SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
December 14, 1998
YELLOW GOLD OF CRIPPLE CREEK, INC.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Colorado 0-9015 84-0768695
-------- ------ ----------
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) I.D. Number)
12407 South Memorial Drive
Bixby, Oklahoma 74008
--------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (800) 850-0349
57 West 200 South, Suite 310
Salt Lake City, Utah 84101
------------------------------------------------------------
(Former name and former address, if changed since last report)
PURPOSE OF THE AMENDMENT- This amended 8-K was filed to include the required
financial statements.
ITEM 2. CHANGES IN CONTROL OF THE REGISTRANT.
On September 30, 1998, the Registrant acquired all of the outstanding
Common Stock and common stock purchase warrants of Ion Collider Technologies,
Ltd. ("ICT"), a Colorado corporation from the stockholders of ICT pursuant to a
share exchange agreement ("Agreement") in exchange for the issuance by the
Registrant of 34,500,000 shares of its Common Stock and 12,000,000 common stock
purchase warrants ("Warrants"). Each Warrant is exercisable to purchase one
share of the Registrant's Common Stock at $.291666 per share at anytime until
June 1, 2008.
ICT is a development stage company formed to commercialize new technologies
for environmental remediation and enhancement of natural resource recovery.
Prior to consummation of the Agreement, the Registrant had 2,705,500 shares
of Common Stock outstanding. Upon closing of the Agreement, after the issuance
of 34,500,000 shares of its Common Stock, there were 37,205,500 shares
outstanding of which the following persons now own 5% or more of the
Registrant's Common Stock:
Name Number of Shares Percentage
---- ---------------- ----------
Universal Environmental
Technologies, Inc. (1) 24,000,000 64.5%
David Nemelka, Jr. 6,300,000 16.9%
Gary J. McAdam (2) 3,900,000 10.5%
(1) David Shroff, the President of the Registrant, is the President of
Universal Environmental Technologies, Inc.
(2) Represents indirect ownership through Summer Breeze LLC and GJM Trading
Partners, Ltd., two entities controlled by Mr. McAdam.
On September 30, 1998, the following individuals were elected to the
offices set forth opposite their name:
Name Office
---- ------
David Shroff President
William Rippetoe Secretary and Treasurer
Gary J. McAdam Vice President
On September 30, 1998, Mr. Shroff was elected a director of the Registrant
and on October 7, 1998, William Rippetoe and Gary J. McAdam were elected
directors of the Registrant.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
See Item 1, above
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) (1) Financial Statements. The following financial statements are
included in this report:
International Cavitation Technologies, Inc - formerly Yellow Gold of
Cripple Creek, Inc.
Independent Auditors' Report dated August 29, 1998.
Balance Sheets as of August 31, 1998 (unaudited), May 31, 1998 and
1997 along with pro forma unaudited balances as of August 31 and May
31, 1998.
Statements of Operations for the three months ended August 31, 1998
(unaudited), the years ended May 31, 1998 and 1997, the unaudited pro
forma three months ended August 31, 1998, and the unaudited pro forma
year ended May 31, 1998.
Statement of Stockholders' Equity from May 31, 1996 through May 31,
1998, and unaudited Statement of Stockholders' Equity for the three
months ended August 31, 1998.
Statements of Cash Flows for the three months ended August 31, 1998
(unaudited), the years ended May 31, 1998 and 1997, the unaudited pro
forma three months ended August 31, 1998, and the unaudited pro forma
year ended May 31, 1998.
Notes to financial statements.
Ion Collider Technologies, Inc - formerly Internet A-Z Marketing, Inc.
Independent Auditors' report dated February 28,1998.
Balance sheets as of December 31, 1997 and 1996.
Notes to financial statements.
Unaudited Balance Sheets as of September 30, 1998 and 1997
Unaudited Statements of Operations for the nine months ended September
30, 1998 and 1997.
Unaudited Statement of Stockholders' Equity for the period from July
26, 1996 through September 30, 1998.
Unaudited Statements of Cash Flows for the nine months ended September
30, 1998 and 1997 Notes to unaudited financial statements.
Notes to financial statements.
