U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarter ended: March 31, 2002
Commission file no.: 33-25126-D
Bio-Solutions International, Inc.
------------------------------------------------------------
(Name of Small Business Issuer in its Charter)
Nevada 85-0368333
- ------------------------------------ --------------------
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
35 Power Lane
Hattiesburg, MS 39402
- ------------------------------------------ --------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (601) 271-7309
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange
on which registered
None None
- ----------------------------------- -----------------------------
Securities to be registered under Section 12(g) of the Act:
Common Stock, $0.0001 par value per share
--------------------------------------------------------
(Title of class)
Copies of Communications Sent to:
Wayne Hartke
The Hartke Building
7637 Leesburg Pike
Falls Church, VA 22043
Indicate by 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 reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
As of March 31, 2002, there were 45,778,718 shares of voting stock of the
registrant issued and outstanding.
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets.................................................F-2
Consolidated Statements of Operations and Comprehensive Income (Loss).......F-3
Consolidated Statements of Stockholders' Equity (Deficiency)................F-4
Consolidated Statements of Cash Flows.......................................F-5
Notes to Consolidated Financial Statements..................................F-6
F-1
Bio-Solutions International, Inc.
(formerly Septima Enterprises, Inc.)
Consolidated Balance Sheets
March 31, June 30,
2002 2001
------------------- ------------------
(unaudited)
ASSETS
CURRENT ASSETS
Cash $ 15,495 $ 4,802
Accounts receivable - trade 20,843 24,940
Inventory 119,971 139,072
------------------- ------------------
Total current assets 156,309 168,814
------------------- ------------------
PROPERTY AND EQUIPMENT
(Net of accumulated depreciation of $7,107 and $3,875
as of March 31, 2002 and June 30, 2001, respectively) 84,957 29,569
------------------- ------------------
Total property and equipment 84,957 29,569
------------------- ------------------
OTHER ASSETS
Security deposits 2,500 2,500
Investments 500 560
Product formulation 50,000 50,000
Goodwill 1,286 1,286
------------------- ------------------
Total other assets 54,286 54,346
------------------- ------------------
Total Assets $ 295,552 $ 252,729
=================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES
Accounts payable 93,635 38,637
Accrued compensation 114,750 81,200
Notes payable - related parties 163,408 318,050
------------------- ------------------
Total current liabilities 371,793 437,887
------------------- ------------------
Total Liabilities 371,793 437,887
------------------- ------------------
STOCKHOLDERS' EQUITY (DEFICIENCY)
Common stock, $0.0001 par value, authorized 100,000,000 shares;
45,778,718 and 37,389,282 issued and outstanding shares, respectively 4,577 3,739
Additional paid-in capital 1,430,561 627,608
Accumulated deficit (1,511,379) (816,505)
------------------- ------------------
Total stockholders' deficit (76,241) (185,158)
------------------- ------------------
Total Liabilities and Stockholders' Deficit $ 295,552 $ 252,729
=================== ==================
The accompanying notes are an integral part of the financial statements
F-2
Bio-Solutions International, Inc.
(formerly Septima Enterprises, Inc.)
Consolidated Statements of Operations
Nine Months Ended March 31,
(Unaudited)
2002 2001
---------------------- --------------------
REVENUES
Sales of franchises $ 26,500 $ 0
Product and service sales 52,280 375
---------------------- --------------------
Total revenues 78,780 375
---------------------- --------------------
EXPENSES
Cost of products 13,070 325
Operating expenses 746,424 37,737
---------------------- --------------------
Total expenses 759,494 38,062
---------------------- --------------------
Net income (loss) before other income (expense)
provision for income taxes (680,714) (37,687)
---------------------- --------------------
OTHER INCOME (EXPENSE)
Interest expense 14,160 0
---------------------- --------------------
Net income (loss) before provision for income taxes (694,874) (37,687)
---------------------- --------------------
Provision for income taxes 0 0
---------------------- --------------------
Net income (loss) $ (694,874)$ (37,687)
====================== ====================
Net income (loss) per weighted average share, basic $ (0.02)$ (0.01)
====================== ====================
Weighted average number of shares 7,426,680
====================== ====================
The accompanying notes are an integral part of the financial statements
F-3
Bio-Solutions International, Inc.
