1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
AUGUST 10, 2001
Date of Report
(Date of earliest event reported)
AMERICAN FINANCIAL HOLDING, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-12666 87-0458888
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
2500 Wilcrest, Suite 540
Houston, Texas 77042
(Address of principal executive offices, including zip code)
(713) 780-4754
(Registrant's telephone number, including area code)
2
ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
Not applicable to this filing.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Not applicable to this filing
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
Not applicable to this filing.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANTS.
Not applicable to this filing.
ITEM 5. OTHER EVENTS.
Not applicable to this filing.
ITEM 6. RESIGNATION OF REGISTRANT'S DIRECTORS.
Not applicable to this filing.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
Page
Report of Pannell Kerr Forster of Texas, P.C., Independent Public Accountants...................................1
Balance Sheets..................................................................................................2
Statements of Operations......................................................................................3 - 4
Statements of Shareholders' Equity............................................................................5 - 7
Statements of Cash Flows......................................................................................8 - 9
Notes to Financial Statements................................................................................10 - 15
3
INDEPENDENT AUDITORS' REPORT
To the Shareholders
Isolagen Technologies, Inc.
We have audited the accompanying balance sheets of Isolagen Technologies, Inc.
(a development stage enterprise) as of December 31, 2000 and 1999, and the
related statements of operations, shareholders' equity and cash flows for the
years then ended and, cumulatively, for the period from December 28, 1995 (date
of inception) to December 31, 2000. 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 auditing standards generally accepted
in the United States of America. 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 financial statements referred to above present fairly, in
all material respects, the financial position of Isolagen Technologies, Inc. as
of December 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 of America.
/s/ Pannell Kerr Forster of Texas, P.C.
Houston, Texas
September 7, 2001
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2
Isolagen Technologies, Inc.
Balance Sheets
December 31, June 30,
--------------------------------- ---------------
2000 1999 2001
-------------- ------------- ---------------
(unaudited)
Assets
Current assets
Cash and cash equivalents $ 2,574 $ 60,994 $ --
Accounts receivable, net of allowance for doubtful
accounts of $6,734 and $12,000 in 2000
and 1999, respectively 2,355 13,072 2,234
Inventory -- 14,646 --
------------- ------------- -------------
Total current assets 4,929 88,712 2,234
------------- ------------- -------------
Property and equipment, net 31,947 48,280 23,809
Other assets 25,420 29,711 26,073
------------- ------------- -------------
Total assets $ 62,296 $ 166,703 $ 52,116
------------- ------------- -------------
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable $ 148,263 $ 149,027 $ 185,062
Accrued expenses 226,833 85,358 479,641
Notes payable to shareholders 105,667 105,667 135,667
Current portion of convertible debt 600,000 400,000 600,000
Deferred revenue 360,000 -- 320,000
------------- ------------- -------------
Total current liabilities 1,440,763 740,052 1,720,370
Convertible debt, less current portion 850,000 850,000 850,000
------------- ------------- -------------
Total liabilities 2,290,763 1,590,052 2,570,370
------------- ------------- -------------
Commitments and contingencies
Shareholders' equity (deficit)
Common stock, $.01 par value; 10,000,000
shares authorized 1,021 967 1,021
Additional paid-in capital 453,339 451,435 453,339
Accumulated deficit during development stage (2,632,547) (1,825,471) (2,922,334)
Treasury stock, at cost (50,280) (50,280) (50,280)
------------- ------------- -------------
Total shareholders' equity (deficit) (2,228,467) (1,423,349) (2,518,254)
------------- ------------- -------------
Total liabilities and shareholder's equity (deficit) $ 62,296 $ 166,703 $ 52,116
------------- ------------- -------------
The accompanying notes are an integral part of these statements.
5
3
Isolagen Technologies, Inc.
