As filed with the Securities and Exchange Commission on April 11, 2001
Registration No. 333-48480
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM SB-2
Amendment No. 2
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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BIOMASSE INTERNATIONAL INC.
(Name of issuer in its charter)
Florida 562000 65-0909206
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code) Identification Number)
721 S.E. 17th Street, Suite 200 Irving Rothstein, Esq.
Fort Lauderdale, Florida Heller, Horowitz & Feit, P.C.
33316 292 Madison Avenue
(954) 524-0558 New York, New York 10017
(Address and telephone number (212) 685-7600
of registrant's principal executive (Name, address and telephone
offices and principal place of business) number of agent for service)
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Copies to:
Irving Rothstein, Esq.
Heller, Horowitz & Feit, P.C.
292 Madison Avenue
New York, New York 10017
Telephone: (212) 685-7600
Approximate date of commencement of proposed sale to public: At the discretion
of the selling stockholders.
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. [X]
CALCULATION OF REGISTRATION FEE
- ----------------------------------- ------------------ ------------------------ -------------------------- -------------------
Title of Each Class of Securities Amount To Be Proposed Maximum Proposed Maximum Amount of
to be Registered Registered Offering Price Per Aggregate Offering Registration Fee
Security (2) Price (2)
- ----------------------------------- ------------------ ------------------------ -------------------------- -------------------
- ----------------------------------- ------------------ ------------------------ -------------------------- -------------------
Common Stock class B, par value 1,704,322 $1.00 (3) $1,704,322 $ 426.08
$0.001
- ----------------------------------- ------------------ ------------------------ -------------------------- -------------------
- ----------------------------------- ------------------ ------------------------ -------------------------- -------------------
Common Stock class B, par
value $0.001 1,325,000 (1) $.001 $ 1,325 $ 0.33
- ----------------------------------- ------------------ ------------------------ -------------------------- -------------------
- ----------------------------------- ------------------ ------------------------ -------------------------- -------------------
Common Stock class B, par value
$0.001 3,929,900 (1) $1.10 (4) $4,322,890 $1,080.72
- ----------------------------------- ------------------ ------------------------ -------------------------- -------------------
- ----------------------------------- ------------------ ------------------------ -------------------------- -------------------
Total 6,959,222 (5) $6,028,537 $1,507.13
- ----------------------------------- ------------------ ------------------------ -------------------------- -------------------
(1) Consists of shares of common stock issuable upon exercise of currently
exercisable warrants. Pursuant to Rule 416, this Registration Statement
also covers any additional shares of common stock which may be issuable by
virtue of the anti-dilution provisions in the warrants.
(2) Estimated solely for the purpose of calculating the registration fee.
(3) Based upon the price of a recent private offering.
(4) Exercise price.
(5) Included 5,254,900 shares of common stock issuable upon exercise of
currently exercisable warrants.
The registrant hereby amends the registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
SUBJECT TO COMPLETION DATED, APRIL 11, 2001
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BIOMASSE INTERNATIONAL INC.
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6,959,222 Shares of Common Stock
This prospectus covers 6,959,222 shares of the common stock, of
Biomasse International, Inc. This figure includes 5,254,900 shares of common
stock that we may issue in the future if currently outstanding warrants are
exercised. None of the warrants themselves are being registered. 1,704,322
shares of common stock are being offered for sale solely by the selling
stockholders.
The securities offered hereby involve a high degree of risk. Please
read the "Risk factors" beginning on page 2.
There is presently no public market for our securities.
--------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
Our principal executive offices are located at 721 S.E. 17th Street
suite 200, Fort Lauderdale, FL 33316. Our telephone number is (954) 524-0558.
The date of the Prospectus is ________, 2001.
Summary
Biomasse is a Delaware corporation established in March 1999. We own a
process to convert, in an environmentally safe manner, the waste residue
produced by pulp and paper mills into steam. We intend to profit by charging
mills less for waste disposal than they currently pay for shipping and storage.
Our process can also provide additional benefits to mills, and profits for us,
by converting the steam into energy thereby creating a low cost, clean energy
source.
Common stock offered for sale Up to 1,704,322 shares
solely by selling stockholders
Common stock underlying warrants Up to 5,254,900 shares.
offered for sale by warrant holders
Price At the market
Number of shares outstanding 15,165,188
Use of proceeds Biomasse will not receive any
proceeds from the sale of the shares
of common stock by the selling
stockholders.
If all the warrants are exercised,
we will receive $4,324,215. No
assurance can be given that we
will receive any funds. However,
any funds will be added to working
capital and will likely be used for
plant construction.
Plan of distribution The sale of the shares of common
stock by the selling
stockholders may be effected by them
from time to time in the over the
counter market or in such other
publicly traded or listed for
quotation.
* The majority of the warrant holders received their warrants as non-cash
compensation for services. Less than 50% of the warrants are held by management.
The balance of the warrants were included in units sold in exempt private
placements to raise financing.
Risk factors
You should carefully consider the following facts and other information
in this prospectus before deciding to invest in the shares. If any of the
following risks actually occur, our business, financial condition or results of
operations could be materially and adversely affected.
Since we have only a limited operating history, it is difficult for you to
evaluate if we are a good investment
We were incorporated in early 1999. We began to offer our first process
in 1999. Accordingly, we have only a very limited operating history, and we face
all of the risks and uncertainties encountered by early-stage companies. Thus,
our prospects must be considered in light of the risks, expenses and
difficulties associated with a new and rapidly evolving market of waste to
energy project. In sum, because of our limited history and the youth and
inherent risks of our industry, predictions of our future performance are very
difficult.
Our independent auditor has expressed concern over our ability to remain in
business
In his report on our audited financial statements, our auditor has
stated that there is a substantial doubt as to whether we will be able to remain
in business for even the next twelve months. His concern is based upon our
growing losses and no specific plan to have the funds necessary to implement our
business plan. If his concerns are proven accurate, any investment in our
securities will likely be lost.
We have incurred substantial losses and anticipate even more losses in the
future which may cause us to become insolvent
From our inception in March 1999 through December 31, 2000, we incurred
an accumulated deficit of $325,492. We anticipate continuing to incur
significant losses until, at the earliest, we generate sufficient revenues to
offset the substantial up-front expenditures and operating costs associated with
developing and commercializing recycling systems utilizing our process. There
can be no assurance that we will ever operate profitably.
We have no customers and generate no revenues and without them, we cannot long
survive
We have not as yet entered into any agreements with any pulp and paper
mills to utilize our process which converts pulp and paper mill waste residue
into steam. We will not generate any meaningful revenues unless we obtain
contracts with a significant number of pulp and paper mills. There can be no
assurance that we will ever be able to obtain contracts with a significant
number of customers to generate meaningful revenues or achieve profitable
operations.
We need substantial additional financing or we may have to curtail operations
Our capital requirements relating to the commercialization of our
process have been, and will continue to be, significant. We are dependent on the
proceeds of future financing in order to continue in business and to develop and
commercialize additional proposed products. Our business plan calls for the
installation of four plants over the next two years which would require at least
$20,000,000 in additional financing. There can be no assurance that we will be
able to raise the substantial additional capital resources necessary to permit
us to pursue this plan. Although, we have indications from investment bankers to
undertake providing us with funds for leasing, we have no current arrangements
with respect to, or sources of, additional financing and there can be no
assurance that any such financing will be available to us on commercially
reasonable terms, or at all. Any inability to obtain additional financing will
have a material adverse effect on us, such as requiring us to significantly
curtail or cease operations.
There still remains some question regarding the efficacy of our process and if
it does not work we will have no business.
Although considerable time and financial resources were expended in the
development of our process, there can be absolutely no assurance that problems
will not develop which would have a material adverse effect on our business.
Although all the components that comprise our process have been separately
proven efficient and reliable in large scale of industrial project size, we have
not as yet realized our first completed industrial project that combine all the
required components, we are uncertain if it will perform all of the functions
for which it has been designed or prove to be sufficiently reliable in
widespread commercial use.
Currently, we are a one product company and if this sole product is
unsuccessful, we will have no business.
Our process currently is for combusting sludge and other waste to rid
pulp and paper mills of their waste products, while generating steam for energy.
However, should others develop more efficient and less costly techniques, we
could potentially have no future business.
We cannot patent our process so others may copy it and develop our business
While we may consider in the future patenting the core aspect of our
process, our innovative combustion chamber, overall, we cannot patent our
process and the protection of our proprietary methods is limited. We regard our
design as an integration of techniques that we have obtained under license as
proprietary and intend to attempt to protect it with trade secret laws,
proprietary rights agreements and internal nondisclosure agreements and
safeguards. However, such methods do not afford complete protection, can be
prohibitively expensive with frequent design changes to the system during the
development phase, and there can be no assurance that others will not
independently develop know-how or obtain access to our know-how or designs,
concepts, ideas and documentation.
Our shares may be classified as a "penny stock" which could limit their
marketability or otherwise depress their market value.
Broker-dealer practices in connection with transactions in "penny
stocks" are regulated by certain penny stock rules adopted by the Securities and
Exchange Commission. Penny stocks generally are equity securities with a price
of less than $5.00. These regulations may have the effect of reducing the level
of trading activity, if any, in the secondary market for our securities which
may depress the market price. It is likely that when public trading of our
shares begins, if ever, the shares will be subject to the penny stock rules and
purchasers of the shares being offered may find it more difficult to sell their
shares and/or obtain full value.
3
We may not receive any proceeds from the securities being offered and any
proceeds that we do receive will be used solely in the discretion of management
without any input from investors or shareholders
We will only receive proceeds from this offering in the event warrants
are exercised. No assurance can be given that any warrants will be exercised. In
the event any warrants are exercised and we receive the proceeds from such
exercise, these proceeds will be added to our general working capital. This
means that management will have the sole discretion on the disbursements of
these funds. As it is possible that if many of the warrants are exercised a
significant amount of proceeds will be realized, this will give management
unfettered discretion over one of our most significant assets. With this
available pool of cash, our management may determine to spend it in ways that
you may not agree with and under general corporate law principles, management
would generally not be required to obtain your approval before any expenditures.
Special note regarding forward-looking statements
Some of the statements under and elsewhere in this prospectus are
forward-looking statements that involve risks and uncertainties. These
forward-looking statements include statements about our plans, objectives,
expectations, intentions and assumptions and other statements contained in this
prospectus that are not statements of historical fact. You can identify these
statements by words such as and similar expressions. We cannot guarantee future
results, levels of activity, performance or achievements. Our actual results and
the timing of certain events may differ significantly from the results discussed
in the forward-looking statements. Factors that might cause such a discrepancy
include those discussed herein and elsewhere in this prospectus. You are
cautioned not to place undue reliance on any forward-looking statements.
Summary historical financial information
The following selected financial data for the years ended September 30,
1999 and 2000, for the quarter ended December 31, 2000 and for the period since
inception to December 31, 2000, is derived from our financial statements
included in this prospectus. The following data should be read in conjunction
with our financial statements.
Statement of operations data
For the Year For the Quarter
Ended 09/30/00 Ended 12/31/00
Net Revenues $ -0- $ -0-
Operating Loss $203,808 $ 56,056
Income Taxes $ -0- $ -0-
Net Loss $203,161 $ 55,878
Loss Per Share $ 0.0132 $ 0.0037
(Basic and Diluted)
4
For the Year From Inception
Ended 09/30/99 to 12/31/00
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Net Revenues $ -0- $ -0-
Operating Loss $ 91,101 $ 350,964
Income Taxes $ -0- $ -0-
Net Loss $ 91,101 $ 350,141
Loss Per Share $ 0.0048 $ 0.0214
(Basic and Diluted)
Balance sheet data
December 31, 2000
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Working Capital $ (94,315)
Total Assets $ 294,291
Total Liabilities $ 108,781
Stockholders' Equity $ 185,510
5
Plan of operations
The following discussion should be read in conjunction with the
financial statements and related notes that are included elsewhere in this
prospectus. All dollar amounts in this prospectus are US dollars.
As further described below, our main business purpose is to provide the
pulp and paper industry with the most practical, economical and efficient way of
giving enhanced value to the waste sludge and other solid residues generated by
their wastewater treatment systems.
We were initially formed in March 1999, are currently still in the
development phase and preparing to begin commercial activity in the second
quarter of 2001.
In September, 1999, we rented 400 sq. ft. of space for our executive
offices in Ft. Lauderdale, Florida. under a one year renewable lease, costing us
$650 per month. We are continuing to lease this space on a month-to-month basis
at the same rental since the lease expired.
Additionally, in March, 1999, we rented 400 sq. ft. of space for our
Quebec field operation offices in Trois-Rivieres, Quebec, under a one year
renewable lease, costing us approximately $330 per month.
Our total monthly expenditures are approximately $50,000, including
rent, employee salaries, management salaries, office overhead, car allowances,
consultant and professional fees, travel, business entertainment, equipment, and
insurance. W.A.F.A Investment Corp. of Ft. Lauderdale has signed a subscription
to purchase $400,000 of our common shares, and the funds have been promised to
be transferred to our bank account in staggered payments. If they pay in full,
we will have funds for at least eight months of operating capital. To date, they
have only paid us $35,000. They have no obligation to pay us the full amount of
their subscription and they have the right to cancel their subscription, without
penalty at any time.
In the event we do not receive substantial funds from W.A.F.A., we will
have to seek additional sources of financing such as private debt or equity
funding, or lines of credit. We will also make an effort to have investors
exercise their warrants. We believe that once a public trading market for our
common stock is established, we will be able to obtain financing more readily
and that sufficient investors will exercise their warrants.
On April 26, 1999, we entered into a license rights agreement with Marc
Dufresne (1978) Inc., a shareholder and an affiliate. The amount of the license
agreement was $588,000. On April 26, 1999, we issued 588,000 shares of common
stock, class B, to Marc DuFresne (1978) Inc., in payment of the license fee.
These shares were valued at $1.00 per share. Pursuant to the terms of the
license agreement, on November 29, 1999 we exercised our right to cancel the
agreement and to acquire outright ownership of all intellectual property and
rights related to the process. Due to its financial difficulties, Marc Dufresne
(1978) Inc. was unable to perform its contractual obligations such as purchasing
the components and assembling the facility for the process. Accordingly,
pursuant to the terms of the license agreement we were allowed to convert our
licensor/licensee relationship to outright ownership of the technology, at no
cost.
6
Marketing
We intend to concentrate initially on the North American pulp and paper
companies to have them transform their sludge and wood residue into steam. We
attended the International Trade Show for the pulp and paper industry being held
in Montreal, Quebec in February 2001, and initiated contacts with numerous
people in the industry thereby introducing the company and our process to them.
To be able to target the most profitable projects, we are negotiating a
service contract with the Ecole Polytechnique, an engineering school affiliated
with the University of Montreal, to do a survey that will allow us to perform
preliminary determinations of projects that would be the most profitable for us.
The university will be responsible for formulating and distributing a specially
designed questionnaire. Thereupon, we intend to follow up by establishing direct
contact with management and the engineering department of those pulp and paper
mills that have been deemed most suitable for us. In collaboration with the
university, we plan to offer, our expertise and services to evaluate a
waste-to-energy project with regards to the feasibility and profitability of
such a project.
Once the feasibility and profitability study will have been
demonstrated for a particular mill, we will seek to conclude long term contracts
for energy generation and waste disposal with that company.
Our first installation
During the past year we identified our first potential customer, The
Great Northern Paper Company of Millinocket, Maine. We completed the
profitability and feasibility studies for this installation and based upon the
study's very positive conclusions, we believe we are close to finalizing a
ten-year contract for the sale of steam utilizing our process. The final selling
price will be determined based upon the final negotiated split of operating
costs, although we estimate that we will be selling the steam at a price of
$6.00 per 1000 lbs.
