UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2005
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
EXCHANGE ACT
For the transition period from to
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Commission file number 000-28673
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Biocol, Inc.
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(Exact name of small business issuer as
specified in its charter)
Wyoming 86-0970004
- --------------------------------------------------------------------------------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
10233 N. MacArthur Blvd. #277, Irving, Texas 75063
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(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.)
Indicate by Check Mark Whether the Registrant is a Shell Company (as
Defined by Rule 12B-2 of the Exchange Act). Yes ; No X
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: November 17, 2005 8,671,743
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Transitional Small Business Disclosure Format (check one).
Yes ; No X
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PART I
ITEM 1. FINANCIAL STATEMENTS
BIOCOL, INC.
(Formerly a Development Stage Company)
BALANCE SHEETS
(Unaudited)
March 31, September 30,
2005 2004
----------------- ------------------
Assets:
Current Assets
Cash and cash equivalents $ 238,479 $ 328,479
Accounts Receivable, net 90,000 52,000
Inventory 618,673 767,174
----------------- ------------------
Total Current Assets 947,152 1,147,653
Intangible Assets - Distribution rights, US, Canada & Europe 4,750,000 4,750,000
----------------- ------------------
Total Assets $ 5,697,152 $ 5,897,653
================= ==================
Liabilities:
Accounts payable $ 148,445 $ 146,145
Accrued expenses 3,000 12,000
Related party payable 12,360 12,360
----------------- ------------------
Total Current Liabilities 163,805 170,505
----------------- ------------------
Stockholders' Equity:
Preferred Stock - Series A, Par value $.001
Authorized 5,000,000 shares, Issued 27,500 shares
at March 31, 2005 and September 30, 2004 27 27
Preferred Stock - Series B, Par value $.001
Authorized 5,000,000 shares, Issued 230,000 shares
at March 31, 2005 and at September 30, 2004 230 230
Common Stock, Par value $.001 Authorized 100,000,000 shares,
Issued 8,671,743 Shares at March 31, 2005
and September 30, 2004 8,671 8,671
Paid-In Capital 5,814,620 5,814,620
Retained Deficit (1,075) (1,075)
Deficit Accumulated During the
Development Stage (289,126) (95,325)
----------------- ------------------
Total Stockholders' Equity 5,533,347 5,727,148
----------------- ------------------
Total Liabilities and
Stockholders' Equity $ 5,697,152 $ 5,897,653
================= ==================
See accompanying notes
BIOCOL, INC.
(Formerly a Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
For the three months ended For the six months ended
March 31, March 31,
-------------------------------------- -------------------------------------
2005 2004 2005 2004
------------------ ------------------ ----------------- -----------------
Revenues $90,000 $ - $165,000 $ -
Cost of sales 81,000 - 148,500 -
------------------ ------------------ ----------------- -----------------
Gross margin 9,000 - 16,500 -
------------------ ------------------ ----------------- -----------------
Expenses:
Salaries 9,000 12,000 18,000 12,000
Consulting 15,000 - 30,000 -
Legal 5,000 15,678 10,000 15,678
Accounting 1,800 950 2,300 950
Research & development 75,000 75,000 150,000 75,000
------------------ ------------------ ----------------- -----------------
Total expenses 105,800 103,628 210,300 103,628
------------------ ------------------ ----------------- -----------------
Net Loss $ (96,800) $ (103,628)$ (193,800) $ (103,628)
================== ================== ================= =================
Loss Per Share:
Basic $ (0.01) $ (0.02) $ (0.02) $ (0.04)
Diluted $ - $ (0.01) $ (0.01) $ (0.01)
================== ================== ================= =================
See accompanying notes
BIOCOL, INC.