Statements of Operations
Cumulative
Period from
December 28,
1995 (date of
December 31, inception) to
-------------------------------- December 31,
2000 1999 2000
------------ ------------- -------------
Revenues
Sales $ 6,584 $ 121,931 $ 1,364,632
License fees 40,000 - 140,000
------------ ------------- -------------
Total revenues 46,584 121,931 1,504,632
Cost of sales 10,846 84,862 384,568
------------ ------------- -------------
Gross profit 35,738 37,069 1,120,064
Selling, general and administrative expenses 728,379 1,265,534 3,551,378
------------ ------------- -------------
Operating loss (692,641) (1,228,465) (2,431,314)
Other income (expense)
Interest income 4,891 5,902 28,380
Interest expense (119,326) (84,215) (229,613)
------------ ------------- -------------
Net loss $ (807,076) $ (1,306,778) $ (2,632,547)
------------ ------------- -------------
Per share information
Net loss per common share - basic and diluted $ (7.97) $ (13.71) $ (28.82)
------------ ------------- -------------
Weighted average number of basic and diluted
common shares outstanding 101,262 95,323 91,335
------------ ------------- -------------
The accompanying notes are an integral part of these statements.
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4
Isolagen Technologies, Inc.
Statements of Operations
Six Months Ended June 30,
----------------------------------------
2001 2000
------------------ ------------------
(unaudited) (unaudited)
Revenues
Sales $ 7,743 $ 4,146
License fees 40,000 --
------------- -------------
Total revenues 47,743 4,146
Cost of sales 4,330 4,936
------------- -------------
Gross profit (loss) 43,413 (790)
Selling, general and administrative expenses 264,299 381,670
------------- -------------
Operating loss (220,886) (382,460)
Other income (expense)
Interest income 8 912
Interest expense (68,909) (60,984)
------------- -------------
Net loss $ (289,787) $ (442,532)
------------- -------------
Per share information
Net loss per common share - basic and diluted $ (2.84) $ (4.40)
------------- -------------
Weighted average number of basic and diluted
common shares outstanding 102,013 100,498
------------- -------------
The accompanying notes are an integral part of these statements.
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5
Isolagen Technologies, Inc.
Statements of Shareholders' Equity
Accumulated
Common Stock Deficit Treasury Stock Total
-------------------------- Additional During ----------------------- Shareholders'
Number Paid-In Development Number Equity
of Shares Amount Capital Stage of Shares Amount (Deficit)
------------ ------------ ------------- ------------- ----------- ---------- ------------
Issuance of common stock for
cash on December 28, 1995 82,000 $ 820 $ -- $ -- -- $ -- $ 820
Issuance of common stock for
cash on November 7, 1996 400 4 49,996 -- -- -- 50,000
Issuance of common stock for
cash on November 29, 1996 80 1 9,999 -- -- -- 10,000
Issuance of common stock for
cash on December 19, 1996 240 2 29,998 -- -- -- 30,000
Issuance of common stock for
cash on December 26, 1996 400 4 49,996 -- -- -- 50,000
Net loss -- -- -- (270,468) -- -- (270,468)
------- ------- -------- ---------- ------- -------- ----------
Balance, December 31, 1996 83,120 831 139,989 (270,468) -- -- (129,648)
Issuance of common stock for
cash on December 27, 1997 760 8 94,992 -- -- -- 95,000
Stock issued for services on
September 1, 1997 400 4 36,256 -- -- -- 36,260
Common stock issued for
services on December 28, 1997 10,305 103 10,152 -- -- -- 10,255
Net loss -- -- -- (52,550) -- -- (52,550)
------- ------- -------- ---------- ------- ----------- ----------
Balance, December 31, 1997 94,585 946 281,389 (323,018) -- -- (40,683)
The accompanying notes are an integral part of these statements.
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6
Isolagen Technologies, Inc.