(formerly Septima Enterprises, Inc.)
Consolidated Statements of Stockholders' Equity (Deficiency)
Additional Total
Number of Common Paid-in Deferred Stockholders'
Shares Stock Capital Compensation Deficit Deficiency
----------- ---------- ------------ ------------- ------------ -------------
BEGINNING BALANCE, June 30, 1999 90,021 $ 9 $ 1,754,727 $ (9,407)$ (1,870,329) $ (125,000)
Net loss 0 0 0 0 0 0
----------- ---------- ------------ ------------- ------------ -------------
BALANCE, June 30, 2000 90,021 9 1,754,727 (9,407) (1,870,329) (125,000)
10/00-shares issued to settle accounts payable 939 1 93,879 0 0 93,880
11/00-shares issued in exchange for options 1,947 2 194,656 0 0 194,658
02/01-shares issued for services 18,300,000 1,830 181,970 0 0 183,800
02/01-acquisition of PSM 11,140,020 1,114 (1,943,376) 9,407 1,508,346 (424,509)
S-8 stock for services 9,370,000 937 92,763 0 0 93,700
144 stock for services 105,000 10 1,040 0 0 1,050
Stock for cash 1,214,285 121 250,379 0 0 250,500
05/01-asset acquisition 12,859,980 1,285 0 0 0 1,285
06/01-cancellation of shares (15,692,910) (1,570) 1,570 0 0 0
Net loss 0 0 0 0 (454,522) (454,522)
----------- ---------- ------------ ------------- ------------ -------------
BALANCE, June 30, 2001 37,389,282 3,739 627,608 0 (816,505) (185,158)
07/01-shares issued for services 125,000 12 12,488 0 0 12,500
08/01-shares issued for services 450,000 45 44,955 0 0 45,000
09/01-shares issued for services 150,000 15 14,985 0 0 15,000
09/01-shares issued for cash 210,526 21 39,979 0 0 40,000
09/01-shares issued for fixed assets 800,000 80 7,920 0 0 8,000
10/01-shares issued for services 450,000 45 61,455 0 0 61,500
12/01-shares issued for services 2,270,000 227 249,473 0 0 249,700
12/01-shares issued for debt conversion 3,553,910 355 355,036 0 0 355,391
12/02-shares issued for services 380,000 38 16,662 0 0 16,700
Net loss 0 0 0 0 (694,874) (694,874)
----------- ---------- ------------ ------------- ------------ -------------
ENDING BALANCE, March 31, 2002
(unaudited) 45,778,718 $ 4,577 $ 1,430,561 $ 0 $ (1,511,379) $ (76,241)
=========== ========== ============ ============= ============ =============
The accompanying notes are an integral part of the financial statements
F-4
Bio-Solutions International, Inc.
(formerly Septima Enterprises, Inc.)
Consolidated Statements of Cash Flows
Nine Months Ended March 31,
(Unaudited)
2002 2001
---------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (694,874) $ (37,687)
Adjustments to reconcile net loss to net cash
used for development activities:
Depreciation 3,272 0
Stock issued for services 400,400 0
Stock issued for interest expense 37,413 0
Change in operating assets and liabilities:
(Decrease) in accounts receivable 4,097 0
(Decrease) in inventory 19,101 0
Increase in accounts payable 54,988 39,748
Increase in accrued compensation 33,550 0
---------------- ---------------
Net cash used by operating activities (142,053) 2,061
---------------- ---------------
CASH FLOW FROM INVESTING ACTIVITIES:
Acquisition of fixed assets (50,620) (625)
---------------- ---------------
Net cash used by investing activities (50,620) (625)
---------------- ---------------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds of note payable - related parties 163,366 0
Proceeds of common stock 40,000 0
---------------- ---------------
Net cash provided by financing activities 203,366 0
---------------- ---------------
Net increase (decrease) in cash 10,693 1,436
CASH, beginning of period 4,802 511
---------------- ---------------
CASH, end of period $ 15,495 $ 1,947
================ ===============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Non-Cash Financing Activities:
Fixed assets acquired for common stock $ 8,000 $ 0
================ ===============
Common stock issued for debt conversion $ 355,391 $ 0
================ ===============
The accompanying notes are an integral part of the financial statements
F-5
Bio-Solutions International, Inc.