Our studies indicate that the cost of equipment and installation for a
plant suitable for Great Northern Paper is approximately $4,525,700. We plan to
finance this amount by approximately 60% debt and 40% equity. While two Canadian
finance companies, Rothschild Financial Corporation and Konex Financial
Services, have expressed interest, by signing a letter of intent, in providing,
over a ten-year period, the approximately $2.7 million required for the debt
portion, these letters are not binding and these companies are not obligated to
provide the funds. The equity portion, requiring approximately $1,800,000, is
expected to be derived from the exercise of at least 1,700,000 warrants of the
total currently outstanding. These warrants are exercisable in to our common
shares at $1.10 per share. Upon us signing a contract for steam production with
Great Northern Paper, three major warrant holders, holding an aggregate of
3,000,000 have indicated their willingness to exercise most if not all of their
warrants. However, they are not obligated to exercise their warrants or provide
us with any funds. At the moment we have no other plans to raise the necessary
funds. However, we are hopeful that if we get the contract with Great Northern
Paper we will be able to generate enough interest to raise the necessary funds.
7
The plant to be built for the Great Northern Paper project would be
able to produce at least 40,000 pounds of steam per hour and operate 8,200 hours
per year. At this level of production and our expected selling price, our annual
revenue should be $1,968,000. The estimated operating cost of this plant is
forecasted to be approximately $850,000 per year, yielding a gross profit of
approximately $1,118,000 from this plant. These revenues have been calculated
based on the minimum capacity to produce 40,000 pounds of steam/hour. Any
additional production will increase the revenue forecasted.
This past summer we engaged the engineering firm of Mesar Consultants
Inc. of Quebec City to assist us with Great Northern Paper project. They
provided us with an engineering study at a cost of $18,000. They are currently
providing us with engineering services in anticipation of our first installation
currently scheduled to commence in the second quarter of 2001. We are also in
the process of concluding agreements with subcontractors and have commenced the
ordering of all necessary equipment for the construction of the steam generating
plant for this project. We expect the installation to commence during the second
quarter of 2001, and plans are for completion of the plant in the first quarter
of 2002. Thus, we anticipate having this first project in operation by the end
of the first quarter of 2002 and to collect our first revenues in the second
quarter of 2002.
Research and development
The technical evaluation of our technology was done by the Ecole
Polytechnique (affiliated with University of Montreal) and they have indicated
their interest to continue research work on our process to maximize its
efficiency, and to adapt this technology for use with others type of waste,
specifically to generate energy from another problematic solid residue: the
organic portion of municipal solid waste.
Effect of recent accounting pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities." ("SFAS No. 133"), which requires companies
to recognize all derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value. SFAS No. 133 is
effective for fiscal years beginning after June 15, 1999. We do not presently
enter into any transactions involving derivative financial instruments and,
accordingly, do not anticipate the new standard will have any effect on our
financial statements.
Use of proceeds
We will not receive any proceeds from the sale of the shares of common
stock by the selling stockholders. However, we will receive the exercise price
of the warrants if they are exercised.
The net proceeds to us from the exercise of all warrants for which the
underlying common stock is registered herewith, would be approximately
$4,324,215. There can be no assurance that we will receive any proceeds from the
exercise of the warrants as not all, or any, warrants may be exercised. This
could result in our receiving none or only minimal proceeds from this offering.
8
Any proceeds received from the exercise of the warrants will be added
to working capital. Aside from the amounts indicated in the Plan of operations
to be used for plant construction, we have no definite plans for the use of any
proceeds from this offering and we have made no specific allocation as to the
use of such proceeds. The proceeds could be used for current administrative,
marketing and other expenses, the acquisition of business or repayment of debt.
Any such application of the proceeds of this offering will be at the discretion
of our management.
Business
We are a Florida corporation, established in early 1999. The main
business goal of Biomasse is to provide to the pulp and paper industry the most
practical, economical and efficient way of giving enhanced value to the waste
sludge (and other solid residues) generated by their wastewater treatment
systems.
We have acquired and improved a waste-to-energy process originally
developed by Marc Dufresne (1978) Inc., of Trois-Rivieres, Quebec This process
is capable of processing pulp and paper mills waste sludge and wood residues in
an efficient and environmentally-friendly way into steam. This innovative
process integrates state-of-the-art technologies that combine fuel conditioning,
efficient combustion, steam generation and flue gas treatment. The steam
generated by this process can be used to generate electrical power or heat.
We believe that the North American pulp and paper industry is facing
many challenges caused by an increasingly competitive world market. Pulp and
paper plants in Canada are lagging behind their competitors in the U.S.A. and
Europe in productivity and in quality of their products. It is generally
accepted in the industry that globally, the industry is now in a restructuring
phase to reduce its costs of operations and diversify its product line.
Production of steam and power from waste sludge and other residues and minimal
use of landfill is one of the solutions for the reduction of operating costs in
the pulp and paper industry.
As is generally known, the pulp and paper industry produces, through
its activities, enormous amounts of waste sludge. Production of pulp and paper
generates by-products that exit the mill in waterborne, airborne or solid forms.
As mills reduce their emissions of airborne particles by installing stack
scrubbers and their waterborne particles and oxygen-consuming solutes by
installing clarifiers and secondary treatment systems, more and more of these
by-products end up in the solid residue stream. Thus, our research shows that
the rising use of secondary treatment facilities is continuously increasing,
considerably, the amount of sludge generated by this industry.
We are aware that the sludge is currently being buried, and this practice
constitutes a method of disposal that has a major impact on the environment. As
is generally known, landfill consumes valuable space, may lead to long-term
leaching problems, and wastes the potential value of these residues. Due to the
severe regulations covering the burial of these wastes, their disposal has
become increasingly costly. New regulations in Quebec, in Canada and in the USA
stipulate that landfill sites must be impermeable and that the lixivium, or
liquid effluent, must be collected and treated to prevent water contamination
and soil/ground water table contamination.
9
As is generally known, the organic substances found in the sludge tend
to decompose once buried, leading to the formation of gases containing a large
fraction of methane produced by anaerobic degradation of buried sludge and other
organic constituents that substantially contribute to the greenhouse effect.
These gases also contain strong smelling compounds that constitute a major
source of odor pollution for neighboring populations. We are aware that this
pollution, combined with the costs related to the management and the development
of landfill sites, as well as the transport costs of sludge, that are bulky with
a high water content, have led the pulp and paper mills to consider alternatives
to landfill.
Waste sludge contains an important fraction of organic matter that has
an attractive energy recovery potential. Our research shows that energy
production from organically rich industrial wastes, such as paper mills sludge,
is now considered by a majority of industrialized countries as an intrinsic
aspect of a responsible care policy. This disposal approach involves several
strategic advantages. This approach reduces the volume of residues to be buried
by at least 90%. The production of energy using these wastes leads to
significant economies in terms of traditional non-renewable fossil fuels, also
providing a net reduction of the emission rates of gases believed responsible
for the greenhouse effect.
However, pulp and paper mills conventional combustion systems are
either not well suited or simply inadequate for sludge combustion. For this
reason the combustion of sludge in conventional systems often led to:
o a decrease in the boiler's capability to produce steam with the
addition of wet wastes;
o an important consumption of auxiliary fuel such as natural gas or oil
to maintain boiler output and sufficiently high combustion temperatures
due to inconsistency of waste fuel moisture and the high water content
in the wastes;
o higher maintenance costs due to ash clogging in the boiler grate; and
o an increase in particle emissions and slag.
Our state-of-the-art process addresses the shortcomings observed in the
currently used methods of energy production from pulp and paper wastes.
Additionally, our solution is innovative in that it offers the customer a
financing program. Our process can be designed, installed, operated and entirely
financed. Our income is based on the sale of steam and electricity to the plant
and/or on a transport charge for removing the sludge from their premises. The
main economical and environmental advantages of our process can be summarized as
follows:
o no investment costs and minimal operation costs for the pulp and
paper mill customer;
o reduction of more than 90% of solid waste to be buried; extensive
reduction of management costs of landfill, sludge transportation and
handling costs;
o reduction of maintenance costs on inadequate conventional boilers
burning sludge;
o increase in total efficiency of the existing steam facilities by using
available flue gases of existing boilers;
o reduction of the total amount of traditional non-renewable fossil
fuels used in the plant;
o elimination of methane emission of landfill and reduction of the global
emission rates of gases responsible of the greenhouse effect;
10
o elimination of problems related to odorous emission of landfills.
Our team offers our process to the pulp and paper mills in a
progressive strategic sequence. This sequence first begins with an evaluation of
the feasibility and profitability of a Waste-to-energy project for both parties.
As a marketing tool, we will provide this evaluation at no cost to mills where
we believe the possibility exists for us to introduce our process.
Additionally, in the medium term, we plan to modify and adapt our
process to new applications such as power generation from the organic fraction
of the municipal solid wastes.
The Industry
General background
The North American pulp and paper industry is a cornerstone of the
American, Canadian and Quebec economies, employing several tens of thousands of
workers in regions across North America. Since the turn of the 20th century it
has been a major source of employment and export. There are around 325 mills in
the U.S. and more than 155 mills across Canada with 64 in Quebec alone.
While world demand for paper has been increasing, the geographical
distribution and the type of paper consumed has not been uniform. As published
by the Pulp and Paper Institute of Canada, April 1997, the North American market
share has declined from 39% in the mid seventies to 36% in the late eighties,
and the Asian market represented 24% in 1989 versus 17% in 1975. Similarly,
demand for newsprint paper decreased over the same period while demand for
writing and printing paper increased.
The industry in the U.S.
In 1992, the date of the most recent published material as reported in
the National Council of the Paper Industry for Air and Stream Improvement, Inc.,
Technical Bulletin 641, the United States pulp and paper industry had a direct
employment of 146,500 and the total value of shipments for the industry was
estimated as $38.3 billion.
The US produced 86.5 million metric tons of paper and paperboard in
1997, almost 739 pounds for every man, woman, and child. This amount represents
29% of the total world production. The forest products industry is the
third-largest industrial consumer of energy, and generates more than 2 billion
tons of waste each year. The industry generates 55% of its own energy using its
woody waste products and other renewable sources for fuel (bark, wood, and
pulping liquor). The total cost of materials, services, and fuels and energy
used by US pulp and paper mills amounted to $21 billion in 1992.
Since 1972, the industry has reduced its use of fossil fuels and its
purchased energy by about 2 percent, yet increased its total production by
nearly 64 percent. Even so, the forest products industry spent more than $8.1
billion on purchased fuels and electricity in 1996, or over 3 percent of the
value of its shipments that year.
11
The Industry in Canada and in Quebec
The Canadian forest industry is Canada's largest industrial employer.
It added 10,000 jobs in 1997 (22,700 jobs have been added since 1993). The
increase resulted in a total of 261,700 full-time equivalent direct jobs in 1997
including 65,000 employees of pulp and paper companies. Of this total,
approximately 30,000 Quebecers work in the pulp and paper and related products
sector. This represents close to 6% of the manufacturing workforce in Quebec.
The 261,700 direct jobs in Canada support the equivalent of a further 755,000
full time equivalent jobs in other sectors of the Canadian economy. Total
capital spending by Canadian pulp and paper producers is approaching $3.4
billion annually.
Canada's, and particularly Quebec's, pulp and paper industry has always
been synonymous with massive exports. Due to market globalization and strong
international competition, this industry constantly has to reach new customers
and meet new demands. Exports outside North America may have been an exception
20 years ago but they are common practice today. In 1998, total export value for
Quebec pulp and paper products reached $7.4 billion and approximately $12.1
billion for Canada in 1996.
Canada's pulp and paper industry has been a longtime, active supporter
of global free and fair trade. Access to export markets has been enhanced by the
North American Free Trade Agreement and the World Trade Organization. In 1995,
60% of all of Quebec's pulp and paper products were sold to the American market.
Canada's and Quebec's paper and paperboard production in 1997 were 18.9
and 8.2 million metric tons, respectively, which represents 6% and 3% of the
total world production. Although Quebec represents only one tenth of one percent
of the world population, it produces some 3% of the pulp and paper and lumber
manufactured each year worldwide. Quebec's paper and lumber manufacturers,
therefore, play a key role in domestic and foreign markets. In the newsprint
sector, Quebec alone accounts for 44.2% of Canadian production and roughly 12%
of world production.
To increase its productivity, diversify its production and improve its
environmental performance, the pulp and paper industry in Quebec has proceeded
with massive investments over the years. In the pulp and paper sector, capital
expenditures reached $6.4 billion between 1987 and 1997, representing 20 % of
all manufacturing investments made in Quebec.
Between 1989 and 1996, Canadian mills spent $3.7 billion on the biggest
environmental upgrade in the industry's history. During the same period, the
industry invested $1.0 billion in building up the capacity to recycle recovered
paper. Today, 23 mills across Canada are capable of recycling, and 62 mills use
recovered paper in whole or in part as a source of fiber.
Despite the overall size of the industry, Canadian and Quebec companies
are small on a global basis. Of the largest 50 companies in the world only five
are Canadian and those are likely to drop from this list as other foreign
companies grow faster.
The trends
12
During the 1980s worldwide consumption of paper increased 5% per year
and, as stated above, writing and printing paper consumption grew faster than
newsprint paper. Also, growth in Asia was the fastest of any other region in the
world.
As a result of the growth in consumption, capacity in the industry grew
even faster. During the 1980s, 30 new newsprint paper machines were put into use
in North America alone.
Mergers in this industry have been common around the world during the
past decade. The purpose of this trend is for companies to become more
competitive globally, increase their capital base, increase their presence in
the world, and acquire new technologies to better respond to the changing market
needs.
We believe that all these trends are likely to continue as additional
Asian countries, such as China, Indonesia and Malaysia, emerge as strong
economies and as people rely less on newspapers to get news and more on on-line
services such as the Internet, and as consumers become more demanding as to type
and price of paper products.
Technical challenges facing the North American industry are centered on
using recycled materials cost-effectively, meeting environmental regulations,
and reducing energy and operation costs. Other pressures include the diminishing
amount of land available for tree farms and landfill, and a lack of capital for
carrying out long-term research and development projects.
The threats facing the North American industry
As the dynamics of the industry have been changing, the North American
pulp and paper industry began facing several challenges. Below are the main
threats the North American industry faces today:
o Although global consumption of papers is on the increase, this increase
has been mainly in foreign markets, particularly in the Far East. This
forces North American companies to have to compete for the world market
against worldwide paper companies, putting downward pressure on prices
and upward pressure on quality and technology.
o To be able to be competitive globally, companies have to be present in
the potentially large and growing markets. To achieve that, many
foreign companies have merged, combining resources and increasing their
presence worldwide. This places additional pressure on companies to
increase their exposure in these markets and to become more efficient.
o As capacity in North America is increasing, prices are likely to drop
and companies would have to operate more efficiently to maintain the
same level of profitability.
The key success factors
Given the above stated challenges, we believe that in order to compete
in today's environment, pulp and paper companies have to satisfy the following
four conditions:
1. Low production costs: The four main elements of production costs
that have to be optimized are:
13
o Lower cost of the fiber by increasingly finding close and
abundant sources of recycled paper;
o Improving the efficiency of the equipment by gradually
replacing old machinery with newer ones;
o Lower cost of labor by exerting pressure on unions to become more
in line with the realities of the international global market; and
o Reducing energy and operating costs by increasing the fraction of
solid residues (wood and sludge) used for steam and electricity
generation and reducing operating costs related to the landfill
management.
o Our process aims to considerably reduce the residues and landfill
management costs, and to recycle these residues in a practical
form: steam and power generation at low costs, contributing to
reduce the global production costs of the mills.