Statements of Shareholders' Equity (Continued)
Accumulated
Common Stock Deficit Treasury Stock Total
-------------------------- Additional During ------------------------ Shareholders'
Number Paid-In Development Number Equity
of Shares Amount Capital Stage of Shares Amount (Deficit)
----------- ----------- ------------- ------------ ----------- ----------- ------------
Issuance of common stock for
cash on August 23, 1998 160 2 20,065 -- -- -- 20,067
Repurchase of common stock
on September 29, 1998 -- -- -- -- 2,400 (50,280) (50,280)
Net loss -- -- -- (195,675) -- -- (195,675)
--------- ------ ------------ ----------- ------ ---------- -----------
Balance, December 31, 1998 94,745 948 301,454 (518,693) 2,400 (50,280) (266,571)
Issuance of common stock for
cash on September 10, 1999 1,884 19 149,981 -- -- -- 150,000
Net loss -- -- -- (1,306,778) -- -- (1,306,778)
--------- ------ ------------ ----------- ------ ---------- -----------
Balance, December 31, 1999 96,629 967 451,435 (1,825,471) 2,400 (50,280) (1,423,349)
Common stock issued for
cash on January 18, 2000 1,923 19 1,904 -- -- -- 1,923
Common stock issued for
services on March 1, 2000 2,465 25 -- -- -- -- 25
Common stock issued for
services on April 4, 2000 996 10 -- -- -- -- 10
Net loss -- -- -- (807,076) -- -- (807,076)
--------- ------ ---------- ----------- ------- ---------- -----------
Balance, December 31, 2000 102,013 $1,021 $ 453,339 $(2,632,547) 2,400 $ (50,280) $(2,228,467)
--------- ------ ---------- ----------- ------- ---------- -----------
The accompanying notes are an integral part of these statements.
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7
Isolagen Technologies, Inc.
Statements of Shareholders' Equity (Continued)
Accumulated
Common Stock Deficit Treasury Stock Total
--------------------- Additional During ----------------------- Shareholders'
Number Paid-In Development Number Equity
of Shares Amount Capital Stage of Shares Amount (Deficit)
--------- -------- ---------- ----------- --------- ---------- -------------
Balance, December 31, 2000 102,013 $1,021 $453,339 $ (2,632,547) 2,400 $ (50,280) $ (2,228,467)
Net loss -- -- -- (289,787) -- -- (289,787)
-------- ------ -------- ------------ --------- ---------- -------------
Balance, June 30, 2001 (unaudited) 102,013 $1,021 $453,339 $ (2,922,334) 2,400 $ (50,280) $ (2,518,254)
-------- ------ -------- ------------ --------- ---------- -------------
The accompanying notes are an integral part of these statements.
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8
Isolagen Technologies, Inc.
Statements of Cash Flows
Cumulative
Period from
December 28,
1995 (date of
Year Ended December 31, inception) to
---------------------------------- December 31,
2000 1999 2000
--------------- --------------- ------------------
Cash flows from operating activities
Net loss $ (807,076) $ (1,306,778) $ (2,632,547)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation 16,333 16,574 52,349
Common stock issued for services 35 -- 46,550
Change in operating assets and liabilities:
Decrease in accounts receivable 10,717 122,796 (2,355)
Decrease (increase) in inventory 14,646 (14,646) --
Decrease (increase) in other assets 4,291 (2,646) (25,420)
Increase (decrease) in accounts payable (763) 128,996 148,263
Increase in accrued expenses 141,474 62,903 226,833
Increase in deferred revenue 360,000 -- 360,000
------------- ------------- ---------------
Net cash used in operating activities (260,343) (992,801) (1,826,327)
------------- ------------- ---------------
Cash flows from investing activities
Purchase of property and equipment -- (7,749) (84,296)
------------- ------------- ---------------
Cash flows from financing activities
Proceeds from convertible debt 200,000 450,000 1,450,000
Proceeds from notes payable to shareholders -- -- 105,667
Proceeds from the issuance of common stock 1,923 150,000 407,810
Repurchase of common stock -- -- (50,280)
------------- ------------- ---------------
Net cash provided by financing activities 201,923 600,000 1,913,197
------------- ------------- ---------------
Net decrease in cash and cash equivalents (58,420) (400,550) 2,574
Cash and cash equivalents, beginning of period 60,994 461,544 --
------------- ------------- ---------------
Cash and cash equivalents, end of period $ 2,574 $ 60,994 $ 2,574
------------- ------------- ---------------
Supplemental cash flow information:
Cash paid for interest $ 68,843 $ 60,092 $ 149,263
------------- ------------- ---------------
The accompanying notes are an integral part of these statements.
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9
Isolagen Technologies, Inc.