(formerly Septima Enterprises, Inc.)
Notes to Consolidated Financial Statements
(Information with respect to the nine months
ended March 31, 2002 and 2001 is unaudited)
(1) SIGNIFICANT ACCOUNTING POLICIES
Organization and operations
Septima Enterprises, Inc. (Company) was incorporated on September 12, 1988
under the laws of the State of Colorado for the purpose of acquiring
interests in other business entities and commercial technologies.
Operations to date have consisted of acquiring capital, evaluating
investment opportunities, acquiring interests in other businesses and
technologies, establishing a business concept, conducting research and
development activities, and manufacturing.
The Company, due to the unsuccessful nature of its initial operations,
ceased all operations in February 1998. In September 1998, creditors of the
Company were successful in obtaining a judgment against the Company for
unpaid debts. In October 1998, the Company was subject to a Judicial Sale
whereby all assets of the Company were sold in satisfaction of the
September 1998 judgment. Accordingly, the aggregate adjusted balance of
open trade payables, as of December 31, 2000, of approximately $134,000 was
the only remaining identifiable liability of the Company.
During the first quarter of Fiscal 2001, the Company's legal counsel began
to negotiate the settlement of the outstanding trade accounts payable. As a
result of these efforts, the Company was able to negotiate settlements
during the second quarter of Fiscal 2001, using cash, the Company's
restricted and unregistered common stock and combinations thereof, to
satisfy approximately $122,700 of open trade payables Additionally,
unaffiliated third parties have agreed to assume the remaining
approximately $11,000 of trade payables owed to unlocated vendors.
The Company held a Special Meeting of the Shareholders on January 22, 2001.
The shareholders approved the following items: 1) Authorized the Company to
effect a 1 for 100 reverse split of the Company's issued and outstanding
common stock as of February 5, 2001; 2) authorized the Company to
reincorporate in the State of Nevada thereby changing the corporate
domicile from Colorado to Nevada; and 3) approved changing the par value of
the common shares from no par value to $0.0001 per share. The effects of
these actions are reflected in the accompanying financial statements as of
the first day of the first period presented.
The Company changed its state of incorporation from Colorado to Nevada by
means of a merger with and into a Nevada corporation formed on January 26,
2001 solely for the purpose of effecting the reincorporation. The
Certificate of Incorporation and Bylaws of the Nevada corporation are the
Certificate of Incorporation and Bylaws of the surviving corporation. Such
Certificate of Incorporation changed the Company's name to Bio- Solutions
International, Inc. and modified the Company's capital structure to allow
for the issuance of 100,000,000 total equity shares consisting of no shares
of preferred stock and 100,000,000 shares of common stock, with a par value
of $0.0001 per share.
Principles of consolidation
The consolidated financial statements include the accounts of Bio-Solutions
International, Inc. and its wholly- owned subsidiaries, Paradigm Sales and
Marketing Corporation. All intercompany transactions have been eliminated.
F-6
Bio-Solutions International, Inc.
(formerly Septima Enterprises, Inc.)
Notes to Consolidated Financial Statements
(1) SIGNIFICANT ACCOUNTING POLICIES (Continued)
Acquisitions
On February 14, 2001, the Company and Paradigm Sales & Marketing
Corporation (a privately-owned Florida corporation), and the individual
holders of all of the outstanding capital stock of Paradigm Sales &
Marketing Corporation (Holders) entered into a reverse acquisition
transaction (Reorganization) pursuant to a certain Share Exchange Agreement
(Agreement) of such date. Pursuant to the Agreement, the Holders tendered
to the Company all issued and outstanding shares of common stock of
Paradigm Sales & Marketing Corporation in exchange for 11,140,020 shares of
post-reverse split restricted, unregistered common stock of the Company.
The reorganization was accounted for as a reverse acquisition.
