Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Feb. 28, 2018 | May 01, 2018 | Aug. 31, 2017 | |
Document and Entity Information | |||
Entity Registrant Name | BURZYNSKI RESEARCH INSTITUTE INC | ||
Entity Central Index Key | 724,445 | ||
Document Type | 10-K | ||
Document Period End Date | Feb. 28, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --02-28 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 1,273,735 | ||
Entity Common Stock, Shares Outstanding | 131,448,444 | ||
Document Fiscal Year Focus | 2,018 | ||
Document Fiscal Period Focus | FY |
BALANCE SHEETS
BALANCE SHEETS - USD ($) | Feb. 28, 2018 | Feb. 28, 2017 |
Current assets | ||
Cash and cash equivalents | $ 506 | $ 731 |
Prepaid expenses | 28,423 | |
Retainer | 10,000 | |
Total current assets | 28,929 | 10,731 |
Total assets | 28,929 | 10,731 |
Current liabilities | ||
Accounts payable | 41,941 | 19,652 |
Accrued liabilities | 94,688 | 24,080 |
Total current liabilities | 136,629 | 43,732 |
Total liabilities | 136,629 | 43,732 |
Commitments and contingencies | ||
Stockholders' deficit | ||
Common stock, $.001 par value; 200,000,000 shares authorized; 131,448,444 shares issued and outstanding as of February 28, 2018 and February 28, 2017 | 131,449 | 131,449 |
Additional paid-in capital | 120,146,481 | 118,609,079 |
Retained deficit | (120,385,630) | (118,773,529) |
Total stockholders' deficit | (107,700) | (33,001) |
Total liabilities and stockholders' deficit | $ 28,929 | $ 10,731 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - $ / shares | Feb. 28, 2018 | Feb. 28, 2017 |
BALANCE SHEETS | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 131,448,444 | 131,448,444 |
Common stock, shares outstanding | 131,448,444 | 131,448,444 |
STATEMENTS OF OPERATIONS
STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Feb. 28, 2018 | Feb. 28, 2017 | |
Operating expenses | ||
Research and development | $ 1,280,470 | $ 1,324,961 |
General and administrative | 332,631 | 179,072 |
Depreciation | 0 | 684 |
Total operating expenses | 1,613,101 | 1,504,717 |
Operating loss before other income | (1,613,101) | (1,504,717) |
Other income | 1,000 | |
Loss before provision for income tax | (1,612,101) | (1,504,717) |
Net loss | $ (1,612,101) | $ (1,504,717) |
Net loss per common share: | ||
Basic and diluted (in dollars per share) | $ (0.01) | $ (0.01) |
Weighted average common shares outstanding: | ||
Basic and diluted (in shares) | 131,448,444 | 131,448,444 |
STATEMENTS OF STOCKHOLDERS' DEF
STATEMENTS OF STOCKHOLDERS' DEFICIT - USD ($) | Common Stock | Additional Paid-in Capital | Retained Deficit | Total |
Balance at Feb. 29, 2016 | $ 131,449 | $ 117,036,345 | $ (117,268,812) | $ (101,018) |
Balance (in shares) at Feb. 29, 2016 | 131,448,444 | |||
Increase (Decrease) in Stockholders' Equity | ||||
Cash contributed by S.R. Burzynski M.D., Ph.D. and related parties | 311,943 | 311,943 | ||
FDA clinical trial expenses paid directly by S.R. Burzynski M.D., Ph.D. | 1,260,791 | 1,260,791 | ||
Net loss | (1,504,717) | (1,504,717) | ||
Balance at Feb. 28, 2017 | $ 131,449 | 118,609,079 | (118,773,529) | (33,001) |
Balance (in shares) at Feb. 28, 2017 | 131,448,444 | |||
Increase (Decrease) in Stockholders' Equity | ||||
Cash contributed by S.R. Burzynski M.D., Ph.D. and related parties | 319,268 | 319,268 | ||
FDA clinical trial expenses paid directly by S.R. Burzynski M.D., Ph.D. | 1,218,134 | 1,218,134 | ||
Net loss | (1,612,101) | (1,612,101) | ||
Balance at Feb. 28, 2018 | $ 131,449 | $ 120,146,481 | $ (120,385,630) | $ (107,700) |
Balance (in shares) at Feb. 28, 2018 | 131,448,444 |
STATEMENTS OF CASH FLOWS
STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Feb. 28, 2018 | Feb. 28, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (1,612,101) | $ (1,504,717) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 0 | 684 |
FDA clinical trial expenses paid directly by S.R. Burzynski, M.D., Ph. D. | 1,218,134 | 1,260,791 |
Changes in operating assets and liabilities | ||
Prepaid expenses | (28,423) | |
Retainer | 10,000 | (10,000) |
Accounts payable | 22,289 | (44,741) |
Accrued liabilities | 70,608 | (16,532) |
NET CASH USED IN OPERATING ACTIVITIES | (319,493) | (314,515) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Cash contribution recorded | 319,268 | 311,943 |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 319,268 | 311,943 |
NET DECREASE IN CASH | (225) | (2,572) |
CASH AT BEGINNING OF PERIOD | 731 | 3,303 |
CASH AT END OF PERIOD | 506 | 731 |
Cash Paid During the Year For: | ||
Interest | 31,471 | 81,688 |
Taxes | $ 400 | $ 400 |
Background, Basis of Presentati
Background, Basis of Presentation, Economic Dependency and Significant Accounting Policies: | 12 Months Ended |
Feb. 28, 2018 | |
BASIS OF PRESENTATION | |
Background, Basis of Presentation, Economic Dependency and Significant Accounting Policies: | 1. Background, Basis of Presentation, Economic Dependency and Significant Accounting Policies: Background and Basis of Presentation The financial statements of Burzynski Research Institute, Inc. (the “Company” or “BRI”), a Delaware corporation, include expenses incurred related to clinical trials, which were sanctioned by the U.S. Food and Drug Administration (FDA) in 1993, for Antineoplaston drugs used in the treatment of cancer. These expenses are incurred directly by S.R. Burzynski, M.D., Ph.D. (Dr. Burzynski or “SRB”) on behalf of the Company and have been reported as research and development costs and as additional paid-in capital. Other funds received from Dr. Burzynski have also been reported as additional paid-in capital. Expenses related to Dr. Burzynski’s medical practice (unrelated to the clinical trials) have not been included in these financial statements. Dr. Burzynski is the President, Chairman of the Board and owner of over 81.0% of the outstanding common stock of the Company, and also is the inventor and original patent holder of certain drug products known as “Antineoplastons,” which he has licensed to the Company. The Company and Dr. Burzynski have entered into various agreements, as further described in Note 2, which provide the Company the exclusive right in the United States, Canada and Mexico to use, manufacture, develop, sell, distribute, sublicense and otherwise exploit all the rights, titles and interest in Antineoplaston drugs used in the treatment of cancer, once the drug is approved for sale by the FDA. The Company is primarily engaged as a research and