SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED March 31, 2006
COMMISSION FILE NUMBER:
RADIAL ENERGY INC.
______________________________________________________
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA
______________________________________________________________
(State or other jurisdiction of incorporation or organization)
Nevada 72-1580091
_______________________ ____________________________________
(State of organization) (I.R.S. Employer Identification No.)
1200 Smith Street, Suite 1600, Houston, Texas 77002
___________________________________________________
(Address of principal executive offices) (Zip Code)
Tel: (713) 353-4963
_________________________________________________
Registrants telephone number, including area code
______________________________________________
(Former name, former address and former fiscal
year, if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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 / /
1
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes / / No /X/
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes /X/ No / /
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
At March 31, 2006, and as of the date hereof, there were outstanding
35,065,824 shares of the Registrant's Common Stock, $.001 par value.
Transitional Small Business Disclosure Format: Yes / / No /X/
2
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS 4
ITEM 2 MANAGEMENT'S DISCUSSION OF OPERATIONS AND
FINANCIAL CONDITION 11
ITEM 3 CONTROLS AND PROCEDURES 18
PART II OTHER INFORMATION 18
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K 19
ITEM 7 SIGNATURES 20
3
EXPLANATORY NOTE
This Annual Report on Form 10-QSB/A is being filed as Amendment No. 1 to the
Quarterly Report on Form 10-QSB of Radial Energy Inc. for the quarter ended
March 31, 2006, which was filed with the Securities and Exchange Commission (the
"SEC") on May 19, 2006 (the "Original Form 10-QSB"). This Amendment is being
filed in response to comments from the SEC resulting from their review of the
Company's Form SB-2 (filed on November 1, 2006). Except as expressly stated in
this Amendment No. 1, generally the amended quarterly report speaks only as of
the filing date of the Original Form 10-KSB and generally does not reflect any
events occurring after December 31, 2005. See the Company's Form 10-QSB's for
the fiscal quarters during 2006 subsequent to the period covered by the Original
Form 10-QSB and its Form 8-K's filed with the SEC since March 31, 2006 for
updated information about the Company's financial affairs.
4
ITEM 1 FINANCIAL STATEMENTS
RADIAL ENERGY INC.
(formerly BV Pharmaceutical, Inc.)
(An Exploration Stage Company)
INTERIM FINANCIAL STATEMENTS
March 31, 2006
(Unaudited)
(Stated in US Dollars)
RADIAL ENERGY INC.
(formerly BV Pharmaceutical, Inc.)
(An Exploration Stage Company)
INTERIM BALANCE SHEETS
March 31, 2006 and December 31, 2005
(Unaudited)
(Stated in US Dollars)
March 31 December 31
2006 2005
_________ ___________
ASSETS
Current
Cash $ 191,244 $ 1,211
Accounts receivable - 1,000
Prepaid expenses 10,011 -
_________ _________
$ 201,255 $ 2,211
========= =========
LIABILITIES
Current
Accounts payable and accrued liabilities $ 17,481 $ 8,435
Unearned revenue - 7,500
_________ _________
17,481 15,935
_________ _________
STOCKHOLDERS' EQUITY (DEFICIENCY)
Capital stock - Note 4
Authorized:
75,000,000 common stock, $0.001 par value
Issued:
35,065,824 common stock (December 31, 2005: 151,065,824) 35,066 151,066
Additional paid-in capital 93,180 6,180
Shares subscribed 350,000 -
Subscription receivable (100,000) -
Deficit accumulated during the development stage (194,472) (170,970)
_________ _________
183,774 (13,724)
_________ _________
$ 201,255 $ 2,211
========= =========
SEE ACCOMPANYING NOTES
RADIAL ENERGY INC.
(formerly BV Pharmaceutical, Inc.)
(An Exploration Stage Company)
INTERIM STATEMENTS OF OPERATIONS
for the three-month period ended March 31, 2006 and 2005
and for the period from June 30, 2000 (Date of Inception) to March 31, 2006
(Unaudited)
(Stated in US Dollars)
June 30, 2000
(Date of
Three months ended Inception) to
March 31, March 31,
2006 2005 2006
___________ ____________ ____________
Revenue
License fees $ - $ - $ 24,000
Other income 8,500 480 10,238
___________ ____________ ____________
8,500 480 34,238
___________ ____________ ____________
Administrative expenses
Advertising and promotion - - 1,001
Bad debt - - 1,000
Consulting fees - Note 5 13,954 - 62,451
Filing fees 1,981 5,047 14,436
Intellectual property acquisition costs - - 50,000
Interest and bank charges 473 1,288 8,087
Investor relations 10,000 - 19,996
Marketing research and development - - 10,000
Office and miscellaneous 2,713 3,379 15,586
Professional fees 6,868 5,222 47,506
Rent - - 505
Travel 5,420 - 5,420
Website maintenance - - 2,129
___________ ____________ ____________
41,409 14,936 238,117
___________ ____________ ____________
Loss before other item (32,909) (14,456) (203,879)
Other item:
Gain on note payable forgiven - Note 4 9,407 - 9,407
___________ ____________ ____________
Net loss for the period $ (23,502) $ (14,456) $ (194,472)
=========== ============ ============
Basic loss per share $ (0.00) $ (0.00)
=========== ============
Weighted average number of shares outstanding - Note 4 87,910,268 149,920,400
=========== ============
SEE ACCOMPANYING NOTES
RADIAL ENERGY INC.