In May 2001, the Company and Biosolutions, Inc. (A New Jersey corporation)
entered into an Asset Acquisition Agreement whereby all the assets were
acquired. Upon allocation of the value ascertained to the 12,859,980 shares
issued, $1,260 of goodwill resulted from the transaction.
Revenue Recognition
The Company's revenue is derived primarily from the sale of its products to
its franchised distributors upon shipment of product. Revenues of franchise
distributorship are recognized in accordance with SFAS No. 45.
Stock-based compensation
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation, which establishes a fair value based method for financial
accounting and reporting for stock-based employee compensation plans and
for transactions in which an entity issues its equity instruments to
acquire goods and services from non-employees.
However, the new standard allows compensation to employees to continue to
be measured by using the intrinsic value based method of accounting
prescribed by Accounting Principles Board Opinion No. 25, Accounting for
Stock Issued to Employees, but requires expanded disclosures. The Company
has elected to continue to apply to the intrinsic value based method of
accounting for stock options issued to employees. Accordingly, compensation
cost for stock options is measured as the excess, if any, of the estimated
market price of the Company's stock at the date of grant over the amount an
employee must pay to acquire the stock. No compensation expense has been
recorded in the accompanying statements of operations related to stock
options issued to employees. All transactions in which goods or services
are the consideration received for the issuance of equity instruments are
accounted for based on the fair value of the consideration received or the
fair value of the equity instruments issued, whichever is more reliably
measurable.
Net loss per share
Basic earnings (loss) per share is computed by dividing the net income
(loss) by the weighted-average number of shares of common stock and common
stock equivalents (primarily outstanding options and warrants). Common
stock equivalents represent the dilutive effect of the assumed exercise of
the outstanding stock options and warrants, using the treasury stock
method. The calculation of fully diluted earnings (loss) per share assumes
the dilutive effect of the exercise of outstanding options and warrants at
either the beginning of the respective period presented or the date of
issuance, whichever is later.
F-7
Bio-Solutions International, Inc.
(formerly Septima Enterprises, Inc.)
Notes to Consolidated Financial Statements
(1) SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income taxes
Deferred income taxes are provided on a liability method whereby deferred
tax assets are recognized for deductible temporary differences and
operating loss and tax credit carry-forwards and deferred tax liabilities
are recognized for taxable temporary differences. Temporary differences are
the differences between the reported amounts of assets and liabilities and
their tax bases. Deferred tax assets are reduced by a valuation allowance
when, in the opinion of management, it is more likely than not that some
portion or all of the deferred tax assets will not be realized. Deferred
tax assets and liabilities are adjusted for the effects of changes in tax
laws and rates on the date of enactment.
Fair value of financial instruments
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments: Cash, accounts receivable and
accounts payable. The carrying amounts approximated fair value because of
the demand nature of these instruments.
Organization and start-up costs
In accordance with Statement of Position 98-5, the organization and
start-up costs have been expensed in the period incurred.
Use of estimates
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, the
disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Inventory
Inventory is stated at the lower of cost or market.
Investments
Investments in common stock are stated at the lower of cost or market.
Accounts receivable
Represents amounts due from franchisers of its products. Substantially all
amounts are expected to be collected within one year. An allowance for bad
debts has not been established because it is not material.
Interim financial information
The financial statements for the nine months ended March 31, 2002 and 2001
are unaudited and include all adjustments which in the opinion of
management are necessary for fair presentation, and such adjustments are of
a normal and recurring nature. The results for the nine months are not
indicative of a full year results.
F-8
Bio-Solutions International, Inc.
(formerly Septima Enterprises, Inc.)
Notes to Consolidated Financial Statements
(2) PROPERTY AND EQUIPMENT
The cost of property and equipment is depreciated using the straight-line
method over the estimated useful lives of the various assets.
Furniture and equipment $ 92,064 $ 33,444
Accumulated depreciation (7,107) (3,875)
------------ ------------
$ 84,957 $ 29,569
============ ============
(3) INCOME TAXES
In accordance with FASB 109, deferred income taxes and benefits are
provided for the results of operations of the Company. As of June 30, 2001,
the Company has incurred cumulative net operating losses of $432,062. At
this time, due to the uncertainty of future profitable operations, a
valuation allowance of 100% will be reflected as an offset against the tax
benefit attributed to this loss. This potential tax benefit may be carried
forward for up to twenty years.
