(Mark One)
For the quarterly period ended:June 30, 2004
For the transition period from _____________ to _____________
Commission file number000-28673
Biocol, Inc.
(Exact name of small business issuer as specified in its charter)
| Wyoming | 86-0970004 | |
|---|---|---|
| (State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
10233 N. MacArthur Blvd. #277, Irving, Texas 75063 (Address of principal executive offices)
(972) 506-9635
Issuer’s telephone number
____________________________________________________________________
(Former name, former address and former fiscal year, if changed since last report.)
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDING DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practical date: July 21, 2004 8,671,743
Transitional Small Business Disclosure Format (check one). Yes ; No X
BIOCOL, INC.
(A Development Stage Company)
BALANCE SHEETS
(Unaudited)
| June 30, 2004 | September 30, 2003 | |||||||
|---|---|---|---|---|---|---|---|---|
| Assets: | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 284,322 | $ | -- | ||||
| Inventory | 767,175 | -- | ||||||
| Total Current Assets | 1,051,497 | -- | ||||||
| Intangible Assets - Distribution rights, US, Canada & Europe | 4,750,000 | -- | ||||||
| Total Assets | $ | 5,801,497 | $ | -- | ||||
Liabilities - Accounts payable & accrued expenses | $ | 110,500 | $ | 5,550 | ||||
| Stockholders' Equity: | ||||||||
| Preferred Stock - Series A, Par value $.001 | ||||||||
| Authorized 5,000,000 shares, Issued 27,500 shares | ||||||||
| at June 30, 2004 and -0- shares at September 30, 2003 | 27 | -- | ||||||
| Preferred Stock - Series B, Par value $.001 | ||||||||
| Authorized 5,000,000 shares, Issued 230,000 shares | ||||||||
| at June 30, 2004 and -0- shares at September 30, 2003 | 230 | -- | ||||||
| Common Stock, Par value $.001 | ||||||||
| Authorized 100,000,000 shares, | ||||||||
| Issued 8,671,743 Shares at June 30, 2004 | ||||||||
| and 1,000,000 at September 30, 2003 | 8,672 | 1,000 | ||||||
| Paid-In Capital | 5,814,620 | 5,374 | ||||||
| Retained Deficit | (1,075 | ) | (1,075 | ) | ||||
| Deficit Accumulated During the | ||||||||
| Development Stage | (131,477 | ) | (10,849 | ) | ||||
| Total Stockholders' Equity | 5,690,997 | (5,550 | ) | |||||
| Total Liabilities and | ||||||||
| Stockholders' Equity | $ | 5,801,497 | $ | -- | ||||
See accompanying notes
BIOCOL, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
| For the three months ended June 30, | For the nine months ended June 30, | Cumulative since October 20, 1999 Inception of development | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2004 | 2003 | 2004 | 2003 | stage | |||||||||||||
| Revenues: | $ | -- | $ | -- | $ | -- | $ | -- | $ | -- | |||||||
| Expenses: | |||||||||||||||||
| Salaries | 7,500 | -- | 19,500 | -- | 19,500 | ||||||||||||
| Consulting | -- | -- | 75,000 | -- | 75,000 | ||||||||||||
| Legal | -- | -- | 15,678 | -- | 15,678 | ||||||||||||
| Accounting | 9,500 | -- | 10,450 | -- | 20,999 | ||||||||||||
| Taxes | -- | 100 | -- | 100 | 300 | ||||||||||||
| Net Loss | $ | (17,000 | ) | $ | (100 | ) | $ | (120,628 | ) | $ | (100 | ) | $ | (131,477 | ) | ||
| Loss Per Share: | |||||||||||||||||
| Basic | $ | -- | $ | -- | $ | (0.03 | ) | $ | -- | -- | |||||||
| Diluted | $ | -- | $ | -- | $ | (0.01 | ) | $ | -- | -- | |||||||
See accompanying notes
BIOCOL, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
| For the nine months ended June 30, | Cumulative since October 20, 1999 Inception of Development | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2004 | 2003 | Stage | |||||||||
| CASH FLOWS FROM OPERATING | |||||||||||
| ACTIVITIES: | |||||||||||
| Net Loss | $ | (120,628 | ) | $ | (100 | ) | $ | (131,477 | ) | ||