2. Market diversification: Since the fastest growth is being found in Asia
and to a lesser extent in Europe, it is important that US, Canadian and
Quebec companies penetrate these markets effectively. Competing in
these markets implies reducing their production costs as described
above to price their products in parity with the other global
companies;
3. Product diversification: New types of paper have to be developed to
meet the increasingly demanding needs of consumers. Companies also have
to shift their focus from the declining newsprint paper segment and
focus more on writing and printing paper and specialized paper which
commands higher profit margins;
4. Meeting Environmental Regulations: Pulp and paper plants are on the
constant lookout for alternatives and cheaper methods of disposal. Our
process produces several environmental advantages: reduction of the
total amount of traditional non-renewable fossil fuels used in the
plant, elimination of methane emission of landfill and reduction of the
global emission rates of gases believed responsible for the greenhouse
effect, and elimination of problems related to odorous emission of
landfills.
Sludge and solid residues generation and management
In the U.S.
The solid waste management and disposal practices in the U.S. Industry
was studied in 1992 and 1999 by the National Council of the Paper Industry for
Air and Stream Improvement, Inc. The 1992 data as reported in the National
Council of the Paper Industry for Air and Stream Improvement, Inc., Technical
Bulletin 641, are used in this document, since the 1999 study is not yet
available to us.
The total amount of solid wastes generated by the pulp and paper
industry in 1989 alone was estimated by the 1992 study to be 12.3 millions dry
metric tons. The total amount of sludge generated in the same year was estimated
to be 4.2 million dry metric tons. Sludge is comprised of fibres, organic
matter, ash, inert matter and moisture. When the amount of sludge generated is
expressed on a dry basis, the moisture content is excluded. For example, a mill
that produces 50,000 dry metric tons per year of sludge having 70% moisture
content generates 166,667 metric tons per year of humid or wet sludge. In 1989,
14
the amount of sludge being use as landfill or lagooned accounted for 70% of the
total, while burning for energy accounted for 21%. This shows a growing trend to
energy conversion which almost doubled during the previous ten years. In 1979,
the amount of sludge being used as landfill or lagooned accounted for 86% of the
total, while burning for energy accounted for 11%. The considerable amount of
sludge being landfilled every day represents an important amount of fuel for our
process.
The overall average total disposal costs for mills using landfill sites
constructed since 1985 was $9.80 per cubic yard or $20.84 per wet metric ton,
compared to an average for all sites, regardless of age, of $6.40 dollars per
cubic yard or $13.61 per wet metric ton. This data represents current total
landfill disposal costs consisting of capital plus operating costs. Estimated
costs for disposal of solid wastes in new as yet unconstructed landfill sites
were reported in this study to be approximately $15 per cubic yard or $31.90 per
wet metric ton.
Consequently, the 1989 annual total direct costs of sludge used as
landfill in the U.S. is estimated to have been more than $146 million for the
pulp and paper industry alone. This estimate is based on an average sludge
humidity of 72.6%, and an average cost of landfill of $13.61 per wet metric ton.
The process offered by Biomasse enables the pulp and paper mills to avoid most
of these sludge disposal costs.
In early 1990, approximately one-half of the industry's landfill sites
had less than 6 years capacity remaining. Approximately 80 percent of the
landfill sites had less than 20 years capacity remaining. It was estimated back
in 1990 that by the end of 1999, the paper industry would require approximately
200 new landfill sites or major expansions on existing sites, with a total
additional area of approximately 10,000 acres. This assumed that the amounts of
solid waste would remain unchanged by 1999.
In Canada and in Quebec
The generation and management of solid waste residues by the Canadian
pulp and paper mills were studied in 1995 by the Pulp and Paper Research
Institute of Canada. Statistics and information presented in this section
originate from this study. In 1995, the amount of solid residues generated by
the Canadian paper industry was estimated at 7.3 millions of dry metric tons per
year. Of this total, 47% was wood and bark used for fuel, 13% was wood and bark
not used as fuel, 23% was sludge, 12% was inorganic, and 5% was in a
miscellaneous category. Generation of secondary sludge increased by 247% from
1994. Sludge generation rates represents 44% of the total generation rates for
solid residues other than wood and bark used as fuel. In 1995, almost half of
the total generated sludge was deposited in landfill sites. The real generation
of sludge is 5,705,000 metric tons per year, when their respective mean
moistures are considered. The following table summarizes the generation rates of
solid residues by the Canadian industry, in 1995:
- --------------------------------------------------------------------------------------------------------------------
Solid residues Generation rates %
(thousands metric tons/year)
====================================================================================================================
====================================================================================================================
Sludge Fraction of total sludge generation: 1704 23%
Primary sludge: 42%
Secondary sludge: 26%
15
Deinkink sludge: 12%
Combined sludge: 18%
Intake sludge: 2%
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Wood and bark 4354 60%
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Inorganics 873 12%
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Miscellaneous 375 5%
====================================================================================================================
====================================================================================================================
TOTAL: 7306 100%
- --------------------------------------------------------------------------------------------------------------------
Use of landfill is still a dominant option for solid residues
management. Of the waste used as landfill, 82% goes to private sites owned by
the paper mills instead of public landfill sites. Land-spreading, composting and
recycling account for only a small fraction of the residues. In 1995,
approximately one third of the sludge was burned. A small fraction of the
sludge, approximately 13%, were land spread or composted, but almost half of the
total sludge generated was deposited in landfill sites. Much of the increment in
secondary sludge is used as landfill, despite the problems that secondary sludge
produces in these sites.
Sludge management is considered to be among the most frequent concerns
of the pulp and paper industry. Incineration of sludge is confirmed as a major
problem in recent study. A lot of mills have chosen the use of landfill as a
temporary measure, intending to find better ways to use sludge in the longer
term. The amount of sludge available for utilization in Canada is estimated by
the Pulp and Paper Research Institute of Canada, April 1997, to be 1,159,000 dry
metric tons per year. The amount of wood and bark is estimated to be 868,000 dry
metric tons per year in the same study.
The costs of sludge and residues land filling have been estimated with
the help of local Canadian pulp and paper associations. The estimated costs
include handling and transportation, and management of the landfill site. They
exclude any investment or social costs. These costs are estimated to range
between $3.41 and $23.86 per wet metric ton, with a mean of approximately $8.18
per wet metric ton. Consequently, the annual (1995) total direct costs of wood
residues and sludge land filling in Canada can be estimated to have been more
than $37 million for the pulp and paper industry alone.
The amount of solid residues generated by the Quebec industry was
estimated in 1998 by the Environmental Ministry of Quebec to have been 3.1
millions of wet metric tons. Of this total, the total amount of generated sludge
is 1,800,000 wet metric tons (58%) with 690,000 wet metric tons that were buried
(38%). In Quebec, the 1998 estimated total direct costs of wood residues and
sludge land filling is estimated to have been more than $8.2 million.
Much work has been done with land application of pulp and paper mill
sludge in the last 15 years. In volume 96 of Pulp and Paper Canada, Pickell and
Wunderlich studied the practices and future options of sludge disposals. As
mentioned in this study, the sludge has been successfully used as a replacement
for manure in agricultural applications, as well as for land reclamation
projects. There seems to be no available data about the costs of these
applications. The lowest cost method of spreading the sludge appears to be by
using dry applications that eliminate the need to re-wet the sludge before
spreading. Recent studies published by Pulp & Paper Canada, 1995, show that the
projected costs for this approach could be reduced to $38.17 per wet metric ton
to apply approximately 36,000 wet tons onto 400 hectares. Finally, composting
16
has been examined but has not gained a lot of support as the process can require
a considerable capital investment for equipment and buildings. Odor can also be
a problem and production costs can be as high as $20.45 per ton, and the market
for compost is limited.
Our process
The basis of our process is the transformation of solid organic wastes
into steam. Steam is the most convenient source of energy that is used in pulp
and paper plants for heating, drying or for any other energy-intensive process.
Our operation combines the service of transporting waste sludge and
wood residues transported from the plant to the process, solid fuel preparation,
minimizes solid fuels storage, efficient combustion, steam production and flue
gases treatment. The available flue gases from new and existing boilers are used
to thermally dry solid fuels and/or preheat combustion air.
Our process offers the possibility to operate in mixed combustion to
produce steam. The process is flexible and easily adapts itself to the
individual conditions of each pulp and paper mill. The main objective of the
flexibility and adaptability features of the process is to maximize the use of
components and utilities that are already available on site, and that can be
incorporated into our process. This approach aims to minimize the investment and
operational costs, benefiting both parties. For example, these components and
utilities can be
o stocking yards;
o exhaust chimney;
o main-power to operate our system;
o treatment and processing of the process outputs:
o filtered exhaust gases;
o wet scrubber liquid output in the mill's waste water treatment basin;
o solid boiler outputs such as ash and clay for land filling;
o electricity to operate our process;
o operating control room; o condensation processing and pumping; and
o existing buildings to install our equipment.
Our process was externally evaluated by known experts of the chemical
engineering department of the Ecole Polytechnique de Montreal (Engineering
School of the Montreal University) and their findings were published by Guy and
Legros in June 1997 in the University Journal. This scientific evaluation of our
process validated the principles of its technology.
The product, the pricing and benefits
The product that we sell can be steam, only, or a combination of steam
and electricity, if the project integrates a cogeneration system. We do not
intend to sell the system that produces the end product. We plan merely to sell
the output: steam and electricity. Our plan is to bill our customers based on
the volume of steam generated. We will also charge a transport fee for the
sludge admitted to the process. We will not charge for the installation,
operation and maintenance of the system. The pricing is set on the basis of
1,000 lbs of steam produced and the amount of produced and delivered power
17
(kWh). And will be dependent on the each mill's guarantee to buy a minimum
amount of steam (and kWh) from us, and provide a minimum constant mass flow of
waste sludge and wood residues, if available. The price of the steam is also
based on the confirmed investment, installation, operating and maintenance
costs, financing costs of the project to us, as well as the number of components
and utilities provided to us by the pulp and paper mill. Due to union
regulations, we will be unable to have our employees operate the system. As a
result, the mill will provide the personnel to operate the system. We will train
the operator(s) as part of our service, but the mill will be completely
responsible for paying the salary and benefits of the operator(s). However,
these expenses will be charged back to us and are calculated and incorporated
into our pricing model.
We will remain the owner of the process and contractually sell the
steam over a period of time, selected by us to achieve a return on our
investment with a reasonable built in profit. The pulp and paper mill can
capitalize its gains at the end of the contract. Our responsibilities can be
summarized as follows:
o design of the process taking into account available components
o manufacturing and subcontracting of process components
o installation and start-up of the process
o operation and maintenance of the process which can be done in
collaboration with or by the customer's operator, supervised by our
representative
The customer's responsibilities can be summarized as follows:
o salary of the provided operator
o environment conformity permits for operation
o components and utilities that can be provided advantageously, by the
plant
The economic benefits
We present here the economic aspects for both parties of an
hypothetical project between us and a medium size North American pulp and paper
mill. In this example, we use typical data to illustrate that the proposed
process generates benefits for both parties, in a general context. We present a
simple context where only steam is sold to the mill and there is no power
production and no garbage removal fees. In other words, while our process will
get rid of the waste by converting it into steam, if the mill is interested, we
can then use the steam to generate energy, or we can simply deliver the steam to
the mill for them to use or not as they choose.
We assume that the following equipments, labors and utilities are
advantageously provided by the mill:
o Existing sludge warehouse
o Process monitoring and control room
o Treatment of our wet scrubber liquid effluent by the existing
primary and secondary treatment system o Electricity, water supply
and compressed air for the operation of our process
o Condense pumping and treatment
18
o Ash management and final disposal
The following basic data are used in our evaluation:
o Hours of operation per year: 8200 hrs
o Cost of natural gas 0.10 $/Nm3
o Cost of electricity sold to us by the mill: 0.04 $/kWh
o Total mass flow of wet sludge generated by the mill: 12.4 metric tons/hr
o Average moisture of mix sludge: 59.17%
o Landfill cost of sludge and ashes: 13.61 $/metric ton
o Current cost of steam production by the mill: 4.37 $/1000lbs
o Cost of the steam sold by us to the mill: 6.00 $/1000lbs
o Total mass flow of generated steam sold by our process: 40,000 lbs/hr
o Capital cost for this project: $6.1 million
o Annual cost of operation and maintenance for this project: $800,000
- --------------------------------------------------------------------------------------------------------------------
Summary of benefits for a typical pulp and paper mill $/year
====================================================================================================================
====================================================================================================================
Savings related to the project:
1. landfill cost of sludge $1,384,000
2. employee for sludge management 43,000
3. material for sludge management (loader, trucks, etc.) 34,000
Annual savings: $1,461,000
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Expenses related to the project:
1. extra cost of steam:
cost of the steam sold by Biomasse to the mill 40,000lbs/hr*8200
hrs/year*6.00 $/1000lbs= $1,968,000 $/year Current cost of steam production
by the mill 40,000lbs/hr*8200 hrs/year*4.37 $/1000lbs= $1,433,360 $/year
534,640 $/year
Annual expenses: (535,000)
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Annual benefits: 926,000
====================================================================================================================
====================================================================================================================
Summary of benefits for Biomasse $/year
====================================================================================================================
====================================================================================================================
Incomes related to the project:
1. minimal revenue from steam sales :
40,000lbs/hr*8200 hrs/year*6.00 $/1000lbs= 1,968,000 $/year
Annual incomes $1,968,000
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Expenses related to the project:
1. cost of operation and maintenance $800,000
(mainly electricity, natural gas and maintenance)
2. employee for process management 30,000
3. landfill cost of ashes and inert material (mainly sand and clay) 239,000
Annual expenses: (1,069,000)
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Annual benefits: 899,000
====================================================================================================================
====================================================================================================================
Estimated payback period: 6.78 years
====================================================================================================================
====================================================================================================================
Total annual benefits for both parties: 1,825,000
- --------------------------------------------------------------------------------------------------------------------
19
The market
The primary target market for our process is the North American pulp
and paper industry. Once established in this industry, we intend to offer our
process to the wood processing industries (saw mills, furniture manufacturers,
etc.). In the longer term, we plan to adapt our process to generate power from
another problematic solid residue: the organic fraction of municipal solid
wastes. After realizing a few projects in North America, we expect to also
expand our market to other continents if opportunities are offered.
There are approximately 400 pulp and paper mills in North America.
Based on available studies, the generation of wastewater treatment sludge can be
estimated to be 21 million of wet metric tons per year. As discussed earlier,
wet residue is sludge with a high moisture content making it heavier and more
difficult to dispose of in an environmentally safe fashion. The total direct
costs of sludge sent to landfill sites in North America can be estimated to be
more than $200 million annually. A large fraction of the North American pulp and
paper mills do not currently attribute any enhanced value to this residue that
we have shown can be efficiently transformed into valuable steam and electricity
and contribute significantly to reductions in their production costs.
We also intend to capitalize on the fact that pulp and paper companies
often operate several plants in the same state or geographic region. Once our
processes has been installed in one plant and its benefits become clear, the
installation of the process in other plants of the same paper company can
reasonably be expected.
Marketing strategy
We plan to install completely at least two projects per year for the
next two years and three annually for the years 2003 and 2004.
