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 September 30, 2002
-------------------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
---
For the transition period from to
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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
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3913 Riga Blvd., Tampa, Florida 33619
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(Address of principal executive offices)
(813) 792-2020
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(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 November 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
Item 3. Controls and Procedures
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
BIOMED RESEARCH TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
AND SUBSIDIARY
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTH PERIODS
ENDED SEPTEMBER 30, 2001 AND 2002
TABLE OF CONTENTS
Condensed Consolidated Financial Statements:
Condensed Consolidated Balance Sheet as of September 30, 2002 (Unaudited) ..................................1
Condensed Consolidated Statements of Operations for the nine months ended
September 30, 2001 and 2002 and for the three months ended September
30, 2001 and 2002, and for the period from October 9, 1996 (inception)
through September 30, 2002 (Unaudited)...................................................................2
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2001
and 2002 and for the period from October 9, 1996 (inception) through September 30, 2002
(Unaudited)..............................................................................................3
Notes to Condensed Consolidated Financial Statements..............................................................4
BIOMED RESEARCH TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
================================================================================
September 30, 2002
------------------
ASSETS
Current assets:
Cash $ 2,895
-----------
Property and equipment, net 6,100
-----------
Other assets:
Deposit 500
Technology and patent rights, net 4,114,363
-----------
Total other assets 4,114,863
-----------
Total assets $ 4,123,858
===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 115,946
Accrued expenses 1,505,202
Due to related parties 78,575
-----------
Total current liabilities 1,699,723
-----------
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 at September 30, 2002 1,114
Additional paid-in capital 5,577,306
Deficit accumulated during the development stage (3,154,285)
-----------
Total stockholders' equity (deficit) 2,424,135
-----------
Total liabilities and stockholders' equity (deficit) $ 4,123,858
===========
See accompanying notes to condensed financial statements.
-1-
BIOMED RESEARCH TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
================================================================================
OCTOBER 9, 1996
THREE MONTHS ENDED NINE MONTHS ENDED (INCEPTION)
SEPTEMBER 30, SEPTEMBER 30, THROUGH
----------------------------- ----------------------------- SEPTEMBER 30,
2001 2002 2001 2002 2002
------------ ------------ ------------ ------------ ------------
Revenues $ -- $ -- $ -- $ -- $ --
------------ ------------ ------------ ------------ ------------
Operating expenses:
Salary expenses 193,750 187,500 577,000 562,500 2,220,523
Depreciation and amortization 75,528 67,046 139,084 209,571 395,351
Other operating expenses 13,093 95,667 245,025 120,036 538,410
------------ ------------ ------------ ------------ ------------
Total operating expenses 282,371 350,213 961,109 892,107 3,154,284
------------ ------------ ------------ ------------ ------------
Net loss $ (282,371) $ (350,213) $ (961,109) $ (892,107) $ (3,154,284)
============ ============ ============ ============ ============
Net loss per share, basic and diluted $ (0.03) $ (0.03) $ (0.11) $ (0.08)
============ ============ ============ ============
Average weighted number of
shares outstanding, basic and diluted 11,144,272 11,144,767 8,536,848 11,144,767
============ ============ ============ ============
See accompanying notes to condensed financial statements.
-2-
BIOMED RESEARCH TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
================================================================================
OCTOBER 9, 1996
NINE MONTHS ENDED (INCEPTION)
SEPTEMBER 30, THROUGH
----------------------- SEPTEMBER 30,
2001 2002 2002
----------- -------- -----------
Net cash used in operating activities $ (315,758) $(42,592) $ (469,726)
----------- -------- -----------
Cash flows from investing activities:
Cash acquired in acquisition 170,000 -- 170,000
Purchase of property, plant and equipment (9,778) -- (15,816)
----------- -------- -----------
Net cash provided by (used in) investing
activities 160,222 -- 154,184
----------- -------- -----------
Cash flows from financing activities:
Increase in related party loans 210,750 40,500 266,202
Proceeds from sale of common stock - net
of costs (47,190) -- 52,235
----------- -------- -----------
Net cash provided by (used in) financing
activities 163,560 40,500 318,437
----------- -------- -----------
Net increase (decrease) in cash 8,024 (2,092) 2,895
----------- -------- -----------
Cash at beginning of period -- 4,987 --
----------- -------- -----------
Cash at end of period $ 8,024 $ 2,895 $ 2,895
=========== ======== ===========
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 FINANCIAL STATEMENTS
================================================================================
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed 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 nine months ended September 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 September 30, 2002. All inter-company accounts
have been eliminated in consolidation.
It is recommended that the accompanying condensed 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 September 30:
2001 2002
-------- ---------
Balance at beginning of period $ 953 $ 38,075
Payments (advances) during the period 17,122 40,500
-------- ---------
Balance payable at end of period $ 18,075 $ 78,575
======== =========
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.
