SFAS No. 147 and 49 but they will not have any relationship to the operations of the Company therefore a description and its impact on the Company's operations has not been disclosed. In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation – Transition and Disclosure," which amends SFAS No. 123 to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS No. 148 expands the disclosure requirements of SFAS No. 123 to require more prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The transition provisions of SFAS No. 148 are effective for fiscal years ended after December 15, 2002. The disclosure provisions of SFAS No. 148 are effective for financial statements for interim periods beginning after December 15, 2002. The Company adopted SFAS No. 148 on January 1, 2003 and its impact did not have a material effect on its financial position or results of operations In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity". SFAS No.150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). The requirements of SFAS No. 150 apply to issuers' classification and measurement of freestanding financial instruments, including those that comprise more than one option or forward contract. SFAS No. 150 does not apply to features that are embedded in a financial instrument that is not a derivative in its entirety. SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003, except for mandatory redeemable financial instruments of non-public entities. It is to be implemented by reporting the cumulative effect of a change in an accounting principle for financial instruments created before the issuance date of SFAS No. 150 and still existing at the beginning of the interim period of adoption. Restatement is not permitted. The adoption of this standard is not expected to have a material effect on the Company's results of operations or financial position. |
3. | Discontinued Operation At a meeting of the Board of Directors on October 1, 2002 the Company set out a reorganization and restructuring plan, which included the disposal of UV Systems Technology Inc (UVS). The debt load being carried by the Company as a result of the UVS operations were impairing the Company’s ability to obtain investment funds or make any other financing arrangements. On December 30, 2002, the Company disposed of its 100% owned asset, UVS. Under the terms of these agreements, the Company sold 100% of the shares of UVS to 659999 BC Ltd, a Canadian private company in exchange for the transfer and assignment to the Company of all outstanding and future |
UltraGuard Water Systems Corp.
Notes to the Consolidated Financial Statements
royalties from Clearwater Technologies Inc (“Clearwater”) and any other rights UVS may have under the License Agreement, which covered the UltraGuard®patents and technology. UVS entered into this Licence Agreement with Clearwater on February 5, 2002. No value was placed on this agreement. Full details of these Agreements between UVS and 659999 BC Ltd were filed with the Securities and Exchange Commission on Form 8-K dated January 15, 2003. | |
4. | Acquisition of License - Technology On December 31, 2002, the Company acquired 100% of the shares of Innovative Fuels Cell Technologies Inc (IFCT). The Company issued 5,000,000 common shares of the Company’s common stock to the shareholders of IFCT to acquire IFCT and its wholly owned Austrian incorporated subsidiary Ultraguard Water Systems GmbH (“UG GmbH”). These shares were valued at $1,007,000. The Company also issued 1,000,000 common shares of the Company to UG GmbH as part of the transaction. These shares are considered treasury shares and are not outstanding. The value placed on these shares was $201,400 which amount has been recorded as a reduction of shareholders’ equity. IFCT is a Nevada corporation incorporated on September 30, 2002. IFCT is the holder of an option to purchase worldwide manufacturing and marketing rights to a 12-volt Magnesium-Air Semi Fuel Cell (Fuel Cell) from MagPower Systems Inc. (“MagPower”) for use with the Company’s Point of Use Ultraviolet Water Purification System and for ancillary uses. IFCT was assigned this option on October 1, 2002 from a related party. IFCT had paid Cnd$2,500 as a down payment for the option with Cnd$97,500 payable and 400,000 shares of the Company were to be issued. On March 14, 2003, the License Agreement was executed between MagPower and IFCT. The terms of the License Agreement included additional rights to use the Fuel Cell for ancillary services to power items such as lighting and radio. As consideration for the additional rights IFCT increased the option payments to be made to Cnd$100,000 and increased the number of common shares to be issued to 500,000. On March 6, 2003, the company issued 400,000 shares into trust subject to certain criteria. On signing of the License Agreement IFCT paid Cnd$5,000 and delivered 200,000 common shares to the vendors. An additional Cnd$5,000 was paid on March 21, 2003 for the payment due on April 1, 2003. Commencing on May 1, 2003, Cnd$7,500 was due and unpaid, however delivery of additional 100,000 common shares was made on May 1, 2003. The remaining balance is due Cnd$7,500 on the first of each month thereafter until MagPower delivers the technical drawings; and Cnd$15,000 per month thereafter until the full amount has been paid. Concurrent with the receipt of the technical drawings from the vendor, the remaining 200,000 common shares will be delivered (100,000 common shares from trust and 100,000 common shares from treasury). The payments due on May 1, 2003 and June 1, 2003 amounting to Cnd$15,000 were not paid as at June 30, 2003. As a condition of the Option Agreement, the Company is required to sell a minimum quantity of 2000 Fuel Cell units in fiscal 2003. Royalties of C$25.00 per cell will be paid to MagPower based on number of units sold. The total consideration paid for the License Agreement as at June 30, 2003 was $1,104,852 which includes the Cnd$2,500 down payment, the 2 payments of Cnd$5,000 each, the value of 5,000,000 common shares of the Company, $1,007,000, the value of 400,000 common shares, $71,200 and certain other organizational and acquisition costs of $18,292. This acquisition was treated as an acquisition of an asset and not a business combination. The asset as at December 31, 2002 is an option to acquire technology and has been recorded as a long-lived asset. Once the Option Agreement is exercised in full the value placed on the Option Agreement will transfer to the License Agreement. The License Agreement will be amortized over 10 years. |
5. | Property and Equipment Property and equipment is stated at cost less accumulated depreciation and reflects the residual value as at June 30, 2003. |
June 30, | December 31, | |||||||
2003 | 2002 | |||||||
Accumulated | Net Book | Net Book | ||||||
Cost | Depreciation | Value | Value | |||||
$ | $ | $ | $ | |||||
(Unaudited) | (Audited) | |||||||
Office furniture and equipment | 5,533 | 5,288 | 245 | 286 | ||||
6. Loans Payable
a) | Loans payable of $200,000 plus accrued interest of $61,423 as at June 30, 2003, are unsecured and bear interest at 1% per month. The loans were due on May 21, 2001. Subsequent to June 30, 2003, the security pledged to secure the loans has been called and taken by the note holder. The security for the loan was pledged 50% by West Peak Ventures of Canada Ltd (West Peak) and 50% by the Company President, Ken Fielding, As a result of the calling of the security, the Company and West Peak have agreed to the and issuance of 1,556,000 common shares of the Company to West Peak in full payment for their losses and have agreed with Ken Fielding |
UltraGuard Water Systems Corp.