(Formerly a Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
For the six months ended
March 31,
-------------------------------------
2005 2004
----------------- ------------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Loss $ (193,800) $ (103,628)
(Increase) Decrease in Accounts Receivable (38,000) -
(Increase) Decrease in Inventory 148,500 (767,175)
Increase (Decrease) in Accounts Payable 2,300 87,950
Increase (Decrease) in Accrued Expenses (9,000) -
----------------- ------------------
Net Cash Used in operating activities (90,000) (782,853)
----------------- ------------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of Distribution Rights - (4,750,000)
----------------- ------------------
Net cash provided by investing activities - (4,750,000)
----------------- ------------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from sale of common stock - 767,175
Proceeds from sale of preferred stock - 5,050,000
Capital contributed by shareholder - -
----------------- ------------------
Net Cash Provided by Financing Activities - 5,817,175
----------------- ------------------
Net (Decrease) Increase in
Cash and Cash Equivalents (90,000) 284,322
Cash and Cash Equivalents
at Beginning of Period 328,479 -
----------------- ------------------
Cash and Cash Equivalents
at End of Period $ 238,479 $ 284,322
================= ==================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ - $ -
Franchise and income taxes $ - $ -
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES: None
See accompanying notes
BIOCOL, INC.
(Formerly a Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED MARCH 31, 2005 AND 2004
(Unaudited)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of accounting policies for Biocol, Inc. (Formerly 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 March 31, 2004 and for the
three and six 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.
(Formerly a Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED MARCH 31, 2005 AND 2004 (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:
Per-Share
Income Shares Amount
(Numerator) (Denominator)
Loss to common shareholders
For the three months ended March 31, 2005
BASIC LOSS PER SHARE $ (96,800) 8,671,743 $ (0.01)
DILUTED LOSS PER SHARE $ (96,800) 31,671,743 $ -
================== =================== ==================
For the three months ended March 31, 2004
BASIC LOSS PER SHARE $ (103,628) 4,750,630 $ (0.02)
DILUTED LOSS PER SHARE $ (103,628) 15,995,073 $ (0.01)
================== =================== ==================
For the six months ended March 31, 2005
BASIC LOSS PER SHARE $ (193,800) 8,671,743 $ (0.02)
DILUTED LOSS PER SHARE $ (193,800) 31,671,743 $ (0.01)
================== =================== ==================
For the six months ended March 31, 2004
BASIC LOSS PER SHARE $(103,628) 2,864,954 $ (0.04)
DILUTED LOSS PER SHARE $ (103,628) 8,456,114 $ (0.01)
================== =================== ==================
BIOCOL, INC.
(Formerly a Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED MARCH 31, 2005 AND 2004 (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 March 31, 2005, the Company had a net operating loss carryforward
for income tax reporting purposes of approximately $290,000 that may be offset
against future taxable income through 2025. 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 - CONCENTRATION OF RISK
As of March 31, 2005, the Company receives 100% of its gross revenues
from one re-seller. The loss of this re-seller would adversely impact the
business of the Company.
BIOCOL, INC.
(Formerly a Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED MARCH 31, 2005 AND 2004 (Continued)
(Unaudited)
NOTE 4 - COMMITMENTS
As of March 31, 2005 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.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
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.
PLAN OF OPERATIONS
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.
PRODUCT HISTORY
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.
RESULTS OF OPERATIONS
For the three months ended March 31, 2005 and 2004, the Company had a
net loss from operations of approximately $97,000 and $104,000 respectively. For
the six months ended March 31, 2005 and 2004, the Company had a net loss from
operations of approximately $194,000 and $104,000 respectively.
Total Revenues - For the three months ended March 31, 2005 and 2004,
the Company had total sales of approximately $90,000 and $-0- respectively, for
an increase of approximately $90,000. For the six months ended March 31, 2005
and 2004, the Company had total sales of approximately $165,000 and $-0-
respectively, for an increase of approximately $165,000. Although revenues are
not yet sufficient to support the operations of the Company, management believes
revenues will continue to grow in the future as the Company continues to
implement its business plan.