We have begun the process of approaching several major pulp and paper
company in Quebec and in the U.S. Our first objective is to identify the most
profitable "sludge & residues-to-energy" projects in North America. To do so, we
intend to collaborate with the Ecole Polytechnique of the University of Montreal
to develop and distribute to potential customers a questionnaire soliciting
information on their solid waste management and current disposal practices. This
survey will be oriented to allow us to perform a preliminary determination of
the potentially most profitable projects. Typical required information are: flow
rate generation of sludge and other wood residues, solid wastes disposal costs,
age of currently used landfill and availability of landfill sites, residues
combustion problems, landfill site management problems, dewatering problems,
utility costs, fuel costs, current costs of steam production by the mill, sludge
characteristics, etc.
We intend to establish a direct contact with the management and the
engineering of the most suitable pulp and paper mills. We will offer our
expertise and services to evaluate the feasibility and the profitability of a
waste-to-energy project, for both parties, in collaboration with the mill. This
collaboration will be dictated by involvement agreements. The proposed studies
could be partially or fully financed by the mills. Our analyses will be proposed
with an optimal sharing of responsibilities, as outlined previously under the
product, pricing and benefits sections.
20
We further intend to promote our process in industry trade shows,
public seminars and in industry publications. We will intensify this promotion
of our process and approach once we have completed our first major
Waste-to-Energy project.
Environmental costs
We currently have only negligible expenses relating to environmental
compliance laws. Our process was specifically designed to be
environmentally-friendly and to comply with generally popular environmental
laws. Based upon our research, we do not expect to incur any significant
expenses in adapting our process to comply with local environmental laws in the
jurisdictions we are marketing our process. Approximately 20% of our equipment
expenses for installing our system is for environmental compliance. This cost is
built into our pricing.
Employees
We currently have three full time employees, all of whom are
executives. One is engaged in financial activities, one is in charge sales and
marketing activities and one is director of engineering and research and
development. In addition, we share two administration personnel with Marc
Dufresne (2000) Inc., at our main office in Trois-Rivieres Ouest. Additional
financing permitting, we intend to hire up to three additional employees. None
of our employees are represented by a labor union. We believe that relations
with our employees are good.
Properties
Our facilities are located in approximately 2,000 square feet of leased
office space in Trois-Rivieres Ouest shared with Marc Dufresne (2000) Inc., of
which we currently occupy approximately 400 sq. ft. with an option to expand. We
also share some office space in Ft. Lauderdale. The lease in Trois-Rivieres
Ouest expires on August 31, 2001 and provides for an annual rental of
approximately $4,000 and in Fort Lauderdale the lease expired on August 31,
2000. We currently continue to occupy the Ft. Lauderdale premises on a
month-to-month tenancy at a cost of $650 per month. We have not signed a new
lease as we are currently looking for a more desirable location. We do not
anticipate any problem with remaining in our current premises until we relocate.
Legal proceedings
We are not involved in any material legal proceedings.
Management
Officers and directors
Our officers and directors are as follows:
21
Name Age Position
- ---- --- --------
Benoit Dufresne 37 President and Director
Jean Gagnon 55 Vice-President Finance and
Secretary and Director
Taghi Zaim 38 Director of Engineering, Research
and Development
Pierre H. Vincent 45 Director
Maurice Robert 51 Director
Mr. Benoit Dufresne was educated in biotechnology and business law and
has specialized training in communications from the Canadian Army. He worked as
financial director for Marc Dufresne (1978) Inc. from 1986 to 1999. During this
tenure, he managed a budget of over $10,000,000 for Sibco Inc., an international
conglomerate consisting of over 12 corporations. Mr. Dufresne was vice-president
of Thermaltech Afrique S.A., a Moroccan corporation specializing in energy
technology from 1994 to 1998. Also, from 1987 and continuing until 1998, he was
president of, and active on a part-time basis for, Thermaltech Canada inc., a
corporation specializing in various technologies related to the energy industry.
Mr. Jean Gagnon has more than twenty years of experience in the
financial markets industry including, marketing analysis, business development,
planning and organizing, restructuring and reorganizing, problem solving and
contract negotiation. From 1981 to 1987, Mr. Gagnon was the director of sales
and marketing for the financing firm Borg Warner Acceptance Canada. In 1987, Mr.
Gagnon founded Societe Merivel Inc., a consulting firm specializing in
commercial leasing. The company was responsible for the implementation and
administration of many companies for which he created, presented and negotiated
successfully more than 3,000 contracts in commercial leasing activities with
different financial institutions. He was president of Societe Merivel until
1995. In 1996, Mr. Gagnon joined Bombardier Capital as director of operations
and business development for this financing firm until 1998, during which year
he became VP finance for the predecessor project to Biomasse.
Mr. Taghi Zaim has a bachelors degree in engineering from the
University of Quebec and a masters degree in applied sciences from the
University of Montreal, as well as a masters degree in Industrial Security from
the University of Quebec. Mr. Zaim has more than fifteen years of experience in
the field of high technology, mostly as director of engineering and computer
science with the firm Omzar Technologies of Canada. Since 1995 and until joining
Biomasse in 1999, he worked as a consulting engineer for both YODA Corp. of
Canada and IBC Corporation.
Mr. Pierre H. Vincent is a practicing lawyer since his admission to the
Quebec Bar in 1976 and he also holds a Masters degree in Commerce from
University of Sherbrooke. Aside from his law practice, from 1995 to 1998, Mr.
Vincent was VP Legal Matters for Uniforet Inc., a Quebec based public company in
the forestry industry. During this period he was responsible for legal matters,
strategies and activities related to the environment. He was also corporate
secretary responsible to define and implement a strategic plan concerning the
environmental policy for Uniforet. For nine years, during 1984 to 1993, he sat
as a Member of Parliament for the Canadian Government. During this period he
was, at various times, Minister of Environment, Minister of Consumer and
Business Affairs, Parliamentary Secretary to the Minister of Finance, the Vice
Prime Minister and the Minister of Revenue.
22
Mr. Maurice Robert is a professional engineer specializing in
mechanical engineering and project management. Mr. Robert has a degree in
Mechanical Engineering and a Masters Degree in Arts. Since 1998 he is president
and chief executive officer of Polydex Inc., a company which specializes in
international development and consulting engineering in the construction
industry. From 1981 to 1998 he was an associate at VFP Consultants Inc., during
which time he managed a team of 30 professional engineers and technicians and
was director and technical director of the mechanical engineering department.
Indemnification of directors and officers
Neither our certificate of incorporation nor our by-laws currently
provide indemnification to our officers or directors. In an effort to continue
to attract and retain qualified individuals to serve as our directors and
officers, we intend to adopt provisions providing for the maximum
indemnification permitted by Florida law.
Compensation of directors
Directors do not receive any compensation for their service as members
of the board of directors.
Consultants
Mr. Rene-Jean Lavallee is a professional engineer with a degree in
chemical engineering from the Ecole Polytechnique de Montreal (Engineering
School of the Montreal University). This degree is a specialty in environmental
and chemical processes. Mr. Lavallee also holds a master's degree in combustion
engineering. His master's degree was directed towards the development of a new
type of furnace to achieve the efficient combustion of various industrial solid
wastes, especially pulp and paper sludge. He is the co-inventor of this newly
patented technology. Mr. Lavallee was also involved in the development of
several specialized technologies in the field of energy production from
industrial waste, waste treatment and waste stabilization.
Abdel Jabbar Abouelouafa holds a degree in administration from
Universite du Quebec at Trois-Rivieres. He holds a master degree in second cycle
from University of Trois-Rivieres and also had studied for a Ph.D at Universite
de Montreal. Mr Abouelouafa was a teacher and research assistant in research
management during 1985-1986 at Universite du Quebec at Trois-Rivieres and
1986-1988 at Universite de Montreal. In 1988 and 1989 he was director of
planning and development for Laboratoires Zunik inc. in Montreal, a corporation
with principal activities in computers. In 1989, Mr. Abouelouafa founded, and
until 1995 was president, of Omzar Technologies inc. a research company in
computers and electronics, which has 60 employees and had $17 million in
revenues, annually. In 1994 and 1995 Mr. Abouelouafa became president and
chaiman of the board of Cap-Tech Communications inc. a public company listed on
the Alberta stock exchange and specializing in computer technology as applied to
network and communications. From 1996 to 1998 Mr. Abouelouafa acted as strategic
counselor to Sofame Tech, a public corporation on the Alberta Stock Exchange
having activities in energy transformation. During 1999 and 2000 he has been
available to consult for Biomasse on strategic planning and financial affairs.
23
Security ownership of certain
beneficial owners and management
The following table sets forth, as of December 31, 2000, information
regarding the beneficial ownership of our common stock based upon the most
recent information available to us for
o each person known by us to own beneficially more than five (5%)
percent of our outstanding common stock,
o each of our officers and directors and
o all of our officers and directors as a group.
Each stockholder's address is c/o Biomasse International Inc., 5345
St.Joseph Street, Trois-Rivieres ouest (Quebec) G9A 5M4.
24
Number of
Number of currently exercisable
Name shares owned warrants owned
beneficially beneficially % of total
------------- --------------------- -----------
Benoit Dufresne(1) 2,743,041 1,132,900 23.8
Jean Gagnon (2) 1,000,000 1,205,000 13.5
Simon Dufresne (1) 2,001,000 128,500 15.5
Societe Merivel Inc. (3) 1,000,000 -0- 6.6
W.A.F.A. Investment Corp (4) 7,400,000 400,000 50.1
Abdel Jabbar Abouelouafa (5) -0- 1,205,000 7.4
Sibco Inc. (6) 1,000,000 -0- 6.6
Marc Dufresne (1978) Inc. (7) 950,565 -0- 6.3
Taghi Zaim -0- 100,000 0.7
All officers and directors
as a group (3 persons) 3,743,041 2,437,900 35.1
(1) Includes 50% of the shares owned by Sibco Inc. and 25% of the shares
owned by Marc Dufresne (1978) Inc.
(2) Includes the shares owned by Societe Merivel Inc.
(3) Controlled by Jean Gagnon, our Vice President Finance.
(4) Owned by W.A.F.A. TRUST which is controlled by the Abouelouafa family.
(5) Mr. Abouelouafa is our consultant. Does not include shares and warrants
held by W.A.F.A. Investment Corp.
(6) Owned by Benoit and Simon Dufresne.
(7) Owned 50 % by Sibco Inc.
Executive compensation
From inception through December 31, 2000 no compensation was paid to
any of our executive officers.
Employment agreements
On January 1st, 2000, Mr. Benoit Dufresne entered into a five (5) year
employment agreement commencing January 1st, 2000. The agreement provides for an
annual salary of $85,000. Mr. Dufresne may also receive bonuses as determined by
the board of directors.
On January 1st, 2000, Mr. Jean Gagnon entered into a five (5) year
employment agreement commencing January 1st, 2000. The agreement provides for an
annual salary of $70,000. Mr. Gagnon may also receive bonuses as determined by
the board of directors.
On April 1, 2000, pursuant to these agreements, we issued 1,000,000
warrants to each of Messrs. Dufresne and Gagnon. The warrant are exercisable at
$1.10 per share and expire on January 31, 2002.
25
On July 31, 2000, Mr. Taghi Zaim entered into a five (5) year
employment agreement commencing at the listing of our share on OTC : BB. The
agreement provides for an annual salary of $34,000 and warrants to purchase
100,000 shares at an exercise price of $1.10 per share.
On April 1st, 2000, Mr. Abouelouafa entered into a five (5) year
consulting agreement. The agreement provides for an annual fee of $60,000 before
the listing and $100,000 after the listing and warrants to purchase 1,000,0000
shares at an exercise price of $1.10 until January 31, 2002. Mr. Abouelouafa
also received some other benefits consisting of a life insurance policy costing
approximately $1,000 per year and a car allowance costing approximately $500 per
month.
Certain relationships and related transactions
Since inception, we made advances to Abdel Jabbar Abouelouafa, Jean
Gagnon and Louise St-Pierre in the amounts of $4,475, $9,802 and $4,769
respectively, for expenses they may incur. These advanced amounts are required
to be repaid in the following fiscal year if the advances exceed the incurred
expenses. As of December 31, 2000, Mr. Abouelouafa and Ms. St.-Pierre have
repaid their advances.
On April 26, 1999, we entered into a license rights agreement with Marc
Dufresne (1978) Inc., a shareholder and an affiliate. The amount of the license
agreement was $588,000. On April 26, 1999, we issued 588,000 shares of common
stock, class B, to Marc DuFresne (1978) Inc., in payment of the license fee.
These shares were valued at $1.00 per share. Pursuant to the terms of the
license agreement, on November 29, 1999 we exercised our right to cancel the
agreement and to acquire outright ownership of all intellectual property and
rights related to the process. Due to its financial difficulties, Marc Dufresne
(1978) Inc. was unable to perform its contractual obligations such as purchasing
the components and assembling the facility for the process. Accordingly,
pursuant to the terms of the license agreement we were allowed to convert our
licensor/licensee relationship to outright ownership of the technology, at no
cost.
On July 7, 1999, we issued 306,000 shares of common stock, class B, to
Marc DuFresne (1978) Inc., a shareholder and an affiliate, in settlement of an
invoice for the purchase of equipment in the amount of $306,000
We have a note payable dated September 30, 1999 in the amount of
$56,566 to Marc DuFresne (1978) Inc., a shareholder of the company. This note is
for reimbursements of expenditures paid by Marc DuFresne (1978) Inc. during the
fiscal year ended September 30, 1999 on behalf of Biomasse International, Inc.
The note is unsecured and bears interest of prime plus two percent and matures
on September 30, 2000. This note was converted into 56,565 shares in November
1999.
Our policy is to obtain all supplies and services on a normal
competitive basis, but that, all things being equal, to purchase from affiliated
or related entities. All related party transactions must be reviewed by the
board of directors to assure that we are not paying higher than fair market
arms-length prices. We currently have two independent directors on our board and
they must approve all related party transactions.
26
Disclosure of commission position on
indemnification for securities act liabilities
Neither our by-laws nor our certificate of incorporation currently
provide indemnification to our officers or directors. In an effort to continue
to attract and retain qualified individuals to serve as our directors and
officers, we intend to adopt provisions providing for the maximum
indemnification permitted by Florida law.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons,
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore
unenforceable.
Description of securities
Authorized and outstanding stock
Our authorized capital stock consists of 5,000,000 shares of Class A,
$1.00 par value and 55,000,000 shares of Class B common stock, $.001 par value.
As of July 31, 2000 there were 15,165,188 shares of Class B common stock
outstanding, which were held by approximately 55 stockholders of record. We have
no intention of issuing any of the Class A shares and intend to file an
amendment to our certificate of incorporation to cancel the Class.
Common stock
Subject to legal and contractual restrictions on payment of dividends,
the holders of common stock are entitled to receive such lawful dividends as may
be declared by the board of directors. In the event of our liquidation,
dissolution or winding up, the holders of shares of common stock are entitled to
receive all of our remaining assets available for distribution to stockholders
after satisfaction of all liabilities and preferences. Holders of our common
stock do not have any preemptive, conversion or redemption rights and there are
no sinking fund provisions applicable to our common stock. Record holders of our
common stock are entitled to vote at all meetings of stockholders and at those
meetings are entitled to cast one vote for each share of record that they own on
all matters on which stockholders may vote. Stockholders do not have cumulative
voting rights in the election of our directors. As a result, the holders of a
plurality of the outstanding shares can elect all of our directors, and the
holders of the remaining shares are not able to elect any of our directors. All
outstanding shares of common stock are fully paid and non-assessable, and all
shares of common stock to be offered and sold in this offering will be fully
paid and non-assessable.