(4) CAPITAL TRANSACTIONS
On October 10, 2000, the Company issued an aggregate 939 post-reverse split
shares (93,880 pre-reverse split shares) of the Company's restricted,
unregistered common stock in settlement of outstanding trade accounts
payable in the amount of approximately $93,880.
In February 2001, the Company changed its state of incorporation from
Colorado to Nevada by means of a merger with and into a Nevada corporation
formed on January 26, 2001 solely for the purpose of effecting the
reincorporation. The Certificate of Incorporation and Bylaws of the Nevada
corporation are the Certificate of Incorporation and Bylaws of the
surviving corporation. Such Certificate of Incorporation changed the
Company's name to Bio-Solutions International, Inc. and modified the
Company's capital structure to allow for the issuance of 100,000,000 total
equity shares consisting of no shares of preferred stock and 100,000,000
shares of common stock. Both classes of stock have a par value of $0.0001
per share.
On February 13, 2001, the Company issued an aggregate 6,300,000
post-reverse split shares of restricted, unregistered common stock for
professional consulting services related to the reinitialization of the
Company, preparation of all delinquent SEC filings and search activities
related to the potential acquisition of a privately- owned operating
entity. This transaction was valued at an estimated "fair value" of $0.01
per share, or $63,000.
On February 16, 2001, the Company filed with the Securities and Exchange
Commission a Form S-8 Registration Statement. The Registration Statement
registered 12,000,000 post-reverse split shares of the Company's common
stock, reserved for the Company's Year 2001 Employee/Consultant Stock
Compensation Plan for the Company's current employees, directors,
consultants and advisors. Through June 30, 2001, a total of 9,300,000
shares under this Registration Statement have been sold or otherwise
issued.
In February 2001, the Company issued 11,140,000 shares of restricted common
stock in the reverse acquisition with Paradigm Sales and Marketing, Inc.
On March 14, 2001, the Company issued 100,000 shares of restricted common
stock as a sign-on bonus in conjunction with an employment agreement.
F-9
Bio-Solutions International, Inc.
(formerly Septima Enterprises, Inc.)
Notes to Consolidated Financial Statements
(4) CAPITAL TRANSACTIONS (Continued)
On May 1, 2001, the Company exchanged 12,859,980 restricted shares of
common stock for the assets and liabilities of Biosolutions, Inc. (a New
Jersey Co.).
On May 10, 2001, the Company issued 5,000 post-reverse split shares of
restricted, unregistered common stock for consulting services valued at
$50.
On June 7, 2001, two (2) stockholders agreed to return to treasury
15,692,910 restricted shares of common stock. No consideration was given
for these shares.
For the period July through September 2001, the Company issued 725,000
restricted shares of common stock for services.
In September 2001, the Company received $40,000 for 210.526 restricted
shares of common stock.
In September 2001, the Company issued 800,000 restricted shares of common
stock for a mobile laboratory.
In October 2001, the Company issued 450,000 shares of common stock for
services.
In December 2001, the Company issued 950,000 shares of common stock for
services.
In December 2001, the Company issued 1,320,000 shares of restricted stock
for services.
In December 2001, the Company issued 3,553,950 shares of restricted stock
to convert $355,391 of Notes from related parties.
In February 2002, the Company issued 9,000 shares of common stock for
services.
In February 2002, the Company issued 381,000 shares of restricted stock for
services.
(5) STOCK OPTIONS
During the second quarter of Fiscal 2001, the Company negotiated the
surrender and cancellation of approximately 12,270 issued and outstanding
options to purchase shares of the Company's common stock at prices ranging
between $2.00 and $100.00 per share, expiring through January 2004, in
exchange for the issuance of an aggregate 1,946 shares of restricted,
unregistered common stock. The common stock was issued at an exchange rate
of approximately 12.42% of the issued and outstanding options cancelled.