development facility for Antineoplaston drugs being tested for the use in the treatment of cancer. The Company’s IND 43742 is currently under full clinical hold and the Company cannot enroll new patients into any clinical trials until the full clinical hold is removed by the FDA. At this time, none of the Antineoplaston drugs have received FDA approval; further, there can be no assurance that FDA approval will be granted. BRI’s administrative offices are located in Houston, Texas; its research and production facilities are in Stafford, Texas. The Company operates primarily as a research and development facility of Antineoplaston drugs currently being tested for the use in the treatment of cancer, and provides consulting services. Segment information is not presented since all of the Company’s operations are attributed to a single reportable segment. The Company has had no significant revenue from external sources. The Company is currently conducting clinical trials on various Antineoplastons in accordance with FDA regulations, however, at this time none of the Antineoplaston drugs have received FDA approval; further, there can be no assurance FDA approval will be granted. Economic Dependency BRI has generated no significant revenues since its inception. As of February 28, 2018, the Company had a working capital deficit of approximately $107,700 and accumulated deficit of approximately $120,386,000. For the years ended February 28, 2018 and 2017, the Company incurred losses of approximately $1,600,000 and $1,500,000, respectively. Dr. Burzynski has funded the capital and operational needs of the Company since its inception from revenues generated through his medical practice pursuant to various agreements as described in Note 2. The Company is economically dependent on its funding from Dr. Burzynski through his medical practice. In the past, a portion of Dr. Burzynski’s patients have been admitted and treated as part of the clinical trial programs. The Company’s IND 43742 is currently under full clinical hold and the Company cannot enroll new patients into any clinical trials until the full clinical hold is removed by the FDA. The FDA imposes numerous regulations and requirements’ regarding these patients and the Company is subject to inspection at any time by the FDA. These regulations are complex and subject to interpretation and though it is management’s intention to comply fully with all such regulations, there is the risk that the Company is not in compliance and is thus subject to sanctions imposed by the FDA. In addition, as with any medical practice, Dr. Burzynski is subject to potential claims by patients and other potential claimants commonly arising out of the operation of a medical practice. The risks associated with Dr. Burzynski’s medical practice directly affect his ability to fund the operations of BRI. Significant Accounting Policies Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Property and Equipment Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets, which range from 5 to 10 years. Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized; maintenance and repairs are charged against earnings as incurred. Upon disposal of assets, the related cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized currently in the Statement of Operations. Income Taxes The Company uses the asset and liability method of accounting for income taxes, under which deferred income taxes are recognized for the tax consequences of temporary differences by applying the enacted statutory tax rate applicable to future years to differences between financial statement carrying amounts and the tax basis of existing assets and liabilities. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities. The costs incurred related to the conduct of FDA approved clinical trials incurred directly by Dr. Burzynski within his medical practice are deducted by Dr. Burzynski and are not included in the Company’s tax provision. The portion of the Texas gross margin tax that is based on income is treated as income taxes and included in the income tax provision. Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740-10, Accounting for Uncertainty in Income Taxes , clarifies the accounting for income taxes by prescribing the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. ASC 740-10 also provides guidance on derecognition, measurement, classification, interest and penalties, accounting during interim periods, disclosure, and transition. For the years ended February 28, 2018 and 2017, no uncertain tax positions were identified. Loss Per Common Share The Company accounts for loss per share in accordance with FASB ASC 260, Earnings per Share . Basic loss per share amounts are calculated by dividing net loss by the weighted average number of common shares outstanding during each period. Diluted loss per share is calculated by dividing net loss by the weighted average number of common shares outstanding for the periods, including the dilutive effect of all common stock equivalents. Dilutive options and warrants that are issued during a period or that expire or are canceled during a period are reflected in the computations for the time they were outstanding during the periods being reported. During the years ended February 28, 2018 and 2017, 1,600,000 warrants and stock options were excluded from the calculation of diluted loss per share because their effect would be anti-dilutive. Research and Development Research and development cost are charged to operations in the period incurred. Equipment used in research and development activities, which have alternative uses, is capitalized. Fair Value of Financial Instruments The carrying value of cash and accounts payable approximates fair value due to the short term maturity of these instruments. None of the financial instruments are held for trading purposes. Management 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 reported amounts of assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reported periods. The significant estimates are the allocation of payroll and other expenses between the clinical trial expenses reported with BRI and Dr. Burzynski’s medical practice expenses. Department managers review at least quarterly the duties of each employee in their department and estimate the percentage of time each employee spends between clinical trials and the medical practice. Payroll costs are allocated between clinical trials and the