UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A-1
Quarterly Report Under Section 13 or 15(d)
of the Securities and Exchange Act of 1934
For the Quarter Ended: Commission File Number
- ---------------------- ----------------------
October 31, 2000 0-28973
BioPulse International, Inc.
---------------------------------------------
(Name of small business issuer in its chapter)
Nevada 87-0634278
- ------------------------------- -------------------------
(State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
10421 South Jordan Gateway, Suite 500, South Jordan, Utah 84095
- --------------------------------------------------------- -----------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (801) 523-0101
----------------
Securities registered pursuant to section 12(b) of the Exchange Act:
None
Check whether the Issuer (1) filed all reports required to be filed by
section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such
report(s), and (2) has been subject to such filing requirements for the
past 90 days. (1) Yes [X ] No [ ]
State the number of shares outstanding of each of the registrants classes
of common equity, as of the latest practicable date:
As of October 31, 2000, issuer had approximately 7,464,610 shares of its
$.001 par value common stock outstanding.
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
C O N T E N T S
Consolidated Balance Sheet . . . . . . . . . . . . . . . . . . . . .F-3
Consolidated Statement of Operations . . . . . . . . . . . . . . . .F-5
Consolidated Statement of Stockholders' Equity . . . . . . . . . . .F-6
Consolidated Statement of Cash Flows . . . . . . . . . . . . . . . .F-8
Notes to the Consolidated Financial Statements . . . . . . . . . . .F-9
2
Biopulse International, Inc.
Consolidated Balance Sheet
Assets
October 31,
2000 1999
------------ ------------
(Unaudited) (Unaudited)
Current assets
Cash $ 104,189 $ 8,994
Accounts receivable (net of allowance for
doubtful accounts) 112,940 209
Inventory 83,502 10,425
Note receivable - employee 9,800 -
Note receivable - related party (Note 8) 19,032 74,620
Prepaid rent - current 135,080 -
------------ ------------
Total Current Assets 464,543 94,248
------------ ------------
Property & Equipment, Net (Note 2) 848,238 208,058
Intangible Assets (Note 3) 689,706 -
Other assets
Deposits 8,731 9,117
Prepaid rent - net of current portion 151,594 -
------------ ------------
Total Other Assets 160,325 9,117
------------ ------------
Total Assets $2,162,812 $ 311,423
============ ============
3
Biopulse International, Inc.
Consolidated Balance Sheet
(continued)
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable $ 92,739 $ 58,305
Accrued expenses 20,081 8,084
Unearned revenue 30,466 -
Notes payable (Note 7) 911,600 -
------------ ------------
Total Current Liabilities 1,054,886 66,389
------------ ------------
Total Liabilities 1,054,886 66,389
Stockholders' Equity
Preferred Stock , Class A, authorized
2,000,000 shares of $.001 par value - 50
Common Stock, authorized
100,000,000 shares of $.001 par value,
7,464,610 issued and outstanding 7,464 6,074
Additional Paid in Capital 1,226,934 1,018,249
Less: Subscriptions receivable (119,586) (301,000)
Retained Earnings (6,886) (478,339)
------------ ------------
Total Stockholders' Equity 1,107,926 245,034
------------ ------------
Total Liabilities and Stockholders' Equity $2,162,812 $ 311,423
============ ============
4
Biopulse International, Inc.
Consolidated Statement of Operations
For the Three For the Three
Months ended Months ended
October 31, October 31,
2000 1999
------------- -------------
(Unaudited) (Unaudited)
Revenues $ 1,159,680 $ 228,208
Cost of Goods Sold 398,359 185,066
------------- -------------
Gross Profit 761,321 43,142
Operating Expenses:
General and administrative 679,803 278,046
------------- -------------
Total Expenses 679,803 278,046
Net Income (Loss) from Operations 81,518 (234,904)
------------- -------------
Net Income (Loss) Before Taxes 81,518 (234,904)
------------- -------------
Provision for Income taxes - -
------------- -------------
Net Income (Loss) $ 81,518 $ (234,904)
============= =============
Net Income (Loss) Per Share $ 0.01 $ (.04)
============= =============
Weighted average shares outstanding 7,464,110 6,073,862
============= =============
Fully diluted earnings per share $ 0.01 $ (.04)
============= =============
Fully diluted weighted average
shares outstanding 8,626,443 6,073,862
============= =============
5
Biopulse International, Inc.