Notes to the Consolidated Financial Statements
6. | Loans Payable (cont’d) |
as compensation for his losses, to set up an unsecured loan payable in the amount of $130,711.50 with interest at 6% per annum. | |
b) | Loans payable totalling $125,000 plus accrued interest of $30,000 was renegotiated in December 2002 as a non-interest bearing loan amount set at $155,000. Payments were to be made totalling $80,000 commencing February 15, 2003 with final payment due June 16, 2002, with the remaining $75,000 to be converted into common shares at a conversion price of 20% below the average bid price between December 7, 2002 and March 7, 2003, to be issued March 10, 2003. The payment due February 15, 2003 was not made. No payment was made on March 15, 2003 or subsequently. On April 25, 2003, Chelverton Fund Limited filed a suit in the Supreme Court of British Columbia against the Company for non-payment of debt in the amount of $155,000 and on May 2, 2003, the Company was served with a writ of summons. The Company entered an appearance and filed a defence against this claim and attempted to negotiate a settlement. Chelverton filed additional information to support their claim and the Company responded with a “no defence” position. Currently the Company is discussing an amicable method of repayment with Chelverton, and have verbally provided a disclosure of the Company’s current financial conditions so that Cheverton may fully understand the Company’s inability to pay the debt at this time. |
c) | Loans payable totalling $61,549 plus accrued interest of $1993 are unsecured and bear interest at 10% per annum. These loans are repayable at any time or when financing in excess of $250,000 is obtained by the Company but not later than August 19, 2003. At the option of the note holder, the principal portion of the loans can be converted into common shares at $0.30 per share at any time within 12 months from February 19, 2003. |
d) | Loans payable of $7,431 are unsecured and bear interest at 6% per annum. |
e) | Loans payable of $11,770 are due on demand, unsecured, and non-interest bearing. |
7. | Amounts Owing to Related Parties |
These amounts, totalling $97,743, represent unpaid wages and consulting for two directors. These amounts are due on demand, unsecured and non-interest bearing. Imputed interest on previous non-interest bearing related party loans totalled $31,928 and recorded as donated capital, calculated at 10% per annum. In fiscal 2002, two officers and directors purchased with notes receivable and debt reduction, 3,000,000 shares of common stock of the Company at $0.0101 per share for a total consideration of $30,300. | |
8. | Common Stock |
Additional | |||||||
Issued | Common | Paid-in | |||||
Shares | Stock | Capital | |||||
# | $ | $ | |||||
Balance, December 31, 2001 (audited) | 26,887,601 | 26,888 | 8,266,082 | ||||
Issuance of stock for expenses pursuant to | |||||||
the exercise of employee stock options | 16,564 | 16 | 1,640 | ||||
Issuance of stock for expenses | 100,000 | 100 | 1,900 | ||||
Issuance of stock for cash pursuant to | |||||||
private placements | 4,350,000 | 4,350 | 230,650 | ||||
Issuance of stock for debt settlement | 13,800,000 | 13,800 | 124,200 | ||||
Issuance of stock for expenses | 1,000,000 | 1,000 | 9,000 | ||||
Stock returned to treasury for cancellation | (330,000 | ) | (330 | ) | (83,270 | ) | |
Balance Pre-Reverse Split | 45,824,165 | 45,824 | 8,550,201 | ||||
Balance Post-Reverse Split 1:50 basis | 916,488 | 917 | 8,595,109 | ||||
Issuance of shares for debt | 3,000,000 | 3,000 | 27,300 | ||||
Issuance of shares to debt settlement | 593,077 | 593 | 592,484 | ||||
Issuance of shares for purchase of | |||||||
Innovative Fuel Cell Technologies Inc. | 5,000,000 | 5,000 | 1,007,000 | ||||
Issuance of shares owned by subsidiary | *1,000,000 | 1,000 | 201,400 | ||||
Less, Treasury Stock | - | - | (201,400 | ) | |||
Issuance of shares to private placement | |||||||
purchasers with non-dilutive provision | 343,000 | 343 | - |
UltraGuard Water Systems Corp.
Notes to the Consolidated Financial Statements
8. | Common Stock (continued) | ||||||
Balance, December 31, 2002 (audited) | 10,852,565 | 10,853 | 10,221,893 | ||||
Issuance of shares for MagPower License Agreement | 400,000 | 400 | 70,800 | ||||
Issuance of shares for consulting expenses | 2,300,000 | 2,300 | 332,100 | ||||
Issuance of shares for expenses | 445,000 | 445 | 28,545 | ||||
Issuance of shares for compensation | 2,400,000 | 2,400 | 78,720 | ||||
Balance, June 30, 2003 (unaudited) | 16,397,565 | 16,398 | 10,732,058 | ||||
*These shares are issued but owned by treasury therefore are not outstanding. (a) Warrants outstanding as at June 30, 2003: | |||||||
(a) | Warrants outstanding as at June 30, 2003: | |||
Exercise | ||||
Class # | Price | Expiry Date(s) | ||
“C”- Post -Reverse Split -1:50 162,100 | $12.00 | September 23, 2005 – October 3, 2010 |
On October 3, 2000, 3,000,000 Class C warrants were issued pursuant to a Strategic Alliance and other agreements with US Filter’s Wallace and Tiernan Products Group, a wholly owned subsidiary of U.S. Filter (“US Filter”) to market and sell under license the Company’s UltraGuard® ultraviolet disinfection technology for water and wastewater applications. The value of the 3,000,000 Class C Warrants issued totalled $656,700. | |||
In June 2001, the Company entered into a funding agreement with US Filter/Wallace and Tiernan Products Group. As a term of the funding agreement, the warrant exercise price on the above 3,000,000 warrants was reduced to $0.24 per share. The expiry date of these warrants was changed to October 3, 2010 .In addition, 5,105,000 Class C warrants were issued with an exercise price of $0.24 per share and an expiry date of October 3, 2010. | |||
These additional warrants were issued because of certain funding criteria being met. The value of the 5,105,000 Class C warrants issued totalled $478,000. These amounts totalling $1,134,700 are being amortized to operations as a financing expense at a rate of $47,800 per annum and a marketing expense at a rate of $65,670 per annum. | |||
As a result of the 1:50 Reverse Split, the total number of C warrant issued; 8,105,000, with an exercise price of $0.24 per share have been reduced to 162,100 Class C warrants with an exercise price of $12.00 per share. | |||
(b) | Employee Stock Option Plans | ||
i) | 2003 Benefit Plan of UltraGuard Water Systems Corp. | ||
The common stock underlying the Employee Stock Option Plan ,registering 2,400,000 shares for future issuance, was registered with the Securities Exchange Commission on March 28, 2003 on Form S-8. | |||
On March 31, 2003, the Company issued 600,000 shares from the 2003 Benefit Plan to a consultant for services valued at $113,400. | |||
On June 9, 2003, the Company issued 200,000 shares from the 2003 Benefit Plan to a consultant for services valued at $26,000. | |||
On June 9, 2003, the Company issued 145,000 shares from the 2003 Benefit Plan for legal services and to an employee for services valued at $18,850. |
UltraGuard Water Systems Corp.
Notes to the Consolidated Financial Statements
8. | Common Stock (continued) | |
(b) | Employee Stock Option Plans (continued) | |
On June 9, 2003, the Company granted 125,000 options to the directors. |
Shares | Weighted | Weighted Average | ||||||
Under Option | Average Option | Remaining Life of | ||||||
# | Price $ | Options (Months) | ||||||
December 31, 2002 | – | – | – | |||||
Granted | 125,000 | .13 | ||||||
June 30, 2003 | 125,000 | .13 | 35 | |||||
The fair value of the employee’s purchase rights under SFAS 123 was estimated using the Black-Scholes model with the following assumptions on the above granted options: risk free interest rate was 5%, expected volatility of 100%, an expected life of 3 years and no expected dividends. | |||
ii) | Independent Contractor/Consulting Agreement Plan of UltraGuard Water Systems Corp. On June 11, 2003 the Company registered and issued 1,500,000 shares on Form S-8 to three consultants for product marketing consulting expenses amounting to $195,000. | ||
These options were granted for services provided, or to be provided, to the Company. Statement of Financial Accounting Standards No. 123 (“SFAS 123") requires that an enterprise recognize, or at its option, disclose the impact of the fair value of stock options and other forms of stock based compensation in the determination of income. The Company has elected under SFAS 123 to continue to measure compensation cost on the intrinsic value basis set out in APB Opinion No. 25. As options are granted at exercise prices based on the market price of the Company’s shares at the date of grant, no compensation cost is recognized. However, under SFAS 123, the impact on net income and income per share of the fair value of stock options must be measured and disclosed on a fair value based method on a pro forma basis. | |||
If compensation expense had been determined pursuant to SFAS 123, the Company’s net loss and net loss per share would have been as follows: |
Six months | Twelve months | ||||||
ended | ended | ||||||
June 30, | December 31, | ||||||
2003 | 2002 | ||||||
$ | $ | ||||||
Net loss | |||||||
As reported | (331,335 | ) | (657,617 | ) | |||
Pro forma | (331,625 | ) | (657,617 | ) | |||
Basic net loss per share | |||||||
As reported | (.03 | ) | (.06 | ) | |||
Pro forma | (.03 | ) | (.06 | ) |
(c) | Long-Term Equity Incentive Plan | |
The Company has allotted 5,000,000 shares pursuant to a Long-Term Equity Incentive Plan approved and registered December 17, 1999. The Plan permits the grant of Non-qualified Stock Options, Incentive Stock Options, Restricted Stock and Performance Shares. As a result of the Reverse Split at 1:50, the shares in the Long-Term Equity Incentive Plan have been reduced to 100,000. | ||
(d) | Legal Services Plan | |
Pursuant to an S-8 Registration Statement filed and accepted on November 19, 2001 the Company issued 3,900,000 common shares at $0.19 per share pursuant to three separate contracts. Of these, a total of 2,500,000 shares were issued and were subsequently cancelled, as the related contract was never fully consummated. In November 2002, the Company issued a total of 1,000,000 shares at $0.01 per share in settlement of all issues outstanding on this matter. As a result of the Reverse Split at 1:50, the shares remaining in the Long-Term |
UltraGuard Water Systems Corp.