Costs and Expenses - Costs of revenues as a percentage of sales is
approximately 90% for the three and six months ended March 31, 2005. Management
expects the cost of labor and other general and administrative costs to decline
s a percentage of sales as the Company carries out its expansion plans.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2005, the Company has working capital of approximately
$780,000. The Company's continued existence is dependent upon its ability to
execute its operating plan and to obtain additional debt or equity financing.
There can be no assurance the necessary debt or equity financing will be
available, or will be available on terms acceptable to the Company.
Management plans include searching for new customers and obtaining
additional financing to fund payment of obligations and to provide working
capital for operations and to finance future growth. The Company is actively
pursuing alternative financing and has had discussions with various third
parties, although no firm commitments have been obtained. In the interim,
shareholders of the Company have committed to meeting its operating expenses.
Management believes these efforts will generate sufficient cash flows from
future operations to pay the Company's obligations and realize other assets.
There is no assurance any of these transactions will occur.
The Company has met its capital requirements primarily through the sale
of its Common Stock, Convertible Preferred Stock, Convertible Debentures and
Notes Payable.
For the six months ended March 31, 2005 and 2004 operating activities
used approximately $90,000 and 783,000, respectively in cash flow.
After the completion of its expansion plans, the Company expects future
development and expansion will be financed through cash flow from operations and
other forms of financing such as the sale of additional equity and debt
securities, capital leases and other credit facilities. There are no assurances
that such financing will be available on terms acceptable or favorable to the
Company.
CRITICAL ACCOUNTING POLICIES
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 and the disclosure of contingent assets and liabilities
of the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Note 1 to the Consolidated Financial
Statements describes the significant accounting policies and methods used in the
preparation of the Consolidated Financial Statements. Estimates are used for,
but not limited to, contingencies and taxes. Actual results could differ
materially from those estimates. The following critical accounting policies are
impacted significantly by judgments, assumptions, and estimates used in the
preparation of the Consolidated Financial Statements.
We are subject to various loss contingencies arising in the ordinary
course of business. We consider the likelihood of loss or impairment of an asset
or the incurrence of a liability, as well as our ability to reasonably estimate
the amount of loss in determining loss contingencies. An estimated loss
contingency is accrued when management concludes that it is probable that an
asset has been impaired or a liability has been incurred and the amount of the
loss can be reasonably estimated. We regularly evaluate current information
available to us to determine whether such accruals should be adjusted.
We recognize deferred tax assets (future tax benefits) and liabilities
for the expected future tax consequences of temporary differences between the
book carrying amounts and the tax basis of assets and liabilities. The deferred
tax assets and liabilities represent the expected future tax return consequences
of those differences, which are expected to be either deductible or taxable when
the assets and liabilities are recovered or settled. Future tax benefits have
been fully offset by a 100% valuation allowance as management is unable to
determine that it is more likely than not that this deferred tax asset will be
realized.
RECENTLY ENACTED AND PROPOSED REGULATORY CHANGES
Recently enacted and proposed changes in the laws and regulations
affecting public companies, including the provisions of the Sarbanes-Oxley Act
of 2002 and rules proposed by the SEC and NASDAQ could cause us to incur
increased costs as we evaluate the implications of new rules and respond to new
requirements. The new rules could make it more difficult for us to obtain
certain types of insurance, including directors and officers liability
insurance, and we may be forced to accept reduced policy limits and coverage or
incur substantially higher costs to obtain the same or similar coverage. The
impact of these events could also make it more difficult for us to attract and
retain qualified persons to serve on the Company's board of directors, or as
executive officers. We are presently evaluating and monitoring developments with
respect to these new and proposed rules,
and we cannot predict or estimate the amount of the additional costs we may
incur or the timing of such costs.
In January 2003, the FASB issued Interpretation No. 46 ("FIN 46"),
CONSOLIDATION OF VARIABLE INTEREST ENTITIES, which addresses the consolidation
of business enterprises (variable interest entities), to which the usual
condition of consolidation, a controlling financial interest, does not apply.
