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, 2002
[ ] 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 March 31, 2002 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 March 31, 2002
Page
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet as of March 31, 2002 (unaudited) 3
Statement of Income for the three and six months ended 4
March 31, 2002 and 2001 and from inception (March 19, 1999)
through March 31, 2002 (unaudited)
Statement of Cash Flows for the six months ended 5
March 31, 2002 and 2001 and from inception (March 19, 1999)
through March 31, 2002 (unaudited)
Notes to the Financial Statements for the six months 6-7
ended March 31, 2002 (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
MARCH 31, 2002
(UNAUDITED)
Assets
Current Assets
Cash and cash equivalents $ 143
Receivables, net 37,867
Prepaid Expenses 136,438
Other current assets (principally related party) 17,356
Total current assets 191,804
Property and equipment, net 19,395
Intangibles, net 45,528
Other assets 8,231
Total assets 264,958
Liabilities and Shareholder's Equity
Current Liabilities
Bank overdrafts 17,411
Accounts payable and accrued expenses 273,818
Accrued salaries and payroll related benefits 153,822
Other current liabilities (principally related party) 198,907
Total current liabilities 643,959
Shareholder's Equity
Common Stock, class A, $1.00 par value; authorized -
5,000,000 shares; issued and outstanding 0
Common Stock, class B, $.001 par value; authorized 19,135
55,000,000 shares; issued and outstanding 16,544,945
Paid in Capital 845,886
Treasury Stock (2,590)
Deficit accumulated during the development stage (1,244,883)
Accumulated other comprehensive income 3,451
Total Shareholder's Equity (379,001)
Total liabilities and shareholder's equity $264,958
==============
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 MARCH 31, 2002 AND 2001
FROM INCEPTION (MARCH 19, 1999) THROUGH MARCH 31, 2002
Inception
(March 19, 1999)
Three months ended March 31, Six months ended March through
---------------------------------------------------------
2002 2001 2002 2001 March 31, 2002
---------- ---------- ---------- ---------- ---------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues: $ - $ - $ 9,409 $ - $ 64,076
Cost of Revenues: - - - - 58,724
---------- ---------- ---------- ---------- ---------------
Gross Profit - - 9,409 - 5,352
Operating Expenses:
Marketing (222) - 74,372 - 74,372
Travel 4,389 2,966 11,286 5,933 70,889
Professional fees 5,320 2,623 7,341 2,623 127,288
Consulting fees 104,858 18,456 123,929 48,856 314,063
Directors fees 4,000 - 9,000 - 9,000
Salaries and payroll related benefits 59,693 - 117,786 - 194,314
Rent 2,497 3,750 6,497 6,832 35,121
Depreciation 1,379 214 2,703 427 4,628
Amortization 5,500 5,500 11,000 11,000 64,472
Selling, general and administrative expenses 31,861 9,091 48,884 22,983 157,236
---------- ---------- ---------- ---------- ---------------
219,285 42,599 412,799 98,655 1,051,381
Operating Loss (219,284) (42,599) (403,390) (98,655) (1,046,029)
Other Income/(Expense)
Interest Income - related party - - - 177 824
Interest Income - other 0 - 6 - 6
Interest Expense (220) - (417) - (743)
Foreign exchange - - - - 1,059
Loss on impairment of asset - - - - (200,000)
---------- ---------- ---------- ---------- ---------------
Total Other Income (219) - (411) 177 (198,854)
Net Loss (219,504) (42,599) (403,801) (98,477) (1,244,883)
Basic weighted average common shares outstanding 16,544,945 15,174,338 16,408,215 15,169,713
========== ========== ========== ==========
Basic Loss per common share $ (0.0133) $ (0.0028) $ (0.0246) $ (0.0065)
========== ========== ========== ==========
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 SIX MONTHS ENDED MARCH 31, 2002 AND 2001
FROM INCEPTION (MARCH 19, 1999) THROUGH MARCH 31, 2002
Inception
(March 19, 1999)
For the six months ended March 31, through
-----------------------------------------------------
2002 2001 March 31, 2002
------------- ------------- ------------------
(Unaudited) (Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ (403,801) $ (98,477) $ (1,244,883)
Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Depreciation and amortization 13,703 11,427 69,100
Rent expense offset to paid in capital 3,000 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 63,562 63,562
Accumulated other comprehensive income 3,451 3,451
Changes in Operating assets and liabilities:
Receivables (37,182) 5,609 (37,867)
Other Current Assets (6,575) (5,533) (17,356)
Other Assets 3 8,946 (8,231)
Accounts Payable and Accrued Liabilities 366,198 34,821 643,959
------------- ------------- ------------------