(b) Exhibits:
10.01 Agreement Concerning the Exchange of Securities
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
YELLOW GOLD OF CRIPPLE CREEK, INC.
(Registrant)
By /s/ David Shroff
------------------------------------
David Shroff
President
Dated: October 12, 1998
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Board of Directors and Stockholders of Yellow Gold of Cripple Creek, Inc.
We have audited the accompanying balance sheet of Yellow Gold of Cripple Creek,
Inc. (a development stage company) as of May 31, 1998 and the related statements
of operations, stockholders' equity and cash flows for the years ended May 31,
1998 and 1997. Our responsibility is to express an opinion on these financial
statements based on our audits. The financial statements for the periods August
1953 (inception) to May 31, 1994 were audited by other auditors who expressed an
unqualified opinion on them. The accumulated totals are the responsibility of
the auditors of the respective periods.
We conducted our audits in accordance with generally accepted auditing
standards. These 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 position. 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 Yellow Gold of Cripple Creek,
Inc as of May 31, 1998 and the results of its operations and cash flows years
ended May 31, 1998 and 1997 in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has no operating capital and has no
operations. These factors raise substantial doubt about its ability to continue
as a going concern. Management's plans in regard to these matters are also
described in Note 2. The financial statements do not include any adjustments
that might result form the outcome of this uncertainty.
/s/ Orton & Company
Certified Public Accountants
Salt Lake City, Utah
August 29, 1998
International Cavitation Technologies, Inc.
(Formerly Yellow Gold of Cripple Creek, Inc.)
(A Development Stage Company)
Balance Sheets
Pro Forma
---------------------------
August 31, May 31, May 31, August 31, May 31,
ASSETS 1998 1998 1997 1998 1998
- -------------------------------------- ----------- ----------- ---------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited)
Current assets:
Cash $ - $ - $ - $ 7,900 $ 77,190
Advances to affiliates - - - 21,013 -
----------- ----------- ---------- ----------- -----------
Total current assets - - - 28,913 77,190
----------- ----------- ---------- ----------- -----------
Other assets:
Patent costs, net of amortization of
$507 at August 31, 1998 - - - 33,617 34,124
Purchase option deposit - - - 220,000 165,000
----------- ----------- ---------- ----------- -----------
- - - 253,617 199,124
----------- ----------- ---------- ----------- -----------
$ - $ - $ - $ 282,530 $ 276,314
=========== =========== ========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable 2,200 18,546 6,679 2,200 18,546
Accounts payable - related party 145 145 - 145 145
----------- ----------- ---------- ----------- -----------
Total current liabilities 2,345 18,691 6,679 2,345 18,691
----------- ----------- ---------- ----------- -----------
Stockholders' equity:
Common stock - $.001 par value, 50,000,000
shares authroized, 676,375 shares
issued and outstanding at August 31,
and May 31, 1998, 122,500 shares issued and
outstanding at May 31, 1997, 9,426,375
pro forma shares issued and outstanding 676 676 123 9,426 9,426
Additional paid-in capital 540,896 524,550 506,031 816,270 792,174
Accumulated deficit - since
the development stage (543,917) (543,917) (512,833) (545,511) (543,977)
----------- ----------- ---------- ----------- -----------
(2,345) (18,691) (6,679) 280,185 257,623
----------- ----------- ---------- ----------- -----------
$ - $ - $ - $ 282,530 $ 276,314
=========== =========== ========== ========== ===========
The accompanying notes are an integral part of these financial statements.
International Cavitation Technologies, Inc.
(Formerly Yellow Gold of Cripple Creek, Inc.)