Notes to the Consolidated Financial Statements
Equity Incentive Plan have been reduced to 30,000. On March 24, 2003 the Company filed a Form S-8 POS with the SEC, which cancelled the Plan and all remaining shares. | |
9. | Segmented Information |
The business of the Company is carried on in one industry segment (See Note 1). | |
The Company currently operates in two geographic segments. The United States operations only consist of costs associated with debt and equity financing and being a public company. As a result of the disposition of UVS, (see Note 3) the Company now operates in one business segment and one geographical area |
Six months ended | Six months ended | ||||||||||||||||
June 30, 2003 | June 30, 2002 | ||||||||||||||||
United | United | ||||||||||||||||
Canada | States | Europe | Total | Canada | States | Europe | Total | ||||||||||
$ | $ | $ | $ | $ | $ | $ | $ | ||||||||||
Revenue | – | 23,438 | – | 23,438 | 62,588 | – | – | 62,588 | |||||||||
Expense | – | 279,363 | 28,534 | 307,897 | 369,002 | 316,321 | – | 685,323 | |||||||||
Loss | – | (302,801 | ) | (28,534 | ) | (331,335 | ) | (306,414 | ) | (316,321 | ) | – | (622,735 | ) | |||
As of June 30, 2003 | As of June 30, 2002 | ||||||||||||||||
United | United | ||||||||||||||||
Canada | States | Europe | Total | Canada | States | Europe | Total | ||||||||||
$ | $ | $ | $ | $ | $ | $ | $ | ||||||||||
Identifiable assets | – | 28,777 | 9,846 | 38,623 | 1,519,163 | 109,021 | – | 1,628,184 | |||||||||
Goodwill, patents, | |||||||||||||||||
Manufacturing | |||||||||||||||||
technology option | – | 1,104,852 | – | 1,104,852 | 108,183 | – | – | 108,183 | |||||||||
Total assets | – | 1,133,629 | 9,846 | 1,143,475 | 1,627,346 | 109,021 | – | 1,736,367 | |||||||||
10. | Legal Proceedings |
On October 20, 1998 a suit was filed in the Supreme Court of British Columbia by Thomas O’Flynn against the Company, Kenneth Fielding (the Company's President and Director), and Charles P. Nield (a former Director and Vice President of the Company), O’Flynn alleges that in April of 1996, he purchased shares of the Common Stock based on a representation that they would be free trading in 40 days of "the filing of a prospectus." He further alleges that in September of 1996 he purchased additional shares of Common Stock based on the representation that the shares would be free trading within 40 days of the Common Stock becoming free trading. O’Flynn alleges that the representation was a warranty and was incorrect. He further alleges that he suffered a loss because the share price decreased while he was holding the shares. He seeks damages for breach of warranty, negligence, misrepresentation and breach of fiduciary duty. The amount claimed is not specified. The Company filed an answer denying the claims and will continues to actively defend the suit. The suit has remained inactive since early 1999. There has been no loss provision set-up pursuant to this action against the Company. | |
On April 25, 2003, Chelverton Fund Limited filed a suit in the Supreme Court of British Columbia against the Company for non-payment of debt in the amount of $155,000. The Company entered an appearance and filed a defence against this claim and attempted to negotiate a settlement. Chelverton filed additional information that supported their claim and the Company responded with a “no defines” position. Currently the Company continues to discuss an amicable method of repayment with Chelverton, and have provided a complete disclosure of the Company’s current financial conditions so that Cheverton may fully understand the Company’s inability to pay the debt at this time. | |
On June 6th, 2003 a group of shareholders (Shareholder Group) filed a consent resolution, which among other things elected a new slate of directors and revised the company by-laws. The Company refused to accept the consent resolution or by-laws as in the opinion of the Company’s legal counsel, the consent resolutions were not in accordance with Nevada Statutes or the filing requirements of Security and Exchange Commission. At a directors meeting held June 9th, 2003, the Company elected two additional directors; Edward a White and Erin Strench to the Company board, bringing the total number of directors to five. On June 16, 2003the Shareholder Group filed for and obtained a temporary restraining order (TRO) against the Company and its five director prohibiting the Company from among other things, issuing stock, transferring assets, changing management and other actions that would affect thestatus quoof the Company. In addition two shareholders issued writs against various directors, alleging breach of fiduciary duty in respect of the issue of certain common shares each to John Gaetz, Ken Fielding and |
UltraGuard Water Systems Corp.
Notes to the Consolidated Financial Statements
others. On June 24, 2003, in discussions between legal counsel for plaintiff, respondent and the hearing Judge; Judge Adams, the TRO was vacated and a date of July 2, 2003 was set for a new TRO hearing to be held in Reno, Nevada. At the July 2, 2003 TRO hearing Judge Adams did not grant a TRO and requested the plaintiff and respondent file a series of three briefs outlining their position. The first brief was filed on July 11, 2003 by our counsel. The plaintiff responded on July 18, 2003 and our counsel filed the final brief on July 25, 2003. At the time of filing this 10QSB quarterly report, the Judge had not ruled on the TRO. The Company’s counsel has responded to the various other suits filed against the Company and its directors. The Company has attempted to remove the cases to federal court and at time of filing this 10QSB have not had a decision from the courts on this filing.. | ||
11. | Subsequent Events | |
a) | On July 23, 2003 the Company issued 100,000 shares of common stock for legal services. These shares were valued at $0.13 per share or $13,000 in total. | |
b) | Loans payable to Bolder Capital amounting to $200,000 plus accrued interest of $61,423 were repaid subsequent to June 30, 2003. The security pledged to secure the loans had been called and taken by the note holder. The security for the loan was pledged 50% by West Peak Ventures of Canada Ltd (West Peak) and 50% by the Company President, Ken Fielding. As a result of the calling of the security, the Company has offered and West Peak has accepted the issuance of 1,556,000 common shares of the Company in full payment for their losses amounting to $130,711.50 and have agreed with Ken Fielding as compensation for his losses, to set up an unsecured loan payable in the amount of $130,711.50 with interest at 6% per annum. |
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS AND FINACIAL CONDITIONS
The following discussion and analysis should be read in conjunction with our Financial Statements and the Notes attached. Information discussed in this report may include forward-looking statements regarding events or our financial performance and are subject to a number of risks and other factors, which could cause the actual results to differ materially from those, contained in the forward-looking statements. Among such factors are, 1) general business and economic conditions, 2) customer acceptance and demand for our products, 3) our overall ability to design, test and introduce new products on a timely basis,4) the nature of the markets addressed by our products, and, 5) other risk factors listed from time to time in documents filed by our Company with the SEC.