| (Increase) Decrease in Inventory | (767,175 | ) | -- | (767,175 | ) | ||||||
| Increase (Decrease) in Accounts Payable | 104,950 | 100 | 110,425 | ||||||||
| Net Cash Used in operating activities | (782,853 | ) | -- | (788,227 | ) | ||||||
| CASH FLOWS FROM INVESTING | |||||||||||
| ACTIVITIES: | |||||||||||
| Purchase of Distribution Rights | (2,000,000 | ) | -- | (2,000,000 | ) | ||||||
| Net cash provided by investing activities | (2,000,000 | ) | -- | (2,000,000 | ) | ||||||
| CASH FLOWS FROM FINANCING | |||||||||||
| ACTIVITIES: | |||||||||||
| Proceeds from sale of common stock | 767,175 | -- | 767,175 | ||||||||
| Proceeds from sale of preferred stock | 2,300,000 | -- | 2,300,000 | ||||||||
| Capital contributed by shareholder | -- | -- | 5,374 | ||||||||
| Net Cash Provided by Financing Activities | 3,067,175 | -- | 3,072,549 | ||||||||
| Net (Decrease) Increase in | |||||||||||
| Cash and Cash Equivalents | 284,322 | -- | 284,322 | ||||||||
| Cash and Cash Equivalents | |||||||||||
| at Beginning of Period | -- | -- | -- | ||||||||
| Cash and Cash Equivalents | |||||||||||
| at End of Period | $ | 284,322 | $ | -- | $ | 284,322 | |||||
BIOCOL, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
| Cash paid during the year for: | |||||||||||
| Interest | $ | -- | $ | -- | $ | -- | |||||
| Franchise and income taxes | $ | -- | $ | -- | $ | 25 | |||||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES:
In February 2004, the Company issued 7,761,743 shares of common stock for inventory valued at $767,175.
In March 2004, the Company issued 27,500 shares of its series “A” preferred stock in exchange for the distribution and marketing rights for the Biocol products in Europe.
See accompanying notes
BIOCOL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTSFOR
THE NINE MONTHS ENDED JUNE 30, 2004 AND 2003
(Unaudited)
NOTE 1 — ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of accounting policies for Biocol, Inc. (a development stage company) is presented to assist in understanding the Company’s financial statements. The accounting policies conform to generally accepted accounting principles and have been consistently applied in the preparation of the financial statements.
Going Concern
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States, which contemplates the Company as a going concern. However, the Company has sustained substantial operating losses in recent years and has used substantial amounts of working capital in its operations. Realization of the assets reflected on the accompanying balance sheet is dependent upon continued operations of the Company which, in turn, is dependent upon the Company’s ability to meet its financing requirements and succeed in its future operations. Management believes that actions presently being taken to revise the Company’s operating and financial requirements provide them with the opportunity for the Company to continue as a going concern.
Interim Reporting
The unaudited financial statements as of June 30, 2004 and for the three and nine month period then ended reflect, in the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to fairly state the financial position and results of operations for the three months. Operating results for interim periods are not necessarily indicative of the results which can be expected for full years.
Organization and Basis of Presentation
The Company was incorporated under the laws of the State of Wyoming on February 27, 1997. On March 15, 2004 the Company changed its name from Pear Network, Inc. To Biocol, Inc. The Company ceased all operating activities during the period from February 27, 1997 to October 20, 1999 and was considered dormant. Since October 20, 1999, the Company is in the development stage, and has not commenced planned principal operations.