The fair value of each option grant is estimated on the date of grant using
the present value of the exercise price with the following weighted-average
assumptions used for grants in 1997: risk-free interest rates of 7.5
percent; expected lives of 5 to 10 years, no dividends and price volatility
of 30%. The weighted average remaining life of the options outstanding is 3
years, as of March 31, 2002. A reconciliation of the Company's stock option
activity, and related information for the year ended June 30, 2001 is as
follows:
F-10
Bio-Solutions International, Inc.
(formerly Septima Enterprises, Inc.)
Notes to Financial Statements
(5) STOCK OPTIONS (Continued)
Year ended
June 30, 2001
-----------------------------------------
Number Weighted
of average
options exercise price
----------------- ---------------------
Outstanding at beginning of year 1,189,500 $ 0.94
Granted - -
Exercised - -
Expired/Forfeited (1,107,000) -
-----------------
Outstanding at end of period 82,500 $ 0.88
=================
The following table summarizes information about the stock options at
December 31, 2001:
Exercise Number Number
Expiration Date Price Outstanding Exercisable
-------------- --------------- -----------------
September 2006 $ 0.20 - -
January 2003 $ 0.20 5,000 5,000
September 2001 $ 0.50 12,500 12,500
Various from May 2002
through January 2003 $1.00 65,000 65,000
--------------- -----------------
82,500 82,500
=============== =================
(6) RELATED PARTIES
On May 16, 2001, the Company entered into an employment agreement with a
shareholder commencing May 1, 2001 for a term of five (5) years. In
addition, there is a sign-on bonus of 100,000 shares of restricted common
stock and an additional 100,000 shares upon completion of the manufacturing
of a specific quality of product. The annual compensation is fixed at
$60,000 per annum.
On January 3, 2000, the Company's wholly-owned subsidiary entered into an
employment agreement with a shareholder for a term of five (5) years. The
Company pays or accrues compensation of $3,000 per month. As of December
31, 2001, approximately $43,000 has been accrued.
The Company entered into an informal compensation agreement with a
shareholder for consulting and marketing services to the Company. Services
are being accrued at $5,500 per month. As of December 31, 2001,
approximately $67,000 has been accrued.
The Company has executed various promissory notes for funds advanced by
related parties. These notes are interest bearing, primarily at 10% per
annum, unsecured and payable upon demand.
(7) LEASE COMMITMENTS
The Company executed a lease agreement for its office facilities commencing
May 15, 2001 and ending on May 31, 2002. The rent expense for 2001 was
$3,400.
F-11
Bio-Solutions International, Inc.
(formerly Septima Enterprises, Inc.)
Notes to Financial Statements
(7) LEASE COMMITMENTS (Continued)
On April 29, 2002, the Company executed a lease agreement for an office and
warehouse facility commencing May 1, 2002 for a term of five (5) years.
Future minimum rentals are as follows:
2002 $ 6,000
2003 36,000
2004 36,000
2005 36,000
(8) SUBSEQUENT EVENTS
In April 2002, the Board of Directors approved the acquisition of various
assets of H30 Holding Corp. for 3,467,862 restricted shares of common
stock. The common stock issued was held until all conditions were met under
agreement dated January 21, 2002
F-12
Item 2. Management's Discussion and Analysis of Operations
General
The Company relied upon Section 4(2) of the Securities Act of 1933, as
amended (the "Act") and Rule 506 of Regulation D promulgated thereunder ("Rule
506") for several transactions regarding the issuance of its unregistered
securities. In each instance, such reliance was based upon the fact that (i) the
issuance of the shares did not involve a public offering, (ii) there were no
more than thirty-five (35) investors (excluding "accredited investors"), (iii)
each investor who was not an accredited investor either alone or with his
purchaser representative(s) has such knowledge and experience in financial and
business matters that he is capable of evaluating the merits and risks of the
prospective investment, or the issuer reasonably believes immediately prior to
making any sale that such purchaser comes within this description, (iv) the
offers and sales were made in compliance with Rules 501 and 502, (v) the
securities were subject to Rule 144 limitation on resale and (vi) each of the
parties is a sophisticated purchaser and had full access to the information on
the Company necessary to make an informed investment decision by virtue of the
due diligence conducted by the purchaser or available to the purchaser prior to
the transaction (the "506 Exemption").