(formerly BV Pharmaceutical, Inc.)
(An Exploration Stage Company)
INTERIM STATEMENTS OF CASH FLOWS
for the three-month period ended March 31, 2006 and 2005
and for the period from June 30, 2000 (Date of Inception) to March 31, 2006
(Unaudited)
(Stated in US Dollars)
June 30, 2000
(Date of
Three months ended Inception) to
March 31, March 31,
2006 2005 2006
___________ ____________ ____________
Cash Flows used in Operating Activities
Net loss for the period $ (23,502) $ (14,456) $ (194,472)
Deduct item not affecting cash:
Gain on note payable forgiven (9,407) - (9,407)
Changes in non-cash working capital
balances related to operations:
Accounts receivable 1,000 - -
Prepaid expenses (10,011) - (10,011)
Accounts payable and accrued liabilities 9,453 173 17,888
Unearned revenue (7,500) - -
___________ ____________ ____________
(39,967) (14,283) (196,002)
___________ ____________ ____________
Cash flows from Financing Activities
Capital stock issued - - 99,975
Decrease in note payable (20,000) - (20,000)
Convertible debentures - 1,233 57,271
Shares subscribed 250,000 - 250,000
___________ ____________ ____________
230,000 1,233 387,246
___________ ____________ ____________
Increase (decrease) in cash during the period 190,033 (13,050) 191,244
Cash, beginning of the period 1,211 24,964 -
___________ ____________ ____________
Cash, end of the period $ 191,244 $ 11,914 $ 191,244
=========== ============ ============
Non-cash Transactions - Note 8
SEE ACCOMPANYING NOTES
RADIAL ENERGY INC.
(formerly BV Pharmaceutical, Inc.)
(An Exploration Stage Company)
INTERIM STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
for the period June 30, 2000 (Date of Inception) to March 31, 2006
(Unaudited)
(Stated in US Dollars)
Deficit
Accumulated
Additional Shares Subs- During the
Common Stock Paid-in Subs- cription Development
*Shares **ParValue Capital cribed receivable Stage Total
___________ __________ __________ ________ __________ ____________ _________
Capital stock subscribed
pursuant to an offering
memorandum for cash
- at $0.0000002 122,172,000 $ 122,172 $ (121,968) $ - $ - $ - $ 204
___________ __________ __________ ________ __________ ____________ _________
Balance, December 31, 2000 122,172,000 122,172 (121,968) - - - 204
Capital stock issued pursuant to
a private placement
- at $0.0025 27,108,400 27,108 40,663 - - - 67,771
- at $0.05 160,000 160 7,840 - - - 8,000
Net loss for the year - - - - - (69,885) (69,885)
___________ __________ __________ ________ __________ ____________ _________
Balance, December 31, 2001 149,440,400 149,440 (73,465) - - (69,885) 6,090
Capital stock issued pursuant to
a private placement
- at $0.05 480,000 480 23,520 - - - 24,000
Net loss for the year - - - - - (30,090) (30,090)
___________ __________ __________ ________ __________ ____________ _________
Balance, December 31, 2002 149,920,400 149,920 (49,945) - - (99,975) -
Net income for the year - - - - - 108 108
___________ __________ __________ ________ __________ ____________ _________
Balance, December 31, 2003 149,920,400 149,920 (49,945) - - (99,867) 108
Net loss for the year - - - - (36,453) (36,453)
___________ __________ __________ ________ __________ ____________ _________
Balance, December 31, 2004 149,920,400 149,920 (49,945) - - (136,320) (36,345)
Capital stock issued pursuant to
conversion of convertible
debentures - at $0.05 1,145,424 1,146 56,125 - - - 57,271
Net loss for the year - - - - - (34,650) (34,650)
___________ __________ __________ ________ __________ ____________ _________
Balance, December 31, 2005 151,065,824 151,066 6,180 - - (170,970) (13,724)
Capital stock retired to the (29,000)
treasury (116,000,00) (116,000) 87,000 - - -
Shares subscribed - - - 350,000 - - 350,000
Subscription receivable - - - - (100,000) - (100,000)
Net loss for the period - - - - - (23,502) (23,502)
___________ __________ __________ ________ __________ ____________ _________
Balance, March 31, 2006 35,065,824 $ 35,066 $ 93,180 $350,000 $(100,000) $ (194,472) $ 183,774
=========== ========== ========== ======== ========== ============ =========
* The common stock issued has been retroactively restated to reflect a
forward stock split of 1,500 new shares for one old share, effective on
January 5, 2001, and a forward split of 4 new shares for one old share,
effective February 20, 2006 (Note 4).
