UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998.
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to _______.
Commission File Number: 0-11586
INTERNATIONAL MANAGEMENT & RESEARCH CORPORATION
(Exact name of registrant as specified in its charter)
Pennsylvania 23-0350710
(State or other jurisdiction of (IRS Employer Identification
incorporation or organization) No.)
810 Lombard Street
Philadelphia, Pennsylvania 19147
(Address of principal executive offices) (Zip Code)
(215) 923-6850
(Registrant's telephone number including area code)
N/A
(Former name, former address and former fiscal year, if changed
since last report)
Securities registered pursuant to Section 12(b) of the Act:
NONE.
Securities registered pursuant to Section 12(g) of the
Act:
Common Stock, $.001 par value
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or 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. X Yes No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The company is unable to give an aggregate market value of the
Registrant's Common Stock due to the inactivity of the stock.
Indicate the number of shares outstanding of each of the issuers
shares of common stock, as of the latest practicable date:
As of December 31st 1998, there were outstanding 12,760,140
shares of the Registrant's Common Stock, $.005 par value.
Documents Incorporated by Reference: None
PART I
ITEM 1. BUSINESS
General Development of Business.
At December 31, 1998, International Management & Research
Corporation ("IMRC") through its wholly owned subsidiary IMRC
Holdings Inc. (IMRCH) owned 108,538,930 shares or 33.19% of
Biosonics, Inc. common stock. As of December 31, 1996, IMRCH
owned 38.26% of Biosonics, Inc. common stock. At December 31,
1995 and 1994, IMRC owned in excess of 50% of Biosonics common
stock, accordingly, Biosonics' financial statements were included
in the consolidated financial statements of IMRC. After
Biosonics, in 1996, increased its authorized shares and issued
new shares to numerous individuals, primarily in exchange for
debt, and from the conversion of preferred stock, IMRCH's
ownership of common stock of Biosonics decreased to less than
50%. Accordingly IMRC is no longer able to consolidate with
Biosonics' financial statements. Currently, IMRC's only business
is the ownership of the stock of Biosonics through IMRCH. IMRC
may pursue the acquisition of operating companies. However, IMRC
has an agreement with Biosonics in which Biosonics has the right
of first refusal for any proposal in the health care industry.
IMRC has not actively traded in the last several months. IMRC,
when traded, is over-the-counter on the NASD Bulletin Board.
Year 2000
IMRC's only business is the ownership of stock in Biosonics
through IMRCH, therefore the Company is not directly effected by
the Y2K bug. Biosonics has released a report explaining that
their product is not computerized and therefore not effected, and
the operations of the company, including the computers, software,
telephone and voice mail systems, digital printers, faxes and
other instruments of the office have been upgraded, since the
company moved to a new location. Biosonics has a plan in effect
that will confirm all service, manufacturing and supply companies
supply Y2K compliance letters prior to signing contracts or
agreements.
Employees
As of December 31, 1998, the Company had one employee. Its only
employee is Jack Paller, its current president. If circumstances
warrant, IMRC may engage additional employees to help manage its
activities.
ITEM 2. PROPERTIES.
The Company's principal place of business is 810 Lombard Street,
Philadelphia, PA and the quarterly rent is $446, which is
currently being accrued as an expense.
ITEM 3. LEGAL PROCEEDINGS.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM 5. MARKET FOR THE REGISTRANTS' COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
High Bid Low Bid
1998
First Quarter 0.120 0.070
Second Quarter 0.150 0.070
Third Quarter 0.150 0.020
Fourth Quarter 0.050 0.020
1997
First Quarter 0.010 0.010
Second Quarter 0.125 0.010
Third Quarter 0.125 0.03125
Fourth Quarter 0.120 0.040
The quotations set forth above were derived from National
Quotation Bureau LLC and reflect inter-dealer prices without
mark-up, mark-down or commissions, and may not necessarily
represent actual transactions on the OTC Bulletin Board.
Currently there is no current active trading market of the
Company's stock. As of December 31, 1998, there were
approximately 1,303 record holders of the Company's Common Stock.
