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 December 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.)
4720, Boulevard Royal, Suite 103, Trois-Rivieres-Ouest, Quebec, Canada G9A 4N1
(Address of principal executive offices)
(819) 374-3131
(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 February 14, 2001 the Registrant had 16,544,945 shares of its Common Stock
outstanding
Transitional Small Business Disclosure Format: YES [ ] NO [X]
Index to Form 10-QSB
For the Quarter ended December 31, 2001
Page
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet as of December 31, 2001 (unaudited) 3
Statement of Income for the three months ended 4
December 31, 2001 and 2000 and from inception (March 19, 1999)
through December 31, 2001 (unaudited)
Statement of Cash Flows for the three months ended 5
December 31, 2001 and 2000 and from inception (March 19, 1999)
through December 31, 2001 (unaudited)
Notes to the Financial Statements for the three months 6
Ended December 31, 2001 (unaudited)
Item 2. Plan of Operations 7-8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 2. Changes in Securities 9
Item 3. Defaults Upon Senior Securities 9
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 10
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
BIOMASSE INTERNATIONAL, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
BALANCE SHEET
AT DECEMBER 31, 2001
(UNAUDITED)
Assets
Current Assets
Cash and cash equivalents $ 14,066
Receivables, net 10,312
Prepaid Consulting fees 185,753
Other current assets (principally related party) 16,150
Total current assets 226,280
Property and equipment, net 20,468
Intangibles, net 51,028
Other assets 8,234
Total assets 306,009
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Liabilities and Shareholder's Equity
Current Liabilities
Accounts payable and accrued expenses 235,385
Accrued salaries and payroll related benefits 100,040
Other current liabilities (principally related party) 129,455
Total current liabilities 464,880
Shareholder's Equity
Common Stock, class A, $1.00 par value; authorized -
5,000,000 shares; issued and outstanding 0 in 2001
Common Stock, class B, $.001 par value; authorized 19,135
55,000,000 shares; issued and outstanding 16,544,945
Paid in Capital 845,884
Treasury Stock (2,590)
Deficit accumulated during the development stage (1,025,379)
Accumulated other comprehensive income 4,080
Total Shareholder's Equity (158,871)
Total liabilities and shareholder's equity $306,009
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Read the accompanying summary of significant accounting notes to
financial statements, which are an integral part of this financial statement.
3
BIOMASSE INTERNATIONAL, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2001 AND 2000
FROM INCEPTION (MARCH 19, 1999) THROUGH DECEMBER 31, 2001
Inception
Three months ended December 31, (March 19, 1999)
---------------------------------------- through
2001 2000 December 31, 2001
-------------- -------------- --------------------
(Unaudited) (Unaudited) (Unaudited)
Revenues: $ 9,417 $ - $ 64,084
Cost of Revenues: - - 58,724
-------------- -------------- --------------------
Gross Profit 9,417 - 5,360
Operating Expenses:
Marketing 74,594 - 74,594
Travel 6,896 2,967 66,499
Professional fees 2,021 - 121,967
Consulting fees 19,071 30,400 209,205
Directors fees 5,000 - 5,000
Salaries and payroll related benefits 58,093 - 134,621
Rent 4,000 3,082 32,624
Depreciation 1,324 214 3,248
Amortization 5,500 1,833 58,972
Selling, general and administrative expenses 17,023 13,893 125,374
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193,523 52,389 832,105
Operating Loss (184,106) (52,389) (826,745)
Other Income/(Expense)
Interest Income - related party - 177 824
Interest Income - other 5 - 5
Interest Expense (197) - (523)
Foreign exchange - - 1,059
Loss on impairment of asset - - (200,000)
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Total Other Income (192) 177 (198,634)
Net Loss (184,297) (52,212) (1,025,379)
Basic weighted average common shares outstanding 16,274,457 15,265,188
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Basic Loss per common share $ (0.0113) $ (0.0034)
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Read the accompanying summary of significant accounting notes to
financial statements, which are an integral part of this financial statement.
4
BIOMASSE INTERNATIONAL, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2001 AND 2000
FROM INCEPTION (MARCH 19, 1999) THROUGH DECEMBER 31, 2001
Inception
(March 19, 1999)
For the years ended December 31, through
----------------------------------------------------
2001 2000 December 31, 2001
------------- -------------- ------------------
(Unaudited) (Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ (184,297) $ (52,212) $ (1,025,380)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization 6,824 2,047 62,221
Rent expense offset to paid in capital 1,500 5,000
Issuance of warrants for advisory services 10,000
Issuance of options for professional services 6,000
Loss on impairment of asset 200,000
Issuance of shares for consulting services 14,247 14,247
Accumulated other comprehensive income 4,080 4,080
Changes in Operating assets and liabilities:
Receivables (9,627) 6,853 (10,312)
Other Current Assets (5,369) 1,742 (16,150)
Other Assets - 8,296 (8,234)
Accounts Payable and Accrued Liabilities 187,119 23,496 464,880
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Net cash provided by/(used in) operating activities 12,976 (8,276) (293,648)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment 2,877 - (23,717)
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Net cash provided by/(used in) investing activities 2,877 - (23,717)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from:
Notes payable, principally related parties - - 56,566
Purchase of treasury stock (3,136) - (7,636)
Exercise of warrants - - 1,325
Sales of common stock - 3,500 281,177
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Net cash provided by/(used in) financing activities (3,136) 3,500 331,432
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Net increase (decrease) in cash and cash equivalents 12,716 (4,776) 14,066
Cash and cash equivalents, beginning of period 1,350 4,891 -
------------- -------------- ------------------
Cash and cash equivalents, end of period $ 14,066 $ 115 $ 14,066
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Supplemental Schedule of noncash investing and financing activities:
April 26, 1999 issued 588,000 shares of common stock 110,000
for license rights from affiliate (recorded at predecessor
basis)
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 56,566 113,132
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.
5
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 form 10-KSB 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
$184,297 for the three months ended December 31, 2001 (unaudited) as well as
reporting net losses of $1,025,379 from inception (March 19, 1999) to December
31, 2001 (unaudited). As reported on the statement of cash flows, the Company
has incurred negative cash flows from operating activities of $293,648 from
inception (March 19, 1999) (unaudited). To date, these losses and cash flow
deficiencies have been financed principally through the sale of common stock
($281,177) (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
On October 19, 2001, the Company repurchased from a shareholder 3,335
units (each unit consisting of one (1) share of common stock and one (1)
warrant).
On December 17, 2001, the Company issued 325,000 shares in settlement
of a consulting agreement.
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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 the near future. 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. No
assurance can be given that these deals will be concluded or that any contracts
will result.
Our studies indicate that the cost of equipment and installation for plants
suitable for The Great Northern Paper Company and Paperboard Jonquiere are
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.
7
Liquidity
As reflected in our December 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 $55,000. Executive and management salaries are approximately an
additional $30,000 per month. However, due to a lack of funds, these salaries
are not being paid and are being accrued.
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 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 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.
Until any of these options eventualize, we are being funded by loans from
shareholders, including management and affiliates. None of these shareholders
have any obligation to continue providing loans and if these loans cease and
other sources of funding are not located, we may have to severely cut back on
our operations which may negatively impact our ability to sign any installation
contracts.
8
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
On December 17, 2001, the Company issued 325,000 shares in settlement
of a consulting agreement valued at $200,000. The shares were issued pursuant to
the exemption contained in Section 4(2) by virtue of the fact that they were
issued in a non-public offering to one holder.
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
9
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
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Jean Gagnon, Vice - President
February 14, 2002
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