Statements of Cash Flows
Six Months Ended June 30,
----------------------------------------
2001 2000
------------------ ------------------
(unaudited) (unaudited)
Cash flows from operating activities
Net loss $ (289,787) $ (442,532)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation 8,138 8,195
Common stock issued for services -- 35
Change in operating assets and liabilities:
Decrease in accounts receivable 121 10,842
Increase in inventory -- (3,802)
Decrease (increase) in other assets (653) 3,871
Increase in accounts payable 36,798 18,653
Increase in accrued expenses 252,809 141,821
Decrease in deferred revenue (40,000) --
------------ ------------
Net cash used in operating activities (32,574) (262,917)
------------ ------------
Cash flows from financing activities
Proceeds from convertible debt -- 200,000
Proceeds from notes payable to shareholders 30,000 --
Proceeds from the issuance of common stock -- 1,923
------------ ------------
Net cash provided by financing activities 30,000 201,923
------------ ------------
Net decrease in cash and cash equivalents (2,574) (60,994)
Cash and cash equivalents, beginning of period 2,574 60,994
------------ ------------
Cash and cash equivalents, end of period $ -- $ --
------------ ------------
Supplemental cash flow information:
Cash paid for interest $ -- $ 18,675
------------ ------------
The accompanying notes are an integral part of these statements.
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10
Isolagen Technologies, Inc.
Notes to Financial Statements
December 31, 2000
NOTE 1 - BASIS OF PRESENTATION, BUSINESS AND ORGANIZATION
Isolagen Technologies, Inc. ("Isolagen" or the "Company") is a
Delaware corporation incorporated on December 28, 1995. Isolagen was
organized to research, develop and market products and services
related to a living system of cultured and expanded autologous
fibroblasts with an exacellar matrix that replenishes the dermis and
subcutaneous tissues (hereinafter referred to as the "Technologies").
During 1999, all commercial sales of the Company's products and
services were suspended until completion of a formal approval process
by the Food and Drug Administration ("FDA").
Through December 31, 2000, the Company has been primarily engaged in
developing its initial product technology, recruiting personnel and
raising capital. In the course of its development activities, the
Company has sustained losses and expects such losses to continue
through at least 2001. The Company will finance its operations
primarily through its existing cash, future financing and revenues.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Interim Financial Information
The financial statements as of June 30, 2001 and for the six months
ended June 30, 2001 and 2000 are unaudited. In the opinion of the
Company's management, such unaudited financial statements include all
adjustments necessary, which include only normal recurring items, to
present fairly the information set forth therein. Results for interim
periods are not necessarily indicative of the results that may be
expected for any other interim period of a full year.
Statement of cash flows
For purposes of the statements of cash flows, the Company considers
all highly liquid debt instruments purchased with an original
maturity of three months or less to be cash equivalents.
Concentration of credit risk
The Company maintains its cash with a major U.S. domestic bank. The
amounts held in this bank exceed the insured limit of $100,000 from
time to time. The terms of these deposits are on demand to minimize
risk. The Company has not incurred losses related to these deposits.
The Company is subject to risks common to companies in the
development stage including, but not limited to, development of new
products, development of markets and distribution channels,
dependence on key personnel, and the ability to obtain additional
capital as needed to fund its product plans. The Company has a
limited operating history and has yet to generate any significant
revenues from customers. To date, the Company has been funded by
private debt and equity financings. The Company's ultimate success is
dependent upon its ability to raise additional capital and to
successfully develop and market its products.
The products developed by the Company require approvals from the
United States FDA or other international regulatory agencies prior to
commercial sales. There can be no assurance that all of the Company's
products will receive the necessary approvals. If the Company was
denied such approvals or such approvals were delayed, it may have a
materially adverse impact on the Company.
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11
Isolagen Technologies, Inc.
Notes to Financial Statements
December 31, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Property and equipment
Property and equipment, consisting primarily of lab equipment,
computer equipment, office furniture and fixtures is carried at cost
less accumulated depreciation. Depreciation for financial reporting
purposes is provided by the straight-line method over the estimated
useful lives of three to five years subject to half year convention.
The cost of repairs and maintenance is charged against income as
incurred.
Inventory
At December 31, 1999, inventory consisted of skin creams and related
products sold to consumers. During 2000, the Company recorded an
obsolence reserve equal to the total ending inventory balance of
$17,271 due to uncertainty regarding shelf-life.
Earnings per share data
Basic earnings (loss) per share is calculated based on the weighted
average common shares outstanding during the period. Diluted earnings
per share also gives effect to the dilutive effect of stock options
warrants and convertible preferred stock (calculated based on the
treasury stock method). The Company does not present diluted earnings
per share for years on which it incurred net losses as the effect of
potentially dilutive shares from convertible debt is antidilutive.
