U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 2002
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ______________ to _________________
Commission File Number: 0-33225
BIOMED RESEARCH TECHNOLOGIES, INC.
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(Exact name of Small Business Issuer as specified in its Charter)
FLORIDA 65-0700727
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3913 Riga Blvd., Tampa, Florida 33619
(Address of principal executive offices)
(813) 792-2020
(Issuer's telephone number)
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(Former Name, former address and former fiscal year, if changed
since last Report.)
Check mark whether the Issuer (1) has filed all reports required to be
filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 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 [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 11,144,767 shares of Common
Stock as of August 1, 2002.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (unaudited)
Item 2. Management's Discussion and Analysis and Plan of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
TABLE OF CONTENTS
Condensed Consolidated Financial Statements:
Condensed Consolidated Balance Sheet as of June 30, 2002 (Unaudited) .......................................2
Condensed Consolidated Statements of Operations for the six months ended
June 30, 2001 and 2002 and for the three months ended June 30, 2001 and
2002, and for the period from October 9, 1996 (inception) through June
30, 2002 (Unaudited).....................................................................................3
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2001 and
2002 and for the period from October 9, 1996 (inception) through June 30, 2002 (Unaudited)...............4
Notes to Condensed Consolidated Financial Statements..............................................................5
BIOMED RESEARCH TECHNOLOGIES, INC.
(A Development Stage Company)
AND SUBSIDIARY
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIODS
ENDED JUNE 30, 2001 AND 2002
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BIOMED RESEARCH TECHNOLOGIES, INC. AND SUBSIDIARY
(A Development Stage Company)
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
June 30, 2002
-------------
ASSETS
Current assets:
Cash $ 1,553
-----------
Property and equipment, net 6,970
-----------
Other assets:
Deposit 500
Technology and patent rights, net 4,180,540
-----------
Total other assets 4,181,040
-----------
Total assets $ 4,189,563
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 108,998
Accrued salaries 1,314,983
Due to related parties 59,075
-----------
Total current liabilities 1,483,056
-----------
Stockholders' equity (deficit) :
Preferred stock, $0.0001 par value,
10,000,000 shares authorized, -0- shares
issued and outstanding --
Common stock, $0.0001 par value; 40,000,000
shares authorized, issued and outstanding,
11,144,767 shares 1,114
Additional paid-in capital 5,577,306
Deficit accumulated during the development stage (2,871,913)
-----------
Total stockholders' equity 2,706,507
-----------
Total liabilities and stockholders' equity $ 4,189,563
===========
See accompanying notes to condensed financial statements.
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BIOMED RESEARCH TECHNOLOGIES, INC. AND SUBSIDIARY
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
October 9, 1996
(Inception)
Three Months Ended June 30, Six Months Ended June 30, through
----------------------------- ----------------------------- June 30,
2001 2002 2001 2002 2002
------------ ------------ ------------ ------------ ------------
Revenues $ -- $ -- $ -- $ -- $ --
------------ ------------ ------------ ------------ ------------
Operating expenses:
Salary expenses 187,500 187,500 383,250 375,000 2,033,023
Depreciation and amortization 63,028 75,478 63,556 142,524 328,304
Other operating expenses 89,128 36,525 164,091 92,212 510,586
------------ ------------ ------------ ------------ ------------
Total operating expenses 339,656 299,503 610,897 609,736 2,871,913
------------ ------------ ------------ ------------ ------------
Net loss $ (339,656) $ (299,503) $ (610,897) $ (609,736) $ (2,871,913)
============ ============ ============ ============ ============
Net loss per share, basic and diluted $ (0.03) $ (0.03) $ (0.08) $ (0.05)
============ ============ ============ ============
Average weighted number of
shares outstanding, basic and diluted 10,224,055 11,144,767 7,960,336 11,144,767
============ ============ ============ ============
</Table>
See accompanying notes to condensed financial statements.
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BIOMED RESEARCH TECHNOLOGIES, INC. AND SUBSIDIARY
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
October 9, 1996
(Inception)
Six Months Ended June 30, through
----------------------------------- June 30,
2001 2002 2002
----------- ----------- -----------
Net cash used in operating activities $ (203,574) $ (24,434) $ (451,568)
----------- ----------- -----------
Cash flows from investing activities:
Cash acquired in acquistion 170,000 -- 170,000
Purchase of property, plant and equipment (9,778) -- (15,816)
----------- ----------- -----------
Net cash provided by investing activities 160,222 -- 154,184
----------- ----------- -----------
Cash flows from financing activities:
Increase in related party loans 193,750 21,000 246,702
Stock subscription payable (47,190) -- --
Proceeds from sale of common stock - net
of costs -- -- 52,235
----------- ----------- -----------
Net cash provided by financing activities 146,560 21,000 298,937
----------- ----------- -----------
Net increase (decrease) in cash 103,208 (3,434) 1,553
----------- ----------- -----------
Cash at beginning of period -- 4,987 --
----------- ----------- -----------
Cash at end of period $ 103,208 $ 1,553 $ 1,553
=========== =========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Non-cash investing and financing activities:
Common stock issued for services $ 572,557 $ -- $ 662,557
=========== =========== ===========
Common stock issued for acquisitions $ 4,863,628 $ -- $ 4,863,628
=========== =========== ===========
See accompanying notes to condensed financial statements.