On April 22, 2002, Enviro, the Company's wholly owned subsidiary, acquired
H30's current beverage business that included the manufacturing, marketing and
sales of the products known as "LunchPak" and "H30 Sport" in exchange for 3,
467,862 shares of the Company's restricted Common Stock. The Company is
currently determining the value of this transaction. Under the terms of the
agreement, Enviro received all rights, title and interest in LunchPak and H30
Sport.
Discussion and Analysis
The discussion contained herein reflects the Results of Operations of the
Company for the nine months ended March 31, 2002 and 2001. The following
discussion and analysis should be read in conjunction with the financial
statements of the Company and the accompanying notes appearing in the previous
section. The following discussion and analysis contains forward- looking
statements, which involve risks and uncertainties in the forward-looking
statements. The Company's actual results may differ significantly from the
results, expectations and plans discussed in the forward-looking statements.
The Company is a technology provider of biological solutions to industries
that desire environmentally-friendly forms of waste remediation. The Company is
the successor entity resulting from the asset purchase of Bio-Solutions
International, Inc., a New Jersey corporation ("BSNJ") and an acquisition of
Paradigm Sales & Marketing, Inc., a Florida corporation ("Paradigm"). BSNJ was a
biotechnology company that owned intellectual properties for the construction
and process of microbial products with remedies for certain environmental
applications and production of value- added products. Paradigm was a sales and
marketing company for environmental application
15
products that is currently building a network of franchises to sell and service
certain applications while recruiting and training qualified distributors and
strategic partners for the more complicated markets. At the time of the
acquisitions, Paradigm owned the exclusive marketing rights for all of BSNJ's
environmental related products and it continues to market all of the Company's
products.
The Company currently operates as Bio-Solutions International, Inc. Unless
the context indicates otherwise, references hereinafter to "the Company" include
both BSNJ and Paradigm as a combined entity.
The ability of the Company to continue as a going concern is dependent upon
increasing sales and obtaining additional capital and financing. The financial
statements do not include any adjustments that might be necessary if the Company
is unable to continue as a going concern. The Company is currently seeking
financing to allow it to continue to expand its operations.
The Company's growth is expected to come primarily from the distribution
and sale of its bioremediation products and through the sale of franchises. This
pattern of growth will closely correlate to increased sales.
Since acquiring Paradigm and the assets and liabilities of BSNJ, the
Company has begun to make preparations for a period of growth, which may require
it to significantly increase the scale of its operations. This increase will
include the hiring of additional personnel in all functional areas and will
result in significantly higher operating expenses. The increase in operating
expenses is expected to be matched by a concurrent increase in revenues.
However, the Company's net loss may continue even if revenues increase and
operating expenses may still continue to increase. Expansion of the Company's
operations may cause a significant strain on the Company's management, financial
and other resources. The Company's ability to manage recent and any possible
future growth, should it occur, will depend upon a significant expansion of its
accounting and other internal management systems and the implementation and
subsequent improvement of a variety of systems, procedures and controls. There
can be no assurance that significant problems in these areas will not occur. Any
failure to expand these areas and implement and improve such systems, procedures
and controls in an efficient manner at a pace consistent with the Company's
business could have a material adverse effect on the Company's business,
financial condition and results of operations. As a result of such expected
expansion and the anticipated increase in its operating expenses, as well as the
difficulty in forecasting revenue levels, the Company expects to continue to
experience significant fluctuations in its revenues, costs and gross margins,
and therefore its results of operations.
The Company's principal place of business is 35 Power Lane, Hattiesburg, MS
39402, and its telephone number at that address is (601) 271-7309. The Company
is quoted on the Over the Counter Bulletin Board ("OTCBB") under the symbol
"BSII"..
Results of Operations -For the Nine Months Ending March 31, 20012and March
31, 2001
Financial Condition, Capital Resources and Liquidity
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For the nine (9) months ended March 31, 2002 and 2001, the Company recorded
revenues in the amount of $26,500 and $0 respectively. The reason for the
increase was the increase in product and service sales.