medical practice based on these percentages. Other expenses are allocated based on the percentage of payroll allocated to either clinical trials or the medical practice. Management believes that the estimates and allocations are reasonable. Actual results could differ from these estimates. Stock Options and Warrants The Company accounts for stock-based compensation under the provisions of FASB ASC 718, “Compensation — Stock Compensation,” which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and non-employee officers based on estimated fair values as of the date of grant. Compensation expense is recognized on a straight-line basis over the requisite service period. The Company accounts for share-based payments to non-employees, with guidance provided by FASB ASC 505-50, “ Equity-Based Payments to Non-Employees .” The Company did not grant any options and no options previously granted vested in any of the periods presented in these financial statements. Thus, there was no effect on net loss and earnings per share regarding the provisions of FASB ASC 718 or FASB 505-50 in any of the periods presented. |
Agreements With, and Other Rela
Agreements With, and Other Related Party Transactions: | 12 Months Ended |
Feb. 28, 2018 | |
Agreements With, and Other Related Party Transactions: | |
Agreements With, and Other Related Party Transactions: | 2. Agreements With, and Other Related Party Transactions: The Company has agreements with its majority shareholder and President Dr. Burzynski as further described below: License Agreement Dr. Burzynski is the owner of patents involving the formulation, preparation, manufacture, production, use, dosage and treatment with Antineoplastons. The United States Patent Office and Patent Offices of thirty-four other countries have issued the patents. The Patents for cancer treatment and diagnosis in the United States and Canada are licensed to the Company pursuant to a License Agreement. The License Agreement grants to the Company the exclusive right, in the United States, Canada, and Mexico, to use, manufacture, develop, sell, distribute, sub-license and otherwise exploit all of Dr. Burzynski’s rights, title, and interests, including patent rights, in Antineoplaston drugs in the treatment and diagnosis of cancer. The Company will not be able to exploit such rights until such time as Antineoplastons are approved, of which there can be no assurance, by the FDA for sale in the United States and the appropriate authority in Canada and Mexico. The Agreement gives Dr. Burzynski the right to make, use, sell, distribute, and otherwise exploit Antineoplastons in connection with the treatment of patients in his medical practice. The License Agreement will terminate upon the earlier of the expiration of the last patent licensed to the Company, or termination by Dr. Burzynski, at his option, if he is removed as a director or officer of the Company without his consent, if the Company files for bankruptcy or if any shareholder or group of shareholders acting in concert becomes the beneficial owner of the Company’s securities having voting power equal to or greater than the voting power of the securities Dr. Burzynski holds. Under the License Agreement, the Company currently owns exclusive rights to eight (8) issued United States Patents, four (4) issued Canadian Patents and one (1) issued Mexican Patent. The five initial United States Patents (the “Initial Patents”) relate to: (i) Determination of Antineoplastons in body tissue or fluids as a testing procedure to aid in the diagnosis of cancer; (ii) Processes for the preparation of purified fractions of Antineoplastons from human urine; (iii) Processes for the synthetic production of Antineoplastons and methods of treating neoplastic disease (cancer); (iv) Administration of Antineoplastons to humans; and (v) Methods of synthesizing A-10. All of these Initial Patents have expired as of February 28, 2009. The Company does not believe the expiration of any of the Initial Patents will have a material adverse effect on the Company. The sixth United States Patent (the “2000 U.S. Patent”) covers Liposomal Antineoplaston therapies with markedly improved anti-cancer activity. The 2000 U.S. Patent expired May 14, 2017. The seventh United States Patent (the “2001 U.S. Patent”) is for a treatment regimen for the administration of phenylacetylglutamine, phenylacetylisoglutamine, and/or phenylacetate. The 2001 U.S. Patent expires on July 23, 2018. The eighth United States Patent (the “2005 U.S. Patent”) relates to a divisional application to the 2001 U.S. Patent. The 2005 U.S. Patent was issued in September 2005 and expires July 31, 2018. The four Canadian Patents (the “Canadian Patents”) relate to: (i) Processes for the preparation of purified fractions of Antineoplastons from human urine, (ii) Processes for the synthetic production of Antineoplastons and methods of treating neoplastic disease (cancer), (iii) Liposomal formulation of Antineoplastons and (iv) Treatment regimen for the administration of phenylacetylglutamine. The Canadian Patents expired or will expire on June 4, 2002, November 14, 2006, May 14, 2017, and July 2, 2019, respectively; however, the Company does not believe the Canadian Patents that expired in 2002, 2006, or 2017 will have a material adverse effect on the Company. The Mexican Patent relates to a treatment regimen for the administration of phenylacetylglutamine. This patent will expire January 14, 2019. Research Funding Agreement Effective March 1, 1997, Dr. Burzynski restructured his funding arrangement with the Company and entered into a Research Funding Agreement. Under this agreement the two parties agreed to the following: 1. The Company agrees to undertake all scientific research in connection with the development of new or improved Antineoplastons for the treatment of cancer. The Company will hire such personnel as is required to fulfill its obligations under the agreement. 2. Dr. Burzynski agrees to fund in its entirety all basic research, which the Company undertakes in connection with the development of other Antineoplastons or refinements to existing Antineoplastons for the treatment of cancer. 3. As FDA approval of Antineoplastons will benefit both parties, Dr. Burzynski agrees to pay the expenses to conduct the clinical trials for the Company. 4. Dr. Burzynski agrees to provide the Company such laboratory and research space as the Company needs at the Trinity Drive facility in Stafford, Texas, and such office space as is necessary at Trinity Drive and at his medical facility. 