The Company has not, since its inception, declared any dividends.
ITEM 6. SELECTED FINANCIAL DATA.
Year Ended December 31
Statement of Loss 1998(1) 1997(1) 1996(1) 1995(1) 1994(1)
Data:
Operating Revenues $0 $0 $0 $62,506 $21,939
Net expenses of
development stage $0 $0 $0 $526,689 $411,521
subsidiary
Net profit (loss)($10,250)($83,124) ($52) ($456,83 ($485,718)
Loss per common $0.00 ($0.01) $0.00 ($0.03) ($0.04)
share
As of December 31,
Balance Sheet Data: 1998(1) 1997(1) 1996(1) 1995(1) 1994(1)
Working
Capital ($460,199)($449,949)($336,825)($3,076,655)($2,759,158)
(Deficit)
Total Assets $117,919 $105,727 $106,588 $242,514 $329,549
Total
Liabilities $578,118 $555,676 $473,413 $3,285,727 $3,066,409
Shareholders'
Deficit ($460,199)($449,949)($366,825)($3,043,213)($2,736,680)
(1) Years ended December 31, 1994 and December 31, 1995 include
the accounts of Biosonics, Inc., of which IMRC through its
wholy-owned subsidiary IMRCH owned in excess of 50% of Biosonics'
common stock. Financial information for the year ended December
31, 1996, 1997 and 1998 do not include Biosonics, Inc. financial
statements.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION.
Liquidity and Capital Resources
During 1998, IMRCH recorded a gain of $80,000 on the transfer of
1,600,000 shares of it's Biosonics Common Stock to three
consultants who provided services to IMRC and Biosonics. The
value of this transfer was $40,000 to the Company and $40,000 to
Biosonics.
During 1997, Dr. Brenman who previously owned more than 5% of
IMRC Common Stock, divested himself in a private transaction to
various individuals, none of which own an aggregate of 5% of IMRC
Common Stock.
During 1996, IMRCH converted its series B preferred stock of
Biosonics Inc. into 7,000,000 shares of common stock of Biosonics
Inc. Also, IMRCH transferred 550,000 shares of Biosonics' common
stock held by it to two outside consultants for certain
advertising and public relations services provided to Biosonics.
During 1993 and 1994, IMRC borrowed an aggregate of $335,000,
$120,000 of which was pursuant to loans that were convertible
into Biosonics common stock owned by IMRCH, at $.01 and $.02 per
share. With respect to $215,000 of the loans, IMRCH agreed to
issue to the lenders 3,000,000 shares of Biosonics common stock
owned by IMRCH. These shares were issued by IMRCH in 1996. In
addition, during 1994, IMRCH raised $190,161 through the sale of
Biosonics common stock owned by IMRCH at a range of $.02 to $.05
per share. In 1996, Biosonics assumed the obligations of the
IMRC loans totaling $335,000. In addition, Biosonics assumed
IMRC's obligation in connection with the $190,161 raised by IMRC
for the sale of Biosonics stock. Biosonics also assumed $68,207
in loans and accrued interest owed to family members of the
Company's president by IMRC. These obligations were then settled
by Biosonics through the conversion of these liabilities into
15,368,820 shares of Biosonics common stock.
The Company is a holding company. Aside from payment of salary
to an officer of the Company and certain overhead expenses,
substantially all of the consolidated results of operations in
1995 and 1994 relate to the operations of Biosonics. As
previously noted, the Company's 1998, 1997 and 1996 financial
statements do not include the accounts of Biosonics. As a
holding company, the Company does not have any substantial assets
other than it's investment in the common stock of Biosonics, Inc.
with a market value of approximately $3.2 million at December 31,
1998.
In recent years, the Company has acted as the receiving and
disbursement agent for all cash receipts and disbursements for
Biosonics. The resulting receivable or payable, as the case may
be, is reflected in the Company's balance sheets and cash flow
statements as advance to or from affiliates. The Company expects
to continue this arrangement through 1998.