(A Development Stage Company)
Statements of Operations
Pro Forma
Year Ended -------------------------------
Three Months ------------------------- Three Months
Ended May 31, May 31, Ended Year Ended
August 31, 1998 1998 1997 August 31, 1998 May 31, 1998
----------- ----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited)
Revenues $ - $ - $ - $ - $ -
----------- ----------- ----------- ----------- -----------
Expenses:
Professional services - 31,084 6,679 - 31,084
Other general and administrative
expenses - - - 1,372 60
Amortization of patents - - - 507 -
----------- ----------- ----------- ----------- -----------
- 31,084 6,679 1,879 31,144
----------- ----------- ----------- ----------- -----------
Net (loss) from operations - (31,084) (6,679) (1,879) (31,144)
----------- ----------- ----------- ----------- -----------
Other income (expense):
Interest income - - - 286 -
----------- ----------- ----------- ----------- -----------
Net (loss) before income taxes - (31,084) (6,679) (1,593) (31,144)
Income taxes - - - - -
----------- ----------- ----------- ----------- -----------
Net (loss) $ - $ (31,084) $ (6,679) $ (1,593) $ (31,144)
=========== =========== =========== =========== ===========
Earnings (loss) per share $ - $ (0.03) $ (0.01) $ - $ -
Average weighted shares outstanding 676,375 676,375 122,500 9,301,375 9,301,375
The accompanying notes are an integral part of these financial statements.
International Cavitation Technologies, Inc.
(Formerly Yellow Gold of Cripple Creek, Inc.)
(A Development Stage Company)
Statements of Stockholders' Equity
Deficit
Common Stock Additional Accumulated
------------------------ Paid-in During the Treasury
Shares Amount Capital Development Stage Stock
----------- ----------- ----------- ----------- -----------
Balance at May 31, 1996 $ 123,125 $ 493 $ 517,661 $ (506,154) $ (4,000)
Cancellation of treasury stock (625) (3) (3,997) - 4,000
Net (loss) - Fiscal year ended May 31, 1997 - - - (6,679) -
----------- ----------- ----------- ----------- -----------
Balance at May 31, 1997 122,500 490 513,664 (512,833) -
Stock issued in exchange for debt releif 553,875 2,215 16,857 - -
Net (loss) - Fiscal year ended May 31, 1998 - - - (31,084) -
----------- ----------- ----------- ----------- -----------
Balance at May 31, 1998 $ 676,375 $ 2,705 $ 530,521 $ (543,917) $ -
=========== =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements.
International Cavitation Technologies, Inc.
(Formerly Yellow Gold of Cripple Creek, Inc.)
(A Development Stage Company)
Statements of Cash Flows
Pro Forma
-----------------------------
Year Ended
Three Months --------------------------- Three Months
Ended May 31, May 31. Ended Year Ended
August 31, 1998 1998 1997 August 31, 1998 May 31, 1998
----------- ----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited)
Cash flow from operating activities:
Net (loss) $ - $ (31,084) $ (6,679) $ (1,593) $ (31,144)
Adjustments to reconcile net loss to net
cash used in operating activities -
Amortization of patent costs - - - 506 -
(Increase) in advances to affiliates - - - (21,013) -
Increase in accounts payable and
accrued expenses - 12,012 6,679 - 12,012
Stock for servies and debt - 19,072 - - 19,072
----------- ----------- ----------- ----------- -----------
Net cash (used in) operating activities - - - (22,100) (60)
----------- ----------- ----------- ----------- -----------
Cash flow from investing activities:
Asset purchase option deposit - - - (220,000) (165,000)
----------- ----------- ----------- ----------- -----------
Net cash (used in) investing activities - - - (220,000) (165,000)
----------- ----------- ----------- ----------- -----------
Cash flow from financing activities:
Issuance of stock and warrants for cash - - - 250,000 242,250
----------- ----------- ----------- ----------- -----------
Net cash provided by financing activities - - - 250,000 242,250
----------- ----------- ----------- ----------- -----------
Net increase in cash - - - 7,900 77,190
Cash - Beginning of period - - - - -
----------- ----------- ----------- ----------- -----------
Cash - End of period $ - $ - $ - $ 7,900 $ 77,190
=========== =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements.
International Cavitation Technologies, Inc.
(Formerly Yellow Gold of Cripple Creek, Inc.)
(A Development Stage Company)
Notes to Financial Statements
May 31, 1998 and 1997
NOTE 1 - ACCOUNTING POLICIES
Organization -
- ------------
The International Cavitation Technologies, Inc. (the "Company") was incorporated
under the laws of the State of Colorado on August 24, 1936. The Company was
involved in various mining activities over the years, none of which proved
successful. During the year 1993, the Company discontinued all operations and
has had no significant revenues from any activity since that time and is
classified as a development stage company per SFAS #7.