Management's plan is to raise equity. 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
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valuation allowance for the deferred tax asset, estimated 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 FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2002
For the three months ended September 30, 2002 our operating expenses
were $282,371 as compared to operating expenses of $350,213 for the three month
period ended September 30, 2001. We have incurred a net loss for the three
months ended September 30, 2002 of $282,371 as compared to a net loss for the
three months ended September 30, 2001 of $350,213.
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002.
For the nine months ended September 30, 2002 our operating expenses
were $892,107 as compared to operating expenses of $961,109 for the nine month
period ended September 30, 2001. We have incurred a net loss for the nine months
ended September 30, 2002 of $892,107 as compared to a net loss for the nine
months ended September 30, 2001 of $961,109.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2002, we had existing cash reserves of $2,895. We
have no revenues. Our operating expenses from inception through September 30,
2002 were $3,154,284, mostly comprised of salary expense ($2,220,523). As a
development stage company we have incurred a net loss from inception through
September 30, 2002 of $3,154,284. 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.
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
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success of our company is dependent on our submission of an IND Application to
the FDA and eventual FDA approval of our Bioavailability 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.
ITEM 3. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Within the 90 days prior to the filing date of this report, the Company
carried out an evaluation of the effectiveness of the design and operation of
its disclosure
4
controls and procedures pursuant to Exchange Act Rule 13a-14. This evaluation
was done under the supervision and with the participation of the Company's
Chairman, President and Principal Financial Officer. Based upon that evaluation,
they concluded that the Company's disclosure controls and procedures are
effective in gathering, analyzing and disclosing information needed to satisfy
the Company's disclosure obligations under the Exchange Act.
CHANGES IN INTERNAL CONTROLS
There were no significant changes in the Company's internal controls or
in other factors that could significantly affect those controls since the most
recent evaluation of such controls.
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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 June 30, 2002, Dr. William Stafford terminated his consulting
agreement with the Company. He had provided advisory and other related services
to the Company. He remains a principal shareholder of the Company.
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 Principal Executive Officer
99.2 Certification of Principal Financial 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: November 12, 2002 By: /s/ Ahmad Moradi
----------------------------------
Ahmad Moradi, Chief Executive Officer
Date: November 12, 2002 By: /s/ Steven Rosner
----------------------------------
Steven Rosner, Vice President, Chief
Operating Officer
Date: November 12, 2002 By: /s/ Donald Clippinger
----------------------------------
Donald Clippinger, President
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CERTIFICATION BY PRINCIPAL EXECUTIVE OFFICER
I, Ahmad Moradi, the principal executive officer of Biomed Research
Technologies, Inc., a Florida corporation (the "Registrant"), certify that:
1. I have reviewed this quarterly report on Form 10-QSB for the period
ended September 30, 2002, of the Registrant (the "Report").
2. Based on my knowledge, the Report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by the Report.
3. Based on my knowledge, the financial statements, and other financial
information included in the Report, fairly present in all material respects the
financial condition, results of operations and cash flows of the Registrant as
of, and for, the periods presented in the Report.
4. The Registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the Registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which the Report is being prepared.
b) evaluated the effectiveness of the Registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
the Report (the "Evaluation Date"); and
c) presented in the Report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The Registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the Registrant's auditors and the Audit
Committee of the Registrant's Board of Directors:
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the Registrant's ability to
record, process, summarize and report financial data and have identified for the
Registrant" auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Registrant's
internal control.
1
6. The Registrant's other certifying officers and I have indicated in
the Report whether or not there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
/s/ Ahmad Moradi
------------------------------------
Name: Ahmad Moradi
Title: Principal Executive Officer
Dated: November 13, 2002
2
CERTIFICATION BY PRINCIPAL FINANCIAL OFFICER
I, Richard Paull, the principal financial officer of Biomed Research
Technologies, Inc., a Florida corporation (the "Registrant"), certify that:
1. I have reviewed this quarterly report on Form 10-QSB for the period
ended September 30, 2002, of the Registrant (the "Report").
2. Based on my knowledge, the Report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by the Report.
3. Based on my knowledge, the financial statements, and other financial
information included in the Report, fairly present in all material respects the
financial condition, results of operations and cash flows of the Registrant as
of, and for, the periods presented in the Report.
4. The Registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the Registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which the Report is being prepared.
b) evaluated the effectiveness of the Registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
the Report (the "Evaluation Date"); and
c) presented in the Report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The Registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the Registrant's auditors and the Audit
Committee of the Registrant's Board of Directors:
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the Registrant's ability to
record, process, summarize and report financial data and have identified for the
Registrant" auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Registrant's
internal control.
1
6. The Registrant's other certifying officers and I have indicated in
the Report whether or not there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
/s/ Richard Paull
-----------------------------------
Name: Richard Paull
Title: Principal Financial Officer
Dated: November 13, 2002
2