5. In the event the research described in the agreement results in the approval of any additional patents for the treatment of cancer, Dr. Burzynski shall own all such patents, but shall license to the Company the patents based on the same terms, conditions and limitations as is in the current license between the parties. 6. Dr. Burzynski shall have unlimited and free access to all equipment which the Company owns, so long as such use is not in conflict with the Company’s use of such equipment, including without limitation to all equipment used in manufacturing of Antineoplastons used in the clinical trials. 7. The amounts, which Dr. Burzynski is obligated to pay under the agreement, shall be reduced dollar for dollar by the following: a.Any income which the Company receives for services provided to other companies for research and/or development of other products, less such identifiable marginal or additional expenses necessary to produce such income (such as the purchase of chemicals, products or equipment) solely necessary to engage in such other research and development activity, and b.The net proceeds of any stock offering or private placement, which the Company receives during the term of the engagement up to a maximum of $1,000,000 in a given Company fiscal year. 8. Effective March 1, 2017, the term of the Research Funding Agreement was extended to February 28, 2018, and is automatically renewable for an additional one-year term thereafter, unless one party notifies the other party at least thirty days prior to the expiration of the term of the agreement of its intention not to renew the agreement. In addition to the foregoing termination provisions, the agreement automatically terminates in the event that Dr. Burzynski owns less than fifty percent of the outstanding shares of the Company, or is removed as President and/or Chairman of the Board of the Company, unless Dr. Burzynski notifies the Company in writing of his intention to continue the agreement notwithstanding this automatic termination provision. Royalty Agreement The Company entered into a royalty agreement with Dr. Burzynski whereby upon receiving FDA approval for interstate marketing and distribution, the Company agrees to pay Dr. Burzynski a royalty interest equivalent to 10% of the Company’s gross income, which royalty interest shall include gross receipts from all future sales, distributions and manufacture of Antineoplastons. Dr. Burzynski will have the right to either produce Antineoplaston products for use in his medical practice to treat up to 1,000 patients without paying any fees to the Company, or purchase from the Company Antineoplaston products for use in his medical practice to treat up to 1,000 patients at a price of the Company’s cost to produce the Antineoplaston products plus 10%. Dr. Burzynski will also have the right to either lease or purchase all the manufacturing equipment located at 12707 Trinity Drive, Stafford, Texas at a fair market price. The Company will also have the right to lease from Dr. Burzynski the entire premise located at 12707 Trinity Drive, Stafford, Texas at arms-length terms at rates competitive with those available in the market at that time, provided that Dr. Burzynski does not need the facility for his use. The term of this agreement is indefinite and will continue until such time as both parties agree it is not in their mutual interest to continue. Other Related Party Transactions Dr. Burzynski owns the production facility located at Trinity Drive. There is no formal lease agreement between Dr. Burzynski and the Company; however, the Research Funding Agreement described above provides that Dr. Burzynski will allow the Company the use of the building. In addition, the Royalty Agreement states that after FDA approval is granted (though approval is not assured) the Company may rent the facility at competitive rates if Dr. Burzynski does not need the facility for his use. The actual facility costs are included in the financial statements as set forth in Note 5. In addition, Dr. Burzynski’s medical clinic performs certain administrative functions such as accounting, and allows the Company the use of some office space. Since May of 2000, Dr. Burzynski’s entire salary is paid through his medical practice and he is not compensated directly by the Company for his services. The Company has received all significant funding from Dr. Burzynski through either cash contributed to the Company or the payment of the cost to conduct FDA approved clinical trials through his medical practice, as disclosed in Note 1. Following is a summary of the capital contributed and clinical trial costs paid by Dr. Burzynski for the years ended February 28, 2018 and 2017, respectively: 2018 2017 Capital contributed $ $ Clinical trial costs paid direct $ $ |
Property and Equipment_
Property and Equipment: | 12 Months Ended |
Feb. 28, 2018 | |
Property and Equipment: | |
Property and Equipment: | 3. Property and Equipment: Property and equipment consists of the following as of February 28, 2018 and 2017, respectively: Estimated Useful Lives 2018 2017 Furniture and equipment 5 - 10 years $ $ Total property and equipment Accumulated depreciation ) ) $ — $ — Depreciation expense for the years ended February 28, 2018 and 2017 was $0 and $684, respectively. |
Employee Benefits_
Employee Benefits: | 12 Months Ended |
Feb. 28, 2018 | |
Employee Benefits: | |
Employee Benefits: | 4. Employee Benefits: Through December 31, 2017, employees of SRB received health care benefits as well as group dental insurance, vision, short-term and long-term disability insurance, and life insurance, under both HMO and PPO options from which employees could choose coverage. Effective January 1, 2018, only PPO options are offered to employees. Employees pay pre-tax premiums from $0 to $2,554 per month depending upon the insurance coverage selected by the employee. The Company had a self-funded plan prior to July 1, 2014, and thus certain claims filed under that plan that were incurred prior to this date continue to be presented to the Company for payment and are expected to decrease over time. The Company charged to operations a provision of $41,213 for 2018 and $28,875 for 2017, which represents the sum of actual claims paid and an estimate of liabilities relating to claims, both asserted and unasserted, resulting from incidents that occurred during the year. These amounts include costs related to employees of SRB that have been allocated to the Company. |