BASIS OF PRESENTATION
The financial statements include accounts of UltraGuard Water Systems Corp. and its 100% owned subsidiaries, UltraGuard Water Systems GmbH and Innovative Fuel Cell Technologies Inc.
MANAGEMENTS DISCUSSION
Our company was incorporated in Nevada in August 1990 and was inactive until eight Canadian and European individuals acquired it in July 1995. The investor’s intent was to develop the company into the United States marketing arm of UV Systems Technology Inc., which was incorporated in British Columbia, Canada in 1993. Our company issued 1,600,000 shares of its restricted common stock ("Common Stock") to certain individual stockholders and one of our officers, as repayment of cash paid to others for expenses related to the acquisition.
In an effort to advance our marketing objective, in September 1995, we entered into a marketing distribution agreement (embodying an earlier oral agreement) with UV Systems Technology Inc. (UVS), for marketing rights for the UltraGuardR Ultraviolet disinfection system in eight Western states. In July 1996 we entered into a funding agreement with UVS. During this period, we structured an agreement with two principals and certain minority shareholders and exchanged common stock to acquire 50.69% of UVS. Under subsequent agreement dated February 14, 2000 with the two principal shareholders Working Opportunity Fund and MDS Ventures Pacific, Inc., (49.39%) we acquired the remaining 49.31% of common stock and all outstanding preferred stock of UVS.
During the year ended August 31, 1999, the Company entered into a development to reconfigure its UV system. In the quarter ended February 29, 2000, the Company produced the prototype of a new UV product line, the Ultra-Flow SLR. This product, with a designed disinfection capacity of up to 1.0 million gallons per day per lamp, will incorporate the Company’s patented flow reactor chamber, the proprietary low pressure, high intensity UV lamp and the patented flow balanced weir. It encompasses layout flexibility; infinite automatic flow control and monitoring, future expansion can be easily accomplished. The client can monitor system and component performance locally or remotely. Additional features include full password- protected, Internet-based, web-monitored, microprocessor control, which will permit monitoring of the Ultra-Flow SLR UV system from the Company ‘s plant or from any location equipped with an Internet connection.
In September 1999 the formal order for a project in Toronto, Canada was secured for about C$ 685,000 (approximately $466,000). The project is now delivered and operating on demand. As this system is used only when high rainfall and storm runoff occurs, demand for it's operating is infrequent. Since installation, we are informed of two storm events, which required the UV system to be activated. This UV system delivered to Toronto is part of a C$50 million combined storm overflows (CSO) project (the world largest submersible CSO pumping station) and is used for disinfection of CSO before discharge into Lake Ontario. During this quarter, at the request of the customer Clearwater Industries (our product manufacturing licensee) replaced the computer operating system with a Programmable Logic Controller (PLC). This decision was taken to permit service of the UV system to be performed by a number of service companies versed in maintaining PLC control systems. This action provides the customer more flexibility and available service options and reflects the direction being taken by Clearwater on new system sales.
Clearwater Industries reports that the UV System remedial work is complete. Final testing will not be conducted until spring 2003 as this site operates only during summer storm events. Tests conducted during 2002 were not successful, as effluent delivered to the UV system did not meet the design standards. Refuse, solids and city street runoff solid waste included in the effluent was not removed prior to entering the UV System. During this first quarter of 2003, the Company was informed that testing is scheduled to start June I, 2003.
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After successful PDU testing in September & October 1998 at the City of Peterborough wastewater treatment plant, we received an order in March 1999 valued at over C$1,100,000 (approximately $748,000.). The UV system will disinfect effluent flow in excess of 36 million gallons per day. The UV system delivery was completed in January 2002 and installed during February and March for operation starting May 15, 2002. Problems were encountered with the field wiring which affected the operating software. As well, problems were encountered with the installation of some of the structural components. In the second quarter, four of the five channels (48 of the 60 lamps) had been operated for about 30 days using the non-flow paced computer system. Clearwater reported that during this period, performance requirements were being met. Negotiation of the work and guarantees required by the customer to complete the balance of the system was being conducted between the City of Peterborough, Clearwater, our product-manufacturing licensee and with USFilter and Clearwater. These negotiations have been unsuccessful. In November the Company received notification that the City of Peterborough was canceling the UV system contract. The Company advised the City that we do not accept this cancellation and will strenuously defend our rights under the contract purchased order. We have made the appropriate loss provisions in our financial statements for year ending 2002, to reflect this cancellation.
Purchase orders for two additional UV systems valued at approximately C$150,000 approximately were produced during the 2000-2001 period and delivered into the Province of Ontario. Additional orders for shipment to Louisiana and Virginia were received, with an aggregate value of about $258,000. These two systems were delivered in 2001.
On January 26, 2001 the Company entered into a Strategic Alliance Agreement, and related agreement with US Filter’s Wallace Tiernan Products Group, under which US Filter has the exclusive right to market the Company’s Ultra Guard®UV system in North, South and Central America, and the Caribbean.Royalty Income. On January 26, 2001, we entered into a Strategic Alliance Agreement (and associated agreements) with US Filter’s Wallace and Tiernan Products group (USFilter ) to market our Ultra Guard® wastewater UV System in North, South and Central America and the Caribbean, filed with the SEC on Form 8-K on February 27, 2001
Stock Purchase Warrants. Concurrently with the execution of the Strategic Alliance Agreement, granted three Stock Purchase Warrants to U.S. Filter/Wallace & Tiernan for an aggregate of 3,000,000 (60,000) shares of the Company’s common stock, as follows. The numbers enclosed in brackets present the effect of post reverse split.
Note: Numbers and values enclosed in brackets ( ) reflect post rollback figures.
1,000,000 (20,000) shares at an exercise price equal to the lower of $0.97 ($48.50) per share or the "Fair Market Value" of the common stock as of April 25, 2001;
1,000,000 (20,000) shares at an exercise price of $1.00 ($50.00) per share; and
1,000,000 (20,000) shares at an exercise price of $2.00 ($100.00) per share.
As a term of a subsequent Funding Agreement, the exercise prices on the 3,000,000 (60,000) warrants was reduced to $0.24 ($12.00) per share. In addition, 5,105,000 (102,100) Class C warrants (the Additional Warrants) were issued as a result of this Funding Agreement. All warrants issued to USFilter may be exercised until October 10, 2010. The total number of Class A warrants issued to USFilter is 8,105,000 (162,100) at a price of $0.24 ($12.00) per share. In summary as result of the 1:50 reverse split USFilter now holds 162,100 Class A warrant exercise price of $12.00.
If the Strategic Alliance Agreement is terminated for convenience, the warrants will expire on the second anniversary of the effective date of the termination for convenience. In addition, on January 25 of each year during the term of the Strategic Alliance Agreement, the Company will grant to U.S. Filter/Wallace & Tiernan additional warrants to purchase common stock, based upon the orders for Systems booked or significantly influenced by U.S. Filter/Wallace & Tiernan during the preceding 12 months. Provided at least US$1,000,000 of orders for Systems have been booked or influenced, U.S. Filter/Wallace & Tiernan would become entitled to purchase 50,000 shares and also 500 shares for each US$10,000 of orders for Systems booked or significantly influenced by U.S. Filter/Wallace & Tiernan in excess of US$1,000,000 during the preceding 12 months. Any warrants issued will be issued at the average of the 10 days preceding the date of determining the number of share due.