BIOCOL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED JUNE 30, 2004 AND 2003 (Continued)
(Unaudited)
NOTE 1 — ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Nature of Business
The Company has acquired the exclusive rights to distribute the Biocol line of products in the U.S., Canada and Europe. Biocol currently offers four products: Biocol Gel, a cosmeceutical; Biocol Cosmetic Mask, a stabilizing platform for use with Biocol Gel; Biocol Bio-Skin, a skin replacement bandage; and Biocol Delivery Gel, a serum for use in conjunction with Biocol Bio- Skin.
Loss per Share
The reconciliations of the numerators and denominators of the basic loss per share computations are as follows:
| Income (Numerator) | Shares (Denominator) | Per-Share Amount | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Loss to common shareholders | |||||||||||
| For the three months ended June 30, 2004 | |||||||||||
| BASIC LOSS PER SHARE | $ | (17,000 | ) | 8,671,743 | $ | -- | |||||
| DILUTED LOSS PER SHARE | $ | (17,000 | ) | 31,671,743 | $ | -- | |||||
| For the three months ended June 30, 2003 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| BASIC LOSS PER SHARE | $ | -- | 1,000,000 | $ | -- | ||||||
| DILUTED LOSS PER SHARE | $ | -- | 1,000,000 | $ | -- | ||||||
| For the nine months ended June 30, 2004 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| BASIC LOSS PER SHARE | $ | (120,628 | ) | 4,807,667 | $ | (0.03 | ) | ||||
| DILUTED LOSS PER SHARE | $ | (120,628 | ) | 16,223,108 | $ | (0.01 | ) | ||||
| For the nine months ended June 30, 2003 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| BASIC LOSS PER SHARE | $ | -- | 1,000,000 | $ | -- | ||||||
| DILUTED LOSS PER SHARE | $ | -- | 1,000,000 | $ | -- | ||||||
BIOCOL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED JUNE 30, 2004 AND 2003 (Continued)
(Unaudited)
NOTE 1 — ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes.
Pervasiveness of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles required management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Concentration of Credit Risk
The Company has no significant off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements.
NOTE 2 — INCOME TAXES
As of June 30, 2004, the Company had a net operating loss carryforward for income tax reporting purposes of approximately $121,000 that may be offset against future taxable income through 2021. Current tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited. No tax benefit has been reported in the financial statements, because the Company believes there is a 50% or greater chance the carryforwards will expire unused. Accordingly, the potential tax benefits of the loss carryforwards are offset by a valuation allowance of the same amount.
NOTE 3 — DEVELOPMENT STAGE COMPANY
The Company has not begun principal operations and as is common with a development stage company, the Company has had recurring losses during its development stage.
BIOCOL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED JUNE 30, 2004 AND 2003 (Continued)
(Unaudited)
NOTE 4 — COMMITMENTS
As of June 30, 2004 all activities of the Company have been conducted by corporate officers from either their homes or business offices. Currently, there are no outstanding debts owed by the company for the use of these facilities and there are no commitments for future use of the facilities.
NOTE 5 — PREFERRED STOCK
On March 26, 2001, the Company authorized five million shares of Preferred Series A Stock, par value $.001, and five million shares of Preferred Series B Stock, par value $.001.
On February 15, 2004 the Company issued 230,000 non-voting Class B Preferred Stock which is convertible at the rate of 100 Common to 1 Preferred.
On March 15, 2004 the Company issued 27,500 shares of non-voting, redeemable Class A Preferred Stock. Class A Preferred have a primary claim on all assets of the Company. The 27,500 shares are redeemable by the holder at face value ($2,750,000) upon merger, sale or transfer of assets, or upon the redeemable due date of the security.
This Quarterly Report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. Investors are cautioned that all forward-looking statements involve risks and uncertainty, including without limitation, the ability of the Company to continue its expansion strategy, changes in costs of raw materials, labor, and employee benefits, as well as general market conditions, competition and pricing. Although the Company believes that the
assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore, there can be no assurance that the forward- looking statements included in this Quarterly Report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a presentation by the Company or any other person that the objectives and plans of the Company will be achieved.
As used herein the term “Company” refers to Biocol, Inc., a Wyoming corporation and its predecessors, unless the context indicates otherwise.