Income taxes
An asset and liability approach is used for financial accounting and
reporting for income taxes. Deferred income taxes arise from
temporary differences between income tax and financial reporting and
principally relate to recognition of revenue and expenses in
different periods for financial and tax accounting purposes and are
measured using currently enacted tax rates and laws. In addition, a
deferred tax asset can be generated by net operating loss
carryforwards ("NOLs"). If it is more likely than not that some
portion or all of a deferred tax asset will not be realized, a
valuation allowance is recognized.
Revenue recognition
The Company recognizes license and other upfront fees on a ratable
basis over the term of the respective agreement. Milestone payments
are recognized upon successful completion of a performance milestone
event. Any amounts received in advance of performance are recorded as
deferred revenue.
Research and development expenses
Research and development include direct costs, research-related
overhead, and costs associated with sponsored research which are
charged to operations as incurred.
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ISOLAGEN TECHNOLOGIES, Inc.
Notes to Financial Statements
December 31, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the
reported amounts of 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.
Recent accounting pronouncements
In July 2001, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 141 "Business Combinations" ("SFAS No. 141"), which
establishes financial accounting and reporting for business
combinations and supersedes APB Opinion No. 16, Business
Combinations, and FASB Statement No. 38, Accounting for
Preacquisition Contingencies of Purchased Enterprises. SFAS No. 141
requires that all business combinations be accounted for using one
method, the purchase method. The provisions of SFAS No. 141 apply to
all business combinations initiated after June 30, 2001. The adoption
of SFAS No. 141 is expected to have no material impact on financial
reporting and related disclosures of the Company.
In July 2001, the FASB issued SFAS No. 142 "Goodwill and Other
Intangible Assets" ("SFAS No. 142"), which establishes financial
accounting and reporting for acquired goodwill and other intangible
assets and supersedes APB Opinion No. 17, Intangible Assets. SFAS No.
142 addresses how intangible assets that are acquired individually or
with a group of other assets (but not those acquired in a business
combination) should be accounted for in financial statements upon
their acquisition, and after they have been initially recognized in
the financial statements. The provisions of SFAS No. 142 are
effective for fiscal years beginning after December 15, 2001. The
Company will adopt SFAS No. 142 during the first quarter of fiscal
2002, and is in the process of evaluating the impact of
implementation on the financial position of the Company.
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment is comprised of:
December 31,
--------------------------------
2000 1999
-------------- -------------
Lab Equipment $ 52,454 $ 52,454
Computer Equipment 6,326 6,326
Office Equipment 25,516 25,516
---------- ----------
84,296 84,296
Less: Accumulated depreciation (52,349) (36,016)
---------- ----------
Property and equipment, net $ 31,947 $ 48,280
---------- ----------
NOTE 4 - NOTES PAYABLE TO SHAREHOLDERS
The Company has unsecured notes payable to two shareholders. The
notes bear interest at 7.5% and are due on demand.
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13
ISOLAGEN TECHNOLOGIES, Inc.
Notes to Financial Statements
December 31, 2000
NOTE 5 - CONVERTIBLE DEBT
Convertible debt consists of the following:
December 31,
--------------------------------
2000 1999
-------------- -------------
Convertible notes payable to individuals, interest ranging from
7.5% to 10% due in quarterly installments, convertible to 1% of
the Company's outstanding common stock per $100,000 of principal
converted, principal and all accrued interest due at maturity on
August 31, 2003. $ 850,000 $ 850,000
Convertible notes payable to individuals, interest at 7.5% due in
quarterly installments, convertible to 1% of the Company's
outstanding common stock per $100,000 of principal converted, due
on demand. 600,000 400,000
----------- ------------
1,450,000 1,250,000
Less: current maturities (600,000) (400,000)
----------- ------------
Convertible debt, less current maturities $ 850,000 $ 850,000
----------- ------------
NOTE 6 - FEDERAL INCOME TAXES
The components of the Company's deferred tax assets at December 31,
2000 and 1999 are as follows:
December 31,
-------------------------------
2000 1999
------------- -------------
Deferred tax assets:
Loss carryforwards $ 887,114 $ 617,369
Deferred tax liabilities:
Deferred revenue 122,400 --
----------- -----------
764,714 617,369
Less: Valuation allowance (764,714) (617,369)
----------- -----------
$ -- $ --
----------- -----------
As of December 31, 2000, the Company has generated NOLs of $2,609,159
available to reduce future income taxes. These carryforwards begin to
expire in 2017. A change in ownership, as defined by federal income
tax regulations, could significantly limit the Company's ability to
utilize its carryforwards. Additionally, because federal tax laws
limit the time during which the NOLs may be applied against future
taxes, the Company may not be able to take full advantage of the NOLs
to reduce future income taxes if it fails to generate taxable income
prior to expiration of the NOLs. As the Company has had cumulative
losses and there is no assurance of future taxable income, valuation
allowances have been recorded to fully offset the deferred tax asset
at December 31, 2000 and 1999. The valuation allowance increased
$147,345 during 2000 due to the Company's current period net loss.
