EXHIBIT 1
DISTECH LIMITED AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2000 AND 1999
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Independent Auditors' Report................................................ 1
Consolidated Balance Sheets................................................. 2
Consolidated Statements of Operations and Comprehensive Loss................ 3
Consolidated Statements of Stockholders' Deficit ........................... 4
Consolidated Statements of Cash Flows....................................... 5
Notes to Consolidated Financial Statements.................................. 7
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Distech Limited and Subsidiary
We have audited the accompanying consolidated balance sheets of Distech Limited
and subsidiary (the "Group") as of March 31, 2000 and 1999, and the related
statements of operations and comprehensive loss, stockholders' deficit and cash
flows for the years then ended. These financial statements are the
responsibility of the Group's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audits 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 financial statements referred to above present fairly, in
all material respects, the financial position of Distech Limited and subsidiary
as of March 31, 2000 and 1999, and the results of its operations and its cash
flows for the years then ended, in conformity with accounting principles
generally accepted in the United States.
As described in Note 13, the Group was acquired on November 30, 2000 by Liquitek
Enterprises, a publicly traded company in the United States, in a business
combination accounted for as a purchase.
BDO INTERNATIONAL
April 26, 2001
Auckland, New Zealand
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DISTECH LIMITED AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
AS AT MARCH 31, 2000 AND 1999
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NOTES 2000 1999
-------------------- -------------------
ASSETS
CURRENT ASSETS
Cash $ 37,591 $ 10,892
Accounts receivable 8,196 135
Inventories 3 200,382 234,379
Related party advances 4 - 53,650
Other current assets 50,481 14,532
-------------------- -------------------
296,650 313,588
PLANT AND EQUIPMENT, NET 5 81,123 93,685
INTANGIBLE ASSETS, NET 6 252,653 270,591
-------------------- -------------------
$ 630,426 $ 677,864
==================== ===================
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 1,057,240 $ 861,137
Capital lease obligations, current portion 7 17,708 6,058
Due to stockholders 9 860,154 850,655
Other loans 10 79,278 106,720
-------------------- -------------------
2,014,380 1,824,570
CAPITAL LEASE OBLIGATIONS, NET OF CURRENT
PORTION 7 12,463 7,204
COMMITMENTS AND CONTINGENCIES 12
STOCKHOLDERS' DEFICIT
Common stock, no par value; 3,536,851 and 3,221,900
shares issued and outstanding at March 31, 2000
and 1999, respectively 3,421,877 2,632,642
Accumulated deficit (4,942,242) (3,798,818)
Accumulated other comprehensive income 123,948 12,266
-------------------- -------------------
(1,396,417) (1,153,910)
-------------------- -------------------
$ 630,426 $ 677,864
==================== ===================
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PAGE 2 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
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DISTECH LIMITED AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
FOR THE YEARS ENDED MARCH 31, 2000 AND 1999
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2000 1999
-------------------- -------------------
NET SALES $ 21,368 $ 155,057
COST OF SALES 151,616 314,753
-------------------- -------------------
GROSS MARGIN (130,248) (159,696)
OPERATING EXPENSES 815,908 1,272,273
-------------------- -------------------
LOSS FROM OPERATIONS (946,156) (1,431,969)
OTHER INCOME (EXPENSE)
Interest income 991 5,442
Interest expense (146,262) (147,103)
Forgiveness of advance (52,292) (91,339)
Other 295 4,687
-------------------- -------------------
(197,268) (228,313)
-------------------- -------------------
NET LOSS $ (1,143,424) $ (1,660,282)
OTHER COMPREHENSIVE INCOME
Foreign currency translation 111,682 (15,151)
-------------------- -------------------
COMPREHENSIVE LOSS $ (1,031,742) $ (1,675,433)
==================== ===================
Basic and diluted loss per common share $ (0.34) $ (0.54)
==================== ===================
Basic and diluted comprehensive loss per common share $ (0.31) $ (0.54)
==================== ===================
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING DURING
THE YEAR 3,379,375 3,098,450
==================== ===================
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PAGE 3 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
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DISTECH LIMITED AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED MARCH 31, 2000 AND 1999
- --------------------------------------------------------------------------------------------------------------------------------
Common Stock Accumulated Other
---------------------------------- Accumulated Comprehensive
Shares Amount Deficit Income Total
------------- ------------------- ------------------- -------------------- --------------------
BALANCE - MARCH 31, 1998 2,975,000 $ 1,973,913 $ (2,138,536) $ 27,417 $ (137,206)
Issuance of common stock 246,900 658,729 - - 658,729
Net loss - - (1,660,282) - (1,660,282)
Other comprehensive loss - - - (15,151) (15,151)