Lease commitments_
Lease commitments: | 12 Months Ended |
Feb. 28, 2018 | |
Lease commitments: | |
Lease commitments: | 5. Lease commitments: Dr. Burzynski leases certain equipment used in the clinical trials under leases originally maturing in one to four years. Rent expense incurred under these leases was approximately $69,978 and $89,229 for the years ended February 28, 2018 and 2017, respectively. As explained in Note 2, Dr. Burzynski owns the facility used by the Company to perform research and produce its drug products. There is currently no lease agreement; however, the facility’s costs are included in the accompanying financial statements as rental expense. The rental expense is derived from not only utilities and expenses normally incurred by a tenant but also mortgage interest, insurance, property taxes and building depreciation. Rent expense totaled $154,506 and $258,159 for 2018 and 2017, respectively. |
Income Taxes_
Income Taxes: | 12 Months Ended |
Feb. 28, 2018 | |
Income Taxes: | |
Income Taxes: | 6. Income Taxes: The costs incurred related to the conduct of FDA approved clinical trials incurred directly by Dr. Burzynski within his medical practice are deducted by Dr. Burzynski and are not included in the Company’s tax provision. Under the Tax Cuts and Jobs Act of 2017, the federal tax rates in effect starting in 2018, affecting future tax benefits, went from 34% to 21%. The change in the enacted rate did not have an effect on the Company’s income tax expense for the year ended February 28, 2018 as a valuation allowance has been recorded for the total deferred tax assets. The valuation allowance decreased by $112,401 due to the change in the enacted rate. The actual income tax benefit attributable to the Company’s losses for the years ended February 28, 2018 and 2017 differ from the amounts computed by applying the U.S. federal income tax rate of 21% and 34%, respectively, to the pretax loss as a result of the following: 2018 2017 Expected benefit $ ) $ ) Effect of expenses deducted directly by Dr. Burzynski Other adjustments ) Change in valuation allowance ) Income tax expense $ — $ — The components of the Company’s deferred income tax assets as of February 28, 2018 and 2017 are as follows: 2018 2017 Deferred tax assets: Net operating loss carryforwards $ $ Excess book (tax) depreciation — — Accrued expenses — — Alternative minimum tax credit carryforwards Total deferred tax assets Less valuation allowance ) ) Net deferred tax assets $ — $ — The Company’s ability to utilize net operating loss carryforwards and alternative minimum tax credit carryforwards will depend on its ability to generate adequate future taxable income. The Company has no historical earnings on which to base an expectation of future taxable income. Accordingly, a valuation allowance for the total deferred tax assets has been provided. The Company has net operating loss carryforwards available to offset future income in the amount of $661,756 as of February 28, 2018. The net operating loss carryforwards expire as of February 28 or 29 of the following years: 2022 $ 2023 $ 2024 $ 2025 $ 2026 $ 2027 $ 2028 $ 2029 $ 2030 $ — 2031 $ — 2032 $ — 2033 $ 2034 $ 2035 $ — 2036 $ — 2037 $ In addition, the Company has alternative minimum tax credit carryforwards of $42,603 at February 28, 2018. |
Equity Transactions_
Equity Transactions: | 12 Months Ended |
Feb. 28, 2018 | |
Equity Transactions: | |
Equity Transactions: | 7. Equity Transactions: On September 14, 1996, the Company granted 600,000 stock options, with an exercise price of $0.35 per share, to an officer who is no longer with the Company. The options vested as follows: 400,000 options September 14, 1996 100,000 options June 1, 1997 100,000 options June 1, 1998 The options are valid in perpetuity. None of the options have been exercised as of February 28, 2018. On June 1, 2009, the Company approved the issuance of 60,000 shares of the Company’s Common Stock as compensation for services rendered to the Company and were fair valued at approximately $9,400. The shares were sold pursuant to an exemption from registration under Section 4(2) of the Securities Act of 1933, as amended, to a single accredited investor and did not involve a public offering. Effective July 5, 2012, the Company entered into a Marketing and Consulting Agreement (the “Marketing Agreement”) with Worldwide Medical Consultants, Inc. (“WMC”) and CARIGEN, LTD (“SRB”), an entity wholly-owned and controlled by Dr. Burzynski, pursuant to which WMC will (i) provide SRB with various marketing and consulting services to assist SRB in locating and developing cancer or health related centers in certain foreign markets and (ii) make payments to the Company equal to 10% of each consulting fee received by WMC for the aforementioned services provided to SRB, net of certain expenses incurred by WMC (“WMC Payment”). In consideration of the WMC Payment, the Company agreed to grant to WMC warrants to acquire an aggregate of 2,000,000 shares of the Company’s Common Stock, exercisable at $0.10 per share with a ten year exercise period, with 1,000,000 shares vesting upon execution of the agreement and the remaining 1,000,000 shares to vest upon the first closing of a transaction by SRB as a result of the services provided by WMC under the Marketing Agreement. The fair market value of the vested warrants as of the date of grant was measured using the Black-Scholes option pricing model and totaled approximately $160,000 or $0.16 per warrant. As of February 28, 2018, none of the aforementioned warrants have been exercised and no additional vesting has occurred. |
Commitments and Contingencies a
Commitments and Contingencies and Supply Source: | 12 Months Ended |
Feb. 28, 2018 | |
Commitments and Contingencies and Supply Source: | |
