SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-QSB
[X] Quarterly report pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the quarterly period ended March 31, 2001
[ ] Transition report pursuant to Section 13 or 15(d) of the Exchange Act
Commission file number 0-32663
BIOMASSE INTERNATIONAL, INC.
(exact name of small business issuer as specified in its charter)
Florida
(State or other jurisdiction of
incorporation or organization)
65-0909206
(IRS Employer Identification No.)
721 S.E. 17th STREET, FORT LAUDERDALE, FL 33316
(Address of principal executive offices)
(954) 232-9653
(Registrant's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 of 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
YES [ ] NO [X ]
As of May 10, 2001 the Registrant had 15,260,043 shares of its Common Stock
outstanding
Transitional Small Business Disclosure Format: YES [ ] NO [X]
Index to Form 10-QSB
For the Quarter ended March 31, 2001
Page
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet as of March 31, 2001 (unaudited) 3
Statement of Income for the three and six months ended 4
March 31, 2001 and 2000 and from inception (March 19, 1999)
through March 31, 2001 (unaudited)
Statement of Cash Flows for the six months ended 5
March 31, 2001 and 2000 and from inception (March 19, 1999)
through March 31, 2001 (unaudited)
Notes to the Financial Statements for the six months 6-7
Ended March 31, 2001 (unaudited)
Item 2. Plan of Operations 8-9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 11
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
BIOMASSE INTERNATIONAL, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
BALANCE SHEET
At MARCH 31, 2001
Assets
Current Assets
Cash and cash equivalents $ 85
Receivables, net 5,793
Other current assets 17,077
Total current assets 22,956
Property and equipment, net 202,700
Intangibles, net 67,528
Other assets 3,234
Total assets 296,418
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Liabilities and Shareholder's Equity
Current Liabilities
Accounts payable 47,969
Accrued expenses 38,144
Other current liabilities 33,994
Total current liabilities 120,106
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
55,000,000 shares; issued and outstanding 15,197,088
Paid in Capital 940,353
Treasury Stock (3,938)
Share subscription receivable (386,500)
Deficit accumulated during the development stage (392,739)
Total Shareholder's Equity 176,312
Total liabilities and shareholder's equity $ 296,418
==============
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 AND SIX MONTHES ENDED MARCH 31, 2001 AND 2000 (UNAUDITED)
FROM INCEPTION (MARCH 19, 1999) THROUGH MARCH 31, 2001 (UNAUDITED)
Inception
For the three months ended For the six months ended (March 19, 1999)
March 31, March 31, through
2001 2000 2001 2000 March 31, 2001
- ------------------------------------------------------------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Operating Expenses:
Travel $ 2,966 $ 12,879 $ 5,933 $ 23,692 $ 45,078
Professional fees 2,623 3,919 2,623 11,579 92,710
Consulting fees 18,456 - 48,856 - 116,677
Rent 3,750 1,827 6,832 3,595 20,366
Depreciation 214 156 427 156 1,011
Amortization 5,500 5,500 11,000 11,000 42,472
Selling, general and administrative 9,091 16,784 22,983 24,440 75,249
- -------------------------------------------------------------------------------------------------------------------
Operating Loss (42,599) (41,065) (98,655) (74,462) (393,563)
- -------------------------------------------------------------------------------------------------------------------
Other Income/(Expense)
Interest Income - related party - 296 177 296 824
Total Other Income - 296 177 296 824
Net Loss (42,599) (40,769) (98,477) (74,165) (392,739)
Basic weighted average common shares
outstanding 15,174,338 14,697,475 15,169,713 15,916,046 16,228,090
========== =========== =========== =========== =============
Basic Loss per common share $ (0.0028) $ (0.0028) $ (0.0065) $ (0.0047) $ (0.0243)
========== =========== =========== =========== =============
Read the accompanying summary of significant accounting notes to
financial statements, which are integral part of this financial statement.