Warrants
We currently have 3,929,900 warrants outstanding, each of which
entitles the registered holder thereof to purchase, at any time until the close
of business on January 31, 2002, one share of Class B common stock at a price of
27
$1.10 and 1,325,000 warrants outstanding, each of which entitles the registered
holder thereof to purchase, at any time, one share of Class B Common stock at a
price of $.001. All of the warrants contain provisions which protect the holders
thereof against dilution by adjustment of the exercise price and number of
warrants, in certain events, such as stock dividends, stock splits, mergers,
sale of substantially all of our assets, and for other extraordinary events.
Transfer agent and registrar
The stock transfer agent and registrar for our common stock is
Intercontinental Registry and Stock Transfer, located at 900 Buchanan blvd # 1,
Boulder City, Nevada 89005-2100.
Dividend policy
Under applicable law, dividends may only be paid out of legally
available funds as proscribed by a statute, subject to the discretion of the
board of directors. In addition, it is currently our policy to retain internally
generated funds to support future expansion of our business. Accordingly, even
if we do generate earnings, and even if we are not prohibited from paying
dividends, we do not currently intend to declare or pay cash dividends on our
common stock for the foreseeable future.
Shares available for future sale
On the date of this prospectus, all 1,704,322 shares included in this
prospectus will generally be freely tradable without restriction imposed by, or
further registration under, the Securities Act for so long as this prospectus is
still current. An additional 13,460,866 shares of our common stock may be deemed
"restricted securities," as that term is defined under Rule 144 promulgated
under the Securities Act. Such shares may be sold to the public, subject to
volume restrictions, as described below. Commencing at various dates, these
shares may be sold to the public without any volume limitations. These figures
do not include the additional 5,254,900 shares underlying currently exercisable
warrants, all of which will be freely tradable upon exercise, provided this
prospectus is current.
In general, under Rule 144 as currently in effect, subject to the
satisfaction of certain other conditions, a person, including one of our
affiliates, or persons whose shares are aggregated with affiliates, who has
owned restricted shares of common stock beneficially for at least one year is
entitled to sell, within any three-month period, a number of shares that does
not exceed 1% of the total number of outstanding shares of the same class. In
the event our shares are sold on an exchange or are reported on the automated
quotation system of a registered securities association, you could sell during
any three-month period the greater of such 1% amount or the average weekly
trading volume as reported for the four calendar weeks preceding the date on
which notice of your sale is filed with the SEC. Sales under Rule 144 are also
subject to certain manner of sale provisions, notice requirements and the
availability of current public information about us. A person who has not been
one of our affiliates for at least the three months immediately preceding the
sale and who has beneficially owned shares of common stock for at least two
years is entitled to sell such shares under Rule 144 without regard to any of
the limitations described above.
28
You should note that we anticipate that our shares of common stock will
initially be included for quotation on the OTC Bulletin Board. Pursuant to SEC
regulations, the OTC Bulletin Board is not considered an "automated quotation
system of a registered securities association" and Rule 144 will only permit
sales of up to 1% of the outstanding shares during any three month period.
Plan of distribution
The sale of the shares of common stock by the selling stockholders may
be effected by them from time to time in the over the counter market or in such
other public forum where our shares are publicly traded or listed for quotation.
These sales may be made in negotiated transactions through the timing of options
on the shares, or through a combination of such methods of sale, at fixed
prices, which may be charged at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated prices. The
selling stockholders may effect such transactions by selling the shares to or
through broker-dealers, and such broker-dealers may receive compensation in the
form of discounts, concessions or commissions from the selling stockholders
and/or the purchasers of the shares for which such broker-dealer may act as
agent or to whom they sell as principal, or both. The compensation as to a
particular broker-dealer may be in excess of customary compensation.
The selling stockholders and any broker-dealers who act in connection
with the sale of the shares hereunder may be deemed to be underwriters within
the meaning of Section 2(11) of the Securities Act, and any commissions received
by them and any profit on any sale of the shares as principal might be deemed to
be underwriting discounts and commissions under the Securities Act.
Selling stockholders
We are registering
o Shares of common stock purchased by investors in our 1999-2000 private
placement offerings,
o a portion of the shares of common stock owned by our founders, and
o 5,254,900 shares of common stock underlying currently outstanding
warrants.
Other than the costs of preparing this prospectus and a registration
fee to the SEC, we are not paying any costs relating to the sales by the selling
stockholders. Each of the selling stockholders, or their transferees, and
intermediaries to whom such securities may be sold may be deemed to be an
"underwriter" of the common stock offered in this prospectus, as that term is
defined under the Securities Act. Each of the selling stockholders, or their
transferees, may sell these shares from time to time for his own account in the
open market at the prevailing prices, or in individually negotiated transactions
at such prices as may be agreed upon. The net proceeds from the sale of these
shares by the selling stockholders will inure entirely to their benefit and not
to ours.
29
Except as indicated below, none of the selling stockholders has held
any position or office, or had any material relationship with us or any of our
predecessors or affiliates within the last three years, and after completion of
this offering will own the amount of our outstanding common stock listed
opposite their name. The shares reflected by each selling stockholder is based
upon information provided to us by our transfer agent and from other available
sources in December, 2000.
These shares may be offered for sale from time to time in regular
brokerage transactions in the over-the-counter market, or, either directly or
through brokers or to dealers, or in private sales or negotiated transactions,
or otherwise, at prices related to the then prevailing market prices. Thus, they
may be required to deliver a current prospectus in connection with the offer or
sale of their shares. In the absence of a current prospectus, if required, these
shares may not be sold publicly without restriction unless held by a
non-affiliate for two years, or after one year subject to volume limitations and
satisfaction of other conditions. The selling stockholders are hereby advised
that Regulation M of the General Rules and Regulations promulgated under the
Securities Exchange Act of 1934 will be applicable to their sales of these
shares. These rules contain various prohibitions against trading by persons
interested in a distribution and against so-called "stabilization" activities.
The selling stockholders, or their transferees, might be deemed to be
"underwriters" within the meaning of Section 2(11) of the Act and any profit on
the resale of these shares as principal might be deemed to be underwriting
discounts and commissions under the Act. Any sale of these shares by selling
shareholders, or their transferees, through broker-dealers may cause the
broker-dealers to be considered as participating in a distribution and subject
to Regulation M promulgated under the Securities Exchange Act of 1934, as
amended. If any such transaction were a "distribution" for purposes of
Regulation M, then such broker-dealers might be required to cease making a
market in our equity securities for either two or nine trading days prior to,
and until the completion of, such activity.
Shares Beneficially Owned
Name of Selling Security Holder Before Offering Offering After offering
Marc Dufresne (1978) Inc. 950,565 84,061 866,504
Benoit Dufresne 2,005,400 177,343 1,368,263
Simon Dufresne 1,501,000 132,737 1,368,263
Sibco inc. 1,000,000 88,432 911,568
W.A.F.A. Investment Corporation 7,400,000 654,400 6,745,600
Societe Merivel Inc. 1,000,000 88,432 911,568
9064-6167 Quebec Inc. 100,000 30,000 70,000
Power Group Investment Inc. 100,000 30,000 70,000
Paul Roy 50,000 15,000 35,000
O.S.F.A. Corp. 135,000 40,500 94,500
Carole Deslongchamps 5,000 1,500 3,500
Louise Gravel 10,000 3,000 7,000
Paulette Landry 2,000 600 1,400
Josee Landry 2,000 600 1,400
Yves Landry 2,000 600 1,400
30
Jean-Marie Landry 2,000 600 1,400
Michel Felx 2,000 600 1,400
Crecenzo Giannangelo 83,478 25,043 58,435
Francesca Piazza 14,348 4,304 10,044
Francesca Piazza 3,897 1,169 2,728
Maria Di Salvatore 10,000 3,000 7,000
Sylvie Boulerice 20,000 6,000 14,000
Jo-Ann Salerno 5,000 2,200 2,800
Paola Di Salvatore 10,000 3,000 7,000
Francesco Spadafora 13,000 3,900 9,100
Franca Spadafora 10,000 3,000 7,000
Esther Spadafora 20,000 6,000 14,000
Pelino Spadafora 40,000 12,000 28,000
BBT Consulting Group Ltd 500,000 150,000 350,000
Andre Desjardins 25,000 7,500 17,500
Maurice Robert 10,000 3,000 7,000
Francois Thibeault 2,000 600 1,400
Diane Girard 16,000 10,400 5,600
Claudette Girard 2,000 1,300 700
Gabriel Lussier 2,500 2,500 0
Yves Lussier 2,500 2,500 0
Jean-Benoit Gagnon 2,000 2,000 0
Lucille Gagnon 4,000 4,000 0
Mylene Gagnon 2,000 2,000 0
Danik Lavoie 1,500 1,500 0
Reynald Gagnon 5,000 5,000 0
Mohamed Bennis 10,000 10,000 0
Francois Thibeault 2,000 2,000 0
Ursule Germain 1,000 1,000 0
Andree Dubuc 1,000 1,000 0
Marc Dufresne 1,000 1,000 0
Polydex Inc. 10,000 10,000 0
Derek Lightfoot 3,000 3,000 0
Marcel Bruneau 5,000 5,000 0
Michel Caron 1,000 1,000 0
Ethel Brenner 1,000 1,000 0
Fran Altman 1,000 1,000 0
Roger Gauvin 1,000 1,000 0
Marcel Mongrain 35,000 35,000 0
Karine Hebert 2,000 2,000 0
Marilyn Bouchard 20,000 20,000 0
Warrants Beneficially Owned*
Name of Warrant Holder Before Offering Offering After Offering
Rene-Jean Lavallee 100,000 100,000 0
31
Benoit Dufresne 1,132,900 1,132,900 0
Simon Dufresne 128,500 128,500 0
Abdel Jabbar Abouelouafa 1,205,000 1,205,000 0
Jean Gagnon 1,205,000 1,205,000 0
Louise St-Pierre 60,000 60,000 0
BBT Consulting Group Ltd 500,000 500,000 0
Power Group Consultants LLC 100,000 100,000 0
Gabriel Lussier 2,500 2,500 0
Yves Lussier 2,500 2,500 0
Jean-Benoit Gagnon 2,000 2,000 0
Lucille Gagnon 4,000 4,000 0
Mylene Gagnon 2,000 2,000 0
Danik Lavoie 1,500 1,500 0
Reynald Gagnon 5,000 5,000 0
Mohamed Bennis 110,000 110,000 0
Francois Thibeault 2,000 2,000 0
Ursule Germain 1,000 1,000 0
Andree Dubuc 1,000 1,000 0
Marc Dufresne 1,000 1,000 0
Jo-Ann Salerno 1,000 1,000 0
Diane Girard 8,000 8,000 0
Polydex Inc. 10,000 10,000 0
Claudette Girard 1,000 1,000 0
Derek Lightfoot 3,000 3,000 0
Marcel Bruneau 5,000 5,000 0
Michel Caron 1,000 1,000 0
Ethel Brenner 1,000 1,000 0
Fran Altman 1,000 1,000 0
Roger Gauvin 1,000 1,000 0
Marcel Mongrain 35,000 35,000 0
Karine Hebert 2,000 2,000 0
Marilyn Bouchard 20,000 20,000 0
Taghi Zaim 100,000 100,000 0
Charles Abikhzer 100,000 100,000 0
W.A.F.A Investment Corp. 400,000 400,000 0
- ----------
* We are registering the shares underlying the warrants. References in the chart
to before or after sale are all references to the underlying shares. The list
has been presented in two parts to distinguish between the actual shares and the
shares underlying the warrants. Each warrant is exercisable into one share of
Class B common stock at a price of $1.10 or $.001.
Legal matters
Legal matters in connection with this offering are being passed upon by
the law firm of Heller, Horowitz & Feit P.C., New York, New York.
32
Experts
Our audited financial statements as of September 30, 1999 and 2000 and
for the fiscal years then ended are included in this prospectus in reliance upon
the report of Mark Cohen C.P.A., an independent certified public accountant, and
upon the authority of said person as an expert in accounting and auditing.
Available information
Commencing on the date of this prospectus, we will be subject to the
information requirements of the Securities Exchange Act of 1934, as amended.
This Act requires us to file reports, proxy statements and other information
with the Securities and Exchange Commission. Copies of the reports, proxy
statements and other information we file can be inspected at the Headquarters
Office of the Securities and Exchange Commission located at 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549:
Copies of the material we file may be obtained from the Public Reference
Section of the Commission, at 450 Fifth Street, N.W., Room 1024, Washington,
D.C. at prescribed rates. The Public Reference Room can be reached at (202)
942-8090. The Commission also maintains a web site that contains reports, proxy
and information statements and other information regarding us. This material can
be found at http://www.sec.gov.
33
Mark Cohen C.P.A.
1772 East Trafalgar Circle
Hollywood, Fl 33020
(954) 922 - 6042
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Biomasse International, Inc.
We have audited the accompanying balance sheet of Biomasse International, Inc.
(a company in the development stage) as of September 30, 2000 and 1999 and the
related statements of operations, shareholders' equity (deficiency) and cash
flows for the year ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Biomasse International, Inc. at
September 30, 2000 and 1999, and the results of its operations and its cash
flows for the year then ended, in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 5 to the
financial statements, the Company has experienced an operating loss and
management has determined that it will require additional capital to continue
funding operations and meet its obligations as they come due. These conditions
raise substantial doubt about the Company's ability to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/Mark Cohen
Mark Cohen C.P.A.
A Sole Proprietor Firm
Hollywood, Florida
December 26, 2000
BIOMASSE INTERNATIONAL, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
BALANCE SHEET
Assets
December 31, September 30,
2000 2000 1999
(Unaudited)
Current Assets
Cash and cash equivalents $ 115 $ 4,891 $ 56,615
Receivables, net 4,549 11,402 17,385
Other current assets 9,802 11,544 15,932
Total current assets 14,466 27,837 89,932
Property and equipment, net 202,914 203,128 200,000
Intangibles, net 73,028 78,528 100,528
Other assets 3,884 12,180 1,218
Total assets 294,291 321,673 391,678
================== ============ =============
Liabilities and Shareholder's Equity
Current Liabilities
Accounts payable 56,062 53,694 31,528
Other current liabilities 52,719 31,591 -
Note Payable - 56,566
Total current liabilities 108,781 85,285 88,093
Shareholder's Equity
Common Stock, class A, $1.00 par value; authorized - - -
5,000,000 shares; issued and outstanding 0 in 2000
and 1999
Common Stock, class B, $.001 par value; authorized 19,135 19,135 19,135
55,000,000 shares; issued and outstanding 15,165,188
15,165,188 and 19,135,223 respectively
Paid in Capital 906,985 905,485 375,550
Treasury Stock (3,970) (3,970) -
Share subscription receivable (386,500) (390,000) -
Deficit accumulated during the development stage (350,141) (294,262) (91,101)
Total Shareholder's Equity 185,510 236,388 303,584
Total liabilities and shareholder's equity $ 294,291 $321,673 $391,678
============= ============ =============
Read the accompanying summary of significant accounting notes to
financial statements, which are an integral part of this financial statement.
