part 2 of above
D-LANZ DEVELOPMENT GROUP, INC.
(A Development Stage Company)
BALANCE SHEET
Assets
December 31, December 31,
1996 1997
Current assets
Cash $-0- $934
Other assets License fees 252,500 Total other assets 252,500
Total assets $-0- $253,434
Liabilities and Stockholders' Equity
Commitments and Contingencies $-0- $-0-
Capital stock Preferred stock-authorized 50,000,000 shares $.001 par value. At December 31, 1996
and 1997 the number of shares outstanding was -0- Common stock-authorized 100,000,000 shares,
par value of $.001. At December 31, 1996 and 1997,
there were 1,551,394 and 10,000,000 shares $1,551
outstanding.
$10,000
Additional paid in capital -0- 246,051
Deficit accumulated during development stage (1,551) (2,617)
Total stockholders' equity -0- 253,434
Total liabilities and stockholders' equity $-0- $253,434
See accompanying notes to financial statements.
D-LANZ DEVELOPMENT GROUP, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the
For the year For the year period from
ended December ended December reorganization
31, 1996 31, 1997 (December 31, 1990)
to
December 31,
Income $-0- $-0- $-0-
Less costs of goods sold -0- -0- -0-
Gross profit -0- -0- -0-
Operations:
General -0- 1,066 1,066
and
administrative
Amortization -0- -0- -0-
Total expense -0- 1,066 1,066
Profit (loss) from -0- operations and before Corporate
income tax expense -0- -0-
Corporate income tax -0- -0- -0-
Net profit or (Loss) $-0- $(1,066) $(1,066)
Net income per share $-0- $-0- $-0-
Total number of shares 10,000,000 10,000,000 10,000,000
outstanding
See accompanying notes to financial statements.
D-LANZ DEVELOPMENT GROUP, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the
For the year For the year For the nine For the nine period from
ended December ended December months ended months ended reorganization
31, 1995 31, 1996 September 30, September 30, (December 31,
1996 1997 1990) to
October 31,
CASH FLOWS FROM OPERATING ACTIVITIES
Net profit (loss) $-0- $-0- $-0- $-0- $-0-
Depreciation and amortization -0- -0- -0- -0- -0-
TOTAL CASH FLOWS FROM OPERATING ACTIVITIES -0- -0- -0- -0- -0-
CASH FLOWS FROM FINANCING ACTIVITIES
Commitments and contingencies -0- -0- -0- -0- -0-
TOTAL CASH FLOWS FROM FINANCING ACTIVITIES -0- -0- -0- -0- -0-
NET INCREASE (DECREASE) IN CASH -0- -0- -0- -0- -0-
CASH BALANCE BEGINNING OF PERIOD -0- -0- -0- -0- -0-
CASH BALANCE END OF PERIOD $-0- $-0- $-0- $-0- $-0-
See accompanying notes to financial statements.
D-LANZ DEVELOPMENT GROUP, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
Additional Deficit accumulated
Date Preferred Preferred Common Common paid during development stage
Stock Stock Stock Stock in capital Total
12-31-1991 -0- $-0- 1,551,394 $1,551 $(1,551) $-0-
12-31-1992 -0- $-0- 1,551,394 $1,551 $(1,551) $-0-
12-31-1993 -0- $-0- 1,551,394 $1,551 $(1,551) $-0-
12-31-1994 -0- $-0- 1,551,394 $1,551 $(1,551) $-0-
12-31-1995 -0- $-0- 1,551,394 $1,551 $(1,551) $-0-
12-31-1996 -0- $-0- 1,551,394 $1,551 $(1,551) $-0-
9 -30-1997(1) 2,000,000 2,000 2,000
9-30-1997(2) 6,448,606 6,449 246,051 252,500
12-31-1997 Net (1,066) (1,066)
loss
12-31-1997 -0- $-0- 10,000,000 10,000 246,051 $(2,617) 253,434
(1) Sale of shares pursuant to Regulation D at $.001 per share. (2) Issuance of shares for
acquisition of License Rights valued at $.04 per share.