Name Change -
- -----------
At its shareholders meeting on December 2, 1998, the Company approved a name
change from Yellow Gold of Cripple Creek, Inc. to International Cavitation
Technologies, Inc.
Authorization of Preferred Stock -
- --------------------------------
On December 2, 1998, the shareholders approved amending the Company's articles
of incorporation to authorize the issuance of up to 5,000,000 shares of
preferred stock to be issued in one or more series at the discretion of the
board of directors.
Reverse Stock Split -
- -------------------
On October 6, 1997, the Company approved a one-for-forty reverse stock split. On
December 2, 1998, the shareholders approved a four to one reverse stock split.
The effects of these reverse stock splits are reflected retroactively in the
accompanying financial statements.
Income Taxes -
- ------------
The Company adopted Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes" in the fiscal year ended May 31, 1995 and has
applied the provisions of the statement on a retroactive basis to the previous
fiscal year, which resulted in no significant adjustment.
Statement on Financial Accounting Standards No. 109 "Accounting for Income
Taxes" requires an asset and liability approach for financial accounting and
reporting for income tax purposes. This statement recognizes (a) the amount of
taxes payable or refundable for the current year and (b) deferred tax
liabilities and assets for future tax consequences of events that have been
recognized in the financial statements or tax returns.
Deferred income taxes result from temporary differences in the recognition of
accounting transactions for tax and financial reporting purposes. There were no
temporary differences at May 31, 1998 and earlier years; accordingly, no
deferred tax liabilities have been recognized for all years.
International Cavitation Technologies, Inc.
(Formerly Yellow Gold of Cripple Creek, Inc.)
(A Development Stage Company)
Notes to Financial Statements
May 31, 1998 and 1997
(Continued)
NOTE 1 - ACCOUNTING POLICIES, Continued
The Company has cumulative net operating loss carryforwards of approximately
$186,000 at May 31, 1998 and $155,000 at May 31, 1997. No effect has been shown
in the financial statements for the net operating loss carryforwards as the
likelihood of future tax benefit from such net operating loss carryforwards is
not presently determinable. Accordingly, the potential tax benefits of the net
operating loss carryforwards estimated based upon current tax rates of $63,000
at May 31, 1998 and $50,000 1997 have been offset by valuation reserves of the
same amount. The net change in deferred tax asset and offsetting valuation
reserve amounted to $13,000 for 1998 and $0 for 1997.
As a result of a reverse merger, which transpired on September 30, 1998, the
Company had a change in ownership of more than 50%. This change in ownership
effectively eliminated the use of any of the Company's net operating loss
carryforwards to offset future earnings.
Loss Per Share -
- --------------
The computation of loss per share of common stock is based on the weighted
average number of shares outstanding during the period less shares held in
treasury.
Cash and Cash Equivalent -
- ------------------------
For the purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments with maturity of three months or less to be cash
equivalents.
Use of Estimates -
- ----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect reported amounts of assets and liabilities, disclosure of contingent
assets and liabilities at the date of the financial statements and revenues and
expenses during the reporting period. In these financial statements, assets,
liabilities and earnings involve extensive reliance on management's estimates.
Actual results could differ from those estimates.
International Cavitation Technologies, Inc.
(Formerly Yellow Gold of Cripple Creek, Inc.)
(A Development Stage Company)
Notes to Financial Statements
May 31, 1998 and 1997
(Continued)
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Company does not have significant cash or other material
assets, nor does it have an established source of revenues sufficient to cover
its operating costs and to allow it to continue as a going concern. It is the
intent of the Company to see a merger with an existing, operating company.
NOTE 3 - REVERSE MERGER
On September 30, 1998, the Company acquired all of the outstanding common stock
and common stock purchase warrants of Ion Collider Technologies, Ltd. ("ICT"), a
Colorado corporation in exchange for the issuance by the Company of 34,500,000
shares (8,625,000 shares after taking into effect the December 2, 1998 reverse
stock split) of its common stock and 12,000,00 common stock warrants (3,000,000
warrants after taking into effect the above described reverse stock split). Each
warrant is exercisable to purchase one share of the Company's common stock at
$1.166 per share (after the reverse merger) anytime until June 1, 2008.