Results of Operations
In 1998, IMRC had no operating activities except for certain
services provided in connection with IMRCH's holdings of
Biosonics' common stock.
The Company believes there will be no significant adverse impact
from inflation and changing prices on the Company's operations.
During 1996, IMRCH transferred certain shares of Biosonics common
stock holdings which resulted in a gain of $85,000.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements of International Management & Research
Corporation are set forth in this report beginning on page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following sets forth certain information about the sole
director and officer of IMRC.
Jack Paller, age 70, has been President, Treasurer and a director
of IMRC since its inception in 1971. Currently, Mr. Paller also
serves as President and a director of IMRC Holdings, Inc. and
serves as President, Chief Executive Officer, and a director of
Biosonics, Inc.
Directors of IMRC hold office for the ensuing year and until
their respective successors have been duly elected and qualified.
Compliance with Section 16(a) of the Securities Exchange Act of
1934.
Section 16(a) of the Securities Exchange Act of 1934 requires
IMRC's officers and directors, and persons who own more than ten
percent (10%) of IMRC's Common Stock, to file reports of
ownership and changes in ownership with the Securities and
Exchange Commission. Such persons are required to furnish IMRC
with copies of all Section 16(a) forms they file.
IMRC notes that IMRC Holdings, Inc. may have been required to
file, and has not filed, Forms 4 reporting certain of the
transactions in IMRC's Common Stock.
ITEM 11. EXECUTIVE COMPENSATION.
Summary Compensation Table
Annual Compensation
Name & Principal Position Year Salary $ Bonus $
Jack Paller 1998 42,000.00 (1) -
Chairman, President and 1997 42,000.00 (1) -
Chief Executive Officer 1996 42,000.00 (1) -
(1) Mr. Paller, the Company's sole director and executive
officer, has deferred the receipt of all of his salary every year
from the year ended December 31, 1990 through December 31, 1998,
and Mr. Paller did not receive or defer any other benefits or
compensation for serving as an executive officer of IMRC during
those years. In his capacity as an executive officer of
Biosonics, Mr. Paller deferred his salary from Biosonics for the
years ended December 31, 1989 through 1998, including $103,000 of
deferred salary per year for the years ended December 31, 1995,
1996 and 1998.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table lists the number of shares of IMRC Common
Stock beneficially owned by all persons known to IMRC to be
beneficial owners of more than 5% of IMRC Common Stock and by
the sole director and officer of IMRC and the percentage of all
outstanding shares held by such person:
Name of Beneficial Owner No. of Shares Percentage
Jack Paller (1) 5,131,660 40.2%
(1) Mr. Paller's address is 185 Commerce Drive, Fort Washington,
Pennsylvania 19034
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
All of the shares of common stock of Biosonics' owned by IMRCH
and Jack Paller are subject to a securities restriction agreement
which prevents any sales by them of the Common Stock of Biosonics
at less than $.05 per share.
During 1996, IMRC converted its series B preferred stock of
Biosonics Inc. into 7,000,000 shares of common stock of Biosonics
Inc. Also IMRC transferred 550,000 shares of Biosonics' Common
Stock held by it to two outside consultants for certain
advertising and public relations services provided to Biosonics.
During the period of 1992 through 1994 IMRC borrowed $352,661
from approximately 25 individuals. These loans were convertible
into common stock of Biosonics owned by IMRCH. The total number
of shares issuable upon conversion of all the loans was
15,368,820 shares of Biosonics common stock. The proceeds of the
loans were lent to Biosonics to use for working capital, and none
of the individuals making the loans were officers or affiliates
of the Company. In 1996 Biosonics and IMRC entered into an
agreement pursuant to which Biosonics would assume responsibility
for the repayment of all the money under these loans and the
issuance of the stock upon conversion of the loans in exchange
for the transfer by IMRCH to Biosonics of 15,368,820 shares of
common stock owned by it and canceling the indebtedness owed to
IMRC by Biosonics.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES, AND REPORTS
ON FORM 8-K.