Biocol, Inc. has acquired the U.S., Canadian, and European rights to exclusively distribute the Biocol line of products. Biocol currently offers four products:
| * | Biocol Gel, a cosmeceutical that when applied directly to the skin reduced wrinkles and promotes natural skin re-genesis. |
| * | Biocol Cosmetic Mask is a stabilizing platform for the sustained use of Biocol Gel. It is used mainly for vanity applications. |
| * | Biocol Bio-Skin is a scientifically- developed Skin Replacement Bandage. |
| * | Biocol Delivery Gel (a serum) is a biologically-active catalyst that, when applied, creates an environment which accelerates natural skin re-genesis. Generally used in conjunction with Biocol Bio-Skin. |
The patented Skin Replacement Bandage and Delivery Gel products are designed to replace natural skin that may have been lost due to burns, frostbite, pressure sores, etc. The Bio-Skin technology designed to replaces traditional skin grafting by using synthetically-created skin in lieu of natural skin.
The patented Cosmetic Mask formula, when applied to the epidermis, also creates an environment that accelerates the re-genesis of natural skin cells, Benefits of the Cosmetic Mask
include reduction of wrinkles, diminishment of enlarged pores, minimization of dark circles, prevention of acne, and more. Biocol, Ltd. (The patent owner) is currently developing additional products to augment the line of cosmetic applications, i.e., deep pore cleansing agents, finishing solutions, etc.
Biocol Bio-Skin is a skin product that was developed under the Soviet regime after years of research by the Russian Academy of Science. The product was originally intended for military applications by the Russians in the event of chemical or nuclear war. Original research began in the early 1980‘s and was perfected during the late 1990‘s. Over 1,000 cases of successful skin replacement using Biocol technology have been documented since 1997.
The Russian Ministry of Health (the equivalent of the U.S. FDA) has approved Biocol Bio-Skin products for use in Russia.
The inventor of the technology, Dr Boris Gavrilyuk works at the Russian Academy of Sciences. In February, 2004, he was given the prestigious Lomonosov Award for his contribution to medical advancement.
The company intents initially to concentrate on direct-marketing the Biocol Gel and the Biocol Face Mask by means of short and long form infomercials and by utilizing already existing Multi-Level Marketing (MLM) avenues.
The Company had no sales or sales revenues for the three months ended June 30, 2004 or 2003 because it was a shell company that had not had any business operations for the past three years.
The Company had no costs of sales revenues for the three months ended June 30, 2004 or 2003 because it was a shell company that had not had any business operations for the past three years. The Company had general and administrative expenses of $17,000 for the three month period ended June 30, 2004 and $-0- for the same period in 2003.
At June 30, 2004, the Company had total current assets of $1,051,497 and total assets of $5,801,497 as compared to $-0- current assets and $-0- total assets at September 30, 2003. The Company had a net working capital of $940,997 at June 30, 2004 and a net working capital deficit of $5,550 at September 30, 2003.
Net stockholders’ equity in the Company was $5,690,997 as of June 30, 2004 and net stockholders’ deficit was $5,550 at September 30, 2003.
The Company’s Chief Executive Officer and Chief Financial Officer have concluded, based on an evaluation conducted within 90 days prior to the filing date of this Quarterly Report on Form 10-QSB, that the Company’s disclosure controls and procedures have functioned effectively so as to provide those officers the information necessary to evaluate whether:
| (I) | this Quarterly Report on Form 10-QSB contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Quarterly Report on Form 10-QSB, and |
| (ii) | the financial statements, and other financial information included in this Quarterly Report on Form 10-QSB, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this Quarterly Report on Form 10-QSB. |
There have been no significant changes in the Company’s internal controls or in other factors since the date of the Chief Executive Officer’s and Chief Financial Officer’s evaluation that could significantly affect these internal controls, including any corrective actions with regard to significant deficiencies and material weaknesses.
None.