See accompanying notes to financial statements.
Note 1. Organization of Company and Issuance of Common Stock
a. Creation of the Company
D-Lanz Development Group, Inc. (the "Company") was formed on June 28, 1972 under the laws of
the State of Delaware under the name OSR Corporation. On May 17, 1988, the Company amended
its certificate of incorporation changing its name to Resort Connections, Inc. and changing the total
shares authorized to issue to 55,000,000 of which 50,000,000 shares are shares of common stock,
$.001 par value per share and 5,000,000 shares of preferred stock, $.001 par value per share. On
January 30, 1990, the Company amended its certificate of incorporation to change its name to
D-Lanz Development Group, Inc. and change the aggregate number of shares of stock the
Company may issue to 100,000,000 shares of which 50,000,000 are shares of common stock, $.001
par value per share and 50,000,000 shares preferred stock, $.001 par value per share.
b. Description of the Company
The Company has purchased the License rights to certain patented technology to manufacture and
market for the countries of Chile and Singapore a temperature sensing device and diagnostic direct
reading, digital device to screen the breast for abnormalities, including cancer.
c. Issuance of Capital Stock
On May 6, 1988, the Company restated the number of common stock outstanding by reverse
splitting the number of shares from 6,200,000 to 1,550,000.
On September 30, 1997, the Company issued 6,448,606 shares of common stock to Health
Technologies International, Inc. ("Health Tech") in consideration for the rights to manufacture and
market certain products valued at $252,500 or $.04 per share.
On September 30, 1997, the Company sold 2,000,000 shares of common stock to Scantek Medical,
Inc. ("Scantek") pursuant to Regulation D for $2,000 or $.001 per share.
Note 2-Summary of Significant Accounting Policies
a. Basis of Financial Statement Presentation
The accompanying financial statements have been prepared on a going concern basis, which
contemplates the realization of assets and the satisfaction of liabilities in the normal course of
business. The Company has been dormant since December 31, 1990. On September 30, 1997, the
Company acquired the License rights to certain patents. The Company has not generated any
income and has been dependent upon management to pay the expenses to maintain the Company's
existence and pay the costs of acquiring the License rights. These factors indicate that the
Company's continuation as a going concern is dependent upon its ability to obtain adequate
financing.
The financial statements presented at December 31, 1997 consist of the balance sheet of the
Company as at December 31, 1997, and the related statements of operations, retained earnings and
cash flows for the year ended December 31, 1996 and 1997.
b. Cash and cash equivalents
The Company treats temporary investments with a maturity of less than three months as cash.
c. Earnings per share
Earnings per share have been computed on the basis of the total number of shares outstanding at
December 31, 1997. On that date, 10,000,000 shares of common stock were outstanding.
d. Revenue recognition
Revenue is recognized when products are shipped or services are rendered
e. Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that effect 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.
Note 3 - Acquisition of License Rights
On September 30, 1997, the Company issued 6,448,606 shares of common stock to purchase from
Health Technologies International, Inc. ("Health Tech") the rights to manufacture and market
certain patented technologies. The License has been valued at the historic cash purchase price of
$252,500 paid by Health Tech for the manufacturing and marketing rights.
Health Tech entered into an agreement on August 15, 1996 with Scantek, a Delaware corporation
located in Mountain Lakes, New Jersey for the licensing of certain patented technology to
manufacture and market for the countries of Chile and Singapore. The patented technology consists
of a temperature sensing device and diagnostic direct reading, digital device to screen the breast for
abnormalities, including cancer.
As a result of the acquisition, the Company has been granted an indivisible, exclusive right and
license within the territories of Chile and Singapore to assemble, use and sell the devices for a period
ending with the expiration of the applicable patents in these countries.