For the nine (9) months ended March 31, 2002 and 2001, the Company had
operating expenses of $746,424 and $37,737. This increase of $708,687 was due
primarily to increased salaries, stock issued for services and other related
expenses.
For the nine (9) months ended March 31, 2002 and 2001, the Company had cost
of products expenses of $52,280 and $375 respectively. This increase of product
costs was directly related to increased product sales.
For the nine (9) months ended March 31, 2002 and 2001, the Company had
total expenses of $759,494 and $38,062. This increase in expenses was due
primarily to increased operations since the asset purchase of BSNJ.
Net Losses
For the nine (9) months ended March 31, 2002 and 2001, the Company reported
a net loss of $694,874 and $37,687 respectively.
The ability of the Company to continue as a going concern is dependent upon
increasing sales and obtaining additional capital and financing. The Company is
currently seeking financing to allow it to begin its planned operations.
Employees
At March 31, 2002, the Company employed seven (7) persons. None of these
employees are represented by a labor union for purposes of collective
bargaining. The Company considers its relations with its employees to be
excellent. The Company plans to employ additional personnel as needed upon
product rollout to accommodate fulfillment needs.
Research and Development Plans
The Company believes that research and development is an important factor
in its future growth. The equipment service industry is closely linked to the
technological advances of the products it services. Therefore, the Company must
continually invest in learning the new technology to provide the best quality
service to the public and to effectively compete with other companies in the
industry. No assurance can be made that the Company will have sufficient funds
to complete new training in the latest technological advances as they become
available. Additionally, due to the rapid advance rate at which technology
advances, the Company's equipment may be outdated quickly, preventing or
impeding the Company from realizing its full potential profits.
17
Forward-Looking Statements
This Form 10-QSB includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements, other than
statements of historical facts, included or incorporated by reference in this
Form 10-QSB which address activities, events or developments which the Company
expects or anticipates will or may occur in the future, including such things as
future capital expenditures (including the amount and nature thereof), expansion
and growth of the Company's business and operations, and other such matters are
forward-looking statements. These statements are based on certain assumptions
and analyses made by the Company in light of its experience and its perception
of historical trends, current conditions and expected future developments as
well as other factors it believes are appropriate in the circumstances. However,
whether actual results or developments will conform with the Company's
expectations and predictions is subject to a number of risks and uncertainties,
general economic market and business conditions; the business opportunities (or
lack thereof) that may be presented to and pursued by the Company; changes in
laws or regulation; and other factors, most of which are beyond the control of
the Company.
Consequently, all of the forward-looking statements made in this Form
10-QSB are qualified by these cautionary statements and there can be no
assurance that the actual results or developments anticipated by the Company
will be realized or, even if substantially realized, that they will have the
expected consequence to or effects on the Company or its business or operations.
PART II
Item 1. Legal Proceedings.
The Company knows of no legal proceedings to which it is a party or to
which any of its property is the subject which are pending, threatened or
contemplated or any unsatisfied judgments against the Company.
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Defaults in Senior Securities
None
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Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted during the quarter ending December 31, 2001,
covered by this report to a vote of the Company's shareholders, through the
solicitation of proxies or otherwise.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) The exhibits required to be filed herewith by Item 601 of Regulation
S-B, as described in the following index of exhibits, are incorporated herein by
reference, as follows:
Exhibit No. Description
- ---------------------------------------------------
10.17 * Agreement with H30
- --------
* Filed herewith
(b) Reports on Form 8-K were filed during the quarter ended March 31, 2002
as follows:
There were no Form 8K filings made during this quarter.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Bio-Solutions International, Inc.
(Registrant)
Date: May 20, 2002
By:
/s/ Louis H. Elwell, III /s/ Joe Ashley
- -------------------------------------------- --------------------------------
Louis H. Elwell, III, Chairman of the Board, Joe H. Ashley, Secretary,
President and Director Treasurer and Director
/s/ Dr. Krish Reddy /s/ R. Vance Hartke
- -------------------------------------------- --------------------------------
Dr. Krish Reddy, Director Senator R. Vance Hartke,
Director
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