Registration Rights Agreement. The Company and U.S. Filter/Wallace & Tiernan also entered into a Registration Rights Agreement. The Registration Rights Agreement entitles U.S. Filter/Wallace & Tiernan to demand registrations (two long form registrations and, if available, short form registrations at specified intervals) and piggyback registrations for the shares of the Company common stock issued upon exercise of the warrants.
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Security Agreement. The Company and UV Systems have granted to U.S. Filter/Wallace & Tiernan a security interest in certain rights in and to their patents, trademarks, trade secrets, copyrights, soft ware and know how, and contracts related to the use or exploitation of these rights in connection with the sale, distribution, promotion, marketing or manufacture of Systems for installation within the Territory. The security interest secures an obligation to make a $100,000 payment under the Strategic Alliance Agreement upon a termination by convenience, or a termination, rejection, disclaiming or repudiation of the License Agreement in connection with insolvency proceedings.
In September 2001 we licensed the Korean company, VITROSYS, the exclusive rights to manufacture and sell our SLR Ultraviolet disinfection systems within the Republic of Korea and a non-exclusive right to manufacture for sale into other territories not currently represented by the Company’s agents. VITROSYS will pay a royalty on each UV system sold. The royalty fee is variable, dependant on the selling price of the UV system. Under the License Agreement, the Company provided full manufacturing drawings, software technology and expertise, and a specified number of hours of training at the Company’s facilities. As a requirement of the License Agreement, VITROSYS will be required to purchase from the Company, a key component for each SLR system. This key component is defined as the royalty verification component. Its purchase will trigger a sale and resultant royalty payment liability. The Korean market for UV is expected to increase as a result of legislation that will require all municipal and Industrial wastewater to be disinfected. To date Vitrosys have secured a number of projects for which they purchased 40 royalty verification components. The Company cannot confirm that this number of units has been sold and therefore cannot calculate the amount of royalty payments payable
During the first quarter of 2002 the Company took actions to reduce its overheads. Having completed the delivery of the UV systems that were produced during 2000 and up to January 26, 2002, we searched for a partner to work with for production of future UV systems orders. We found Clearwater Technologies Inc., based in Langley, B.C. Canada (“Clearwater”) to perform these and other activities. On February 5, 2002 we signed an agreement with Clearwater Technologies Inc wherein Clearwater agreed to assume the manufacturing of new UV projects and to supply these to our Strategic Alliance partner, USFilter. Clearwater is engaged in the water industry, targeting the treatment of potable water for smaller towns to which they provide complete packaged treatment plants. Clearwater agreed to assume the manufacturing of any new UV project sold to our Strategic Alliance partner, USFilter. Clearwater will also provide warranty services on the previously delivered UV products. The Company will be paid a royalty on sales, the percentage scaled upward as the total sale volume increases. This association with Clearwater as our manufacturing partner permitted the company to move from its’ factory and reduce staff level in production, engineering and support. A number of key production staff moved to the Clearwater facility to assist in setting up for this manufacturing responsibility. The remaining staff at the Company worked in a liaison and support role between USFilter and Clearwater.
This change of manufacturing strategy in the first quarter of 2002 significantly reduced our monthly operational costs. UVS became inactive with no further operations. Activities of UVS were limited to accounting functions, recording of accounts receivable collections and advising Clearwater on project completion activities.
Future revenue from UltraGuard’s wastewater technology will be royalties based and will be received from Clearwater as a result of sales made to USFilter, and sales of the systems, made to others. Two UV systems projects have been delivered in March 2003 by Clearwater, however payment is not due until the UV systems have been accepted by the purchaser.
On October 1, 2002 the directors mandated a debt and corporate restructuring of the Company. This mandate included the disposing of UVS and its associated debt, and the reduction of all other debt carried by the Company. Given the Company’s inability to raise the additional funds necessary to continue the operations of UVS and with UVS liabilities exceeding assets by a significant amount, the board of directors and investors determined that by selling UVS the Company could continue viable operations pursuing its focus on the point of entry (POE) and point of use (POU) ultraviolet systems.
Recent US and world events as well as the worldwide requirement for a higher quality of water will accelerate the use of ultraviolet products for use in drinking water applications and air treatment, both for surface and ventilation. To capitalize on this market opportunity, our Company changed its market focus from the wastewater products, which were now fully marketed by others, to drinking water UV products.
6
During the year 2002 we completed the development of a UV product to be used in drinking water applications. UV units for the drinking water market will target application such as POE and POU. POE UV systems will treat water at the entry point into residences, industry or any location requiring safe drinking water. POU systems will treat water at selected points within the home or establishment, using a system installed at the water faucet. Both POE and POU may be sold as stand-alone units or in combinations with various filters. Ultraviolet will not penetrate the envelope or the wrappings to disinfect the contents of the package but is applicable to external surface disinfection. Independent testing of the POU UV System, including CSA and UL approval is yet to accomplished. Tests are to be conducted over the following months subject to availability of adequate resources.
On December 20, 2002 the Company negotiated the repayment of debt in the amount of $593,077 owed to the Elco Bank Clients in exchange for 593,077 share of the Company’s common stock $1.00.
On December 31, 2002 the Company entered into various agreements to complete the disposition of UVS and to remove of the excessive UVS liabilities carried on the Company’s financial statements. The reader should refer to the Company’s financial statements attached hereto for a complete understanding. Manufacturing and marketing of the UVS technology had been discontinued by the Company and was licensed to Clearwater Industries in early 2002. The purchasers of UVS were 659999 BC Ltd a corporation controlled by two officers and directors of the Company. Terms of the sale included the transfer by UVS to the Company of all current and future revenue that may accrue as a result of the UVS technology, which was all revenue the Company could have accrued had it not sold UVS. The intent of 659999 BC Ltd is to keep UVS inactive. Full details of these agreements are available on Form 8K filed with the SEC on January 15, 2003.
On December 30, 2002 the Company acquired 100 % of Innovative Fuel Cell Technologies Inc, a Nevada Incorporated company, the holder of an option to purchase a worldwide license from MagPower Systems Inc (MagPower) for their air magnesium fuel cell technology. The purchase price in the option agreement was C$100,000,and 400,000 shares of the Company’s common stock, increased respectively in March 2003 to C$102,500 and 500,000 shares of the Company’s common stock. The increase in the price and the number of shares of common stock was as a result of negotiations to extend the use right to include ancillary uses among other things lighting and radio in areas where a UV disinfection systems has been installed. The Fuel Cell will provide the necessary power to operate ultraviolet disinfection systems, lighting and radio in areas of the world where no other forms of electrical power is unavailable. The product has applications in remote areas of all countries worldwide. Applications in developing countries such as Africa, some of the Middle East countries and China, where large numbers of the population are not serviced by an electrical grid and do not have a safe water supply, are market areas.
The Company issued six million shares of its common stock to the shareholders of Innovative Fuel Cell Technologies Inc (“Innovative”) for 100% of Innovative. Included in the Innovative assets was the Austrian Company, UltraGuard Water Systems GmbH (“GmbH). The incorporation of GmbH was made by Innovative in contemplation of its sale of Innovative to the Company. GmbH is set up to manufacture and market Point of Use UV produces in Germany and the European Union Countries (“EU”) to exploit the EU and other European markets potential. The market potential was increased when the European Commission recently brought in strict guidelines (“EU Water Framework Directive. In addition GmbH will manufacture the Fuel Cell products for the various world markets.
During this quarter GmbH completed the manufacturing of its first prototype POU unit and completed five unit for testing. GmbH is working with three Austrian firms, which supply design engineering and perform the manufacturing and assembly. The Austrian Government, through on of its support divisions, the TMG, has provided financial support to the three Austrian firms to offset a portion of the design and manufacturing cost. The POU unit has been designed to the applicable ultraviolet disinfection equipment codes of Germany and Austria. The expected major marketplace is Germany where effective January 2004 member states must ensure that drinking water meets stringent guidelines to protect the quality of the water (both hot and cold) that consumers receive from their taps; the Point of Use.