Consolidated Statement of Stockholders' Equity
Deficit
Accumulated
During
Subscr- the
iptions Additional Devel-
Preferred Stock Common Stock Recei- paid-in opment
Shares Amount Shares Amount vable capital Stage
------------------------------------------------------------------
Balances at
inception - $ - - $ - $ - $ - $ -
Net loss for the
year ended July
31, 1998 - - - - - - -
------------------------------------------------------------------
Balance,
July 31, 1998 - - - - - - -
Stock for cash to
organizers - - 4,000,000 4,000 - - -
Recapitalization
for accounting
purposes of
Biopulse, Inc. - - 73,862 74 - (74) -
Stock issued for
subscriptions
receivable at
$.49 per share - - 2,000,000 2,000 (970,000) 968,000 -
Stock issued for
cash at $1.00
per share 25,000 25 - - - 24,975 -
Stock issued
for services
at $1.00 per
share 25,374 25 - - - 25,348 -
Net loss for
the year ended
July 31, 1999 (243,435)
------------------------------------------------------------------
Balance,
July 31, 1999 50,374 50 6,073,862 6,074 (970,000) 1,018,249 (243,435)
Conversion of
preferred stock
to common stock (25,374) (25) 50,748 50 - - -
Stock issued for
services - - 600,000 600 - (600) -
6
Biopulse International, Inc.
Consolidated Statement of Stockholders' Equity
Deficit
Accumulated
During
Subscr- the
iptions Additional Devel-
Preferred Stock Common Stock Recei- paid-in opment
Shares Amount Shares Amount vable capital Stage
------------------------------------------------------------------
Stock issued for
subscription
receivable at
$.10 per share - - 600,000 600 (60,000) 59,400 -
Stock issued for
$3 per share - - 5,000 5 - 14,995 -
Collection of
subscription
receivable - - - - 870,434 - -
Net Income for the
year ended
July 31, 2000 155,031
------------------------------------------------------------------
Balance,
July 31, 2000 25,000 25 7,329,610 7,329 (159,566) 1,092,044 (88,404)
Conversion of
preferred stock
to common stock (25,000) (25) 50,000 50 - (25) -
Stock issued for
$3 per share - - 25,000 25 - 74,975 -
Stock issued for
equipment - - 60,000 60 - 59,940 -
Collection of
subscription
receivable - - - - 40,000 - -
Net Income for
the three months
ended October
31, 2000 - - - - - - 81,518
------------------------------------------------------------------
Balance, October
31, 2000 - $ - 7,464,610 $7,464 $(119,566) $1,226,934 $(6,886)
==================================================================
7
Biopulse International, Inc.
Consolidated Statement of Cash Flows
For the Three
Months ended
October 31,
2000
--------------
(Unaudited)
Cash Flows from Operating
Activities
Net Income (Loss) $ 81,518
Adjustments to reconcile
net income to cash
provided by operations:
Depreciation & Amortization 42,144
(Increase) decrease in receivables (95,910)
(Increase) decrease in inventory (6,408)
(Increase) decrease in prepaid rent 30,000
Increase (decrease) in payables (12,048)
Increase (decrease) in accrued expenses (10,065)
Increase (decrease) in unearned fees (47,318)
--------------
Net Cash (Used) Provided by
Operating Activities (18,087)
Cash Flows from Investment
Activities:
Purchase of Equipment (160,379)
Acquisition of intangible assets (700,000)
--------------
Net Cash (Used) Provided by
Investing Activities (860,379)
--------------
Cash Flows from Financing
Activities:
Issued common stock for cash 75,000
(Increase) decrease in subscription receivable 40,000
Cash received from debt financing 825,600
--------------
Net Cash (Used) Provided by
Financing Activities 940,600
--------------
Net increase (decrease) in cash 62,134
Cash, beginning of period 42,055
--------------
Cash, end of period $ 104,189
==============
7
Biopulse International, Inc.