BIOMASSE INTERNATIONAL, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2000 (UNAUDITED)
FOR THE YEARS ENDED SEPTEMBER 30, 2000 AND 1999
FROM INCEPTION (MARCH 19, 1999) THROUGH DECEMBER 31, 2000
For the three
months ended Inception
December 31, Year Ended September 30, (March 19, 1999)
-------------------------------- through
2000 2000 1999 December 31, 2000
-------------- ------------ ------------ ------------------
(Unaudited) (Unaudited)
Operating Expenses:
Travel $ 2,967 $ 32,938 $ 6,207 $ 42,112
Professional fees - 27,915 62,172 90,087
Consulting fees 30,400 57,821 10,000 98,221
Rent 3,082 12,925 609 16,616
Depreciation 214 584 797
Amortization 5,500 22,000 9,472 36,972
Selling, general and administrative expenses 13,893 49,625 2,641 66,158
-------------- ------------ ------------ ------------------
Operating Loss (56,056) (203,808) (91,101) (350,964)
Other Income/(Expense)
Interest Income - related party 177 646 - 824
-------------- ------------ ------------ ------------------
Total Other Income 177 646 - 824
Net Loss (55,878) (203,161) (91,101) (350,141)
Basic weighted average common shares outstanding 15,165,188 15,449,199 18,836,507 16,376,931
============== ============ ============ ==================
Basic Loss per common share $ (0.0037) $ (0.0132) $ (0.0048) $ (0.0214)
============== ============ ============ ==================
Read the accompanying summary of significant accounting notes to
financial statements, which are an integral part of this financial statement.
BIOMASSE INTERNATIONAL, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENT OF SHAREHOLDERS' EQUITY
FROM INCEPTION (MARCH 19, 1999) THROUGH DECEMBER 31, 2000
Common Class A Common Class B Treasury Shares - Class B
------------------------------------------------------------------------------------
Shares Amount Shares Par Value Amount Shares Par Value Amount
------------------------ -----------------------------------------------------------
Balance, beginning: March 19, 1999 - $ - - $ - - $ -
April 01, 1999 sale of Class B common stock 17,684,723 0.001 17,685
April 01, 1999 contract settlement -
BBT Consulting Group, Inc. 500,000 0.001 500
April 01, 1999 non cash advisory services
April 26, 1999
Issuance of stock to Marc Dufresne (1978) Inc.
for license rights 588,000 0.001 588
Dividend to affiliate - Marc Dufresne (1978) Inc.
for license rights
July 07, 1999
Issuance of stock to Marc Dufresne (1978) Inc.
for equipment 306,000 0.001 306
Dividend to affiliate - Marc Dufresne (1978) Inc.
for equipment
September 30, 1999 sale of Class B common stock through 56,500 0.001 57
circular offering
Net loss year ended September 30, 1999
-------- -------- ---------- -------- ----------- ------- -------- -----------
Balance: September 30, 1999 - - 19,135,223 0.001 19,135 - -
November 29, 1999
Repurchased treasury shares from Marc Dufresne (1978) Inc. (4,500,000) 0.001 (4,500)
Proceeds from the sale of Class B through circular offering 3,000 0.001 3
Issuance of stock to Marc Dufresne (1978) Inc. for settlement 56,565 0.001 57
of note payable
March 01, 2000 sale of Class B common through circular offering 5,000 0.001 5
March 13, 2000 sale of Class B common through circular offering 5,400 0.001 5
April 05, 2000 sale of Class B common through circular offering 2,000 0.001 2
June 09, 2000 sale of Class B common through circular offering 35,000 0.001 35
June 16, 2000 sale of Class B common through circular offering 1,000 0.001 1
June 23, 2000 sale of Class B common through circular offering 2,000 0.001 2
July 07, 2000 sale of Class B common through circular offering 20,000 0.001 20
September 30, 2000 subscription of Class B common through 400,000 0.001 400
circular offering
September 30, 2000 office rent applied to paid in capital
Net loss for the twelve month period ended September 30, 2000
-------- -------- ---------- -------- ----------- ---------- -------- ----------
Balance, ending: September 30, 2000 - - 19,135,223 0.001 19,135 (3,970,035) 0.001 (3,970)
October 13, 2000 receipts for share subscription receivable
(Unaudited)
December 31, 2000 office rent applied to paid in capital (Unaudited)
Net loss for the three month period ended December 31, 2000
(Unaudited)
-------- -------- ---------- -------- ----------- ------- -------- -----------
Balance, ending: December 31, 2000
(Unaudited) - $ - 19,135,223 $ 0.001 $ 19,135(3,970,035) $ 0.001 (3,970)
Read the accompanying summary of significant accounting notes to
financial statements, which are an integral part of this financial statement.
BIOMASSE INTERNATIONAL, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENT OF SHAREHOLDERS' EQUITY
FROM INCEPTION (MARCH 19, 1999) THROUGH DECEMBER 31, 2000 (CONT.)
Accumulated
Share Deficit during Total
Paid in Subscription Development Shareholder's
Capital Receivable Stage Equity
-------- ------------- --------------- ----------------
Balance, beginning March 19, 1999 $ - $ - $ - $ -
April 01, 1999 sale of Class B common stock - 17,685
April 01, 1999 contract settlement - - - 500
BBT Consulting Group, Inc.
April 01, 1999 non cash advisory services 10,000 (10,000) -
April 26, 1999
Issuance of stock to Marc Dufresne (1978) Inc.
for license rights 587,412 - 588,000
Dividend to affiliate - March Dufresne (1978) Inc. (478,000) (478,000)
for equipment
July 07, 1999
Issuance of stock to Marc Dufresne (1978) Inc.
for equipment 305,694 - 306,000
Dividend to affiliate - Marc Dufresne (1978) Inc. (106,000) (106,000)
for equipment
September 30, 1999 sale of Class B common stock through 56,444 - 56,500
circular offering
Net loss year ended September 30, 1999 (81,101) (81,101)
----------- ----------- ----------- ----------
Balance: September 30, 1999 375,550 - (91,101) 303,584
November 29, 1999
Repurchased treasury shares from March Dufresne (1978) Inc. (4,500)
Proceeds from the sale of Class B through circular offering 2,997 3,000
Issuance of stock to Marc Dufresne (1978) Inc. for settlement 56,509 56,566
of note payable
March 01, 2000 sale of Class B common through circular offering 4,995 5,000
March 13, 2000 sale of Class B common through circular offering 5,395 5,400
April 05, 2000 sale of Class B common through circular offering 1,998 2,000
June 09, 2000 sale of Class B common through circular offering 34,965 35,000
June 16, 2000 sale of Class B common through circular offering 999 1,000
June 23, 2000 sale of Class B common through circular offering 1,998 2,000
July 07, 2000 sale of Class B common through circular offering 19,980 20,000
September 30, 2000 subscription of Class B common through 399,600 (390,000) 10,000
circular offering
September 30, 2000 office rent applied to paid in capital 500 500
Net loss for the twelve month period ended September 30, 2000 (203,161) (203,161)
----------- ----------- ----------- ----------
Balance, ending: September 30, 2000 905,485 (390,000) (294,262) 236,388
October 13, 2000 receipts for share subscription receivable 3,500 3,500
(Unaudited)
December 31, 2000 office rent applied to paid in capital 1,500 (1,500) -
(Unaudited)
Net loss for the three month period ended December 31, 2000
(Unaudited) (53,378) (53,378)
----------- ----------- ----------- ----------
Balance, ending: December 31, 2000 (Unaudited) $906,985 $ (386,500) $(350,141) $185,510
BIOMASSE INTERNATIONAL, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2000 (UNAUDITED)
FOR THE YEARS ENDED SEPTEMBER 30, 2000 AND 1999
FROM INCEPTION (MARCH 19, 1999) THROUGH DECEMBER 31, 2000
For the three Inception
months ended For the years ended September 30, (March 19, 1999)
December 31, ---------------------------------- through
2000 2000 1999 December 31, 2000
-------------- -------------- -------------- -------------------
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ (55,878) $ (203,161) $ (91,101) $ (350,141)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization 5,714 22,584 9,472 37,770
Rent expense offset to paid in capital 1,500 500 2,000
Issuance of warrants for advisory services 10,000 10,000
Changes in Operating assets and liabilities:
Receivables 6,853 5,983 (17,385) (4,549)
Other Current Assets 1,742 4,388 (15,932) (9,802)
Other Assets 8,296 (10,962) (1,218) (3,884)
Accounts Payable and Accrued Liabilities 23,496 53,757 31,528 108,781
-------------- -------------- -------------- -------------------
Net cash provided by/(used in) operating activities (8,276) (126,913) (74,636) (209,825)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment - (3,711) - (3,711)
-------------- -------------- -------------- -------------------
Net cash provided by/(used in) investing activities - (3,711) - (3,711)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from:
Notes payable, principally related parties - - 56,566 56,566
Purchase of treasury stock - (4,500) - (4,500)
Sales of common stock 3,500 83,400 74,685 161,585
-------------- -------------- -------------- -------------------
Net cash provided by/(used in) financing activities 3,500 78,900 131,251 213,651
-------------- -------------- -------------- -------------------
Net increase (decrease) in cash and cash equivalents (4,776) (51,724) 56,614 115
Cash and cash equivalents, beginning of period 4,891 56,615 - -
-------------- -------------- -------------- -------------------
Cash and cash equivalents, end of period $ 115 $ 4,891 $ 56,614 $ 115
============== ============== ============== ===================
Supplemental Schedule of noncash investing and financing activities:
April 26, 1999 issued 588,000 shares of common stock 110,000 110,000
for license rights from affiliate (recorded at predecessor
basis)
July 07, 1999 issued 306,000 shares of common stock 200,000 200,000
for equipment from affiliate (recorded at predecessor
basis)
November 29, 1999 issuance of 56,565 shares of 56,566 56,566
common stock in settlement of note payable (related
Read the accompanying summary of significant accounting notes to
financial statements, which are an integral part of this financial statement.
BIOMASSE INTERNATIONAL, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2000
FOR THE YEARS ENDED SEPTEMBER 30, 2000 AND 1999
FROM INCEPTION (MARCH 19, 1999) THROUGH DECEMBER 31, 2000
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
Biomasse International, Inc., was incorporated in the State of Florida on
March 19, 1999. The company has acquired a unique technology to process and
dispose of the waste created by pulp and paper companies in an efficient and
environmentally-friendly way. The pulp and paper industry in Canada is facing
many challenges caused by an increasingly competitive world market. Pulp and
paper plants in Canada are lagging behind their competitors in the U.S.A. and
Europe in productivity and in quality of their products. The industry is now in
a restructuring phase to reduce its costs of operations and diversify its
products line. The industry is also increasingly scrutinized by environmental
agencies as this industry is a major producer of toxic waste. Environmental
regulations are becoming tighter and the public is becoming more
environmentally-conscious. Biomasse International, Inc.'s technology addresses
both problems: to eliminate the toxic waste by incinerating it and then from the
waste material to produce steam energy which can be used for the operation of
machinery in the plants. The plant thus saves the cost of trucking the waste to
distant locations to bury it, and at the same time it eliminates the waste
completely, meeting the most stringent environmental concerns.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of accounting:
Biomasse International, Inc. prepares its financial statements in accordance
with generally accepted accounting principles. This basis of accounting
involves the application of accrual accounting; consequently, revenues and
gains are recognized when earned, and expenses and losses are recognized
when incurred. Financial statement items are recorded at historical cost and
may not necessarily represent current values.
Management estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
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. Certain amounts included in the financial statements are
estimated based on currently available information and management's judgment
as to the outcome of future conditions and circumstances. Changes in the
status of certain facts or circumstances could result in material changes to
the estimates used in the preparation of financial statements and actual
results could differ from the estimates and assumptions. Every effort is
made to ensure the integrity of such estimates.
Fair value of financial instruments:
The carrying amounts of cash and equivalents, accounts receivable, accounts
payable and accrued liabilities approximate their fair values because of the
short duration of these instruments.
Intangible assets
Intangible assets consist principally of intellectual property and rights
related to the technology to process and dispose of waste created by pulp
and paper companies. Intangible assets are amortized on a straight line
basis over 5 years.
BIOMASSE INTERNATIONAL, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2000
FOR THE YEARS ENDED SEPTEMBER 30, 2000 AND 1999
FROM INCEPTION (MARCH 19, 1999) THROUGH DECEMBER 31, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
Impairment of long-lived assets:
Long-lived assets and certain identifiable intangibles held and used by the
Company are reviewed for possible impairment whenever events or changes in
circumstances indicate the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of the assets to the future net cash flows
expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which
the carrying amount of the assets exceeds the fair value of the assets.
Cash and cash equivalents:
The Company considers all highly liquid investments with original maturities
of ninety days or less to be cash and cash equivalents. Such investments are
valued at quoted market prices.
Receivables:
The Company believes that the carrying amount of receivables at December 31,
2000 approximates the fair value at such date.
Property, equipment and depreciation:
Property and equipment are stated at cost less accumulated depreciation.
Depreciation is computed using the straight-line method over the estimated
useful lives as follows when the property and equipment is placed in
service:
Estimate Useful Life
(In Years)
Office Furniture and Equipment 10
Computer Equipment 3
Machinery and Equipment 10
The cost of fixed assets retired or sold, together with the related
accumulated depreciation, are removed from the appropriate asset and
depreciation accounts, and the resulting gain or loss is included in net
earnings.
Repairs and maintenance are charged to operations as incurred, and
expenditures for significant improvements are capitalized. The cost of
property and equipment retired or sold, together with the related
accumulated depreciation, are removed from the appropriate asset and
depreciation accounts, and the resulting gain or loss is included in
operations.
Earnings (Loss) per share calculation:
Earnings (Loss) per common share are calculated under the provisions of SFAS
No. 128, "Earnings per Share," which establishes standards for computing and
presenting earnings per share. SFAS No. 128 requires the Company to report
both basic earnings (loss) per share, which is based on the weighted-average
number of common shares outstanding during the period, and diluted earnings
(loss) per share, which is based on the weighted-average number of common
shares outstanding plus all potential dilutive common shares outstanding.
Options and warrants are not considered in calculating diluted earnings
(loss) per share since considering such items would have an anti-dilutive
effect.
BIOMASSE INTERNATIONAL, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2000
FOR THE YEARS ENDED SEPTEMBER 30, 2000 AND 1999
FROM INCEPTION (MARCH 19, 1999) THROUGH DECEMBER 31, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
Recent Accounting Pronouncements:
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards Board (SFAS) No. 133,
"Accounting for Derivative Instruments and Hedging Activities", amended by
Statements of Financial Accounting Standards Board (SFAS) No. 137,
"Accounting for Derivative Instruments and Hedging Activities - Deferral of
the Effective Date of FASB Statement No. 133 - an amendment of FASB
Statement 133" and Statement of Financial Accounting Standards Board (SFAS)
No. 138, "Accounting for Derivative Instruments and Hedging Activities - an
amendment of FASB Statement 133." These new standards establish accounting
and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging
activities. It requires that entities recognize all derivatives as either
assets or liabilities in the consolidated balance sheet and measure those
instruments at fair value. This Statement is effective for all fiscal
quarters of all fiscal years beginning after June 15, 2000. The adoption of
this statement by the Company did not have a material impact on its
financial condition or results of operations.
NOTE 3 - DETAILS OF FINANCIAL STATEMENT COMPONENTS
December 31, September 30,
2000 2000 1999
---- ---- ----
(Unaudited)
Receivables:
Due from Federal Tax Authority $ 1,255 $ 2,830 $ -
Due from Provincial Tax Authority 3,294 2,985 -
Advances due from A. Abouelouafa - 5,587 -
Other receivables - - 17,385
--------- ------------ --------
$ 4,549 $11,402 $17,385
Other current assets:
Prepaid rent - 282 -
Employee advances 9,802 11,262 15,932
--------- ------------- --------
$ 9,802 $11,544 $15,932
Property and equipment:
Furniture & Fixtures $ 1,638 $ 1,638 $ -
Computer Equipment 2,073 2,073 -
Equipment 200,000 200,000 200,000
------- ------- -------
(Acquired from affiliate and recorded at 203,711 203,711 200,000
predecessor basis with the cost over such
basis recorded as a dividend to
affiliate).