------------- ------------------- ------------------- -------------------- --------------------
BALANCE - MARCH 31, 1999 3,221,900 2,632,642 (3,798,818) 12,266 (1,153,910)
Issuance of common stock 314,951 789,235 - - 789,235
Net loss - - (1,143,424) - (1,143,424)
Other comprehensive income - - - 111,682 111,682
------------- ------------------- ------------------- -------------------- --------------------
BALANCE - MARCH 31, 2000 3,536,851 $ 3,421,877 $ (4,942,242) $ 123,948 $ (1,396,417)
============= =================== =================== ==================== ====================
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PAGE 4 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
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DISTECH LIMITED AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, 2000 AND 1999
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2000 1999
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ 1,143,424 $ 1,660,282
Adjustments to reconcile net loss to net cash used in operating
activities
Depreciation and amortization 39,416 40,234
Loss on disposal of asset 2,699 452
Write-off of related party advance 52,292 0
Interest credited to shareholders advances 61,521 96,069
Services credited to shareholders advances 0 50,981
Stock issued for services 195,502 3,691
Stock issued for interest 12,220 0
Services capitalized to share application account 876,008 0
Changes in operating assets and liabilities
Accounts receivable (8,373) 1,048
Inventories 20,501 35,548
Other assets (31,522) 11,244
Accounts payable and accrued expenses (562,270) 499,169
----------- -----------
NET CASH USED IN OPERATING ACTIVITIES (485,431) (921,846)
CASH FLOWS FROM INVESTING ACTIVITIES
Advances 0 (105)
Expenditure relating to patents (17,828) (16,564)
Proceeds from disposal of equipment 650 0
Acquisitions of property, plant and equipment (2,078) (33,692)
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (19,256) (50,361)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on loans (104,018) (421,808)
Advances from stockholders 86,849 540,278
Repayment of stockholder advances (58,250) 0
Principal payments on capital lease obligation (2,794) (1,307)
Net proceeds from issuance of common stock 611,293 649,115
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 533,080 766,278
----------- -----------
NET INCREASE (DECREASE) IN CASH 28,393 (205,929)
Foreign Currency Translation Adjustments (1,694) (10,449)
----------- -----------
CASH - beginning of year 10,892 227,270
----------- -----------
CASH - end of year $ 37,591 $ 10,892
=========== ===========
(continued)
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PAGE 5 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
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DISTECH LIMITED AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, 2000 AND 1999
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for interest $ 72,522 $ 51,034
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PAGE 6 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
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DISTECH LIMITED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2000 AND 1999
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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
Distech Limited (the "Company") was incorporated in New Zealand on August 25,
1995 under the New Zealand Companies Act of 1993. The Company is engaged,
primarily in New Zealand, in the commercialization of low temperature vacuum
mechanical vapour recompression evaporation technology capable of removing
organic and inorganic contaminants from liquids. The Company has patents
registered worldwide on this technology.
FOREIGN CURRENCY TRANSLATION
The Company's position and results of operations are measured using the
Company's local currency, the New Zealand dollar, as the functional currency.
Revenues and expenses have been translated into U.S. dollars at average exchange
rates prevailing during the periods. Assets and liabilities have been translated
at the rates of exchange on the balance sheet date. The resulting translation
gain and loss adjustments are recorded directly as a separate component of
stockholders' deficit. Foreign currency translation adjustments resulted in
gains (losses) of $111,682 and $(15,151) in fiscal 2000 and 1999, respectively.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the holding company (Distech
Limited) and its fully owned subsidiary (Distech USA, Inc) accounted for using
the purchase method as prescribed by accounting principles generally accepted in
the United States ("GAAP"). All significant intercompany transactions have been
eliminated in consolidation.
USE OF ESTIMATES
Management uses estimates and assumptions in preparing financial statements in
accordance with GAAP. Such estimates and assumptions affect the reported amounts
of certain assets and liabilities, disclosures relating to any contingent assets
and liabilities, and the reported amounts of certain expenses. Actual results
could vary from the estimates used to prepare the accompanying financial
statements.
CONCENTRATIONS OF CREDIT RISK
The Company extends credit to its customers based upon its evaluation of each
customer's financial condition and credit history. The Company generally does
not require collateral from its customers. Should a customer be unable to meet
its obligation to the Company, the accounting loss would equal the recorded
accounts receivable.