A FINANCIAL STATEMENTS & EXHIBITS
1 Financial Statements Page
Auditors' Report F-1
Balance Sheets at December 31, 1997 and 1998 F-2
Statements of Operations for Each of the Three
Years in the Period Ended December 31, 1998 F-3
Statements of Minority Interest and Changes in
Shareholders' Equity (deficiency) for the Three F-4
Years in the Period ended December 31, 1998
Statements of Cash Flows for each of the Three
Years in the Period ended December 31, 1998 F-5
Notes to Financial Statements F-6
2 All schedules have been omitted because they are
not applicable or the required information is shown in
the consolidated financial statements or notes therein
3 Exhibits
*3.1 Articles of Incorporation (Exhibit to Registrant's
Registration Statement on Form 10 ["Form 10"])
*3.5 By-Laws of Registrant, as amended (Exhibit to
Registrant's Form 10)
*10.1 Agreement between Registrant and Biosonics with respect to
opportunities in the field of medical technology. (Exhibit
to Biosonics, Inc. Registration Statement on Form S-1
(File No. 2-27024) [the "Form S-1"]
*10.7 Securities Restriction Agreement dated September 30,
1987 between Registrant and Biosonics, Jack and Sarah
Paller, and Henry S. Brenman (Exhibit to 1987 Form 10-K)
27 Financial Data Schedule
B REPORTS ON 8-K
The registrant did not file any reports on Form 8-K during
the quarter ended December 31, 1998
* Incorporated by reference.
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant had duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
INTERNATIONAL MANAGEMENT &
RESEARCH CORPORATION
By: /s/Jack Paller
Jack Paller, President
Date: April 14, 1999
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.
By: /s/Jack Paller
Jack Paller, President,
Chairman (Principal Executive
Officer), Treasurer (Principal
Financial Officer and Principal
Accounting Officer) and Director
Date: April 14, 1999
INTERNATIONAL MANAGEMENT & RESEARCH
CORPORATION
* * *
December 1998, 1997 and 1996
INTERNATIONAL MANAGEMENT & RESEARCH CORPORATION
CONTENTS
December 31, 1998 and 1997
Page Number
Auditors' Report F-l
Consolidated Financial Statements:
Balance Sheets at December 31, 1998 and 1997 F-2
Statements of Operations for Each of the
Three Years in the Period Ended December 31, 1998 F-3
Statements of Changes in Shareholders'
Deficiency for Each of the Three
Years in the period Ended December 31, 1998 F-4
Statements of Cash Flows for Each of the Three
Years in the Period Ended December 31, 1998 F-5
Notes to Consolidated Financial Statements F-6 through F-11
INDEPENDENT AUDITORS' REPORT
Board of Directors
International Management & Research Corporation
We have audited the accompanying consolidated balance sheets
of International Management & Research Corporation as of December
31, 1998 and 1997,and the related consolidated statements of
operations, changes in shareholders' deficiency, and cash flows
for December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we plan
and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects, the
consolidated financial position of International Management &
Research Corporation as of December 31, 1998 and 1997, and the
consolidated results of its operations and its cash flows for
each of the three years in the period ended December 31, 1998 in
conformity with generally accepted accounting principles.
/s/Morris J. Cohen & Co.,
P.C.
MORRIS J. COHEN & CO., P.C.
Philadelphia, Pennsylvania
February 23, 1999
F-1
INTERNATIONAL MANAGEMENT & RESEARCH CORPORATION
CONSOLIDATED BALANCE SHEETS
December 31, 1998 and 1997
ASSETS
1998 1997
Current assets
Cash $ 5,837
Notes receivable $ 23,469 37,000
Advances to affiliate 32,000 62,450
Other receivable 62,450 440
________ _______
Total assets $117,919 $105,727
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
Current liabilities
Accrued payroll and rent, officer $ 422,528 $ 378,744
Accounts payable and accrued expenses 60,326 60,326
Due to affiliate 95,264 116,606
Total current liabilities 578,118 555,676
Commitments and contingencies (Note 5)
Shareholders' deficiency
Common stock, $.005 par value,
50,000,000 shares authorized,
12,760,140 shares issued and
outstanding 63,801 63,801
Capital in excess of par value 1,072,812 1,072,812
Accumulated deficit (1,596,812) (1,586,562)
(460,199) (449,949)
Total liabilities and
shareholders' deficiency $ 117,919 $ 105,727
The accompanying notes are an integral part of these financial
statements.