ICT is a development stage company formed to commercialize new technologies for
use in various industries with immediate application, for environmental
remediation and enhancement of natural resource.
NOTE 4 - RELATED PARTY TRANSACTION
During fiscal 1998, an officer advanced $9,217 for working capital to pay for
ongoing professional fees to keep the Company current in its annual and
quarterly filings. Of the $9,217, $9,072 of the debt was assigned to another
officer/director, who exchanged the debt for 2,015,500 shares of stock.
International Cavitation Technologies, Inc.
(Formerly Yellow Gold of Cripple Creek, Inc.)
(A Development Stage Company)
Notes to Financial Statements
May 31, 1998 and 1997
(Continued)
NOTE 5 - NON-QUALIFIED STOCK OPTION PLAN
During the year ended May 31, 1998, the Company adopted a Non-Qualified Stock
Option Plan to provide itself with ongoing legal and professional expertise in
its regulatory filing requirements and ongoing negotiations for viable business
and merger opportunities. The Company set aside 500,000 shares for such a plan.
The price of the options is to be determined by the board of directors and are
set to expire in five years.
During the year ended May 31, 1998, 200,000 shares were optioned and exercised
at $.05 per share for services rendered.
NOTE 6 - PRO FORMA FINANCIAL STATEMENTS
The pro forma statements presented as of May 31, 1998, and August 31, 1998,
represented the pro forma consolidated financial statements of the Company and
ICT as if it had been a subsidiary of the Company during the reporting periods
covered by these pro forma statements. See the accompanying ICT financial
statements for its financial statement disclosures.
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Director and Stockholder
Internet A-Z Marketing, Inc.
We have audited the balance sheets of Internet A-Z Marketing, Inc., a
Colorado corporation and a development stage company, as of December 31, 1997
and 1996. These balance sheets are the responsibility of the Company's
management. Our responsibility is to express an opinion on these balance sheets
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. Audits include examining, on a test basis, evidence supporting the
amounts and disclosure in the balance sheets. Audits also include assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall balance sheet presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the balance sheets referred to above presents fairly, in
all material respects, the financial position of Internet A-Z Marketing, Inc. as
of December 31, 1997 and 1996, in conformity with generally accepted accounting
principles.
Hogan & Slovacek
Oklahoma City, Oklahoma
February 28, 1998
Internet A-Z Marketing, Inc.
(A Development Stage Company)
-----------------------------
BALANCE SHEETS
--------------
DECEMBER 31, 1997 AND 1996
--------------------------
1997 1996
---------- ----------
Assets:
Stock subscription receivable from the sole
stockholder $ 50 $ 50
========== ==========
Stockholder's Equity:
Common stock - $.001 par value, 50,000,000
shares authorized, 5,000 shares outstanding $ 5 $ 5
Paid-in Capital 45 45
---------- ----------
$ 50 $ 50
========== ==========
The accompanying notes are an integral part of these statements.
Internet A-Z Marketing, Inc.
(A Development Stage Company)
-----------------------------
NOTES TO BALANCE SHEETS
-----------------------
DECEMBER 31, 1997 AND 1996
--------------------------
1. ORGANIZATION
Internet A-Z Marketing, Inc. (the "Company") was incorporated in the State
of Colorado on July 26, 1996. The Company is currently in its development stage
and has had no operations other than the formation of the company. Costs of
organizing the Company were minimal and borne by the organizer.
2. STOCK OPTION PLAN
The director approved a stock option plan effective May 14, 1997. This
stock option plan reserves 500,000 shares of common stock to be issued to
qualified employees, officers, directors, consultants, advisors and others
deemed to have rendered services to the Company. No options have been granted as
of February 28, 1998.
ION COLLIDER TECHNOLOGIES, INC.