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PAGE 7
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DISTECH LIMITED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2000 AND 1999
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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
CONCENTRATIONS OF CREDIT RISK (continued)
For the years ended March 31, 2000 and 1999 the Company had three major
customers who accounted for significantly all sales.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Management believes that the carrying amounts of the Company's financial
instruments approximate their fair value at March 31, 2000 and 1999.
INVENTORIES
Inventories are valued at the lower of cost (using the first-in, first-out
method) or estimated market.
PLANT AND EQUIPMENT
Plant and equipment are stated at cost. Major renewals and improvements are
capitalized, while replacements, maintenance and repairs that do not
significantly improve or extend the useful life of the asset are expensed when
incurred.
All plant and equipment is being depreciated using accelerated methods.
Machinery capitalized for research and development projects with alternative
future uses (see RESEARCH AND DEVELOPMENT below) are depreciated using the
straight-line method over the shorter of 10 years or the estimated life of the
project. Leasehold improvements are amortized over the shorter of the estimated
useful life of the asset or the remaining lease term.
INTANGIBLE ASSETS
Intangible assets consist primarily of goodwill and patent costs. Goodwill and
patents are amortized using the straight-line method over estimated lives of 20
years and 12 years, respectively.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company reviews the carrying values of its long-lived and identifiable
intangible assets for possible impairment whenever events or changes in
circumstance indicate that the carrying amount of the assets may not be
recoverable. If the cost basis of a long-lived asset is greater than the
projected future undiscounted net cash flows from such asset (excluding
interest), an impairment loss is recognized. Impairment losses are calculated as
the difference between the cost basis of an asset and its estimated fair value.
Any long-lived assets held for disposal are reported at the lower of their
carrying amounts or fair values less costs to sell. During the years ended March
31, 2000 and 1999, no valuation adjustments were required. As such, the
Company's long-lived assets are stated at cost less accumulated depreciation and
amortization.
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DISTECH LIMITED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2000 AND 1999
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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
REVENUE RECOGNITION
Revenue is recognized when products are shipped to customers.
RESEARCH AND DEVELOPMENT
All research and development costs are expensed when incurred except for the
costs of materials and equipment or facilities that are acquired or constructed
for research and development activities that have future alternative uses (in
research and development projects or otherwise). Such costs are capitalized as
tangible assets and depreciated over the shorter of the estimated life of the
project or 10 years.
INCOME TAXES
The company is taxed under the provisions of the New Zealand income taxation
laws. Taxation is payable at 33% on taxable profits. Due to losses incurred to
date, no taxation is currently payable.
Using the liability method required by Statement of Financial Accounting
Standards No. 109, "ACCOUNTING FOR INCOME TAXES" ("SFAS 109"), the estimated tax
effects of temporary differences between financial and income tax reporting are
recorded in the period in which the events occur. Such differences between the
financial and tax bases of assets and liabilities result in future tax
deductions or taxable income (Note 10).
COMPREHENSIVE INCOME
The Company discloses comprehensive income as required by Statement of Financial
Accounting Standards No. 130, "REPORTING COMPREHENSIVE INCOME". Other
comprehensive income, as defined, includes unrealized gains or losses on foreign
currency translations, net of deferred taxes, as recorded by the Company in
accordance with Statement of Financial Accounting Standards No. 52, "FOREIGN
CURRENCY TRANSLATION".
LOSS PER COMMON SHARE
In accordance with Statement of Financial Accounting Standards No. 128,
"Earnings per Share," basic loss per share is computed by dividing the loss
attributable to common stockholders by the weighted average number of common
shares outstanding during the period. For the years ended March 31, 2000 and
1999, the Company had not issued any securities that could potentially dilute
loss per common share. The weighted average number of common shares outstanding
for the years ended March 31, 2000 and 1999 are 3,379,375 and 3,098,450,
respectively.
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PAGE 9
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DISTECH LIMITED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2000 AND 1999
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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
COMMON STOCK ISSUED FOR SERVICES
The Company accounts for common stock issued for non-employee services using
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation".
2. GOING CONCERN
Since incorporation, the Company has experienced significant operating losses.
The accompanying consolidated financial statements have been prepared on a going
concern basis based on forecasted future results and a letter of support from
the parent company (see Note 13) Liquitek Enterprises Inc, stating it will not
withdraw its support within the foreseeable future.
Should the Company be unable to continue operations, the going concern basis may
be invalid and provision would have to be made for any possible loss on
realization of the Company's assets and for any other liabilities which may
arise should the Company cease operations.