F-2
INTERNATIONAL MANAGEMENT & RESEARCH CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31, 1998, 1997 and 1996
1998 1997 1996
General and administrative
expenses $ 91,780 $ 84,654 $100,157
Other income
Gain on sale of securities 80,000 85,000
Interest income 1,530 1,530 15,105
81,530 1,530 100,105
Net Loss $(10,250) $(83,124) $ (52)
Loss per common share
outstanding $(.00) $(.01) $(.00)
The accompanying notes are an integral part of these financial
statements.
F-3
INTERNATIONAL MANAGEMENT & RESEARCH CORPORATION
CONSOLIDATED STATEMENTS OF
CHANGES IN SHAREHOLDERS' DEFICIENCY
Shareholders' Deficiency
Capital in
Common Stock Excess of Accumulated
Shares Amount Par Value Deficit Total
Balance at
December
31, 1995 12,760,140 $63,801 $7,676,063 $(10,783,077)(3,043,213)
Adjustment for
change in
reporting entity(1) (6,603,251) 9,279,691 2,676,440
Net loss, year ended
December 31, 1996 (52) (52)
Balance at
December
31, 1996 12,760,140 63,801 1,072,812 (1,503,438) (366,825)
Net loss, year
ended December 31,
1997 __________ _______ ________ (83,124) (83,124)
Balance at
December
31, 1997 12,760,140 63,801 1,072,812 (1,586,562) (449,949)
Net loss, year ended
December 31,
1998 _________ ______ ________ (10,250) (10,250)
Balance at
December
31, 1998 12,760,140 63,801 1,072,812 (1,596,812) (460,199)
(1) The Company's ownership interest in Biosonics, Inc. was more
than 50% until September 1996. Accordingly, the accounts of
Biosonics, Inc. were included in the Company's consolidated
financial statements through December 31, 1995, however, they
were not included in the Company's consolidated financial
statements in 1997 and 1996.
The accompanying notes are an integral part of these financial
statements.
F-4
INTERNATIONAL MANAGEMENT & RESEARCH CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 1998, 1997 and 1996
1998 1997 1996
Cash flows from operating activities
Net loss $(10,250) (83,124) (52)
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities
Securities transferred on behalf
of affiliate (40,000)
Changes in operating assets
and liabilities
Prepaid expenses and other
current assets 440 (440) 4,968
Accrued payroll
and rent, officer 43,784 43,784 43,784
Accounts payable and
accrued expenses ______ ______ 5,210
4,224 43,344 53,962
Net cash provided by (used in)
operating activities (6,026) (39,780) 53,910
Cash flows from investing activities
Decrease in notes receivable 5,000 60,085
Advances from affiliate 18,658 38,479 40,248
Net cash provided by
investing activities 23,658 38,479 100,333
Cash flows from financing activities
Principal payments of note payable (231,100)
Net cash used in financing activities (231,100)
Increase (decrease) in cash 17,632 (1,301) (76,757)
Cash, beginning 5,837 7,138 83,895
Cash, ending $23,469 $5,837 $ 7,138
The accompanying notes are an integral part of these financial
statements.
F-5
INTERNATIONAL MANAGEMENT & RESEARCH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 1998, 1997 and 1996
1. Nature of business and significant accounting policies
Business
International Management & Research Corporation (IMRC)(the
Company) is a holding Company with investments in Biosonics,
Inc., a development stage corporation involved in medical
products development.
Summary of significant accounting policies
Consolidation policy
At December 31, 1998 and 1997, IMRC, through its wholly-owned
subsidiary - IMRC Holdings, Inc., (IMRCH), owned 108,538,930
and 110,138,930 shares, respectively, or 33.19% and 35.76%,
respectively, of the common stock of Biosonics, Inc.