Notes to the Financial Statements
October 31 and July 31, 2000
NOTE 1 - Summary of Significant Accounting Policies
a. Organization
Biopulse International, Inc. (the Company) was incorporated
in the State of Nevada on July 13,1984 originally under the name of
Universal Financial Capital Corp. The Company changed its name in
September 1985 to International Sensor Technologies, Inc. As
International Sensor Technologies, Inc. the Company incurred heavy
losses and no revenue from operations. The Company also experienced
five years of inactivity. On January 12, 1999, the Company again
changed its name to BioPulse International, Inc. when it acquired
BioPulse, Inc. The Company is in the business of managing drug and
rehabilitation centers, integrated medicine clinics, and medical
research programs.
The Company issued 4,000,000 common shares in exchange for
100 percent of the outstanding stock of Biopulse Inc., a Utah
corporation organized June 4, 1998. The share exchange with Biopulse,
Inc. was accounted for as a reverse acquisition (recapitalization),
therefore all historical financial information is that of the
accounting survivor Biopulse, Inc.
The Company also paid $100,000 to an officer/director of the
Company for accounting, legal and organization expenses to
recapitalize the Company. This was expensed during the period ended
July 31, 1999.
b. Recognition of Revenue
The Company recognizes income and expense on the accrual basis of
accounting. Revenue from services to patients is recognized as
services are performed.
c. Earnings (Loss) Per Share
The computation of earnings per share of common stock is based on
the weighted average number of shares outstanding at the date of the
financial statements.
d. Cash and Cash Equivalents
The Company considers all highly liquid investments with
maturities of three months or less to be cash equivalents.
e. Provision for Income Taxes
No provision for income taxes has been recorded due to net
operating loss carryforwards totaling approximately 2,370,000 that
will be offset against future taxable income pursuant to limitations
of the Internal Revenue Code. These NOL carryforwards begin to expire
in the year 2000. No tax benefit has been reported in the financial
statements because the Company believes there is a 50% or greater
chance the carryforward will expire unused, and are limited pursuant
to the Internal Revenue Code. The loss from the year ended July 31,
1999 can be used to offset income for the period ended July 31, 2000.
Accordingly, no tax provision has been recorded.
9
Biopulse International, Inc.
Notes to the Financial Statements
October 31 and July 31, 2000
NOTE 1 - Summary of Significant Accounting Policies (continued)
Deferred tax assets and the valuation account is as follows at
October 31, July 31,
2000 2000
-------------- --------------
Deferred tax asset:
NOL carrryforward $ 700,000 $ 700,000
Valuation allowance (700,000) (700,000)
-------------- --------------
Total $ - $ -
============== ==============
f. Principles of Consolidation
These financial statements include the books of Biopulse
International, Inc and its wholly owned subsidiary Biopulse, Inc. All
intercompany transactions and balances have been eliminated in the
consolidation.
h. Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the
date of the financial statements and expenses during the reporting
period. In these financial statements, assets, liabilities and
expenses involve extensive reliance on management's estimates. Actual
results could differ from those estimates.
i. Accounts Receivable Allowance
The Company periodically reviews accounts receivable and the
allowance for doubtful accounts. At October 31, 2000 the allowance
was $36,500.
j. Inventory
Inventory is recorded at the lower of cost or market on the
first-in, first-out basis, and consists primarily of nutrition
supplements and medical supplies.
NOTE 2 - Property and Equipment
The Company capitalizes purchases of long lived assets that are
expected to give benefit to the Company over the life of the asset.