3. INVENTORIES
Inventory consists of the following at December 31:
2000 1999
------------------ ------------------
Raw materials $ 48,525 $ 76,966
Work-in-process 11,527 8,005
Finished goods 140,330 149,408
------------------ ------------------
$ 200,382 $ 234,379
================== ==================
4. RELATED PARTY ADVANCES
Funds were advanced during the 1999 fiscal year to Global Distillation Services
Inc ("GDS"), a company incorporated in the United States. The advances were
forgiven in fiscal 1999, and, accordingly, a loss in the amount of $91,339 is
included in the accompanying March 31, 1999 consolidated statement of operations
and comprehensive loss.
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PAGE 10
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DISTECH LIMITED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2000 AND 1999
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4. RELATED PARTY ADVANCES (continued)
In an agreement dated 25th August 1995, Distech accepted assignment from D E J
Ward of a debt owed to him by Milcon Developments (NZ) Limited (the "Ward
Advance"). Mr. Dudley Ward is a Director of the Company and is a 25%
shareholder, including ownership through various entities of which Mr. Dudley
Ward has voting and/or dispositive power. The debt is repayable to the Company
on demand and bears interest at 1% over the BNZ Mortgage One interest rate or
equivalent (9% at March 31, 2000 and 1999). The debt is unsecured.
During fiscal 2000, the Directors of the Company waived repayment of the Ward
Advance under a deed of forgiveness of debt. The loss of $52,292 is included in
the accompanying March 31, 2000 consolidated statement of operations and
comprehensive loss.
5. PLANT AND EQUIPMENT
Plant and equipment consist of the following as of March 31:
2000 1999
------------------- -----------------
Motor vehicles $ 14,705 $ 15,656
Plant & Equipment 65,995 69,197
Furniture, fixtures and equipment 77,041 60,764
Leasehold improvements 3,739 -
------------------- -----------------
161,480 145,617
Accumulated depreciation and amortization (80,357) (51,932)
------------------- -----------------
$ 81,123 $ 93,685
=================== =================
Depreciation expense for the years ended March 31, 2000 and 1999 totaled $21,074
and $22,076, respectively. Included in plant and equipment at March 31, 2000 are
costs totaling $50,118 for research and development equipment with alternative
future uses that were capitalized in fiscal 1998.
6. INTANGIBLE ASSETS
2000 1999
------------------- -----------------
Goodwill acquired through purchase of
business in 1995 $ 250,590 $ 266,800
Accumulated amortization (57,427) (47,801)
------------------- -----------------
193,163 218,999
(continued)
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PAGE 11
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DISTECH LIMITED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2000 AND 1999
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6. INTANGIBLE ASSETS (continued)
Patent costs 73,771 60,251
Accumulated amortization (14,281) (8,659)
------------------- -----------------
59,490 51,592
------------------- -----------------
Total $ 252,653 $ 270,591
=================== =================
Amortization expense for the years ended March 31, 2000 and 1999 totaled $19,382
and $18,157 respectively.
7. CAPITAL LEASE OBLIGATIONS
The Company leases equipment under several capital lease obligations. At March
31, 2000 and 1999, these assets are included in plant and equipment in the
accompanying consolidated balance sheets at $27,754 and $15,130, respectively,
less accumulated amortization in the amount of $4,071 and $1,086, respectively.
Future minimum lease payments required under capital lease obligations are as
follows for the years ending March 31:
2001 $ 19,537
2002 10,263
2003 4,028
-------------------
33,828
Less amount representing interest 3,657
-------------------
Capital lease obligation (including current
portion of $17,708) $ 30,171
===================
8. DUE TO STOCKHOLDERS
Certain stockholders have periodically advanced funds to and received repayments
from the Company and its subsidiary. Advances from stockholders generally accrue
interest at a rate of 12% per annum, are due upon demand and are to be repaid as
cash becomes available or through the issue of stock (see Note 13).
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PAGE 12
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DISTECH LIMITED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2000 AND 1999
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9. OTHER LOANS
The Company received $1 million from a third party on February 13, 1998. The
loan was personally guaranteed by the directors of the Company, repayable on
demand. The loan bears interest at 20% per annum, with interest payable monthly.
The loan has been progressively repaid.
10. INCOME TAXES
The Company has a tax net operating loss carryforward, for New Zealand tax
purposes, of approximately $2,900,000 at March 31, 2000, which was eliminated by
operation of tax law as a result of the Company's acquisition by Liquitek
Enterprises, Inc. (see Note 13).
The Company's deferred tax asset approximated $960,000 and $670,000 at March 31,
2000 and 1999, respectively. Because there is no reasonable assurance that such
asset will be realized in future years, the Company has recorded a 100%
valuation allowance against this deferred tax asset.