(A Development Stage Company)
Balance Sheets
September 30,
ASSETS 1998 1997
----------- -----------
(Unaudited) (Unaudited)
Current assets:
Cash $ 25,049 $ -
Stock subscription receivable - 50
Advances to affiliates (Note 5) 84,572 -
----------- -----------
Total current assets 109,621 50
Other assets:
Patents, net of amortization of $676 at
September 30, 1998 33,449 -
Purchase option deposit 220,000 -
----------- -----------
253,449 -
----------- -----------
$ 363,070 $ 50
=========== ===========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities
Notes payable to affiliated companies (Note 5) $ 87,500 $ -
----------- -----------
Total current liabilities 87,500 -
Stockholders' equity:
Common stock - $.001 par value, 50,000,000 shares
authorized, 5,000 shares, 5,000 shares, and
5,750,000 shares outstanding at December 31,
1996, 1997, and September 30, 1998,
respectively 5,750 5
Additional paid-in capital 278,375 45
Accumulated deficit (8,555) -
----------- -----------
275,570 50
----------- -----------
$ 363,070 50
=========== ===========
The accompanying notes are an integral part of these financial statements.
ION COLLIDER TECHNOLOGIES, LTD
(A Development Stage Company)
Statements of Operations
Nine Months Ended
September 30,
--------------------------------
1998 1997
----------- -----------
(Unaudited) (Unaudited)
Revenues $ - $ -
----------- -----------
Expenses:
Professional services 3,528 -
Other general and administrative expenses 4,637 -
Amortization of patents 676 -
----------- -----------
8,841 -
----------- -----------
Loss from operations (8,841) -
----------- -----------
Other income (expense)
Interest income 286 -
----------- -----------
Net (loss) before income taxes (8,555) -
Income taxes (Note 1) - -
----------- -----------
Net (loss) $ (8,555) -
=========== ===========
Earnings (loss) per share (Note 1) $ (0.003) $ N/A
Average weighted shares outstanding 2,725,604 5,000
The accompanying notes are an integral part of these financial statements.
ION COLLIDER TECHNOLOGIES, LTD
(A Development Stage Company)
Statements of Stockholders' Equity
(Unaudited)
Common
Common Stock Additional Retained Stock
-------------------------- Paid-in Earnings Warrants
Shares Amount Capital (Deficit) Issued
----------- ----------- ----------- ----------- -----------
July 26, 1996 - Issued shares for stock subscription 5,000 $ 5 $ 45 $ - $ -
----------- ----------- ----------- ----------- -----------
Balance at December 31, 1996 and 1997 5,000 5 45 -
May 28, 1998 - Issued stock for patents 4,000,000 4,000 30,125 -
May 30, 1998 - Issued stock and warrants as
repayment of note payable 440,000 440 54,560 440,000
May 30, 1998 - Issued stock and warrants for cash 210,000 210 34,540 1,060,000
May 30, 1998 - Retirement of stock subscription (5,000) (5) (45) -
May 30, 1998 - Issued stock and warrants for cash 1,300,000 1,050 151,450 300,000
August 31, 1998 - Issued stock and warrants
for cash 50,000 50 7,700 200,000
September 29, 1998 - Retirement of stock for
no consideration (250,000) - -
Net (loss) - Nine months ended September 30, 1998 - - (8,555) -
Balance at September 30, 1998 5,750,000 $ 5,750 $ 278,375 $ (8,555) $2,000,000
=========== ========== =========== =========== ===========
The accompanying notes are in integral part of these financial statements.
ION COLLIDER TECHNOLOGIES, LTD
(A Development Stage Company)
Statements of Cash Flows
Nine Months Ended
September 30,
--------------------------------
1998 1997
----------- -----------
(Unaudited) (Unaudited)
Cash flow from operating activities:
Net income (loss) $ (8,555) $ -
Adjustments to reconcile net income to net cash
provided by (used in) operations -
Amortization expense 676 -
Advances to affiliates (84,572) -
----------- -----------
Net cash (used in) operating activities (92,451) -
----------- -----------
Cash flow from investing activities:
Asset purchase option deposit (220,000) -
----------- -----------
Net cash (used in) investing activities (220,000) -
Cash flow from financing activities:
Borrowings from affiliates 87,500 -
Issuance of stock and warrants for cash 250,000 -
----------- -----------
Net cash provided by financing activities 337,500 -
----------- -----------
Net increase in cash 25,049 -
Cash - Beginning of period - -
Cash - End of period $ 25,049 $ -
=========== ===========
Supplemental Disclosure Of Noncash Item:
Patents acquired in exchange for common stock $ 34,124 $ -
=========== ===========
The accompanying notes are an integral part of these financial statements.