About Magnesium Fuel Cells
Magnesium air fuel cells provide greater safety and cost savings over the better-known hydrogen fuel cells. Both cell produce electricity through an electrochemical reaction but magnesium-based fuel cells are more environmentally friendly, easier to recycle, more versatile and more efficient because they are simpler and safer. Magnesium-Air Fuel Cells are cleaner; they support the global push for a sustainable environment. They are easily recycled, clean and consume no fossil fuels, produce no toxic emissions, thus reducing harmful greenhouse effects. To recharge the cell, you basically remove the spent magnesium core, replace it with a new core and add salt or seawater electrolyte.
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Magnesium-Air Fuel Cells are safer; the simple magnesium anode and natural electrolyte make this cell less combustible than a hydrogen fuel cell. Unlike hydrogen fuel cells, which use pure hydrogen, with magnesium-based fuel cells, no safety sealed fuel storage is required, its fuel can be magnesium or magnesium-alloy. No special safety permits are required for transportation by plane. The magnesium-based fuel cell has an indefinite shelf life because the electrolyte can be removed before storage. When power is needed, the electrolyte is poured back into the cell. Electrolyte in a non-magnesium fuel cell, power generator or battery cannot be removed, stored or reused by the consumer. This sustainability provides a reliable source of power for emergency situations.
The magnesium air fuel cell will be packaged with the UV POU and POE purification systems to provide a permanent or portable purification system for either temporary service application, emergency stand-by or for remote dwellings or villages where electrical power is unavailable.
Grant of License
On March 14, 2003 the Company’s wholly owned subsidiary, Innovative Fuel Cell Technology Inc entered into a Licensing Agreement (Agreement) with MagPower Systems Inc (MagPower) for certain rights to a Magnesium-Air Fuel Cells (Fuel Cell) for use as a power source for The Company’s UV products. On March 21, 2003 Innovative Fuel Cell Technology Inc assigned the Agreement to the Company. Under the Agreement, MagPower granted to the Company an exclusive right to a worldwide territory (Territory) to use the Fuel Cell in the manufacture, use and sale, exclusively with its products within the Territory. In addition the Company, with the consent of MagPower is at liberty to sub-license others to manufacture the rights to sell and install the Fuel Cell for use with the Company’s products so long as any such sub-licensee has executed an industry standard non-disclosure agreement. MagPower granted to the Company the further right to sell and use the Fuel Cell for purposes other than in combination with the Company’s products, (i.e. for powering lights and radios) in communities, towns or villages where the Company has installed its products so long as prior to any such initial sale there is not another licensee of the MagPower’s Product for that community, town or village.
Term of the License Agreement
Subject to the provisions for early termination as set out in the License Agreement, the License Agreement will remain in full force and effect for a period of five (5) years from the date set forth above with an option to renew by the Company without further license fee payable, for a further term of five (5) years. Provided further the Company shall have the right to renew this License Agreement for two further five year terms, subject to the MagPower and the Company, agreeing on a further licensing fee, royalty fee and revised annual production requirements for each of the second and third renewal periods.
(1) | Initial Payments: The Company will pay MagPower the amount of one hundred and two thousand five hundred (C$102,500.00) dollars under the following terms and conditions: | |
A) | The sum of C$2,500.00 already paid for the option. | |
B) | With the signing of the Agreement, the Company paid to MagPower five thousand (C$5,000.00) dollars | |
C) | On or March 21st, 2003 the Company paid to MagPower the amount of five thousand (C$5,000.000) dollars. | |
D) | Commencing May 1st, 2003 and on the first day of each and every applicable month the Company shall pay an amount of seven thousand five hundred (C$7,500.00) dollars to MagPower. Applicable month shall include and mean each and every month up to and including the month that MagPower provides the technical drawing for the Product to the Company. Upon receipt of the Technical Drawings, the Company is required to pay MagPower on the first day of every month thereafter the amount of fifteen thousand (C$15,000.00) dollars until MagPower has received the accumulative total purchase amount. | |
(2) | Royalties: As consideration for the license granted under the Technology, the Company agrees to pay MagPower during the term of this License Agreement an ongoing royalty of twenty five (C25.00 CDN) dollars for each Product manufactured. Such Royalties shall be payable on a quarterly basis with a minimum number of units per annum of Two Thousand (2,000), with said minimum commencing in the second year of the term of this Licensing Agreement. | |
(3) | With the signing of this Agreement the Company issued to the MagPower free and clear of any liens and/or encumbrances except as required under SEC Security Regulatory requirements, two hundred thousand (200,000) common shares of the Company. On May 1st, 2003 the Company issued to MagPower free and clear of any liens and/or encumbrances except as required under SEC Security Regulatory requirements one hundred thousand (100,000) common shares of the Company. Upon receipt of the technical drawings, Licensee shall issue to the MagPower free and clear of any liens and/or encumbrances |
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except as required under SEC Security Regulatory requirements, two hundred thousand (200,000) common shares of the Company. | |
(4) | Interest on Late Payments: Interest on all late initial payments, royalties and any other sums due to the MagPower shall be charged at the rate of 3% per month until payment is received. |
(5) | No Deductions for Tax: Always respecting the tax payments requirements within the domicile country of the Licensee and the MagPower and all requirement as and if they apply to paying taxes on payments to be made by Licensee to MagPower, all payments to the MagPower shall be made without any deduction of any kind on the payments under this License Agreement. The Company undertakes to take all reasonable steps to assist the MagPower to obtain the benefit of any double taxation, which may apply to any of the payments under this License Agreement and to minimize the impact of any taxation in respect of such payments. A full copy of the License Agreement is referenced in ITEM 6 – EXHIBITS and attached. |
Payments due for May, June, July and have not been made and are overdue. The Company is working with MagPower to maintain the License during this period of arrears.
In February 2003, the Company completed a redesign of its website. This website includes details of the fuel cell technology, the point of use UV systems and the wastewater systems. Go towww.ultraguard.com to view these products.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED June 30, 2003.
Six months ended June 30, 2003 compared to the three months ended June 30, 2002.
As a result of the disposition of UV Systems Technology Inc. in 2002, the income statement reflects the line-by-line operations of UltraGuard Water Systems Corp., excluding UV Systems Technology Inc. (See Note 3 of the Financial Statements for additional information).
Revenues. During the six months ended June 30, 2003, we reported revenues of $23,438 compared to nil revenue being reported in the six months of fiscal 2002, an increase of 100%. The increase was primarily from the sales of UV system components.
Direct Project Costs. Project costs recorded during the six months of fiscal 2003 amounted to $18,812 compared to nil during the six months of fiscal 2002, an increase of 100%. The increase was mainly due to the costs of UV system components sold.
Gross Profit before adjustment. Gross profit increased by $4,626 during the six months of fiscal 2003, compared to nil recorded during the comparable period of fiscal 2002. The increase was mainly from the sales of UV system components.
Foreign Exchange Translation Gain. For the six months ended June 30, 2003, we reported a foreign exchange translation gain of $111, an increase of 100% compared to nil reported in the comparable prior fiscal period.
General and Administrative Expense. For the six months ended June 30, we reported general and administrative expense of $257,604, an increase of $21,491, or 9% from $236,113 reported in the comparable period of the prior year. This increase resulted primarily from the increased consulting fees for product marketing and legal fees for the various law suits the Company is currently responding to.
Imputed Interest. For the six months ended June 30, we reported nil imputed interest compared to $29,123 in the comparable period of the prior year, a decrease of $29,123 or 100%.