BIOMASSE INTERNATIONAL, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 31, 2001 AND 2000 (UNAUDITED)
FROM INCEPTION (MARCH 19, 1999) THROUGH MARCH 31, 2001 (UNAUDITED)
Inception
For the six months ended (March 19, 1999)
March 31, through
2001 2000 March 31, 2001
- ----------------------------------------------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $(98,477) (74,165) $ (392,739)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization 11,427 11,156 43,483
Rent expense offset to paid in capital 3,000 - 3,500
Issuance of warrants for advisory services - - 10,000
Changes in Operating assets and liabilities:
Receivables 5,609 6,147 (5,793)
Other Current Assets (5,533) 3,000 (17,077)
Other Assets 8,946 (1,300) (3,234)
Accounts Payable and Accrued Liabilities 34,821 (5,780) 120,106
Net cash provided by/(used in) operating activities (40,207) (60,942) (241,754)
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
Purchase of treasury stock - (4,500) (4,500)
Sales of common stock 35,400 13,400 193,485
Net cash provided by/(used in) financing activities 35,400 8,900 245,551
Net increase (decrease) in cash and cash equivalents (4,806) (55,753) 85
Cash and cash equivalents, beginning of period 4,891 56,615 -
Cash and cash equivalents, end of period $ 85 $ 862 $ 85
========== =========== ===========
Supplemental Schedule of noncash investing and financing activities:
April 26, 1999 issued 588,000 shares of common stock 100,000
for license rights from affiliate (recorded at predecessor
basis) subsequently written off in 2000
July 07, 1999 issued 306,000 shares of common stock 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
party)
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 AND SIX MONTHS ENDED MARCH 31, 2001
(Unaudited)
NOTE 1 -BASIS OF PRESENTATION
The accompanying unaudited financial statements of Biomasse
International, Inc. have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-QSB and Article 10 of Regulation S-X. The financial
statements reflect all adjustments consisting of normal recurring adjustments
which, in the opinion of management, are necessary for a fair presentation of
the results for the periods shown. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
These financial statements should be read in conjunction with the
audited financial statements and footnotes thereto included in Biomasse
International, Inc.'s Registration Statement on Form SB-2 (Registration No.
333-48480) as filed with the Securities and Exchange Commission.
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 and
disclosure of contingent assets and liabilities at the date of the financial
statements and that effect the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
NOTE 2 - EARNINGS (LOSS) PER SHARE
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.
NOTE 3 - 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
$42,599 and $98,477 for the three and six months ended March 31, 2001
(unaudited) as well as reporting net losses of $392,739 from inception (March
19, 1999) to March 31, 2001 (unaudited). As reported on the statement of cash
flows, the Company incurred negative cash flows from operating activities of
$40,207 for the six months ended March 31, 2001 (unaudited) and has reported
deficient cash flows from operating activities of $241,754 from inception (March
19, 1999) (unaudited). To date, these losses and cash flow deficiencies have
been financed principally through the sale of common stock ($193,485)
(unaudited). Additional capital and/or borrowings will be necessary in order for
the Company to continue in existence until attaining and sustaining profitable
operations. Management has continued to develop a strategic plan to develop a
management team, maintain reporting compliance and establish long term
relationships with other major organizations to implement its unique technology
to process and dispose of the waste created by pulp and paper companies in an
efficient and environmentally-friendly way.
NOTE 4 - STOCKHOLDER'S EQUITY
During the quarter, the Company sold 31,900 units at $1.00 per share
(each unit consisting of one (1) share of Class B common stock and one (1)
warrant). Each warrant entitles the registered holder thereof to purchase one
share of Class B common stock at any time until the close of business January
31, 2004, at a price of $1.10.
Item 2. Plan of Operations
The following discussion should be read in conjunction with the financial
statements and related notes that are included under Item 1. Statements made
below which are not historical facts are forward-looking statements.
Forward-looking statements involve a number of risks and uncertainties
including, but not limited to, general economic conditions, our ability to
complete development and then market our services, competitive factors and other
risk factors as stated in other of our public filings with the Securities and
Exchange Commission.