The Company also capitalizes improvements and costs that increases the
value of or extend the life of the asset.
Capitalized assets are depreciated over the estimated useful
lives of the assets (five to seven years for furniture and fixtures
and leasehold improvements, three to five years for computer
equipment) on the straight line basis.
10
Biopulse International, Inc.
Notes to the Financial Statements
October 31 and July 31, 2000
NOTE 2 - Property and Equipment (continued)
Property and Equipment consists of the following at October 31,
2000 and July 31, 2000:
October 31, July 31,
2000 2000
------------- -------------
Furniture & Equipment $ 171,301 $ 144,228
Medical Equipment 683,104 543,087
Leasehold improvements 93,576 44,306
Auto 4,000 -
Accumulated Depreciation (103,743) (71,892)
------------- -------------
Total Property & Equipment $ 848,238 $ 659,729
============= =============
Depreciation expense was $60,508 for the years ended July 31,
2000 and $31,850for the three months ended October 31, 2000.
NOTE 3 - Intangible Assets
The companies intangible assets are patent pending and other
technologies acquired form Aidan Inc. in August 2000. The cost of
acquiring these assets are capitalized and amortized over their
estimated useful life. Patents have a useful life of 17 years.
Intangible assets consist of the following at October 31,2000:
Intangible Assets $ 700,000
Accumulated Amortization ( 10,294)
-----------
Total Intangible Assets $ 689,706
===========
NOTE 4 - Equity
During January, 1999, the Company issued 4,000,000 shares of common
stock for 100 percent of the outstanding stock of Biopulse, Inc. The
shares were valued at $4,000.
During April 1999, the Company issued 2,000,000 shares of common
stock for subscriptions receivable of $970,000.
During April 1999, the Company issued 25,000 shares of preferred
stock, class "A" for cash of $25,000.
During April 1999, the Company issued 25,374 shares of preferred
stock, class "A" for services valued at $25,374.
11
Biopulse International, Inc.
Notes to the Financial Statements
October 31 and July 31, 2000
NOTE 4 - Equity (continued)
During the year ended July 31, 2000 the Company has the following
equity transactions:
- Issued 600,000 shares to the underwriter for services rendered in
the offering.
- Issued 600,000 shares at $.10 per share pursuant to a
subscription agreement.
- Issued 5,000 shares for $3 per share.
During the three months ended October 31, 2000 the Company has
the following equity transactions:
- Issued 25,000 shares for $3 per share.
- Issued 60,000 shares for equipment at $1 per share.
NOTE 5 - Commitments and Contingencies
The Company is committed to an operating lease for office space in
Sandy, Utah. The lease requires the Company to pay monthly rent of
$8,731 and expires December 2003.
The Company is committed to an operating lease for office space in
Tijuana, Mexico. The lease requires the payment of 11,000 per month
adjusted each March 1st by the consumer price index, and expires
February 28, 2005. For purposes of computing future obligations a CPI
increase of 3.5% is assumed.
Future minimum operating lease payments are as follows at October
31, 2000:
2000 $ 39,462
2001 240,622
2002 245,392
2003 250,342
2004 150,650
2005 25,250
-----------
Total $ 951,718
NOTE 6 - Royalties
The Company has an agreement to pay $450 in royalties per patient
who participates in a three week treatment program or $21 per day for
treatments of less than three weeks.
12
Biopulse International, Inc.
Notes to the Financial Statements
October 31 and July 31, 2000
NOTE 7 - Note Payable
The Company borrowed $86,000 to be paid back on or before
September 5, 2000 along with $8,600 in interest. The Company is
currently in default on this note. The note was repaid in November
2000.
The Company borrowed $225,000 on October 25, 2000 and is due
January 23, 2000. Medical care is to be provided to the lender's
daughter in leu of interest. Interest will be charged from the due
date, at the annual rate of 18%, if not paid by the due date.