ION COLLIDER TECHNOLOGIES, LTD.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1998 AND 1997
NOTE 1 - ACCOUNTING POLICIES
General -
- -------
Ion Collider Technologies, Ltd. (the "Company") was incorporated in the State of
Colorado on July 26, 1996 as Internet A-Z Marketing, Inc. On June 4, 1998, the
Company implemented a name change to Ion Collider Technologies, Ltd.
The Company owns four patents related to the use of ion collider technology to
separate particles from liquid, enhance the recovery of crude oil, increase the
amount of hydrocarbons recoverable from underground reservoirs, and for water
clarification.
On September 30, 1998, the Company became the wholly owned subsidiary of
International Cavitation Technologies, Inc. ("ICT") fomrerly Yellow Gold of
Cripple Creek, Inc. in connection with a reverse merger. See Note 4 for further
details.
Development Stage -
- -----------------
The Company is currently in its development stage. The Company's goal is to
oversee the commercial implementation of its various patented processes. It
anticipates that revenues will be generated from licensing fees, royalties from
the use of this technology by third parties, and for services rendered in the
commercial application of these patented technologies.
Fiscal Year -
- -----------
The Company's fiscal year ends on December 31, for both financial and income tax
reporting purposes.
Revenue and Expense Recognition -
- -------------------------------
The Company recognizes revenues and expenses on the accrual basis in accordance
with generally accepted accounting policies.
Amortization of Patent Costs -
- ----------------------------
Patent costs are being amortized on a straight-line basis over their remaining
lives as of the date of acquisition. As of September 30, 1998, the patents had
remaining unamortized lives of between 16 and 18 years.
Income Taxes -
- ------------
The Company was dormant prior to 1998 and filed no activity returns for 1996 and
1997. There are no significant timing differences between the reporting of
income and expenses for financial and income tax reporting purposes.
Use of Estimates -
- ----------------
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates, judgements, and
assumptions that effect the reported amounts of assets and liabilities as of the
date of the financial statements and revenues and expenses during the reporting
period. Actual results could differ materially from those estimates.
ION COLLIDER TECHNOLOGIES, LTD.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1998 AND 1997
NOTE 1 - ACCOUNTING POLICIES, Continued
Earnings Per Share -
- ------------------
Earnings (loss) per share are calculated on the weighted average of common
shares and common share equivalents outstanding during the year. Common stock
warrants are considered to be common share equivalents and are used to calculate
earnings per common and common equivalent except when they are anti-delutive.
Cash Equivalents -
- ----------------
For purposes of the statement of cash flows, cash equivalents include cash and
all highly liquid debt instruments with original maturity dates of three months
or less.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared in accordance with generally
accepted accounting principles applicable to a going concern which contemplates
the realization of assets and the liquidation of liabilities in the normal
course of business. However, the Company does not have significant cash and has
not had significant operations. Furthermore, one of its principal assets is a
nonrefundable option to purchase certain assets which, if purchased in full,
may require significant but as yet undetermined amounts of cash to realize. See
Note 5 for further details on this option. The Company's ability to continue as
a going concern is dependant upon its ability to develop a market for its
technology and to obtain adequate financing in the interim to cover its
operating expenses. All of these factors raise substantial doubt about the
Company's ability to continue as a going concern. The financial statements do
not include any adjustments related to the recoverability and classification of
recorded assets, or the amount and classification of liabilities that might be
necessary in the event the Company can not continue in existence. Management is
in the process of raising additional capital and believes that there is a
substantial market for the Company's technology.
NOTE 3 - CAPITAL STRUCTURE
Common Stock -
- ------------
The Company is authorized to issue up to 50,000,000 shares of $.001 par value
common stock. At September 30, 1998, the Company had 5,750,000 shares of common
stock issued and outstanding.
Preferred Stock -
- ---------------
The Company is authorized to issue up to 5,000,000 shares of $.001 par value
preferred stock. Dividend and liquidation preferences are to be determined at
the time the preferred stock is issued. As of September 30, 1998, the Company
had issued no preferred stock.