Commitments and Contingencies and Supply Source: | 8. Commitments and Contingencies and Supply Source: In the ordinary course of conducting business, the Company may be a party to legal proceedings and claims. As of February 28, 2018, the Company does not expect the final outcome of any such matters to have a material adverse effect on its financial position, results of operations, or cash flows. As described in Note 2, the Company entered a Royalty Agreement with Dr. Burzynski. Under that agreement, upon FDA approval, the Company is obligated to provide Dr. Burzynski the right to produce Antineoplaston products to treat up to 1,000 patients without paying any fees to the Company or the right to purchase Antineoplaston products to treat up to 1,000 patients at cost plus 10%. As such, Dr. Burzynski supplies all of the Antineoplaston products to the Company. No patients were treated during the year ended February 28, 2018, and one patient was treated at the Burzynski Research Clinic during the year ended February 28, 2017. Management estimates the current production facilities have the capacity to produce product to treat approximately 1,500 patients per year. There is space available at the current site to expand the facility for increased capacity if necessary. The Company received approximately 86% of the chemicals used in producing Antineoplastons from four suppliers during the year ended February 28, 2018 and 74% from three suppliers during the year ended February 28, 2017. Dr. Burzynski has established additional vendors to supply these chemicals should there be a loss of these suppliers. |
Background, Basis of Presenta15
Background, Basis of Presentation, Economic Dependency and Significant Accounting Policies: (Policies) | 12 Months Ended |
Feb. 28, 2018 | |
BASIS OF PRESENTATION | |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. |
Property and Equipment | Property and Equipment Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets, which range from 5 to 10 years. Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized; maintenance and repairs are charged against earnings as incurred. Upon disposal of assets, the related cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized currently in the Statement of Operations. |
Income Taxes | Income Taxes The Company uses the asset and liability method of accounting for income taxes, under which deferred income taxes are recognized for the tax consequences of temporary differences by applying the enacted statutory tax rate applicable to future years to differences between financial statement carrying amounts and the tax basis of existing assets and liabilities. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities. The costs incurred related to the conduct of FDA approved clinical trials incurred directly by Dr. Burzynski within his medical practice are deducted by Dr. Burzynski and are not included in the Company’s tax provision. The portion of the Texas gross margin tax that is based on income is treated as income taxes and included in the income tax provision. Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740-10, Accounting for Uncertainty in Income Taxes , clarifies the accounting for income taxes by prescribing the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. ASC 740-10 also provides guidance on derecognition, measurement, classification, interest and penalties, accounting during interim periods, disclosure, and transition. For the years ended February 28, 2018 and 2017, no uncertain tax positions were identified. |
Loss Per Common Share | Loss Per Common Share The Company accounts for loss per share in accordance with FASB ASC 260, Earnings per Share . Basic loss per share amounts are calculated by dividing net loss by the weighted average number of common shares outstanding during each period. Diluted loss per share is calculated by dividing net loss by the weighted average number of common shares outstanding for the periods, including the dilutive effect of all common stock equivalents. Dilutive options and warrants that are issued during a period or that expire or are canceled during a period are reflected in the computations for the time they were outstanding during the periods being reported. During the years ended February 28, 2018 and 2017, 1,600,000 warrants and stock options were excluded from the calculation of diluted loss per share because their effect would be anti-dilutive. |
Research and Development | Research and Development Research and development cost are charged to operations in the period incurred. Equipment used in research and development activities, which have alternative uses, is capitalized. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying value of cash and accounts payable approximates fair value due to the short term maturity of these instruments. None of the financial instruments are held for trading purposes. |
Management Estimates | Management 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 reported amounts of assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reported periods. The significant estimates are the allocation of payroll and other expenses between the clinical trial expenses reported with BRI and Dr. Burzynski’s medical practice expenses. Department managers review at least quarterly the duties of each employee in their department and estimate the percentage of time each employee spends between clinical trials and the medical practice. Payroll costs are allocated between clinical trials and the medical practice based on these percentages. Other expenses are allocated based on the percentage of payroll allocated to either clinical trials or the medical practice. Management believes that the estimates and allocations are reasonable. Actual results could differ from these estimates. |
Stock Options and Warrants | Stock Options and Warrants The Company accounts for stock-based compensation under the provisions of FASB ASC 718, “Compensation — Stock Compensation,” which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and non-employee officers based on estimated fair values as of the date of grant. Compensation expense is recognized on a straight-line basis over the requisite service period. The Company accounts for share-based payments to non-employees, with guidance provided by FASB ASC 505-50, “ Equity-Based Payments to Non-Employees .” The Company did not grant any options and no options previously granted vested in any of the periods presented in these financial statements. Thus, there was no effect on net loss and earnings per share regarding the provisions of FASB ASC 718 or FASB 505-50 in any of the periods presented. |
Agreements With, and Other Re16
Agreements With, and Other Related Party Transactions: (Tables) | 12 Months Ended |
Feb. 28, 2018 | |
Agreements With, and Other Related Party Transactions: | |
Summary of the capital contributed and clinical trial costs paid by related party | 2018 2017 Capital contributed $ $ Clinical trial costs paid direct $ $ |