If the Company fails to achieve for a period of 12 consecutive months the minimum net sales of the
devices with respect to each country, Scantek may upon 30 days written notice and at its option
either terminate this agreement or delete the country from the Company's territories. Minimum net
sales as defined is based upon market penetration. The size of the market in each of the three
countries will be computed using official government census information from each country. The
market is defined as the lesser of two pairs of the device for each women between the ages of 25
and 70 or such usage as may be recommended by the relevant medical association or government
agency in each country in the Territory. The percentage of market penetration by year is as follows:
Year Percentage of Market Penetration 1998 0% 1999 1% 2000 3% 2001 4% 2002 and after 5%
This schedule is based upon the scheduled delivery of an operational assembly line, part of which
will be installed in Scantek's facility, part of which will be install in the Company's facility. The above
referenced years were adjusted to appropriate calendar years so as not to prejudice the Company's
365 day time period in which to achieve the graduated market penetration.
As of September 30, 1997, Health Tech has paid to Scantek a nonrefundable License Fees
aggregating $252,500.
The Company is required to pay a royalty equal to 15% of Net Sales of Licensed Devices in the
Territories during each contract year during the term of the agreement. The royalty paid, will in no
instance be less than $1.00 per unit or a guaranteed minimum royalty payable as follows:
The first minimum royalty payment of $80,000 is not due until December 31, 1998; $200,000 for the
year 1999; $300,000 for the year 2000 and $400,000 for each year thereafter.
Royalties are due and payable each quarter either for the actual amount due or 25% of the minimum
royalty payable for the year.
In the event that at any time during the term of this agreement, the consumer price index in effect
for the national government of the country of the territory be increased by 10% over the index base
as of the date of the agreement. Then the minimum royalty payable and the minimum net sales for
the year will be increased by 10%.
The Company sold to Scantek 2,000,000 shares of common stock, representing 20% of the total
issued and outstanding common shares of the Company as of the date of the agreement for the
aggregate sum of $2,000 or $.001 per share. Under no circumstances will Scantek's common stock
position be diluted to less than 15% of the issued and outstanding common stock of the Company. In
the event Scantek will receive, at nominal cost, warrants to purchase sufficient shares of common
stock to maintain its 20% ownership, such warrants will allow the purchase of shares at $2.25 per
share for five years from the date of the agreement.
The Company is required to arrange to purchase a turnkey manufacturing line. Upon completion of
the line, that portion of the line that manufactures Sensors for the licensed devices will be installed at
the same location as Scantek's own manufacturing facility. Scantek will operate that portion of the
line and to the extent of the lines manufacturing capacity, deliver the Company's requirements for
Sensors to the Company's plant location F.O.B. for cost plus 25%. Scantek will maintain a purchase
money security interest in the sensors delivered pursuant to this agreement.
During each contract year, the Company is required to spend 5% of net sales during the immediately
preceding year on advertising and promotion.
Upon termination of this agreement, the Company agrees that neither the Company's officers,
directors, principals nor its shareholders will during a period of 5 years from the date of termination
manufacture Sensors or purchase Sensors manufactured by any entity other than Scantek for use in
the licensed devices or any competing device or directly or indirectly manage, operation or control of
or be connected as an officer, director, shareholder, partner, consultant, owner, employee, agent,
lender, donor, vendor, or otherwise, or have any financial interest in or aid assist anyone else in the
conduct of any competing entity which offers similar devices for sale.
The Company is required to maintain product liability insurance with a limit of not less than
$1,000,000.
Note 4 - Related Party transactions
a. Issuance of Common Shares
On September 30, 1997, the Company issued 6,448,606 shares of common stock to Health Tech in
consideration for the purchase of certain patents valued at $252,500.
Mr. Roger Fidler is President of both the Company and of Health Tech
On September 30, 1997, the Company sold 2,000,000 shares of common stock to Scantek Medical,
Inc. ("Scantek") pursuant to Regulation D for $2,000.
b. Lease Commitment
The Company occupies office space rent free on a month to month basis from Roger Fidler,
President at 400 Grove Street, Glenn Rock, New Jersey.
c. Officer Salaries
No officer received salaries in excess of $100,000.