Accordingly, for 1998 and 1997, the Company's investment
is being accounted for using the equity method (cost of $-0-,
market value of approximately $2.7 million and $6.6 million
at December 31, 1998 and 1997, respectively).
Stock ownership
The Company's president owns approximately 40% of the common
stock of the Company and 4% of the common stock of Biosonics,
Inc.
Accounting estimates
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 and disclosure of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could
differ from those estimates.
Cash transactions
During 1998, 1997 and 1996 IMRC acted as the disbursing and
receiving agent for all cash disbursements and receipts for
Biosonics, Inc.
Loss per share
Loss per share was calculated based on the weighted average
number of shares outstanding of 12,760,140 for each of the
years in the three-year period ended December 31, 1998.
F-6
INTERNATIONAL MANAGEMENT & RESEARCH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 1998, 1997 and 1996
1. Nature of business and significant accounting policies
(Continued)
Deferred income taxes
Deferred income taxes are provided for the temporary
differences between the financial reporting basis and the tax
bases of the Company's assets and liabilities.
2. Advances to affiliate and due to affiliate
At December 31, 1998 and 1997, advances to affiliate and due
to affiliate represent unsecured, non-interest bearing
advances, to and from Biosonics, Inc.
3. Shareholders' equity
The Company is subject to a securities restriction agreement
with the Pennsylvania Securities Commission which provides
that it will not sell any of its shares of Biosonics, Inc.'s
common stock for less than $.05 per share. This restriction
also applies to certain controlling shareholders of
Biosonics, Inc.
4. Income taxes
The Company and its wholly-owned subsidiary file a
consolidated federal tax return. The Company has available
at December 31, 1998, unused operating loss carryforwards
which may provide future tax benefits expiring as follows:
Year of Expiration Carryforwards
2010 36,000
2011 39,000
$75,000
The tax effects of temporary differences that give rise to
deferred tax assets at December 31, 1998 and 1997 are as
follows:
1998 1997
Net operating loss carryforwards $25,000 $45,000
Less valuation allowance 25,000 45,000
Net deferred tax asset $ -0- $ -0-
INTERNATIONAL MANAGEMENT & RESEARCH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 1998, 1997 and 1996
4. Income taxes (Continued)
SFAS No. 109 requires that the Company record a valuation
allowance when it is "more likely than not that some portion
or all of the deferred tax assets will not be realized." It
further states that "forming a conclusion that a valuation
allowance is not needed is difficult when there is negative
evidence such as cumulative losses in recent years." As the
ultimate utilization of net operating loss carryforwards and
tax credits depends on the Company's ability to generate
sufficient taxable income in the future, the losses in recent
years make it appropriate to record a valuation allowance.
5. Commitments and contingencies
Leases
The Company leases its office from an officer of the Company
under a month-to-month operating lease with lease payments
aggregating $1,784 annually. Accrued but unpaid rents
related to this lease of $30,528 and $28,744 at December 31,
1998 and 1997, respectively, are included in accrued
expenses.
Rent expense was $1,784, for each of the years ended December
1998, 1997 and 1996.
Legal matters
Unissued securities
During 1993 and 1994, IMRC borrowed an aggregate of $335,000,
$120,000 of which was pursuant to loans that were convertible
into Biosonics common stock owned by IMRCH, at $.01 and $.02
per share. With respect to $215,000 of the loans, IMRCH
agreed to issue to the lenders 3,000,000 shares of Biosonics
common stock owned by IMRCH. These shares were issued by
IMRCH in 1996. In addition, during 1994, IMRCH raised
$190,161 through the sale of Biosonics common stock owned by
IMRCH at a range of $.02 to $.05 per share. In 1996,
Biosonics assumed the obligations of the IMRC loans totaling
$335,000. In addition, Biosonics assumed IMRC's obligation
in connection with the $190,161 raised by IMRC for the sale
of Biosonics stock. Biosonics also assumed $68,207 in loans
and accrued interest owed to family members of the Company's
president by IMRC. These obligations were then settled by
Biosonics through the conversion of these liabilities into
15,368,820 shares of Biosonics common stock.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires
officers, directors and entities owning more than ten percent
of a company's common stock to file reports of changes in
ownership with the SEC and to provide the company with copies
of such forms.