Property and Equipment_ (Tables
Property and Equipment: (Tables) | 12 Months Ended |
Feb. 28, 2018 | |
Property and Equipment: | |
Schedule of property and equipment | Estimated Useful Lives 2018 2017 Furniture and equipment 5 - 10 years $ $ Total property and equipment Accumulated depreciation ) ) $ — $ — |
Income Taxes_ (Tables)
Income Taxes: (Tables) | 12 Months Ended |
Feb. 28, 2018 | |
Income Taxes: | |
Schedule of actual provision for income tax that differs from the amounts computed by applying the U.S. federal income tax rate to the pretax loss | 2018 2017 Expected benefit $ ) $ ) Effect of expenses deducted directly by Dr. Burzynski Other adjustments ) Change in valuation allowance ) Income tax expense $ — $ — |
Schedule of components of the Company's deferred income tax assets | 2018 2017 Deferred tax assets: Net operating loss carryforwards $ $ Excess book (tax) depreciation — — Accrued expenses — — Alternative minimum tax credit carryforwards Total deferred tax assets Less valuation allowance ) ) Net deferred tax assets $ — $ — |
Schedule of expiration of net operating loss carryforwards | The net operating loss carryforwards expire as of February 28 or 29 of the following years: 2022 $ 2023 $ 2024 $ 2025 $ 2026 $ 2027 $ 2028 $ 2029 $ 2030 $ — 2031 $ — 2032 $ — 2033 $ 2034 $ 2035 $ — 2036 $ — 2037 $ |
Equity Transactions_ (Tables)
Equity Transactions: (Tables) | 12 Months Ended |
Feb. 28, 2018 | |
Equity Transactions: | |
Schedule of options vested | 400,000 options September 14, 1996 100,000 options June 1, 1997 100,000 options June 1, 1998 |
Background, Basis of Presenta20
Background, Basis of Presentation, Economic Dependency and Significant Accounting Policies: - Basis of Presentation thru Fair Value of Financial Instruments (Details) | 12 Months Ended | |
Feb. 28, 2018USD ($)itemshares | Feb. 28, 2017USD ($)shares | |
Percentage of outstanding stock owned by the President and Chairman of the Board | 81.00% | |
Number of antineoplaston drugs that have received FDA approval | item | 0 | |
Economic Dependency | ||
Significant external revenue | $ 0 | $ 0 |
Working capital deficit | 107,700 | |
Accumulated deficit | 120,385,630 | 118,773,529 |
Losses incurred | 1,612,101 | 1,504,717 |
Income Taxes | ||
Uncertain tax positions | $ 0 | $ 0 |
Loss Per Common Share | ||
Warrants and stock options excluded from calculation of diluted loss per share (in shares) | shares | 1,600,000 | 1,600,000 |
Fair Value of Financial Instruments | ||
Number of financial instruments held for trading purposes | item | 0 | |
Minimum | ||
Economic Dependency | ||
Estimated useful lives | 5 years | |
Maximum | ||
Economic Dependency | ||
Estimated useful lives | 10 years |
Background, Basis of Presenta21
Background, Basis of Presentation, Economic Dependency and Significant Accounting Policies: - Stock Options and Warrants (Details) - Stock options - USD ($) | Jun. 01, 1998 | Jun. 01, 1997 | Sep. 14, 1996 | Feb. 28, 2018 | Feb. 28, 2017 |
Stock options and Warrants | |||||
Vested (in shares) | 100,000 | 100,000 | 400,000 | 0 | 0 |
Effect on net loss | $ 0 | $ 0 | |||
Effect on earnings per share | $ 0 | $ 0 |
Agreements With, and Other Re22
Agreements With, and Other Related Party Transactions: (Details) | 12 Months Ended | |
Feb. 28, 2018USD ($)item | Feb. 28, 2017USD ($) | |
Agreements With, and Other Related Party Transactions | ||
Capital contributed | $ | $ 319,268 | $ 311,943 |
Clinical trial costs paid direct | $ | $ 1,218,134 | 1,260,791 |
License Agreement | United States | ||
Agreements With, and Other Related Party Transactions | ||
Number of patents issued on which exclusive rights are owned | 8 | |
Number of Initial Patents | 5 | |
License Agreement | Canada | ||
Agreements With, and Other Related Party Transactions | ||
Number of patents issued on which exclusive rights are owned | 4 | |
License Agreement | Mexico | ||
Agreements With, and Other Related Party Transactions | ||
Number of patents issued on which exclusive rights are owned | 1 | |
Dr. Burzynski | ||
Agreements With, and Other Related Party Transactions | ||
Capital contributed | $ | $ 319,268 | 311,943 |
Clinical trial costs paid direct | $ | $ 1,218,134 | $ 1,260,791 |
Dr. Burzynski | License Agreement | ||
Agreements With, and Other Related Party Transactions | ||
Number of other countries in which Patent Offices and Patent Officers issued patents | 34 | |
Dr. Burzynski | Research Funding Agreement | ||
Agreements With, and Other Related Party Transactions | ||
Number of parties | 2 | |
Renewable term | 1 year | |
Dr. Burzynski | Research Funding Agreement | Minimum | ||
Agreements With, and Other Related Party Transactions | ||
Notice period for nonrenewal prior to expiration of term of agreement | 30 days | |
Dr. Burzynski | Research Funding Agreement | Maximum | ||
Agreements With, and Other Related Party Transactions | ||
Net proceeds of any stock offering or private placement | $ | $ 1,000,000 | |
Ownership percentage for termination of agreement | 50.00% | |
Dr. Burzynski | Royalty Agreement | ||
Agreements With, and Other Related Party Transactions | ||
Royalty interest as a percentage of gross income | 10.00% | |
Number of patients to be treated with antineoplaston products in option two, percentage added to cost of production to determine overall price | 10.00% | |
Dr. Burzynski | Royalty Agreement | Maximum | ||
Agreements With, and Other Related Party Transactions | ||
Number of patients to be treated with antineoplaston products under the option in which related party would have the right to produce the products without paying any fees | 1,000 | |
Number of patients to be treated with antineoplaston products under the option in which related party would have the right to purchase the products from the company at specified price | 1,000 |
Property and Equipment_ (Detail
Property and Equipment: (Details) - USD ($) | 12 Months Ended | |
Feb. 28, 2018 | Feb. 28, 2017 | |
Property and Equipment | ||
Total property and equipment | $ 22,415 | $ 22,415 |
Accumulated depreciation | (22,415) | (22,415) |
Depreciation expense | $ 0 | 684 |
Minimum | ||
Property and Equipment | ||
Estimated Useful Lives | 5 years | |
Maximum | ||
Property and Equipment | ||
Estimated Useful Lives | 10 years | |
Furniture and equipment | ||
Property and Equipment | ||
Total property and equipment | $ 22,415 | $ 22,415 |
Furniture and equipment | Minimum | ||
Property and Equipment | ||
