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 June 30, 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.)
4720, Boulevard Royal, Suite 103, Trois-Rivieres-Ouest, Quebec, Canada G9A 4N1
(Address of principal executive offices)
(819) 374-0093
(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, and (2) has been
subject to such filing requirements for the past 90 days.
YES [X ] NO [ ]
As of August 14, 2001 the Registrant had 15,686,447 shares of its Common Stock
outstanding
Transitional Small Business Disclosure Format: YES [ ] NO [X]
Index to Form 10-QSB
For the Quarter ended June 30, 2001
Page
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet as of June 30, 2001 (unaudited) 3
Statement of Income for the three and nine months ended 4
June 30, 2001 and 2000 and from inception (March 19, 1999)
through June 30, 2001 (unaudited)
Statement of Cash Flows for the nine months ended 5
June 30, 2001 and 2000 and from inception (March 19, 1999)
through June 30, 2001 (unaudited)
Notes to the Financial Statements for the nine months 6-7
Ended June 30, 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 JUNE 30, 2001
(Unaudited)
Assets
Current Assets
Cash and cash equivalents $ 177
Receivables, net 12,970
Other current assets 20,990
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Total current assets 34,138
Property and equipment, net 202,487
Intangibles, net 62,028
Other assets 3,234
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Total assets 301,887
=============
Liabilities and Shareholder's Equity
Current Liabilities
Accounts payable 74,771
Accrued expenses 33,496
Other current liabilities 35,757
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Total current liabilities 144,024
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 15,666,112
Paid in Capital 606,213
Treasury Stock (3,469)
Share subscription receivable -
Deficit accumulated during the development stage (464,017)
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Total Shareholder's Equity 157,863
=============
Total liabilities and shareholder's equity $ 301,887
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 NINE MONTHS ENDED JUNE 30, 2001 AND 2000 (UNAUDITED)
FROM INCEPTION (MARCH 19, 1999) THROUGH JUNE 30, 2001 (UNAUDITED)
Inception
For the three months ended For the nine months ended (March 19, 1999)
June 30, June 30, through
2001 2000 2001 2000 June 30, 2001
---- ---- ---- ---- --------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Operating Expenses:
Travel $ 7,903 $ 7,817 $ 13,836 $ 33,574 $ 52,981
Professional fees 1,833 19,190 4,456 32,568 94,543
Consulting fees 43,391 - 92,247 - 160,068
Rent 4,150 1,218 10,982 5,422 24,516
Depreciation 214 214 641 370 1,225
Amortization 5,500 5,500 16,500 16,500 47,972
Selling, general and administrative expenses 8,287 17,130 31,270 43,374 83,536
----- ------ ------ ------ ------
Operating Loss (71,278) (51,067) (169,933) (131,809) (464,841)
Other Income/(Expense)
Interest Income - related party - 174 177 470 824
----- --- --- --- ---
Total Other Income - 174 177 470 824
Net Loss (71,278) (50,893) (169,755) (131,338) (464,017)
Basic weighted average common shares outstanding 15,091,566 14,715,902 15,148,152 15,515,998 16,644,467
========== ========== ========== ========== ==========
Basic Loss per common share $ (0.0047) $ (0.0035) $ (0.0112) $ (0.0085) $ (0.0279)
========= ========= ========= ========= =========
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 CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30, 2001 AND 2000 (UNAUDITED)
FROM INCEPTION (MARCH 19, 1999) THROUGH JUNE 30, 2001 (UNAUDITED)
Inception
For the nine months ended (March 19, 1999)
June 30, through
2001 2000 June 30, 2001
---- ---- -----------------
(Unaudited) (Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ (169,755) (131,338) $ (464,017)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization 17,141 16,870 49,197
Rent expense offset to paid in capital 4,500 - 5,000
Issuance of warrants for advisory services - - 10,000
Changes in Operating assets and liabilities:
Receivables (1,568) 14,057 (12,970)
Other Current Assets (9,446) 655 (20,990)
Other Assets 8,946 (8,770) (3,234)
Accounts Payable and Accrued Liabilities 58,739 9,994 144,024
Net cash provided by/(used in) operating activities (91,443) (98,534) (292,990)
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 86,729 53,400 244,814
Net cash provided by/(used in) financing activities 86,729 48,900 296,880
Net increase (decrease) in cash and cash equivalents (4,714) (53,345) 178
Cash and cash equivalents, beginning of period 4,891 56,615 -
Cash and cash equivalents, end of period $ 177 $ 3,270 $ 177
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 NINE MONTHS ENDED JUNE 30, 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
$71,278 and $169,755 for the three and nine months ended June 30, 2001
(unaudited) as well as reporting net losses of $464,017 from inception (March
19, 1999) to June 30, 2001 (unaudited). As reported on the statement of cash
flows, the Company incurred negative cash flows from operating activities of
$91,443 for the nine months ended June 30, 2001 (unaudited) and has reported
deficient cash flows from operating activities of $292,990 from inception (March
19, 1999) (unaudited). To date, these losses and cash flow deficiencies have
been financed principally through the sale of common stock ($244,814)
(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.
BIOMASSE INTERNATIONAL, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2001
(Unaudited)
NOTE 4 - STOCKHOLDER'S EQUITY
From January 01, 2001 through March 31, 2001 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 31,900 units at price of $1.00 per unit. From this
transaction, the Company issued 31,900 shares of Class B common stock and 31,900
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, 2004,
one share of common stock at a price of $1.10.
From April 01, 2001 through June 30, 2001 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 50,524 units at price of $1.00 per unit. From this
transaction, the Company issued 50,524 shares of Class B common stock and 50,524
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, 2004,
one share of common stock at a price of $1.10.
On April 30, 2001, a share subscription for 386,500 units (each unit
consisting of one (1) share of common stock and one (1) warrant) was cancelled.
On June 18, 2001, warrant holders exercised 805,000 warrants into
common shares at a price of $.001 per share.
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 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 with both of these organizations in the second half of
2001. If 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 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 June 30, 2001 balance sheet, we have minimal cash on hand.
Monthly operating expenses including rent, communications, travel, and
professional fees and other general and administrative 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 listed its stock publicly on
the OTC Bulletin Board. When we listed, the number of our employees increased to
five with the addition of a Vice President of Legal Affairs as well as an
administrative person. Once this happened, 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 proposed contracts 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 the 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 is $1.10 per
share and expires 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 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 50,524 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.
On April 30, 2001, a share subscription for 386,500 units (each unit
consisting of one (1) share of common stock and one (1) warrant) was cancelled.
On June 18, 2001, warrant holders exercised 805,000 warrants into
common shares at a price of $.001 per share.
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
August 14, 2001