** The par value of common stock has been retroactively restated to reflect a
change from no par value to a par value of $0.001 per share.
SEE ACCOMPANYING NOTES
RADIAL ENERGY INC.
(formerly BV Pharmaceutical, Inc.)
(An Exploration Stage Company)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
March 31, 2006 and 2005
(Unaudited)
(Stated in US Dollars)
NOTE 1 INTERIM REPORTING
The accompanying unaudited interim financial statements have been
prepared by Radial Energy Inc. (the "Company") pursuant to the
rules and regulations of the United States Securities and Exchange
Commission. Certain information and disclosures normally included
in annual financial statements prepared in accordance with
accounting principles generally accepted in the United States of
America have been condensed or omitted pursuant to such rules and
regulations. In the opinion of management, all adjustments and
disclosures necessary for a fair presentation of these financial
statements have been included. Such adjustments consist of normal
recurring adjustments. These interim financial statements should
be read in conjunction with the audited financial statements of
the Company for the fiscal year ended December 31, 2005.
The results of operations for the three months ended March 31,
2006 are not indicative of the results that may be expected for
the full year.
NOTE 2 CONTINUANCE OF OPERATIONS
These interim financial statements have been prepared in
accordance with generally accepted accounting principles
applicable to a going concern, which assumes that the Company will
be able to meet its obligations and continue its operations for
its next twelve months. Realization values may be substantially
different from carrying values as shown and these financial
statements do not give effect to adjustments that would be
necessary to the carrying values and classification of assets and
liabilities should the Company be unable to continue as a going
concern. At March 31, 2006, the Company had not yet achieved
profitable operations, has accumulated losses of $194,472 since
its inception and expects to incur further losses in the
development of its business, all of which casts substantial doubt
about the Company's ability to continue as a going concern. The
Company's ability to continue as a going concern is dependent upon
its ability to generate future profitable operations and/or to
obtain the necessary financing to meet its obligations and repay
its liabilities arising from normal business operations when they
come due. The Company intends to obtain additional financing by
the sale of its common stock through a private placement commenced
on February 21, 2006 (Note 3).
Radial Energy Inc.
(formerly BV Pharmaceutical, Inc.)
(An Exploration Stage Company)
Notes to the Financial Statements
March 31, 2006 and 2005
(Unaudited)
(Stated in US Dollars) - Page 2
NOTE 3 ADDITIONAL ACCOUNTING POLICIES
EXPLORATION STAGE COMPANY
The Company complies with Financial Accounting Standard Board
Statement No. 7 the Securities and Exchange Commission Act Guide 7
for its characterization of the Company as an Exploration Stage
Company. The Company is devoting substantially all of its present
efforts to establish a new business and none of its planned
principal operations have commenced. For the purpose of providing
cumulative amounts for the statements of operations and cash
flows, these amounts will consider only those losses for the
period from Inception to March 31, 2006. Effective April 1, 2006,
the cumulative amounts for the statements of operations and cash
flows will reflect the Company's new exploration stage activity.
OIL AND GAS PROPERTIES
The Company follows the full cost method of accounting for oil and
gas operations whereby all costs of exploring for and developing
oil and gas reserves are initially capitalized on a
country-by-country (cost centre) basis. Such costs include land
acquisition costs, geological and geophysical expenses, carrying
charges on non-producing properties, costs of drilling and
overhead charges directly related to acquisition and exploration
activities.
Costs capitalized, together with the costs of production
equipment, are depleted and amortized on the unit-of-production
method based on the estimated gross proved reserves. Petroleum
products and reserves are converted to a common unit of measure,
using 6 MCF of natural gas to one barrel of oil.
Costs of acquiring and evaluating unproved properties are
initially excluded from depletion calculations. These unevaluated
properties are assessed periodically to ascertain whether
impairment has occurred. When proved reserves are assigned or the
property is considered to be impaired, the cost of the property or
the amount of the impairment is added to costs subject to
depletion calculations.
If capitalized costs, less related accumulated amortization and
deferred income taxes, exceed the "full cost ceiling" the excess
is expensed in the period such excess occurs. The "full cost
ceiling" is determined based on the present value of estimated
future net revenues attributed to proved reserves, using current
prices less estimated future expenditures plus the lower of cost
and fair value of unproven properties within the cost centre.