Accumulated depreciation 797 583 -
---------- ------- -------
$202,914 $203,128 $200,000
Intangibles:
License rights/Intellectual property $110,000 $110,000 $110,000
(Acquired from affiliate and recorded at
predecessor basis with the cost over
such basis recorded as a dividend to affiliate).
Accumulated amortization 12,324 10,490 3,157
---------- ------- -------
$ 97,676 $ 99,510 $106,843
BIOMASSE INTERNATIONAL, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2000
FOR THE YEARS ENDED SEPTEMBER 30, 2000 AND 1999
FROM INCEPTION (MARCH 19, 1999) THROUGH DECEMBER 31, 2000
NOTE 3 - DETAILS OF FINANCIAL STATEMENT COMPONENTS (CONTINUED):
On November 29, 1999, the Company was advised by Marc Dufresne (1978) Inc., a
majority shareholder and affiliate, of a financial difficulty concerning Marc
Dufresne (1978) Inc.. By way of a licensing agreement dated April 26, 1999, the
Company exercised it right to cancel the agreement and acquire the intellectual
property at no cost as a penalty to Marc Dufresne (1978) Inc., for its inability
to perform its contractual obligation. (refer to note 6 - repurchase of stock
from shareholder and note 7).
December 31, September 30,
2000 2000 1999
---- ---- ----
(Unaudited)
Other assets:
Loan receivable -
Related Party $ - $ 7,646 $ -
Security Deposit 3,884 4,544 1,218
$ 3,884 $12,180 $ 1,218
NOTE 4 - COMMITMENTS AND CONTIGENCIES
Employment Contracts
On April 01, 1999, the Company executed a five year employment
agreement (which was to start on January 01, 2000 and has been amended to
start on the date the company's stock is listed on the OTC bulletin board)
with its President, Vice President Technical, Vice President Strategic
Matter, Vice President Finance and the Vice President Legal Matters. On
November 29, 1999, the Vice President Legal Matters and Vice President
Technical resigned and their employment contracts were cancelled. On March
31, 2000, the Vice President Strategic Matters resigned and the employment
contract was cancelled. There were no costs to the Company associated with
the resignation and cancellation of the employment contracts.
Office Leases
On September 01, 1999, the Company entered into an agreement with
Fernand Lamothe, Inc. for office space in Fort Lauderdale, Florida. The term
of the agreement was one (1) year expiring on August 31, 2000. The annual
lease amount was $7,308 USD.
On September 01, 2000, the Company entered into an agreement with
Gestion Sibco Inc. for office space Quebec, Canada. Benoit DuFresne is a
major shareholder of Gestion Sibco Inc.. The term of the agreement is one
(1) year expiring on August 31, 2001. The annual lease amount is $6,000 USD.
Gestion Sibco Inc has agreed to waive the lease payments due since the
Company is in the development stage and has incurred losses since inception.
The lease amount for September 2000 of $500 USD has been reflected in the
financial statements of the Company at September 30, 2000 as rent expense
with an offset to paid in capital. $1,500 has been reflected in the
financial statements of the Company at December 31, 2000 as rent expense
with an offset to paid in capital
BIOMASSE INTERNATIONAL, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2000
FOR THE YEARS ENDED SEPTEMBER 30, 2000 AND 1999
FROM INCEPTION (MARCH 19, 1999) THROUGH DECEMBER 31, 2000
NOTE 5 - GOING CONCERN
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. The company reported a net loss of
$55,878 for the three months ended December 31, 2000 (unaudited). The Company
also reported net losses of $203,161 and $91,101 for the twelve months ended
September 30, 2000 and 1999 respectively as well as reporting net losses of
$350,141 from inception (March 19, 1999) to December 31, 2000 (unaudited). As
reported on the statement of cash flows, the Company incurred negative cash
flows from operating activities of $8,276 for the three months ended December
31, 2000 (unaudited). The Company incurred negative cash flows from operating
activities of $126,913 and $74,635 for twelve months ended September 30, 2000
and 1999 respectively and has reported deficient cash flows from operating
activities of $209,825 (unaudited) from inception (March 19, 1999). To date,
these losses and cash flow deficiencies have been financed principally through
the sale of common stock ($161,585) Additional capital and/or borrowings will be
necessary in order for the Company to continue in existence until attaining and
sustaining profitable operations.
NOTE 6 - RELATED PARTY TRANSACTIONS
Advance to Officer:
During 1999, 2000 and the current year, the Company advanced amounts to
the Vice President, Jean Gagnon, for travel and other expenses he may
incur in the course of business. These advanced amounts are required to
be repaid in the following fiscal year if the advances exceed the
incurred expenses. At December 31, 2000, the advanced amount totaled
$9,802 (unaudited).
License rights:
On April 26, 1999, the Company entered into a license rights agreement
with Marc DuFresne (1978) Inc., a shareholder of the company and an
affiliate. The amount of the license agreement was $588,000. On April 26,
1999, the Company issued 588,,000 shares of common stock, class B, to
Marc DuFresne (1978) Inc., a shareholder of the company, in settlement of
the license rights agreement in the amount of $588,000. The license was
capitalized at predecessor cost for an amount of $110,000 with the
difference of $478,000 treated as a dividend to affiliate. The $478,000
dividend to affiliate was applied against paid in capital.
Note payable to stockholder:
The company had a note payable dated September 30, 1999 in the amount of
$56,566 to Marc DuFresne (1978) Inc., a majority shareholder of the
company. This note is for reimbursements of expenditures paid by Marc
DuFresne (1978) Inc. during the fiscal year ended September 30, 1999 on
behalf of Biomasse International, Inc. The note is unsecured and bears
interest of prime plus two percent and matures on September 30, 2000.
Issuance of stock for equipment:
On July 07, 1999, the Company issued 306,000 shares of common stock,
class B, to Marc DuFresne (1978) Inc., a majority shareholder of the
company and an affiliate, in settlement of an invoice for the purchase of
equipment in the amount of $306,000. The equipment was capitalized at
predecessor cost for an amount of $200,000 with the difference of
$106,000 treated as a dividend to affiliate. The $106,000 dividend to
affiliate was applied against paid in capital.
BIOMASSE INTERNATIONAL, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2000
FOR THE YEARS ENDED SEPTEMBER 30, 2000 AND 1999
FROM INCEPTION (MARCH 19, 1999) THROUGH DECEMBER 31, 2000
NOTE 6 - RELATED PARTY TRANSACTIONS (CONTINUED):
Repurchase of shares from stockholder:
On November 29, 1999, the Company was advised by Marc Dufresne (1978)
Inc., a majority shareholder and affiliate, of a financial difficulty
concerning Marc Dufresne (1978) Inc.. By way of a licensing agreement
dated April 26, 1999, the Company exercised it right to cancel the
agreement and repurchase 4,500,000 shares held by Marc Dufrresne (1978)
Inc.. These shares are being held by Biomasse International, Inc. as
treasury shares. The company also exercised its right to acquire all
intellectual property and rights related to the technology to process and
dispose of waste created by pulp and paper companies at no cost as a
penalty to Marc Dufresne (1978) Inc., for its inability to perform its
contractual obligation. The company had a note payable dated September
30, 1999 in the amount of $56,566 to Marc DuFresne (1978) Inc., a
majority shareholder of the company. This note is for reimbursements of
expenditures paid by Marc DuFresne (1978) Inc. during the fiscal year
ended September 30, 1999 on behalf of Biomasse International, Inc. As
part of the above transaction, it was agreed by all parties to issues
56,565 shares of stock is settlement of this note.
NOTE 7 - CONVERSION OF LICENSE RIGHTS TO INTELLECTUAL PROPERTY
On November 29, 1999, the Company was advised by Marc Dufresne (1978) Inc.,
a majority shareholder and affiliate, of a financial difficulty concerning
Marc Dufresne (1978) Inc.. By way of a licensing agreement dated April 26,
1999, the Company exercised it right to cancel the agreement. The company
also exercised its right to acquire all intellectual property and rights
related to the technology to process and dispose of waste created by pulp
and paper companies at no cost as a penalty to Marc Dufresne (1978) Inc.,
for its inability to perform its contractual obligation.
NOTE 8 - INCOME TAXES
The Company did not provide any current or deferred United States federal,
state or foreign income tax provision or benefit for the period presented
because it has experienced operating losses since inception. The Company
has provided a full valuation allowance on the deferred tax asset,
consisting primarily of net operating loss carryforwards, because of
uncertainty regarding its realizability.
BIOMASSE INTERNATIONAL, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2000
FOR THE YEARS ENDED SEPTEMBER 30, 2000 AND 1999
FROM INCEPTION (MARCH 19, 1999) THROUGH DECEMBER 31, 2000
NOTE 9 - SHAREHOLDERS' EQUITY
Common stock
The Company has 5,000,000 shares of class A common stock which to date
have never been issued. Management has no intent of issuing any of these
shares and will be canceling these shares by filing an amendment to the
articles of incorporation with the State of Delaware.
On April 01, 1999, the Company issued 17,684,723 shares of Class B common
stock to founding shareholder's at a price of $.001.
On April 01, 1999, the Company issued 500,000 shares of Class B common
stock at par value and 500,000 warrants to BBT Consulting Group, Inc. as
part of its contractual agreement to obtain a (NASD) OTC Bulletin Board
listing of its common shares. Each warrant entitles the registered holder
thereof to purchase at any time one share of common stock at a price of
$.001. The Company also incurred consulting fees of $50,000 as part of
its contractual agreement with BBT Consulting Group, Inc. The fair value
of the shares and warrants were determined to be $.001 on April 01, 1999.
BIOMASSE INTERNATIONAL, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2000
FOR THE YEARS ENDED SEPTEMBER 30, 2000 AND 1999
FROM INCEPTION (MARCH 19, 1999) THROUGH DECEMBER 31, 2000
NOTE 9 - SHAREHOLDERS' EQUITY (CONTINUED):
On April 26, 1999, the Company issued 588,,000 shares of common stock of
Class B, at a price of $1.00 per share, to Marc DuFresne (1978) Inc., a
shareholder of the company, in settlement of the license rights agreement
in the amount of $588,000.
On July 07, 1999, the Company issued 306,000 shares of common stock of
Class B to Marc DuFresne (1978) Inc., a majority shareholder of the
company and an affiliate, in settlement of an invoice for the purchase of
equipment in the amount of $306,000.
On September 30, 1999, the Company, in accordance with it offering
circular to sell no less than 200,000 and up to 1,250,000 units on an
ongoing basis (each unit consisting of one (1) share of common stock and
one (1) warrant), sold 56,500 units at price of $1.00 per unit. From this
transaction, the Company issued 56,500 shares of Class B common stock and
56,500 warrants. Each warrant entitles the registered holder thereof to
purchase at any time from the date of the offering until the close of
business January 31, 2002, one share of common stock at a price of $1.10.
On November 29, 1999, the Company issues 56,565 shares of stock stock of
Class B, at a price of $1.00 per share, as settlement of a note payable
dated September 30, 1999 in the amount of $56,566 to Marc DuFresne (1978)
Inc., a majority shareholder of the company. This note is for
reimbursements of expenditures paid by Marc DuFresne (1978) Inc. during
the fiscal year ended September 30, 1999 on behalf of Biomasse
International, Inc.
From November 29, 1999 to June 23, 2000, the Company, in accordance with
it offering circular to sell no less than 200,000 and up to 1,250,000
units on an ongoing basis (each unit consisting of one (1) share of
common stock and one (1) warrant), sold 53,400 units at price of $1.00
per unit. From this transaction, the Company issued 53,400 shares of
Class B common stock and 53,400 warrants. Each warrant entitles the
registered holder thereof to purchase at any time from the date of the
offering until the close of business January 31, 2002, one share of
common stock at a price of $1.10.
On July 07, 2000 the Company, in accordance with it offering circular to
sell no less than 200,000 and up to 1,250,000 units on an ongoing basis
(each unit consisting of one (1) share of common stock and one (1)
warrant), sold 20,000 units at price of $1.00 per unit. From this
transaction, the Company issued 20,000 shares of Class B common stock and
20,000 warrants. Each warrant entitles the registered holder thereof to
purchase at any time from the date of the offering until the close of
business January 31, 2002, one share of common stock at a price of $1.10.
On September 30, 2000 the Company, in accordance with it offering
circular to sell no less than 200,000 and up to 1,250,000 units on an
ongoing basis (each unit consisting of one (1) share of common stock and
one (1) warrant), sold 400,000 units at price of $1.00 per unit. From
this transaction, the Company issued 400,000 shares of Class B common
stock and 400,000 warrants. Each warrant entitles the registered holder
thereof to purchase at any time from the date of the offering until the
close of business January 31, 2002, one share of common stock at a price
of $1.10.
BIOMASSE INTERNATIONAL, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2000
FOR THE YEARS ENDED SEPTEMBER 30, 2000 AND 1999
FROM INCEPTION (MARCH 19, 1999) THROUGH DECEMBER 31, 2000
NOTE 9 - SHAREHOLDERS' EQUITY (CONTINUED):
Treasury stock
On November 29, 1999, the Company was advised by Marc Dufresne (1978)
Inc., a majority shareholder and affiliate, of a financial difficulty
concerning Marc Dufresne (1978) Inc.. By way of a licensing agreement
dated April 26, 1999, the Company exercised it right to cancel the
agreement and repurchase 4,500,000 shares held by Marc Dufrresne (1978)
Inc at $0.001 per share. These shares are being held by Biomasse
International, Inc. as treasury shares. The company uses the cost method
of accounting for treasury stock. The company has made these shares
available first for sale through its circular offering and also before
any other unissued common shares are sold. The total number of treasury
shares available at December 31, 2000 is 3,970,035.
Warrants and options
In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 123,
"Accounting for Stock-Based Compensation". The Company has determined
that it will continue to account for employee stock-based compensation
under Accounting Principles Board No. 25 and elect the disclosure-only
alternative under SFAS No. 123.
On April 01, 1999, the Company issued 500,000 warrants to BBT Consulting
Group, Inc. as part of its contractual agreement to obtain a (NASD) OTC
Bulletin Board listing of its common shares. Each warrant entitles the
registered holder thereof to purchase at any time one share of common
stock at a price of $.001. The Company did not reflect any expense in the
financial statements for these warrants issued since the grant price of
the warrant equaled the fair value of the stock on April 01, 1999.
On April 01, 1999, the Company issued 100,000 warrants to Mr. Rene-Jean
Lavallee for advisory services. Each warrant entitles the registered
holder thereof to purchase at any time one share of common stock at a
price of $.001. On this date Mr. Lavallee was considered an unrelated
third party. These warrants were issued for advisory services relating to
the engineering aspects of a project. Although Mr. Lavallee agreed not to
charge the company for his service and was not expecting payment, it was
determined his efforts were 200 hours at $50 per hour totaling $10,000.
This amount has been reflected as consulting expense in the financial
statements with an offset to paid in capital.
On April 01, 1999, the Company, pursuant to certain executive employment
contracts, issued 725,000 warrants to senior executives of the Company at
an exercise price of $.001 per share. The Company did not reflect any
compensation expense in the financial statements for these warrants
issued since the grant price of the warrant equaled the fair value of the
stock on April 01, 1999.