Note 5 - Preferred Stock
The Company is authorized to issue 5,000,000 shares of preferred stock, $.001 par value per share.
The board of directors of the Company is granted the power to determine by resolution from time to
time the power, preferences, rights, qualifications, restrictions or limitations of the preferred stock.
At December 31, 1997, the number of preferred shares outstanding was -0-.
Note 6 - Marketable Securities, Available for Sale
The Company adopted Financial Accounting Standards Board ("FASB") Statement No. 115,
"Accounting for Certain Investments in Debt and Equity Securities", which requires that investments
in equity securities that have readily determinable fair values and investments in debt securities be
classified in three categories: held-to-maturity, trading and available-for-sale. Based on the nature of
the assets held by the Company and Management's investment strategy, the Company's investments
have been classified as available-for-sale. Management determines the appropriate classification of
debt securities at the time of purchase and reevaluates such designation as of each balance sheet
date.
Securities classified as available-for-sale are carried at estimated fair value, as determined by
quoted market prices, with unrealized gains and losses, net of tax, reported in a separate component
of stockholders' equity. At December 31, 1997, the Company had no investments that were
classified as trading or held-to-maturity as defined by the Statement.
The following is a summary of cash, cash equivalents and available-for-sale securities by balance
sheet classification at December 31, 1997:
Gross Gross Estimated
Unrealized Unrealized Fair
' Cost Gains Gains Value
------ ------------- ------------- -------------
Cash $934 $934
Total cash and
cash equivalents $934 $934
===== =====
Note 7 - Income Taxes
The Company provides for the tax effects of transactions reported in the financial statements. The
provision if any, consists of taxes currently due plus deferred taxes related primarily to differences
between the basis of assets and liabilities for financial and income tax reporting. The deferred tax
assets and liabilities, if any represent the future tax return consequences of those differences, which
will either be taxable or deductible when the assets and liabilities are recovered or settled. As of
December 31, 1997, the Company had no material current tax liability, deferred tax assets, or
liabilities to impact on the Company's financial position because the deferred tax asset related to the
Company's net operating loss carry forward and was fully offset by a valuation allowance.
At December 31, 1997, the Company has net operating loss carry forwards for income tax purposes
of $2,617. These carry forward losses are available to offset future taxable income, if any, and
expire in the year 2010. The Company's utilization of this carry forward against future taxable
income may become subject to an annual limitation due to a cumulative change in ownership of the
Company of more than 50 percent.
The components of the net deferred tax asset as of December 31, 1997 are as follows:
Deferred tax asset:
Net operating loss carry forward $ 890
Valuation allowance $( 890)
Net deferred tax asset $ -0-
The Company recognized no income tax benefit for the loss generated for the SFAS No. 109
requires that a valuation allowance be provided if it is more likely year ended December 31, 1997.
SFAS No. 109 requires that a valuation allowance be provided if it is more likely than not that some
portion or all of a deferred tax asset will not be realized. The Company's ability to realize benefit of
its deferred tax asset will depend on the generation of future taxable income. Because the Company
has yet to recognize significant revenue from the sale of its products, the Company believes that a
full valuation allowance should be provided
Note 8 - Commitments and Contingencies
Liabilities, Commitments and Contingencies
At December 31, 1997 the Company has no liabilities or contingencies.
Note 9. Supplemental Cash Flow Information
The following is supplemental cash flow information for the year ended December 31, 1997.
Issuance of 6,448,606 shares for acquisition of License rights $(252,500)
Common stock 252,500
Total $ -0-
======
Note 10 - Development Stage Company
The Company is considered to be a development stage company with little operating history. The
Company is dependent upon the resources of the Company's management and its ability to raise or
borrow additional funds to continue to exist. The Company has purchased the License rights to
manufacture and market certain patented technologies from Scantek and will require additional
funds to complete the process of building manufacturing facilities and implement the Company's
marketing program.
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