Interest. For the six months ended June 30, we reported interest of $21,733, a decrease of $29,352 or 57%, from $51,085 reported in the comparable prior fiscal period. The decrease was the result of the reduction of loans at the end of 2002.
Stock Based Compensation Expense. For the six months ended June 30, 2003, we reported stock compensation expense of $56,735 resulting from the Strategic Alliance signed with USFilter/WT. The equivalent expense for the prior fiscal period is included in the loss of discontinued operations. (See Note 3 of the Financial Statements for additional information).
Loss on Discontinued Operations. For the six months ended June 30, 2003, we reported nil loss on discontinued operations compared to $306,414 for the prior fiscal period, or a 100% decrease. (See Note 3 of the Financial Statements for additional information).
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Net Loss for the Period. For the six months ended June 30, 2003, we reported a net loss for the period of $331,335, a decrease of $291,400, or 47% over $622,735 in the comparable period of fiscal 2002. The decrease in net loss was primarily due to the loss of discontinued operations as a result of the disposal of investment in UV Systems Technology Inc. in 2002. In addition, decreases were also as a result of increased revenue, decreased investor relations expenses, decreased imputed interest, and decreased interest for the fiscal period 2003.
Net Loss per Share. For the six months ended June 30, 2003, we reported a net loss per share for the period of $0.03, a decrease of $1.12, or 97%, from $1.15 in the comparable period of the prior fiscal period. The net loss per share decreased as a result of the decrease in the net loss in fiscal 2003 and the decreased net loss being allocated over an increased number of shares outstanding and share equivalents in fiscal 2003.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED June 30, 2003.
Three months ended June 30, 2003 compared to the three months ended June 30, 2002.
As a result of the disposition of UV Systems Technology Inc. in 2002, the income statement reflects the line-by-line operations of UltraGuard Water Systems Corp., excluding UV Systems Technology Inc. (See Note 3 of the Financial Statements for additional information).
Foreign Exchange Translation Loss. For the three months ended June 30, 2003, we reported a foreign exchange translation gain of $223, an increase of 100% compared to nil reported in the comparable prior fiscal period.
General and Administrative Expense. For the three months ended June 30, 2003, we reported general and administrative expense of $137,310, an increase of $23,942, or 21% from $113,368 reported in the comparable period of the prior year. This increase resulted primarily to the increased consulting fees for product marketing and legal fees for the various lawsuits the Company is currently responding to.
Imputed Interest. For the three months ended June 30, we reported nil imputed interest compared to $29,123 in the comparable period of the prior year, a decrease of $29,123 or 100%.
Interest. For the three months ended June 30, 2003, we reported interest of $9,296, a decrease of $16,475, or 64%, from $25,771 reported in the comparable prior fiscal period. The decrease was the result of the reduction of loans at the end of 2002.
Stock Based Compensation Expense. For the three months ended June 30, 2003, we reported stock compensation expense of $28,367 resulting from the Strategic Alliance signed with USFilter/WT. The equivalent expense for the prior fiscal period is included in the loss of discontinued operations. (See Note 3 of the Financial Statements for additional information).
Loss on Discontinued Operations. For the three months ended June 30, 2003, we reported nil loss on discontinued operations compared to $129,494 for the prior fiscal period, a 100% decrease. (See Note 3 of the Financial Statements for additional information).
Net Loss for the Period. For the three months ended June 30, 2003, we reported a net loss for the period of $174,750, a decrease of $123,006, or 41% over $297,756 in the comparable period of fiscal 2002. The decrease in net loss was primarily due to the loss of discontinued operations in fiscal 2002 due to the disposal of investment in UV Systems Technology Inc.
Net Loss per Share. For the three months ended June 30, 2003, we reported a net loss per share for the period of $0.01, a decrease of $0.54, or 98%, from $0.55 in the comparable period of the prior fiscal period. The net loss per share decreased as a result of the decrease in the net loss being allocated over an increased number of shares outstanding and share equivalents in fiscal 2003 and also due to the decrease in net loss in fiscal 2003.
LIQUIDITY
The nature of our business may be expected to include a normal lag time between the incurring of operating expenses and the collection of contract receivables. In addition, we are dependent on sales by licensees for any royalty revenue and will depend on sales from distributors, licensees and sales agents for product sales. For these and other reasons, we may experience periods of limited working capital and may be expected to require financing for working capital during those periods.
In addition, we will require financing over and above our current resources to sustain our operations and expand our marketing efforts. We cannot assure that the additional financing can be obtained on a timely basis, on terms that are acceptable or if at all.
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During 2002 we financed our operations in part, from proceeds of sales of restricted common stock and loans from related parties and minority shareholders of UVS.
We expect that, during fiscal 2003, as and if sales increase, we will continue to depend on receipt of additional funds through public or private equity or debt sales or other lender financing to fund the subcontract manufacturing of products sold, and general operational and sales expenses. Except as previously indicated, no arrangements are currently in place to raise funds, although we actively continue to seek sources. Failure to receive these funds may be expected to have a material adverse effect on our company.
PART II Other Information
Item 1. Legal Proceedings
On October 20, 1998 a suit was filed in the Supreme Court of British Columbia by Thomas O' Flynn against the Company, Kenneth Fielding (the Company's President and Director), and Charles P. Nield (a former Director and Vice President of the Company). O' Flynn alleges that in April of 1996, he purchased shares of the Common Stock based on a representation that they would be free trading in 40 days of "the filing of a prospectus". He further alleges that in September of 1996 he purchased additional shares of Common Stock based on the representation that the shares would be free trading within 40 days of the Common Stock becoming free trading. O' Flynn alleges that the representation was a warranty and was incorrect. He further alleges that he suffered a loss because the share price decreased while he was holding the shares. He seeks damages for breach of warranty, negligence, misrepresentation and breach of fiduciary duty. The amount claimed is not specified. The Company filed an answer denying the claims and continues to actively defend the suit. Examination for discovery of Charles P. Nield was conducted in June 1999; since then there has been no further activity.
On April 25, 2003, Chelverton Fund Limited filed a suit in the Supreme Court of British Columbia against the Company for non-payment of debt in the amount of $155,000. The Company entered an appearance and filed a defence against this claim and attempted to negotiate a settlement. Chelverton filed additional information that supported their claim and the Company responded with a “no defines” position. Currently the Company continues to discuss an amicable method of repayment with Chelverton, and have provided a complete disclosure of the Company’s current financial conditions so that Cheverton may fully understand the Company’s inability to pay the debt at this time.
On June 6th, 2003 a group of shareholders (Shareholder Group) filed a consent resolution, which among other things elected a new slate of directors and revised the company by-laws. The Company refused to accept the consent resolution or by-laws as in the opinion of the Company’s legal counsel, the consent resolutions were not in accordance with Nevada Statutes or the filing requirements of Security and Exchange Commission. At a directors meeting held June 9th, 2003, the Company elected two additional directors; Edward a White and Erin Strench to the Company board, bringing the total number of directors to five. On June 16, 2003the Shareholder Group filed for and obtained a temporary restraining order (TRO) against the Company and its five director prohibiting the Company from among other things, issuing stock, transferring assets, changing management and other actions that would affect thestatus quo of the Company. In addition two shareholders issued writs against various directors, alleging breach of fiduciary duty in respect of the issue of certain common shares each to John Gaetz, Ken Fielding and others. On June 24, 2003, in discussions between legal counsel for plaintiff, respondent and the hearing Judge; Judge Adams, the TRO was vacated and a date of July 2, 2003 was set for a new TRO hearing to be held in Reno, Nevada. At the July 2, 2003 TRO hearing Judge Adams did not grant a TRO and requested the plaintiff and respondent file a series of three briefs outlining their position. The first brief was filed on July 11, 2003 by our counsel. The plaintiff responded on July 18, 2003 and our counsel filed the final brief on July 25, 2003. At the time of filing this 10QSB quarterly report, the Judge had not ruled on the TRO. The Company’s counsel has responded to the various other suits filed against the Company and its directors. The Company has attempted to remove the cases to federal court and at time of filing this 10QSB have not had a decision from the courts on this filing..