On February 15, 2004 the Company issued 230,000 non-voting Class B Preferred Stock which is convertible at the rate of 100 Common to 1 Preferred.
On March 15, 2004 the Company issued 27,500 shares of non-voting, redeemable Class A Preferred Stock. Class A Preferred have a primary claim on all assets of the Company. The 27,500 shares are redeemable by the holder at face value ($2,750,000) upon merger, sale or transfer of assets, or upon the redeemable due date of the security.
None/Not Applicable.
None/Not Applicable.
The members of the Board of Directors of the Company serve until the next annual meeting of stockholders, or until their successors have been elected. The officers serve at the pleasure of the Board of Directors. The following table sets forth the name, age, and position of each executive officer and director of the Company:
| DIRECTOR'S NAME | AGE | OFFICE | TERM EXPIRES | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
Dr. Boris Karpivich Gavrilyuk MD, PhD | 75 | Director | next annual meeting | ||||||||
| Alexander Gorbachev, PhD | 42 | Director | next annual meeting | ||||||||
| Christopher C. Corwin | 55 | CEO, CFO and Director | next annual meeting | ||||||||
| Rex Judd | 42 | Vice-President | next annual meeting | ||||||||
Dr. BORIS KARPIVICH GAVRILYUK MD, PhD: Dr. Gavrilyuk was educated at the Saratov Medical Institute receiving both an undergraduate and a graduate degree in microbiology. He received his PhD and his MD in 1956 from the Institute of Experimental Medicine, Russian Academy of Medical Science, Saint-Petersburg. He was further awarded an advanced “Professors-degree in Biophysics in 1993. From 1990 until now Dr. Gavrilyuk is head of the Laboratory of cell and tissue growth of the Institute of Biophysics of the Russian Academy of Sciences. Dr. Gavrilyuk has published in excess of 100 articles and monograms. The Dr. has12 patents and 20 certificates/avtorskie, patents assigned to the government or others.
ALEXANDER GORBACHEV, PhD: Dr. Gorbachev received his Masters degree in chemical engineering from KUZBASS Polytechnical Institute. In 1990 the Dr. received his Doctorate in Economics from Moscow State University. Dr. Gorbachev has been an independent consultant for the last 20 years, primarily as expert on “Westernization” of Eastern European enterprises and the development and promotion of Eastern European products in the West.
CHRISTOPHER C. CORWIN: Mr. Corwin was educated at Michigan State University, he received a BA with emphasis on labor relations in 1972. From 1998-2001 he was Manager, Human Resources for Mattel, Incorporated. He was manager, Human Resources fr BMS Catastrophe, Inc. from 2001-2002. Mr. Corwin has acted as an Independent Consultant from 2002 until the present time.
REX JUDD : Mr. Judd is a Professional Consultant who specializes in Channel Marketing, Direct Response Marketing, and Management. During the previous 15 years he as acted as an advising consultant to such notable companies as Sears, Bausch and Lob, Xerox, Westinghouse, and American Express. Mr. Judd has also served as an Adjunct Professor on the staff of St. John Fisher Collage in Rochester, New York.
(a) EXHIBITS
The following documents are filed herewith or have been included as exhibits to previous filings with the Commission and are incorporated herein by this reference:
Exhibit No. Exhibit
| 3 | Articles of Incorporation (1) |
| 3.2 | Bylaws (1) |
| 3.1 | Amended Articles of Incorporation (1) |
| 3.3 | Amended Articles of Incorporation (2) |
| 31 | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 32 | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| (b) | Reports on Form 8-K. No reports on Form 8-K were filed during the period covered by this Form 10-QSB. |
| (1) | Incorporated herein by reference from Registrant’s Form 10SB12G, Registration Statement, dated December 27, 1999. |
| (2) | Incorporated herein by reference from Registrant’s Form 10QSB, March 31, 2001, dated January 17, 2002. |
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, this 19th day of July, 2004.
Biocol, Inc.
/s/ Christopher C. Corwin
Christopher C. Corwin
President/CFO and Director
July 19, 2004