ION COLLIDER TECHNOLOGIES, LTD.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1998 AND 1997
NOTE 3 - CAPITAL STRUCTURE, Continued
Warrants -
- --------
As of September 30, 1998, the Company had outstanding warrants to purchase
2,000,000 shares of the Company's common stock at $1.75 per share. All warrants
expire in 2008.
NOTE 4 - REVERSE MERGER WITH YELLOW GOLD
On September 30, 1998, the Company's shareholders entered into an agreement with
ICT whereby ICT acquired all 5,750,000 shares of the Company's outstanding
common stock and all of its 2,000,000 common stock warrants outstanding in
exchange for 34,500,000 shares of common stock in ICT and 12,000,000 common
stock purchase warrants.
Subsequent to this transaction, the Company's former shareholders owned
approximately 93% of Yellow Gold's outstanding common stock.
ICT is a 12G reporting company and, as such, its common stock is registered with
the Securities and Exchange Commission. ICT has a May 31 fiscal year end.
NOTE 5 - RELATED PARTY TRANSACTIONS
On May 28, 1998, the Company acquired four patents and one pending patent in
exchange for 4,000,000 shares of the Company's common stock. Prior to the
acquisition of these patents, the predecessor owner of these patents entered
into four non exclusive licensing agreements, one of which is with an affiliated
company. The rights associated with these licensing agreements were not assigned
to the Company. These patents were valued at $34,124, the contributing
shareholder's tax basis in these properties on the date of the exchange.
As of September 30, 1998, the Company had advanced to affiliated companies
$84,572.
On September 21, 1998, the Company entered into an asset purchase agreement with
Universal Enviromental Technologies, Inc.(the "Seller"), Excalibur Oil
Corporation, Big Blue, Inc., and Soil Savers, Inc.(the "Seller's Affiliates"),
and two of the Seller's shareholders. This agreement gave the Company the option
to purchase any or all of the Seller's and/or the Seller's Affiliates assets
including, but not limited to, licenses and contracts and any future assets
acquired by the Seller and/or the Seller's Affiliates between the date of this
agreement and December 31, 1999, the end of the option period. The purchase
ION COLLIDER TECHNOLOGIES, LTD.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1998 AND 1997
NOTE 5 - RELATED PARTY TRANSACTIONS, Continued
price shall be the lesser of a price agreed upon by all parties or the fair
market value at the date of exercise. In consideration for this option, the
Company paid to and on behalf of the Seller and Seller's Affiliates $220,000
constituting an option deposit. This deposit is to be applied against the
purchase price of any assets the Company wishes to purchase or will be forfeited
if the option is not exercised by the end of the option period. The Sellers are
affiliated with ICT, the Company's parent.
As of September 30, 1998, the Company had three term notes payable to affiliated
entities. These notes totaled $87,500, are unsecured, bearing interest at 10 %
per annum, and are due in 60 days from the date of issuance. Each of the notes
was renewed subsequent to September 30, 1998 for an additional ten months. ICT
granted 210,000 ICT common stock warrants, exercisable at $.50 per share for a
period of two years, to these affiliates as additional consideration for the
renewal of these loans. After renewal, these notes mature as follows:
September 1, 1999 $37,500
September 15, 1999 25,000
September 30, 1999 25,000
--------
Total notes payable
to affiliates $87,500
Enhanced Recovery Technologies, Inc., an affiliated company, owns a license
agreement to use technology owned by the Company on a non-exclusive basis. This
Company does not have economic interest in this licensing agreement.
In May 1998, the Company entered into a verbal agreement with Big Blue, Inc.
("Big Blue"), whereby, Big Blue was granted a non-exclusive right to utilize
certain technology owned. The arrangement provides for the Company to receive
90% of the net profits generated from Big Blue's use of this technology. The
verbal agreement is to be memorialized in a definitive agreement no later than
December 31, 1998.
NOTE 6 - STOCK OPTION PLAN
The directors approved a stock option plan effective May 14, 1997. This stock
option plan reserves 500,000 shares of common stock to be issued to qualified
employees, officers, directors, consultants, advisors and others deemed to have
rendered services to the Company. No options have been granted as of December
11, 1998.