NOTE 8 - Note Receivable - Related Party
Notes receivable - related party are detailed as follows:
October 31, October 31,
2000 1999
------------ ------------
Note receivable from a corporation, under
common ownership, non-interest bearing,
due within one year 19,032 74,620
------------ ------------
Total Notes receivable - Related Party $ 19,032 $ 74,620
============ ============
NOTE 9 - Preferred Stock
The Company has authorized five classes of Preferred Stock, each
class has 2,000,000 shares authorized at $.001 par value. At October
31, 2000, the Company had no preferred stock outstanding.
NOTE 10 - Reverse Stock Split
In November 1998, the board of directors authorized a 1 for 400
reverse stock split.
Item 2 Managements Discussion and Analysis
Overview
BioPulse International, Inc., (the "Company" or "BioPulse") was
incorporated in the state of Nevada on July 13, 1984 originally under the
name Universal Financial Capital Corp. The Company changed its name in
September 1985 to International Sensor Technologies, Inc. As International
Sensor Technologies, Inc., the Company incurred heavy losses and no revenue
from operations. The Company also experienced five years of inactivity. On
January 12, 1999, the Company again changed its name to BioPulse
International, Inc. when it acquired BioPulse, Inc. The company is
considered to be in its early stages of market development. The company is
in the business of managing drug and rehabilitation centers, integrated
medicine clinics, and medical research programs.
13
BioPulse offers a variety of alternative medicinal products and
services, including dietary supplements, clinical procedures, and medical
equipment from around the world. The Company's efforts focus on treatments
for degenerative diseases such as cancer.
During 1998, BioPulse identified the initial protocols to be included
in the BioPulse treatment programs. The Company evaluated a variety of
techniques and products before determining which ones were most
appropriate. Some of the selected treatments have not yet been approved by
the United States Food and Drug Administration ("the FDA"), so they are
being studied at clinics outside the United States. The Company made
arrangements to have clinical studies done at clinics owned by licensed
physicians in Mexico and Germany that would utilize these protocols.
During 2000, the Company began expanding the scope of the treatments
it was studying to include biotech developments. The Company believes that
recent advances in biochemistry and microbiology have the potential to
explain the observable benefits of alternative medicine so that these
treatments can be optimized. At the same time, developments in biotech and
immunotherapy hold the promise of new treatments that are consistent with
the alternative medicine philosophy of improving overall health by working
with the body's natural systems to fight disease.
BioPulse believes that these technological developments can converge
with the public shift toward alternative medicine that has been recognized
by the U.S. Government and major medical associations and institutions.
The Company has focused on cancer, which is the second leading cause of
death in the United States (over 500,000 deaths annually) and costs the
U.S. economy more than $100 billion per year.
Results of Operations
The following discussion contains comments about the financial
condition of BioPulse International, Inc. for the Quarter ended October 31,
2000.
BioPulse International, Inc. restarted operations after a merger with
BioPulse Inc. during the fiscal year ended July 31, 1999. Operations
began in January 1999.
As is typical with most new businesses, there is a period of time
before the business is profitable. The market needs to be developed,
employees trained, policies and procedures fine-tuned and the Company needs
to become known and earn a reputation with its potential customers and
clients. During the first half of its last fiscal year, BioPulse was still
going through the startup process.
Since restarting operations, BioPulse has been refining its operations
and developing its market. BioPulse has advertised in periodicals
targeting its potential patients, rented booths at trade shows, developed a
good reputation by its results and by satisfied patients. Its fees started
low and have increased as its market developed and as demand for its
treatments has increased. BioPulse has also been developing new treatments
to offer its patients and expand its market.
During the last half of its last fiscal year, the Company became
profitable. The current quarter is the third profitable quarter in a row.
Revenues for the current quarter are $1,159,680 compared to $228,208 for
the same quarter last year; an increase of 500%. During the quarter,
BioPulse acquired the patent pending rights to Aidan Incorporated's
dendritic cell vaccine technology. This is partly responsible for the
increase in revenues. Revenues from exploiting this technology should be
more dramatic in future quarters as more doctors and patients become aware
of its potential.