F-8
INTERNATIONAL MANAGEMENT & RESEARCH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 1998, 1997 and 1996
5. Commitments and contingencies (Continued)
Other matters
IMRC has an agreement with Biosonics, Inc. in which Biosonics
has the right of first refusal on any proposal for
acquisitions in the health care industry.
6. Supplemental disclosure of cash flow information
1998 1997 1996
Cash paid for
Interest -0- 1,314 61,869
Supplemental schedule of noncash financing activities
In 1998, the Company gave a total of 1,600,000 of its shares
in Biosonics, Inc. to three entities who provided consulting
services to the Company valued at $40,000 and to Biosonics,
also valued at $40,000. The Company reduced its loan payable
to Biosonics, Inc. by $40,000 for the value of shares issued
on Biosonics, Inc.'s behalf.
In 1996, the Company forgave notes and accrued interest
receivable from Biosonics, Inc. totaling $379,968 in exchange
for Biosonics, Inc. assuming certain liabilities of the
Company.
7. Interest expense
Interest expense for the years ended December 1998, 1997, and
1996 was $-0-, $1,314, and $46,153, respectively.
8. Transactions in stock of Biosonics, Inc.
During 1998 IMRCH recorded a gain of $80,000 on the transfer
of 1,600,000 shares of its Biosonics common stock to
consultants who had provided services to IMRC valued at
$40,000 and to Biosonics, also valued at $40,000.
During 1996, IMRCH converted its Series B preferred stock of
Biosonics, Inc. into 7,000,000 shares of common stock of
Biosonics, Inc. Also, IMRCH recorded a gain of $85,000 on the
transfer of 550,000 shares of its Biosonics common stock to
consultants who had provided services to Biosonics, Inc.
IMRCH may have been required to file and has not filed
required forms reporting the transactions relating to
Biosonics common stock described above.
F-9
INTERNATIONAL MANAGEMENT & RESEARCH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998, 1997 and 1996
9. Investment in Biosonics, Inc.
Summarized financial information for this affiliate in 1998
and 1997 are as follows:
1998 1997
Earnings data
Net sales $ $26,763
Gross profit (loss) 4,124
Net loss (866,454)
Balance sheet data
Current assets $ $132,872
Noncurrent assets 22,251
Current liabilities 2,456,138
Shareholders' deficiency (2,301,015)
10. Quarterly results (Unaudited)
Net
Income
Gross Net (Loss)
Profit Income Per
Sales (Loss) (Loss) Share
1998 -1ST Quarter $(15,220) $(.00)
-2nd Quarter 29,094 .00
-3rd Quarter 12,384) (.00)
-4th Quarter (11,740) (.00)
Total $(10,250) (.00)
1997-1st Quarter (15,167) (.00)
-2nd Quarter (46,047) (.01)
(18,497) (.00)
(3,413) (.00)
-0- -0- (83,124) (.01)
1996 (17,998) (.00)
13,285) (.00)
44,231 .00
(13,000) (.00)
-0- -0- (52) (0.00)
F-10
INTERNATIONAL MANAGEMENT & RESEARCH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998, 1997 and 1996
10. Quarterly results (Unaudited)(Continued)
The following is a reconciliation of 1998 quarterly results
(unaudited) as originally reported in the Company's 1998
Form 10-Q filing, adjusted for consulting fees which were
not previously reported in the 2nd quarter and for a
clerical error made in the 3rd quarter.
ORIGINALLY
REPORTED ADJUSTMENT AS ADJUSTED
1998-2nd Quarter
Net income 69,094 (40,000) 29,094
Net income per share .005 (.003) .002
3rd Quarter Net income (loss)
Net income (loss) 69,094 (81,478) (12,384)
per share
.005 (.006) (.001)
F-11