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BIOMED RESEARCH TECHNOLOGIES, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of Biomed
Research Technologies, Inc. and Subsidiary (the "Company") have been prepared in
accordance with generally accepted accounting principles for interim financial
information and Regulation S-B. Accordingly, they do not include all of the
information and footnotes required for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation of the results for the
interim periods presented have been included. These results have been determined
on the basis of generally accepted accounting principles and practices applied
consistently with those used in the preparation of the Company's Annual
Financial Statements for the year ended December 31, 2001. Operating results for
the six months ended June 30, 2002 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2002.
The accompanying unaudited condensed consolidated financial statements include
the accounts of Biomed Research Technologies, Inc. and its wholly owned
subsidiary, Sure Medical, Inc. at June 30, 2002. The unaudited condensed
consolidated financial statements include the accounts of Biomed Research
Technologies, Inc. for the six months ended June 30, 2001, and its wholly owned
subsidiary, Sure Medical, Inc. from the date of acquisition, April 17, 2001 to
June 30, 2001. All inter-company accounts have been eliminated in consolidation.
It is recommended that the accompanying condensed consolidated financial
statements be read in conjunction with the financial statements and notes for
the year ended December 31, 2001 found in the Company's Form 10-KSB.
NOTE 2 - RELATED PARTY TRANSACTIONS
The following summarizes the Company's outstanding payables to related parties
at June 30:
2001 2002
------- -------
Balance at beginning of period $ 953 $38,075
Transactions during the period 123 21,000
------- -------
Balance payable at end of period $ 1,076 $59,075
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NOTE 3 - GOING CONCERN
The Company has minimal capital available to meet future obligations and to
carry out its planned operations. The Company is dependent upon its shareholders
for its financial support. These factors raise substantial doubt about the
Company's ability to continue as a going concern.
Managements' plan is to obtain equity and financing through the sale of common
stock. There can be no assurance that the Company can raise additional funding
through the sale of its common stock. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
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ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
GENERAL
Biomed Research Technologies, Inc., through its subsidiary, is engaged
in identifying biomedical technologies currently available at academic research
institutions and developing these technologies into products which will improve
human health and the quality of life. Through our wholly-owned subsidiary, Sure
Medical, Inc., we hold the exclusive worldwide rights to the Bioavailability
Booster. The Bioavailability Booster is an enantiomer. Certain enantiomers have
been identified for their ability to bend light in opposite directions from
their mirror image resulting in the potential enhancement of the performance of
certain pharmaceutical products. We believe the Bioavailability Booster can be
used to augment performance of certain FDA approved pharmaceutical products. We
are currently a development stage company without any marketable products at
this time.
"We", "us", or "our" refers to Biomed Research Technologies, Inc. and
our wholly owned subsidiary, Sure Medical, Inc.
Management's discussion and analysis contains various forward looking
statements within the meaning of the Securities and Exchange Act of 1934. These
statements consist of any statement other than a recitation of historical fact
and can be identified by the use of forward looking terminology such as "may,"
"expect," "anticipate," "estimates" or "continue" or use of negative or other
variations of comparable terminology. Management cautions that these statements
are further qualified by important factors that could cause actual results to
differ materially from those contained in forward looking statements, that these
forward looking statements are necessarily speculative, and there are certain
risks and uncertainties that could cause actual events or results to differ
materially from those referred to in forward looking statements.
CRITICAL ACCOUNTING POLICIES
Management believes the following critical accounting policies affect
the significant judgments and estimates used in the preparation of the financial
statements.
USE OF ESTIMATES
Management's discussion and analysis of financial condition and results
of operations is based upon our financial statements, which have been prepared
in accordance with accounting principles generally accepted in the United States
of America. The preparation of these financial statements requires management to
make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues, and expenses, and related disclosure of contingent assets
and liabilities. On an ongoing basis, management evaluates these estimates,
including those related to valuation allowance for the deferred tax asset,
estimated
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useful life of fixed assets and the carrying value of long- lived assets and
intangible assets. Management bases these estimates on historical experience and
on various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying value of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions.