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14
ISOLAGEN TECHNOLOGIES, Inc.
Notes to Financial Statements
December 31, 2000
NOTE 7 - COMMITMENTS AND CONTINGENCIES
Operating leases
The Company leases office space, office furniture and fixtures and
equipment under noncancelable operating lease arrangements for
various periods ranging up to five years. Future minimum lease
payments are as follows:
Year Ending
December 31,
------------
2001 $ 105,850
2002 108,542
2003 64,963
----------
Total future minimum lease payments $ 279,355
----------
Lease rental expenses were approximately $105,000 and $99,000 for the
years ended December 31, 2000 and 1999, respectively.
License agreement
Effective July 1, 2000, the Company granted exclusive rights to
develop and market its Technologies and products within Japan. Should
the development efforts result in a marketable product, the Company
will receive royalties based on product sales. Upon execution of the
license agreement, the Company received an initial up-front fee of
$400,000 which was deferred and will be recognized on a ratable basis
over the five year term of the agreement. For the year ended December
31, 2000, the Company recognized $40,000 of contract revenues
pursuant to this agreement.
Litigation
The Company is involved in a legal dispute with one of its vendors.
The full amount of disputed invoices is included in accounts payable
at December 31, 2000. In the opinion of management, resolution of the
dispute should not have a material adverse impact on the financial
condition of the Company.
NOTE 8 - RELATED PARTIES
The Company has notes payable and convertible debt due to officers
and shareholders. Interest of $15,188 and $15,000 was paid to
shareholders during 2000 and 1999, respectively.
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15
ISOLAGEN TECHNOLOGIES, Inc.
Notes to Financial Statements
December 31, 2000
NOTE 9 - SUBSEQUENT EVENTS
Acquisition and merger
On August 10, 2001, the Company completed an acquisition agreement
and plan of merger with American Financial Holdings, Inc. ("AFH") and
Gemini IV, Inc. ("Gemini"). This merger was initiated in December
2000.
AFH was a non-operating, public shell company with limited assets.
Consequently, the substance of the merger transaction was a capital
transaction rather than a business combination. The transaction was
equivalent to the issuance of stock by AFH for the net assets of the
Company and Gemini, accompanied by a recapitalization and private
placement of common stock of AFH. The accounting is identical to that
resulting from a reverse acquisition, except that no goodwill or
other intangibles are recorded.
Subsequent to the merger, the Company continued as a wholly-owned
subsidiary of AFH. Proceeds from the recapitalization and private
placement totaling $2,020,000 are sufficient to meet the Company's
short-term cash requirements.
Operating lease
In September 2001, the Company terminated its lease for office space
and initiated relocation of its primary offices to Houston, Texas.
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(b) PRO FORMA FINANCIAL INFORMATION.
Pro Forma Financial Information of American Financial Holding, Inc.
is not required under Regulation S-X.
(c) EXHIBITS.
Not applicable to this filing.
ITEM 8. CHANGE IN FISCAL YEAR.
Not applicable to this filing.
ITEM 9. REGULATION FD DISCLOSURE.
Not applicable to this filing.
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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.
AMERICAN FINANCIAL HOLDING, INC.
By: /s/ Michael Macaluso
Dated: October 3, 2001 Michael Macaluso, Chief Executive Officer
(Principal Executive Officer)