Our main business purpose is to provide the pulp and paper industry with the
most practical, economical and efficient way of disposing of the sludge they
produce as a by-product of their operations. Our proprietary technology also
allows us to give enhanced value to the waste sludge and other residues
generated by their wastewater treatment systems. We own a process to convert, by
combustion, in an environmentally safe manner, the waste residue produced by
pulp and paper mills into steam. We intend to profit by charging mills for the
disposal of their sludge by converting it to steam, which will be less than they
are currently paying for shipping and storage of waste sludge. As an added
benefit to the mill, it can, in turn, use the steam as energy thereby creating a
low cost, clean energy source.
We intend to concentrate initially on the North American pulp and paper
companies. During the past year we identified our first potential customers, The
Great Northern Paper Company of Millinocket, Maine and Paperboard Jonquiere of
Jonquiere, Quebec. We completed the profitability and feasibility studies for
these installations 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 with both of these organizations in June 2001. Once these
contracts are finalized, a nine to twelve month installation process will ensue.
We do not expect to generate any substantial revenue until the installation is
completed and the system has been tested and is operational.
Our studies indicate that the cost of equipment and installation for a plant
suitable for The Great Northern Paper Company and Paperboard Jonquiere is
estimated at approximately $7,000,000 and $6,500,000, respectively. We plan to
finance all of this amount with debt instruments. Rothschild Financial
Corporation, a finance company, has expressed interest, by signing a letter of
intent, to provide all the necessary financing for these projects.
We attended the International Trade Show for the pulp and paper industry held in
Montreal, Quebec in February 2001, and initiated contacts with numerous people
in the industry thereby introducing us and our process to them. From this
attendance, as well as from discussions with our affiliates and contacts, we
have been contacted by several pulp and paper companies interested in knowing
more about our process. We have started preliminary discussions with several of
these companies for the possible installation of our process.
Liquidity
As reflected in our March 31, 2001 balance sheet, we have minimal cash on hand.
Monthly operating expenses including rent, communications, travel, and
professional fees and other general and administrative expenses are
approximately $25,000. Our management, which is comprised of three individuals -
a President, Vice President - Finance and a Director of Engineering, Research
and Development agreed not to accept any salaries until the company has listed
its stock publicly on the OTC Bulletin Board. When we are listed, we expect the
number of our employees will increase to five with the addition of a Vice
President of Legal Affairs as well as an administrative person. Once this
happens, executive and management salaries are estimated to be approximately
$30,000 per month. We have several options to fund the above monthly
expenditures: In our contract with the pulp and paper manufacturers, we are
requiring a deposit with the signing of the contract of approximately one
month's revenue. In the case of the Great Northern Paper Company, that equates
to approximately $350,000. These deposits will then contribute to satisfying our
overall monthly expenditures. Another option which could be available to us is
the exercise of warrants held by warrant holders. Approximately 3.9 million
shares have been registered with the SEC upon exercise of currently exercisable
warrants. The exercise price for these warrants is $1.10 per share and they
currently expire on January 31, 2004. Upon signing a contract for production
with The Great Northern Paper Company, three major warrant holders, holding an
aggregate of 3 million warrants have each 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. The company also
continues, through its circular offering, to sell up to 1,250,000 units at a
price of $1.00 per unit on an ongoing basis (each unit consisting of one (1)
share of common stock and one (1) warrant). The sale of these units would assist
in satisfying our current cash requirements. No guarantee can be given that we
will sell sufficient units to generate any meaningful cash flow.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
During the quarter, we sold 31,900 units at $1.00 per share (each unit
consisting of one (1) share of Class B common stock and one (1) warrant). Each
warrant entitles the registered holder thereof to purchase one share of Class B
common stock at any time until the close of business January 31, 2004, at a
price of $1.10. Subsequent to the end of the quarter, the expiration date of the
warrants was extended from January 31, 2002 to January 31, 2004. Also subsequent
to the end of the quarter, an additional 62,155 units were sold.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K.
None
SIGNATURES
In accordance with Section 13 or 15(d) of the 1934 Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereto duly
authorized.
BIOMASSE INTERNATIONAL, INC.
By: /s/ Jean gagnon
Jean Gagnon, Vice President
May 14, 2001