13
Gross profit improved even more dramatically. It increased from
$43,142 in the first quarter last fiscal year to $761,321 during the first
quarter of this fiscal year; an increase of more than 1700%. This is due
to increases in fees and as well as the increase in number of patients
treated. Net profit went form a loss of $234,804 to a profit of $81,518.
Significant Elements of Income or Loss That Do Not Arise From Continuing
Operations
There are no significant elements of income or loss that do not arise
from continuing operation during the current fiscal year.
Liquidity
The Company has one note payable to unrelated parties other than
accounts payable of $86,000. Funds were provided to finance the Company
during its development stage primarily by notes payable from related
parties. A substantial block of stock (2,000,000 shares) was sold for
approximately $1,000,000 in notes receivable, of which the Company has
collected approximately $900,000. As of the end of the fiscal year, an
additional $100,000 was remaining in notes receivable.
The proceeds from the stock sale provided liquidity for the Company to
carry the Company through its development period. The Company is currently
generating sufficient cash flow to finance operations.
Known Trends
There are no known trends, events or uncertainties that have had or
that are reasonable expected to have a material impact on the net sales or
revenues or income from continuing operations.
Material Commitments for Capital Expenditures and Capital Resources
There are no material commitments for capital expenditures. BioPulse
has made all of the capital expenditures necessary to carry on its
business. BioPulse is exploring raising additional equity to finance
expansion at an greater pace than can be financed from current operations.
PART II OTHER INFORMATION
Item 1 Legal Proceedings
None
Item 2 Changes in Securities
Recent Sales of Unregistered Securities.
On August 18, 2000, 60,000 restricted common shares were issued to Rob
Reeder, pursuant to an exemption from registration under section 4(2) of
the Securities Act of 1933, in exchange for medical equipment valued at
approximately $60,000.
On August 18, 2000, 6,000 restricted common shares were issued to
Robert Perez, pursuant to an exemption from registration under section 4(2)
of the Securities Act of 1933. $18,000 was received by the Company.
On August 18, 2000, 7,500 restricted common shares were issued to
Perez Makasian Williams, pursuant to an exemption from registration under
section 4(2) of the Securities Act of 1933. $22,500 was received by the
Company.
15
On August 18, 2000, 2,500 restricted common shares were issued to
Robert Williams, pursuant to an exemption from registration under section
4(2) of the Securities Act of 1933. $7,500 was received by the Company.
On September 7, 2000, 9,000 restricted common shares were issued to
Jack O. Scher, pursuant to an exemption from registration under section
4(2) of the Securities Act of 1933. $27,000 was received by the Company.
On September 22, 2000, 25,000 shares of preferred stock issued to Brad
Fey were converted to 50,000 shares of common stock pursuant to an
exemption from registration under section 4(2) of the Securities Act of
1933. No cash was received by the Company.
On November 21, 2000, 353,636 common shares and warrants to purchase
up to an additional 189,318 common shares were issued to Kauser Partners,
LP, pursuant to an exemption from registration under section 4(2) of the
Securities Act of 1933. $1,000,000 was received by the Company. The
warrants can be exercised for a period of five years at a price of $7.50
per share, which exercise price is subject to change according to the terms
of the warrant agreement.
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
(a) Exhibits
1. Financial Statement Data Schedule As Filed
2. BioPulse International, Inc. 2000
Stock Option Plan As Filed
(b) Reports on Form 8-k No reports on Form 8-k were filed
during the quarter.
16
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
Biopulse International, Inc.
Date: February 13, 2001 By: /s/ Jan Morse
----------------------------
President
Date: February 13, 2001 By: /s/ Mike Jones
----------------------------
Treasurer
17
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Biopulse International, Inc.
Date: February 13, 2001 By:
----------------------------
President
Date: February 13, 2001 By:
----------------------------
Treasurer
18