FIN 46 requires an entity to assess its business relationships to determine if
they are variable interest entities. As defined in FIN 46, variable interests
are contractual, ownership or other interests in an entity that change with
changes in the entity's net asset value. Variable interests in an entity may
arise from financial instruments, service contracts, guarantees, leases or other
arrangements with the variable interest entity. An entity that will absorb a
majority of the variable interest entity's expected losses or expected residual
returns, as defined in FIN 46, is considered the primary beneficiary of the
variable interest entity. The primary beneficiary must include the variable
interest entity's assets, liabilities and results of operations in its
consolidated financial statements. FIN 46 is immediately effective for all
variable interest entities created after January 31, 2003. For variable interest
entities created prior to this date, the provisions of FIN 46 were originally
required to be applied no later than our first quarter of Fiscal 2004. On
October 8, 2003, the FASB issued FASB Staff Position (FSP) FIN 46-6, EFFECTIVE
DATE OF FASB INTERPRETATION NO. 46, CONSOLIDATION OF VARIABLE INTEREST ENTITIES.
The FSP provides a limited deferral (until the end of our second quarter of
2004) of the effective date of FIN 46 for certain interests of a public entity
in a variable interest entity or a potential variable interest entity. We will
continue to evaluate FIN 46, but due to the complex nature of the analysis
required by FIN 46, we have not determined the impact on our consolidated
results of operations or financial position.
In April 2003, the FASB issued SFAS No. 149, AMENDMENT OF STATEMENT 133
ON DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES. SFAS No. 149 amends and
clarifies accounting for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities under SFAS
No. 133. In particular, this Statement clarifies under what circumstances a
contract with an initial net investment meets the characteristic of a derivative
and when a derivative contains a financing component that warrants special
reporting in the statement of cash flows. We adopted this standard for contracts
entered into or modified after June 30, 2003. The adoption of SFAS No. 149 did
not have a material impact on our consolidated results of operations or
financial position.
In May 2003, the FASB issued SFAS No. 150, ACCOUNTING FOR CERTAIN
FINANCIAL INSTRUMENTS WITH CHARACTERISTICS OF BOTH LIABILITIES AND EQUITY. This
Statement requires certain financial instruments that embody obligations of the
issuer and have characteristics of both liabilities and equity to be classified
as liabilities. We adopted this standard for financial instruments entered into
or modified after May 31, 2003. The adoption of SFAS No. 150 did not have a
material impact on our consolidated results of operations or financial position.
In November 2004, the FASB issued SFAS No. 151, INVENTORY COSTS - AN
AMENDMENT OF ARB NO. 43, CHAPTER 4. This Statement amends the guidance in ARB
No. 43, Chapter 4, "Inventory Pricing," to clarify the accounting for abnormal
amounts of idle facility expense, freight, handling costs, and wasted material
(spoilage). Paragraph 5 of ARB 43, Chapter 4 previously stated
that"...under some circumstances, items such as idle facility expense, excessive
spoilage, double freight, and rehandling costs maybe so abnormal as to require
treatment as current period charges..." This Statement requires that those items
be recognized as current-period charges regardless of whether they meet the
criterion of "so abnormal." In addition, this Statement requires that allocation
of fixed production overheads to the costs of conversion be based on the normal
capacity of the production facilities. This statement is effective for inventory
costs incurred during fiscal years beginning after Jun 15, 2005. Management does
not believe the adoption of ths Statement will have any immediate material
impact on the Company.
On December 16, 2004, the FASB issued SFAS No. 123 ( R ), SHARE-BASED
PAYMENT, which is an amendment to SFAS No. 123, ACCOUNTING FOR STOCK-BASED
COMPENSATION. This new standard eliminates the ability to account for
share-based compensation transactions using Accounting Principles Board ("APB")
Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, and generally requires
such transactions to be accounted for using a fair-value based method and the
resulting cost recognized in our financial statements. This new standard is
effective for awards that are granted, modified or settled in cash in interim
and annual periods beginning after June 15, 2005. In addition, this new standard
will apply to unvested options granted prior to the effective date. We will
adopt this new standard effective for the fourth fiscal quarter of 2005, and
have not yet determined what impact this standard will have on our financial
position or results of operations.