Item 2. Changes in Securities
During the quarter ended June 30, 2003 the Company issued the following shares for the listed consideration
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Date | Shares | Residency | Consideration | Exemption | Citizenship |
May 02/03 | 200,000 | CAN | Consulting | S-8* | CAN |
May 09/03 | 10,000 | USA | Compensation | S-8* | USA |
May 21/03 | 100,000 | CAN | Compensation | S-8* | CAN |
June 09/03 | 300,000 | CAN | Compensation | Reg S | CAN |
June 12/03 | 600,000 | Panama | Consulting | S-8** | EURO |
June 12/03 | 600,000 | USA | Consulting | S-8** | CAN |
June 12/03 | 300,000 | China | Consulting | S-8** | CAN |
June 13/03 | 1,200,000 | CAN | Compensation | Reg S | CAN |
June 13/03 | 1,200,000 | CAN | Compensation | Reg S | CAN |
June 13/03 | 15,000 | CAN | Compensation | S-8* | CAN |
July 02/03 | 20,000 | CAN | Compensation | S-8* | CAN |
*Registered on S-8 on March 12, 2003 |
**Registered on S-8 on June 12, 2003 |
ITEM 3. Default upon Senior Securities |
None |
ITEM 4. Submissions 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 (exhibit reference numbers refer to Item 601 of Regulation SB)
Exhibit Number | Description | Method of Filing |
(3)(i) | Articles of Incorporation (1) | |
(3)(ii) | Bylaws, as amended (2) | |
(10)(iii) | Agreement between Douglas | |
Sommerville and Company dated | ||
12/6/96 (3) | ||
(10)(iv) | Agreement between John Gaetz | |
and the Company dated 12/6/96 (3) | ||
(10)(v) | Sample Agreement among minority | |
Shareholders of UV Systems | ||
Technology, Inc. and the Company | ||
each dated 2/28/97 (3) |
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(10)(vi) | Marketing Distribution Agreement | |
Between UV Systems Technology, Inc. | ||
and the Company (2) | ||
(10)(vii) | Sales Representation Agreement | |
between UV Systems Technology, | ||
Inc. and "The Representative" (2) | ||
(10)(viii) | Exclusive Distributorship Agreement | |
Between UV Waterguard Systems, Inc. | ||
and Chiyoda Kohan Co., Ltd., and NIMAC | ||
Corporation. (2) | ||
(10)(ix) | 1997 Stock Option Plan (4) | |
(10)(x) | Interim Funding Agreement | |
between UVS, MDS and WOF (5) | ||
(10)(xi) | Letter Agreement between the | |
Company and Elco Bank and Trust | ||
Company Limited (6) | ||
(10)(xii) | Loan Agreement between the Company | |
and TD Bank (6) | ||
(10)(xiii) | The Company’s 1999 Long-Term | |
Equity Incentive Plan (7) | ||
(10)(xiv) | Letter Agreement between Service | |
Systems, UVS, MDS and WOF dated | ||
Feb 13, 2000 (7) | ||
(10)(xv) | Lease dated October 2000 between | |
Service Systems, UV Systems and | ||
Slough Estates Canada Limited (8) | ||
(10)(xvi) | Legal Services Plan between Rosenfeld, | |
Goldman & Ware, Inc filed on November | ||
19, 2001(9) | ||
(10)(xvii) | Stock Exchange Agreement with Innovative | |
Fuel Cell Technologies, Inc date Jan 14, 2003 (10) | ||
(10)(xviii) | Sale of UV Systems Technology Inc to | |
65999 BC Ltd agreements dated Jan 15, 2003 (11) | ||
(10)(xx) | Purchase of License Agreement between | Filed Herewith |
Innovative Fuel Cell Technologies, Inc | Electronically | |
and MagPower Systems Inc on | ||
March 14, 2003 (12) | ||
(10)(xxi) | 2003 Benefit Plan of | |
UltraGuard Water Systems Corp (13) | ||
(10) (xxii) | Independent/Consultant Agreement | |
(11) | Statement Regarding Computation | Filed Herewith |
of Per Share Earnings | Electronically | |
(21) | Subsidiaries of the Corporation: | |
UV Systems Technology, Inc., | ||
incorporated in B.C.Canada |
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(31.1) | Certification of Ken Fielding, President and | |
Chief Executive Officer Pursuant to 18 U.S.C. | Filed Herewith | |
Section 1350, Section 906 of the | Electronically | |
Sarbanes-Oxley Act of 2002. | ||
(31.2) | Certification of | John R Gaetz Vice President and |
Chief Financial Officer Pursuant to 18 U.S.C. | Filed Herewith | |
Section 1350, Section 906 of the | Electronically | |
Sarbanes-Oxley Act of 2002. |
(1 | ) | Incorporated by reference to the Corporation's Form 10SB effective on |
January 22, 1997 | ||
(2 | ) | Incorporated by reference to the Corporation's Form S-8 filed with the |
Commission on October 6, 1997. | ||
(3 | ) | Incorporation by reference to the Corporation's Form 10Q for the fiscal |
Year ended February 28, 1997. | ||
(4 | ) | Incorporation by reference to the Corporation's Form 10KSB for the fiscal |
Year ended August 31, 1997. | ||
(5 | ) | Incorporation by reference to the Corporation's Form 10KSB for the fiscal |
Year ended August 31, 1998. | ||
(6 | ) | Incorporation by reference to the Corporation's Form 10KSB for the fiscal |
Year ended August 31, 1999 | ||
(7 | ) | Incorporation by reference to the Corporation's Form 10KSB for the fiscal |
Year ended August 31, 2000 | ||
(8 | ) | Incorporation by reference to the Corporation's Form 10Q for the fiscal |
Quarter ended November 30, 2000. | ||
(9 | ) | Incorporated by reference to the Corporation's Form S-8 filed with the |
Commission on Nov 19, 2001 | ||
(10 | ) | Incorporated by reference to the Corporation's Form S-8 filed with the |
Commission on Jan 14, 2003 | ||
(11 | ) | Incorporated by reference to the Corporation's Form S-8 filed with the |
Commission on Jan 15, 2003 | ||
(12 | ) | Incorporated by reference to the Corporation's Form S-8 filed on |
March 24, 2003. | ||
(13 | ) | Incorporation by reference to the Corporation's Form 10QASB for the fiscal |
period ended March 31, 2003. | ||
(14 | ) | Incorporated by reference to the Corporation's Form S-8 filed on |
June 12, 2003 |
(b) | Reports on Form 8-K |
The Company filed four reports on Form 8-K, | |
On January 14, 2003 reporting the acquisition by stock exchange agreement dated December | |
30, 2002 details of the purchase of Innovative Fuel Cell Technologies | |
On January 15, 2003 reporting the sale of UV Systems Technology Inc to 65999 BC Ltd on | |
Dec 31, 2002. | |
On March 24, 2003 reporting the filing of the 2003 Benefit Plan of UltraGuard Water | |
Systems Corp. | |
On June 12, 2003 reporting the filing of Independent/Consultant Agreement of UltraGuard | |
Water Systems Corp. |
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SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.
ULTRAGUARD WATER SYSTEMS CORP
/s/ Kenneth R. Fielding
Kenneth R. Fielding, President
Date: August 19, 2003 | /s/ Ken Fielding |
Ken Fielding, Director | |
Date: August 19, 2003 | /s/ John R Gaetz |
John R Gaetz, Director |
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