On September 30, 1999, the Company, in accordance with it offering
circular to sell no less than 200,000 and up to 1,250,000 units on an
ongoing basis (each unit consisting of one (1) share of common stock and
one (1) warrant), sold 56,500 units at price of $1.00 per unit. From this
transaction, the Company issued 56,500 shares of Class B common stock and
56,500 warrants. Each warrant entitles the registered holder thereof to
purchase at any time from the date of the offering until the close of
business January 31, 2002, one share of common stock at a price of $1.10.
BIOMASSE INTERNATIONAL, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2000
FOR THE YEARS ENDED SEPTEMBER 30, 2000 AND 1999
FROM INCEPTION (MARCH 19, 1999) THROUGH DECEMBER 31, 2000
NOTE 9 - SHAREHOLDERS' EQUITY (CONTINUED):
From November 29, 1999 through June 23, 2000, the Company, in accordance
with it offering circular to sell no less than 200,000 and up to
1,250,000 units on an ongoing basis (each unit consisting of one (1)
share of common stock and one (1) warrant), sold 53,400 units at price of
$1.00 per unit. From this transaction, the Company issued 53,400 shares
of Class B common stock and 53,400 warrants. Each warrant entitles the
registered holder thereof to purchase at any time from the date of the
offering until the close of business January 31, 2002, one share of
common stock at a price of $1.10.
On April 01, 2000, the Company issued 1,000,000 warrants to A Abdel
Jabbar Abouelouafa as part of a contractual consulting agreement. As per
the agreement, consulting fees of $5,000 per month since April 01, 2000
have been reflected in the financial statements, which is the entire
consulting fee agreed to. The warrants are exercisable at $1.10 per share
and expire on January 31, 2002. The Company did not reflect any expense
in the financial statements for these warrants issued since the grant
price of the warrant exceeded the fair value of the stock on April 01,
2000.
On April 01, 2000, the Company, pursuant to an executive employment
contract, issued 1,000,000 warrants to its President, Mr. Benoit
Dufresne. The warrants are exercisable at $1.10 per share and expire on
January 31, 2002. The Company did not reflect any compensation expense in
the financial statements for these warrants issued since the grant price
of the warrant exceeded the fair value of the stock on April 01, 2000.
On April 01, 2000, the Company, pursuant to an executive employment
contract, issued 1,000,000 warrants to its Vice President Finance, Mr.
Jean Gagnon The warrants are exercisable at $1.10 per share and expire on
January 31, 2002. The Company did not reflect any compensation expense in
the financial statements for these warrants issued since the grant price
of the warrant exceeded the fair value of the stock on April 01, 2000.
On July 07, 2000 the Company, in accordance with it offering circular to
sell no less than 200,000 and up to 1,250,000 units on an ongoing basis
(each unit consisting of one (1) share of common stock and one (1)
warrant), sold 20,000 units at price of $1.00 per unit. From this
transaction, the Company issued 20,000 shares of Class B common stock and
20,000 warrants. Each warrant entitles the registered holder thereof to
purchase at any time from the date of the offering until the close of
business January 31, 2002, one share of common stock at a price of $1.10.
On Augurst 22, 2000, the Company issued 300,000 warrants to 3 parties as
part of a contractual consulting agreement. As per the agreement,
consulting fees of $1,000 per month since April 01, 2000 have been
reflected in the financial statements, which is the entire consulting fee
agreed to. The warrants are exercisable at $1.10 per share and expire on
January 31, 2002. The Company did not reflect any expense in the
financial statements for these warrants issued since the grant price of
the warrant exceeded the fair value of the stock on August 22, 2000.
On August 22, 2000, the Company, pursuant to an employment contract,
issued 100,000 warrants to its Director of Engineering R&D. The warrants
are exercisable at $1.10 per share and expire on January 31, 2002. The
Company did not reflect any compensation expense in the financial
statements for these warrants issued since the grant price of the warrant
exceeded the fair value of the stock on August 22, 2000.
BIOMASSE INTERNATIONAL, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2000
FOR THE YEARS ENDED SEPTEMBER 30, 2000 AND 1999
FROM INCEPTION (MARCH 19, 1999) THROUGH DECEMBER 31, 2000
NOTE 9 - SHAREHOLDERS' EQUITY (CONTINUED):
On September 30, 2000 the Company, in accordance with it offering
circular to sell no less than 200,000 and up to 1,250,000 units on an
ongoing basis (each unit consisting of one (1) share of common stock and
one (1) warrant), sold 400,000 units at price of $1.00 per unit. From
this transaction, the Company issued 400,000 shares of Class B common
stock and 400,000 warrants. Each warrant entitles the registered holder
thereof to purchase at any time from the date of the offering until the
close of business January 31, 2002, one share of common stock at a price
of $1.10.
FAS 123 "Accounting for stock based compensation"
December 31, Year ended September 30,
Paragraph 47 (a) 2000 2000 1999
---- ---- ----
(Unaudited)
1. Beginning of year - outstanding
i. number of options 2,825,000 725,000 0
ii.weighted average exercise price .82 .001 0
2. End of year - outstanding
i. number of options 2,825,000 2,825,000 725,000
ii. weighted average exercise price .82 .001 0
3. End of year - exercisable
i. number of options 2,825,000 2,825,000 725,000
ii. weighted average exercise price .82 .001 0
4. During the year - Granted
i. number of options 0 2,100,000 725,000
ii. weighted average exercise price 0 1.10 .001
5. During the year - Exercised
i. number of options 0 0 0
ii. weighted average exercise price 0 0 0
6. During the year - Forfeited
i. number of options 0 0 0
ii. weighted average exercise price 0 0 0
7. During the year - Expired
i. number of options 0 0 0
ii. weighted average exercise price 0 0 0
BIOMASSE INTERNATIONAL, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2000
FOR THE YEARS ENDED SEPTEMBER 30, 2000 AND 1999
FROM INCEPTION (MARCH 19, 1999) THROUGH DECEMBER 31, 2000
NOTE 9 - SHAREHOLDERS' EQUITY (CONTINUED):
December 31, Year ended September 30,
2000 2000 1999
---- ---- ----
(Unaudited)
Paragraph 47 (b) Weighted-average grant-date
fair value of options granted
during the year:
1. Equals market price 0.00 0.00 0.00
2. Exceeds market price 0.00 0.00 0.00
3. Less than market price 0.00 0.00 0.00
Paragraph 47(C)Equity instruments other than options none none none
Paragraph 47(d) Description of the method and significant assumptions used
during the year to estimate the fair value of options:
The Black Scholes option pricing model is the method used to calculate The fair
value of options.
1. Weighted average risk-free interest rate 6.00% 6.00% 6.00%
2. Weighted average expected life (in months) 13.00 16.00 28.00
3. Weighted average expected volatility 0.00% 0.00% 0.00%
4. Weighted average expected dividends 0.00 0.00 0.00
Paragraph 47(e) Total compensation cost recognized in 0 0 0
income for stock-based employee compensation awards.
Paragraph 47(f) The terms of significant none none none modifications of
outstanding awards.
Paragraph 48 - Options outstanding at the date of the latest statement of
financial position presented:
1. (a) Range of exercise prices $0.001-$1.10 $0.001-$1.10 $ 0.001
(b) Weighted-average exercise price .82 .82 0.001
2. Weighted-average remaining contractual 13.00 16.00 28.00
life (in months)
Inception
Mar. 19, 1999
December 31, Year ended Year ended Through
After proforma effect 2000 Sept. 30, 2000 Sept 30, 1999 December 31, 2000
----------------- ------------------ ---------------- -------------------
(Unaudited)
Net Income (52,212) (188,494) (84,786) (325,492)
Earnings per share $ (0.0035) $ (0.0122) $ (0.0045) $ (0.0199)
You should only rely on the information contained
in this document or other information that we refer you to.
We have not authorized anyone to provide you with any other
information that is different. You should note that even though
you received a copy of this prospectus, there may have been changes
in our affairs since the date of this prospectus. This 6,959,222 Shares of Common Stock
prospectus does not constitute an offer to sell
securities in any jurisdiction in which such offer
or solicitation is not authorized
BIOMASSE INTERNATIONAL INC.
TABLE OF CONTENTS PAGE
Risk factors 2
Special note regarding PROSPECTUS
Forward-looking statements 7
Summary historical financial
Information 8
Plan of operations 9
Use of proceeds 12
Business 13
Management 20 _____________ , 2000
Security ownership of certain
Beneficial owners and management 22
Executive compensation 22
Certain relationships and
related transactions 23
Disclosure of commission position
on indemnification for securities
act liability 23
Description of securities 23
Plan of distribution 25
Selling stockholders 26
Legal matters 28
Experts 28
Available information 29
Index to Financial Statements.............. F-
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other expenses of issuance and distribution
The following statement sets forth the estimated expenses in connection
with the offering described in the Registration Statement, all of which will be
borne by the Registrant.
Securities and Exchange Commission Fee ....................... $ 2,003
Accountants' Fees ............................................ $ 11,000
Legal Fees ................................................... $ 25,000
Company's Administrative Expenses ............................ $ 30,000
Printing and engraving ..................................... $ 5,000
Miscellaneous ................................................ $ 3,997
Total $ 77,000
=======
Item 14. Indemnification of directors and officers.
Neither our By-Laws nor our Certificate of Incorporation currently
provide indemnification to our officers or directors. In an effort to continue
to attract and retain qualified individuals to serve as our directors and
officers, we intend to adopt provisions providing for the maximum
indemnification permitted by Florida law.
Item 15. Recent sales of unregistered securities
On April 01, 1999, the Company issued an aggregate of 17,684,723 shares
of Class B common stock to 30 persons as founding shareholder's at a price of
$.001. These shares were issued to non-U.S. persons pursuant to the exemption
contained in Regulation S except for one shareholder which is a U.S. entity but
is controlled by a non-U.S. person and was exempt pursuant to Section 4(2).
On April 01, 1999, the Company issued 500,000 shares of Class B common
stock at par value and 500,000 warrants to BBT Consulting Group, Inc. as part of
its contractual agreement to obtain a (NASD) OTC Bulletin Board listing of its
common shares. Each warrant entitles the registered holder thereof to purchase
at any time one share of common stock at a price of $.001. The fair value of the
shares and warrants were determined to be $.001 on April 01, 1999. The issuance
was an exempt transaction pursuant to Section 4(2) inasmuch as it was not issued
as part of an offering to raise funds.
On April 01, 1999, the Company issued 100,000 warrants to Mr. Rene-Jean
Lavallee for advisory services valued at $10,000. Each warrant entitles the
registered holder thereof to purchase at any time one share of common stock at a
price of $.001. These warrants were issued for advisory services relating to the
engineering aspects of a project. The issuance was an exempt transaction
pursuant to Section 4(2) inasmuch as it was not issued as part of an offering to
raise funds.
On April 01, 1999, the Company, pursuant to certain executive
employment contracts, issued 725,000 warrants to the senior executives of the
Company at an exercise price of $.001 per share. The issuance was an exempt
transaction pursuant to Section 4(2) inasmuch as it was not issued as part of an
offering to raise funds.
On April 01, 2000, the Company issued an aggregate of 3,000,000
warrants to as part of contractual agreements. The warrants are exercisable at
$1.10 per share and expire on January 31, 2002.
On April 26, 1999, the Company issued 588,000 shares of Class B common
stock, at a price of $1.00 per share, to Marc DuFresne (1978) Inc., a
shareholder of the company, in payment of a licensing fee in the amount of
$588,000. The issuance was an exempt transaction pursuant to Section 4(2)
inasmuch as it was not issued as part of an offering to raise funds.
On July 07, 1999, the Company issued 306,000 shares of Class B common
stock, at a price of $1.00 per share to Marc DuFresne (1978) Inc., a majority
shareholder of the company and an affiliate, in settlement of an outstanding
invoice for the purchase of equipment in the amount of $306,000. The issuance
was an exempt transaction pursuant to Section 4(2) inasmuch as it was not issued
as part of an offering to raise funds.
In an offering commencing on September 30, 1999, the Company sold an
aggregate of 529,000 units at a price of $1.00 per unit. Each unit consisted of
one share and one warrant. Each warrant entitles the registered holder thereof
to purchase at any time from the date of the offering until the close of
business January 31, 2002, one share of common stock at a price of $1.10. These
units were issued exclusively to non-U.S. persons pursuant to the exemption
contained in Regulation S.
On November 29, 1999, the Company issued 56,565 shares of Class B
common stock at a price of $1.00 per share, as settlement of a note payable
dated September 30, 1999 in the amount of $56,566 to Marc DuFresne (1978) Inc.,
a majority shareholder of the company. This note was for reimbursements of
expenditures paid by Marc DuFresne (1978) Inc. during the fiscal year ended
September 30, 1999 on behalf of Biomasse International, Inc. The issuance was an
exempt transaction pursuant to Section 4(2) inasmuch as it was not issued as
part of an offering to raise funds.
On August 22, 2000, the Company issued 300,000 warrants to 3 parties as
part of a contractual consulting agreement. The warrants are exercisable at
$1.10 per share and expire on January 31, 2002. The issuance was an exempt
transaction pursuant to Section 4(2) inasmuch as it was not issued as part of an
offering to raise funds.
On August 22, 2000, the Company, pursuant to the terms of an employment
contract, issued 100,000 warrants to its Director of Engineering R&D. The
warrants are exercisable at $1.10 per share and expire on January 31, 2002. The
issuance was an exempt transaction pursuant to Section 4(2) inasmuch as it was
not issued as part of an offering to raise funds.
In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for
Stock-Based Compensation". The Company has determined that it will continue to
account for employee stock-based compensation under Accounting Principles Board
No. 25 and elect the disclosure-only alternative under SFAS No. 123.
Item 16. Exhibits and financial statements schedules.
3.1 Certificate of Incorporation, as amended*
3.2 By-Laws
4.1 Specimen Common Stock Certificate
4.2 Specimen Warrant Certificate
4.3 Form of Warrant Agreement*
5 Opinion of Heller, Horowitz & Feit P.C.*
10.1 Leases
10.2 Employment Agreement with Benoit Dufresne
10.3 Employment Agreement with Jean Gagnon
10.4 Employment Agreement with Taghi Zaim
10.5 Consulting Agreement with Abdel Jabbar Abouelouafa
10.6 License rights agreement with Marc DuFresne (1978) Inc.
10.7 Consulting Agreement with BBT Consulting Group, Inc.
23.1 Consent of Heller, Horowitz & Feit, P.C. (included in the Opinion
filed as Exhibit 5)
23.2 Consent of Mark Cohen, C.P.A.*
27 Financial data schedule*
* Filed herewith
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information in the
registraion statement; and notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any deviation
from the low or high and of the estimated maximum offering range may be
reflected in the form of prospectus filed with Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration statement.
(iii) Include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement provided,
however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statement.
(iv) Include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
SIGNATURES
In accordance with the requirements of the Securities Act, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and has authorized this registration
statement or amendment to be signed on its behalf by the undersigned, in the
City of Montreal on the 11th day of April, 2001.
BIOMASSE INTERNATIONAL INC.
By: /s/Benoit Dufresne
--------------------------------
In accordance with the requirements of the Securities Act, this
registration statement or amendment was signed by the following persons in the
capacities and on the dates stated:
Signature Title Date
------------ ------ ------
By: /s/Benoit Dufresne President and Director April 11, 2001
Benoit Dufresne
By: /s/Jean Gagnon Vice President Finance April 11, 2001
Jean Gagnon and Director
By: /s/Pierre H. Vincent Director April 11, 2001
Pierre H. Vincent
By: _____________________ Director April ___, 2001
Maurice Robert