In December 2004, the FASB issued SFAS No. 152, ACCOUNTING FOR REAL
ESTATE TIME- SHARING TRANSACTIONS, which amends FASB statement No. 66,
Accounting for Sales of Real Estate, to reference the financial accounting and
reporting guidance for real estate time-sharing transactions that is provided in
AICPA Statement of Position (SOP) 04-2, Accounting for Real Estate Time- Sharing
Transactions. This statement also amends FASB Statement No. 67, Accounting for
Costs and Initial Rental Operations of Real Estate Projects, to state that the
guidance for (a) incidental operations and (b) costs incurred to sell real
estate projects does not apply to real estate time-sharing transactions. The
accounting for those operations and costs is subject to the guidance in SOP04-2.
This Statement is effective for financial statements for fiscal years beginning
after June 15, 2005. Management believes the adoption of this Statement will
have no impact on the financial statements of the Company.
In December 2004, the FASB issued SFAS No. 153, EXCHANGE OF NONMONETARY
ASSETS. This Statement addresses the measurement of exchanges of nonmonetary
assets. The guidance in APB Opinion NO. 29, Accounting for Nonmonetary
Transactions, is based on the principle that exchanges of nonmonetary assets
should be measured based on the fair value of the assets exchanged. The guidance
in that Opinion, however, included certain exceptions to that principle. This
Statement amends Opinion 29 to eliminate the exception for nonmonetary exchanges
of similar productive assets and replaces it with a general exception for
exchanges of nonmonetary assets that do not have commercial substance. A
nonmonetary exchange has commercial substance if the future cash flows of the
entity are expected to change significantly as a result of the exchange. This
Statement is effective for financial statements for fiscal years beginning after
June 15, 2005. Earlier applications is permitted for nonmonetary assets
exchanges incurred during fiscal years beginning after the date of this
statement is issued. Management believes the adoption of this Statement will
have no impact on the financial statements fo the Company.
ITEM 3. CONTROLS AND PROCEDURES
The Company's Chief Executive Officer and Chief Financial Officer are
responsible for establishing and maintaining disclosure controls and procedures
for the Company.
(a) Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, the Company carried
out an evaluation, under the supervision and with the participation of the
Company's management, including the Company's President, of the effectiveness of
the design and operation of the Company's disclosure controls and procedures
pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). Based upon the evaluation, the Company's President
concluded that, as of the end of the period, the Company's disclosure controls
and procedures were effective in timely alerting him to material information
relating to the Company required to be included in the reports that the Company
files and submits pursuant to the Exchange Act.
(b) Changes in Internal Controls
Based on this evaluation as of March 31, 2005, there were no
significant changes in the Company's internal controls over financial reporting
or in any other areas that could significantly affect the Company's internal
controls subsequent to the date of his most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None/Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
None/Not Applicable.
ITEM 5. OTHER INFORMATION
EXECUTIVE OFFICERS AND DIRECTORS
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 new executive officer and director of the Company:
DIRECTOR'S NAME AGE OFFICE TERM EXPIRES
Paul Bailey 35 CEO, CFO and Director next annual meeting
PAUL BAILEY: Mr. Bailey is founder and CEO of Maverick Micro, an Internet
Retailer of Advanced Custom computer Interconnects and Accessories and also
oversees its wholly owned division Maverick Websites. He has held this position
since inception in 2002. He is a Bachelors Candidate in Business Administration
at Anderson University. Mr. Bailey has acted as an Independent Consultant to the
Company from 2004 until the present time.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(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.
SIGNATURES
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.
Biocol, Inc.
/s/ Paul Bailey
Paul Bailey
President/CFO and Director
November 17, 2005