Estimated Useful Lives | 5 years | |
Furniture and equipment | Maximum | ||
Property and Equipment | ||
Estimated Useful Lives | 10 years |
Employee Benefits_ (Details)
Employee Benefits: (Details) - USD ($) | 12 Months Ended | |
Feb. 28, 2018 | Feb. 28, 2017 | |
Employee Benefits | ||
Provision for employee benefit plan | $ 41,213 | $ 28,875 |
Minimum Essential Coverage "MEC" Plan | Minimum | ||
Employee Benefits | ||
Pre-tax premiums per month | 0 | |
Minimum Essential Coverage "MEC" Plan | Maximum | ||
Employee Benefits | ||
Pre-tax premiums per month | $ 2,554 |
Lease commitments_ (Details)
Lease commitments: (Details) - USD ($) | 12 Months Ended | |
Feb. 28, 2018 | Feb. 28, 2017 | |
Lease commitments | ||
Rent expense | $ 69,978 | $ 89,229 |
Rent expense | $ 154,506 | $ 258,159 |
Minimum | ||
Lease commitments | ||
Term of lease | 1 year | |
Maximum | ||
Lease commitments | ||
Term of lease | 4 years |
Income Taxes_ - Income Tax Expe
Income Taxes: - Income Tax Expenses and Deferred Tax Assets (Details) - USD ($) | 2 Months Ended | 10 Months Ended | 12 Months Ended | |
Feb. 28, 2018 | Dec. 31, 2017 | Feb. 28, 2018 | Feb. 28, 2017 | |
Income Taxes: | ||||
Decrease in valuation allowance | $ (112,401) | |||
U.S. federal income tax rate (as a percent) | 21.00% | 34.00% | ||
Actual income tax benefit | ||||
Expected benefit | (338,541) | $ (511,604) | ||
Effect of expenses deducted directly by Dr. Burzynski | 338,541 | 511,604 | ||
Other adjustments | (60,630) | 23,128 | ||
Change in valuation allowance | 60,630 | (23,128) | ||
Deferred tax assets: | ||||
Net operating loss carryforwards | $ 138,969 | 138,969 | 199,599 | |
Alternative minimum tax credit carryforwards | 42,603 | 42,603 | 42,603 | |
Total deferred tax assets | 181,572 | 181,572 | 242,202 | |
Less valuation allowance | $ (181,572) | (181,572) | (242,202) | |
Historical earnings | $ 0 | $ 0 |
Income Taxes_ - Operating Loss
Income Taxes: - Operating Loss Carryforwards (Details) | Feb. 28, 2018USD ($) |
Net operating loss carryforwards | |
Operating Loss Carryforwards | $ 661,756 |
Alternative minimum tax credit carryforwards | 42,603 |
2,022 | |
Net operating loss carryforwards | |
Operating Loss Carryforwards | 29,250 |
2,023 | |
Net operating loss carryforwards | |
Operating Loss Carryforwards | 73,401 |
2,024 | |
Net operating loss carryforwards | |
Operating Loss Carryforwards | 69,394 |
2,025 | |
Net operating loss carryforwards | |
Operating Loss Carryforwards | 13,475 |
2,026 | |
Net operating loss carryforwards | |
Operating Loss Carryforwards | 46,972 |
2,027 | |
Net operating loss carryforwards | |
Operating Loss Carryforwards | 31,220 |
2,028 | |
Net operating loss carryforwards | |
Operating Loss Carryforwards | 7,737 |
2,029 | |
Net operating loss carryforwards | |
Operating Loss Carryforwards | 31,868 |
2,033 | |
Net operating loss carryforwards | |
Operating Loss Carryforwards | 207,097 |
2,034 | |
Net operating loss carryforwards | |
Operating Loss Carryforwards | 76,643 |
2,037 | |
Net operating loss carryforwards | |
Operating Loss Carryforwards | $ 74,699 |
Equity Transactions_ (Details)
Equity Transactions: (Details) | Jul. 05, 2012USD ($)$ / shares$ / itemshares | Jun. 01, 2009USD ($)shares | Jun. 01, 1998shares | Jun. 01, 1997shares | Sep. 14, 1996$ / sharesshares | Feb. 28, 2018shares | Feb. 28, 2017shares |
Worldwide Medical Consultants, Inc. ("WMC") | CARIGEN, LTD ("SRB") | |||||||
Marketing Agreement | |||||||
Consulting fee (as a percent) | 10.00% | ||||||
Warrants to be granted to acquire shares of common stock (in shares) | 2,000,000 | ||||||
Exercisable price (in dollars per share) | $ / shares | $ 0.10 | ||||||
Warrants exercise period | 10 years | ||||||
Shares vesting upon execution of the agreement | 1,000,000 | ||||||
Remaining shares to vest upon the first closing of a transaction by SRB under the marketing agreement | 1,000,000 | ||||||
Fair value of vested warrants at date of grant | $ | $ 160,000 | ||||||
Fair value of vested warrants at date of grant (in dollars per share) | $ / item | 0.16 | ||||||
Warrants exercised (in shares) | 0 | ||||||
Additional warrants vested (in shares) | 0 | ||||||
Stock options | |||||||
Stock options and Warrants | |||||||
Granted (in shares) | 600,000 | ||||||
Exercise price (in dollars per share) | $ / shares | $ 0.35 | ||||||
Vested (in shares) | 100,000 | 100,000 | 400,000 | 0 | 0 | ||
Exercised (in shares) | 0 | ||||||
Common Stock issued as compensation for services rendered (in shares) | 60,000 | ||||||
Fair value of Common Stock issued as compensation for services rendered | $ | $ 9,400 |
Commitments and Contingencies29
Commitments and Contingencies and Supply Source: - Patients (Details) - Dr. Burzynski - item | 12 Months Ended | |
Feb. 28, 2018 | Feb. 28, 2017 | |
Commitments and contingencies and supply source | ||
Number of patients were treated at the Burzynski Research Clinic | 1 | |
Number of patients who can be treated per year with the current production capacity of antineoplaston products as estimated by the management | 1,500 | |
Royalty Agreement | ||
Commitments and contingencies and supply source | ||
Number of patients to be treated with antineoplaston products in option two, percentage added to cost of production to determine overall price | 10.00% | |
Royalty Agreement | Maximum | ||
Commitments and contingencies and supply source | ||
Number of patients to be treated with antineoplaston products under the option in which related party would have the right to produce the products without paying any fees | 1,000 | |
Number of patients to be treated with antineoplaston products under the option in which related party would have the right to purchase the products from the company at specified price | 1,000 |
Commitments and Contingencies30
Commitments and Contingencies and Supply Source: - Concentration Risk (Details) - item | 12 Months Ended | |
Feb. 28, 2018 | Feb. 28, 2017 | |
Four suppliers | ||
Commitments and contingencies and supply source | ||
Number of suppliers | 4 | |
Three suppliers | ||
Commitments and contingencies and supply source | ||
Number of suppliers | 3 | |
Cost of goods sold | Supplier concentration risk | Four suppliers | ||
Commitments and contingencies and supply source | ||
Concentration of risk (as a percent) | 86.00% | |
Cost of goods sold | Supplier concentration risk | Three suppliers | ||
Commitments and contingencies and supply source | ||
Concentration of risk (as a percent) | 74.00% |