RESULTS OF OPERATIONS
As of June 30, 2002, we had existing cash reserves of $1,553. We have
no revenues. Our operating expenses from inception through June 30, 2002 were
$2,871,913, mostly comprised of salary expense ($2,033,023). As a development
stage company we have incurred a net loss from inception through June 30, 2002
of $2,871,913. Since our patent for the Bioavailability Booster was not acquired
until 2001, a nominal amount of our net losses are attributable to product
development and the nature of our net losses is principally compensation
expense.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2002
For the three months ended June 30, 2002 our operating expenses were
$299,503 as compared to operating expenses of $339,656 for the three month
period ended June 30, 2001. We have incurred a net loss for the three months
ended June 30, 2002 of $299,503 as compared to a net loss for the three months
ended June 30, 2001 of $339,656.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2002.
For the six months ended June 30, 2002 our operating expenses were
$609,736 as compared to operating expenses of $610,897 for the six month period
ended June 30, 2001. We have incurred a net loss for the six months ended June
30, 2002 of $609,736 as compared to a net loss for the six months ended June 30,
2001 of $610,897.
PLAN OF OPERATIONS
While we were organized in 1996, we did not acquire Sure Medical, Inc.
until April 2001. We have little operating history upon which an evaluation of
management's performance and our future prospects can be made. There can be no
assurances whatsoever that we will be able to successfully implement our
business strategy or penetrate our markets or attain a wide following for our
product, or that we will ever attain a level of profitability. In addition, we
will be subject to all the risks inherent in a start-up enterprise. Our
prospects must be considered in light of the numerous risks, expenses, delays
and problems frequently encountered in the establishment of a new business in
industries characterized by emerging markets and intense competition. The
success of our company is dependent on our submission of an IND Application to
the FDA and eventual FDA approval of our Bioavailability
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Booster. We must obtain financing or establish a relationship with an FDA
approved manufacturer in order to meet cash requirements required to file an FDA
application. We estimate that the cost of repeating pre-clinical studies with a
product available from an FDA approved manufacturer will be approximately
$250,000. We anticipate that these costs will be assumed by third parties.
Without the establishment of a third party relationship with an FDA approved
manufacturer we will not be able to complete the necessary pre-clinical studies
to prepare an IND application for submission to the FDA.
We are focusing our attention towards establishing relationships to
submit an application to the FDA, as well as to market, license, manufacture and
produce our Bioavailability Booster. In the event we cannot establish the
necessary third party relationships, we will need to raise additional financing
to continue our operations. We are currently focused on identifying drug
manufacturing and marketing companies to form agreements and alliances to
eventually produce and develop a commercially viable product. Presently we are
working to structure agreements, joint ventures, licensing contracts, and
strategic alliances with these companies. To date we have not entered into any
agreements, joint ventures, licensing contracts or strategic alliances.
Because of our plan to joint venture or license our product, we do not
anticipate significant continuing cash operating losses. However, to the extent
we continue to issue shares as compensation for services our operating losses
will continue. Our officers have historically accrued the majority of their
salaries, although portions of their salaries for the year ended December 31,
2001 have been partially paid from funds received through Sure's private
placement in January 2001.
We do not anticipate any purchase of plant or significant equipment
during the next 12 months. We also do not anticipate any significant change in
the number of our employees in the next 12 months. Each of these items are
subject to material change in the event of a joint venture or significant
financing.
Our auditors have included a paragraph in their report on our annual
financial statements for the year ended December 31, 2001 which expresses
concern about our ability to continue as a going concern unless we can secure
additional financing. We expect significant operating losses to continue at
least during 2002. There can be no assurances that any additional funding will
be available or, if available, that such funding can be obtained on favorable
terms.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
On May 30, 2002, we were notified by the Securities and Exchange
Commission that our Form 10-SB Registration Statement, as amended (originally
filed on or about October 11, 2001), had cleared comments with the Staff of the
Securities and Exchange Commission.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required by Item 601 of Regulation S-B
The following exhibits are filed as part of this report:
Exhibits:
99.1 Certification of Chief Executive Officer
99.2 Certification of Chief Operating Officer
(b) Reports on Form 8-K
None.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned as duly authorized officers of the Registrant.
Biomed Research Technologies, Inc.
Date: August 13, 2002 By: /s/ AHMAD MORADI
-------------------------------------
Ahmad Moradi, Chief Executive Officer
and Chairman
Date: August 13, 2002 By: /s/ STEVEN ROSNER
-------------------------------------
Steven Rosner, Vice President, Chief
Operating Officer and Director
Date: August 13, 2002 By: /s/ DONALD CLIPPINGER
-------------------------------------
Donald Clippinger, President and
Director
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