Net cash provided by/(used in) operating activities (641) (40,207) (307,265)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment 2,570 - (24,024)
------------- ------------- ------------------
Net cash provided by/(used in) investing activities 2,570 - (24,024)
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 - 35,400 281,177
------------- ------------- ------------------
Net cash provided by/(used in) financing activities (3,136) 35,400 331,432
------------- ------------- ------------------
Net increase (decrease) in cash and cash equivalents (1,207) (4,806) 143
Cash and cash equivalents, beginning of period 1,350 4,891 -
------------- ------------- ------------------
Cash and cash equivalents, end of period $ 143 $ 85 $ 143
============= ============= ==================
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 56,566
common stock in settlement of note payable (related
party)
December 05, 2001 issuance of 325,000 shares of 200,000 200,000
common stock for prepaid consulting fees.
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 SIX MONTHS ENDED MARCH 31, 2002
(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 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
$403,801 for the six months ended March 31, 2002 (unaudited) as well as
reporting net losses of $1,244,883 from inception (March 19, 1999) to March 31,
2002 (unaudited). As reported on the statement of cash flows, the Company has
incurred negative cash flows from operating activities of $307,265 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.
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 signed our first agreement on April 12, 2002 with J. Ford Ltee., a pulp and
paper manufacturer in Quebec, Canada. This agreement is for five years with an
expected revenue stream of approximately $1 million US per year to Biomasse. The
expected start date for installation is late June 2002 and the project should
begin generating revenue by December 2002.
We intend to concentrate initially on the North American pulp and paper
companies. During the past year we identified several 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 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.
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 January 2002, 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, 2002 balance sheet, we have minimal cash on hand.
Monthly operating expenses including rent, communications, travel, consulting,
and professional fees and other general and administrative are approximately
$30,000. Our President and Vice President - Finance agreed not to accept any
salaries until the company's common stock was quoted publicly on the OTC
Bulletin Board. At such time, the number of our employees increased to four 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 $20,000 per month.
We have several options to fund the above monthly expenditures: In our contract
with the pulp and paper manufacturers, we intend to require a deposit with the
signing of the contract of approximately one month's revenue. These deposits
will then contribute to the satisfying our overall monthly expenditures. In the
case of the J Ford Ltee project, that equates to approximately $83,000 US.
However, since this is our first contract we agreed to defer payment of the
deposit until such time as we receive a firm committment for the financing for
the project. We expect to secure the financing within 30 days.
We have entered into an agreement to secure financing whereby the Company shall
receive $250,000 US at the signing of a 12% secured convertible debenture and an
additional $250,000 US in the near future. The $500,000 US debenture is
convertible into common stock at a conversion price of the lesser of $.225 or
the average of the lowest 3 inter-day trading prices during the 20 trading days
immediately prior to the conversion date discounted by 50%. The debenture holder
will also receive for each $1.00 of debenture investment, warrants to purchase 3
shares of the Company's common stock. The warrant term shall be for three years.
The intial exercise price of the warrants is the lessor of $.107 or the average
of the lowest 3 inter-day trading prices during the ten trading days immediately
prior to the exercise date.
Inasmuch as we need approximately $50,000 per month to cover our overhead
expenses, between the $500,000 financing and $83,000 deposit we expect to have
sufficient funds to pay our expenses until our first facility comes on-line and
we begin receiving revenues.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
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, 2002