A summary of the activity in the deferred tax benefit and related 100% valuation
allowance for the years ended March 31, 2000 and 1999 follows:
Balance - March 31, 1998 $ 350,000
Deferred benefit for 1999 320,000
-----------------
Balance - March 31, 1999 670,000
Deferred benefit for 2000 290,000
-----------------
Balance - March 31, 2000 $ 960,000
=================
The deferred tax asset at March 31, 2000 and 1999 consisted primarily of tax net
operating loss carryforwards.
11. COMMITMENTS AND CONTINGENCIES
LEASE COMMITMENTS
The Company leases certain factory and office space under a noncancelable
operating lease that expires January 16, 2003. Rent is subject to a review every
two and a half years.
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PAGE 13
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DISTECH LIMITED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2000 AND 1999
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11. COMMITMENTS AND CONTINGENCIES (continued)
LEASE COMMITMENTS (continued)
Future minimum payments under this noncancelable operating lease are as follows
for the years ending March 31:
2001 $ 29,692
2002 29,692
2003 24,743
-------------------
$ 84,127
===================
Rent expense for the years ended March 31, 2000 and 1999 approximated $31,000
each year.
OTHER CONTINGENCIES
The Company's commitments and contingencies also include the usual obligations
incurred in the ordinary course of business. In the opinion of management, these
matters will not have a material adverse effect on the Company's financial
position or results of operations.
12. RELATED PARTY TRANSACTIONS
Included in due to stockholders (Note 8) are balances relating to companies
owned by various directors of the company. These balances represent loans,
directors' fees and management consulting fees charged to the Company. These
liabilities bear interest at 12 percent per annum and, except as discussed in
the PAYMENT OF LIABILITIES WITH COMMON STOCK section of Note 13, are repayable
on demand.
Other related party transactions are discussed elsewhere in these notes to the
financial statements.
13. SUBSEQUENT EVENTS (UNAUDITED)
ACQUISITION
On February 12, 2001, 100% percent of the Company was acquired by Liquitek
Enterprises, Inc. ("Liquitek"), a company publicly traded in the United States.
In the first phase of this transaction, which was effective November 30, 2000,
Liquitek acquired approximately 71% of the Company's equity securities in
exchange for a total of approximately 11,400,000 shares and warrants of
Liquitek at a 3:1 exchange ratio. In accordance with New Zealand law, Liquitek
subsequently made a successful
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PAGE 14
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DISTECH LIMITED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2000 AND 1999
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13. SUBSEQUENT EVENTS (UNAUDITED) (continued)
ACQUISITION (continued)
tender offer at the same exchange ratio for the remaining approximately 1.6
million Company equity securities in exchange for a total of approximately
4.8 million Liquitek shares, options and warrants. Subsequent to March 31,
2000 and prior to December 31, 2000, Liquitek advanced to the Company
$620,000.
Unless Liquitek raises $5 million of fresh equity capital by September 30, 2001,
the former Company stockholders have the right to rescind the transaction
described in the preceding paragraph.
The terms of the Liquitek options and warrants issued to the former Company
stockholders are summarized as follows: options to acquire 69,000 shares of
Liquitek common stock for NZ$1.67 per share, expiring on December 31, 2005; and
warrants to acquire approximately 791,000 shares of Liquitek common stock for
NZ$1.67 per share, expiring on May 1, 2001.
OTHER MATTERS
In October 2000, the Company issued 1,576,517 shares, 263,632 warrants and
23,000 options.
PAYMENT OF LIABILITIES WITH COMMON STOCK
The Company has received services and loans from certain parties, which are
included in accounts payable and accrued expenses, due to stockholders and other
loans in the accompanying consolidated balance sheet at March 31, 2000.
Following the approach from Liquitek these parties have agreed to accept the
issue of the Company's common stock to settle such outstanding liabilities.
On October 31, 2000 the Company issued common stock and warrants in repayment
of the following liabilities of the Company at March 31, 2000. The issue
price of the shares was approximately $0.50 per share in respect to
liabilities arising prior to April 30, 1998 and approximately $2.51 per share
for liabilities arising after such date:
$0.50 SHARES $2.51 SHARES
NO. OF SHARES NO. OF SHARES VALUE
------------------ ------------------ ------------------
Directors' loans 281,203 159,073 $ 539,554
Directors' fees 308,767 55,207 293,091
Creditors and loans - 54,014 135,354
Staff and contractors - 76,178 190,895
Equus management fees 151,986 72,135 256,935
------------------ ------------------ ------------------
741,956 416,607 $ 1,415,829
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