Proceeds from a sale of petroleum and natural gas properties are
applied against capitalized costs, with no gain or loss
recognized, unless such a sale would alter the relationship
between capitalized costs and proved reserves of oil and gas
attributable to a cost centre. Royalties paid net of any tax
credits received are netted with oil and gas sales.
Radial Energy Inc.
(formerly BV Pharmaceutical, Inc.)
(An Exploration Stage Company)
Notes to the Financial Statements
March 31, 2006 and 2005
(Unaudited)
(Stated in US Dollars) - Page 3
NOTE 4 CAPITAL STOCK
Effective on January 5, 2001, the Company forward split its issued
common stock on the basis of 1,500 new for one old.
On May 25, 2004, the Company amended its authorized capital stock
to 75,000,000 common shares with a par value of $0.001 per share.
The number of authorized shares and the par value per share as
referred to in these financial statements has been restated
wherever applicable to give retroactive effect to this amendment.
On February 10, 2006, the Company repurchased a total of
29,000,000 common shares at $0.001 per share from the previous
President of the Company by the issuance of a promissory note for
$29,000 bearing interest at 8% per annum and due August 10, 2006.
The Company repaid $20,000 of the promissory note on March 27,
2006, which was accepted as payment in full. Consequently the
balance of the note and related interest was written off during
the three months ended March 31, 2006.
Effective on February 20, 2006, the Company forward split its
issued common stock on the basis of four new for one old. The
number of shares referred to in these financial statements has
been restated wherever applicable to give retroactive effect on
the forward stock splits. There was no effect on the Company's
authorized share capital.
The retroactive restatement of the issued common shares is
required by the Securities and Exchange Commission's Staff
Accounting Bulletin, Topic 4c. In actuality, the forward stock
split, of four for one is effective after the Company's repurchase
of 29,000,000. Consequently, the number of shares actually issued
immediately prior to the split was 8,766,456 common shares. The
actual number of common shares, both pre-forward split and
post-forward split, are less than the number of common shares
authorized of 75,000,000.
On February 10, 2006, the Company approved a private placement
offering of up to 8,000,000 units at $0.25 per unit for maximum
proceeds of $2,000,000. The minimum offering is $100,000. Each
unit consists of one common share and one stock purchase warrant
exercisable for two years into one common share at $0.30 per
share. The private placement offering commenced on February 21,
2006 and at March 31, 2006, the Company had received shares
subscriptions for $350,000. Of the $350,000 shares subscriptions,
cash consideration totalling $250,000 had been received at March
31, 2006. Subsequent to March 31, 2006, the Company received
additional share subscriptions for $1,000,000.
On March 29, 2006, the officers of the Company decided to pursue a
new direction and in order to facilitate a name change approved a
plan of merger between the Company and Radial Energy Inc. ("REI")
a newly incorporated wholly-owned inactive subsidiary incorporated
in the State of Colorado on April 10, 2006. Under the plan of
merger, the common shares of REI were cancelled and all assets of
REI shall become assets of the Company and all liabilities of REI
shall be assumed by the Company and REI shall cease to exist and
the Company will change its name to Radial Energy Inc. The purpose
of the merger was to facilitate a name change to Radial Energy
Inc.
Radial Energy Inc.
(formerly BV Pharmaceutical, Inc.)
(An Exploration Stage Company)
Notes to the Financial Statements
March 31, 2006 and 2005
(Unaudited)
(Stated in US Dollars) - Page 4
NOTE 5 RELATED PARTY TRANSACTION
During the three months ended March 31, 2006, the Company incurred
$9,000 (March 31, 2005: $Nil) in consulting fees charged by a
former director of the Company.
NOTE 6 COMMITMENTS
By an employment agreement dated March 10, 2006 with the President
of the Company, and effective April 1, 2006, the Company will pay
$180,000 per year plus annual bonuses as determined by the Board
of Directors of the Company. In addition, the President will
receive a $400 per month auto allowance, $800 per month insurance
reimbursement and a minimum $1,000 per month for rental and
administrative expenses to maintain an office. The Company may
also issue stock options to the President as deemed appropriate by
the Board of Directors. The term of the agreement is 3 years.
NOTE 7 SUBSEQUENT EVENTS - Note 3
i) By a letter of intent dated April 19, 2006, the Company agreed
to enter into a Joint Operating Agreement ("JOA") which was
formalized on May 11, 2006, with Peruvian and American
companies to acquire a 20% working interest and 18% revenue
interest in an oil project located in Peru by the funding the
acquisition of certain equipment to be used for drilling,
testing and evaluation of the first well on the property in
the amount of $1,650,000. Of the total, $900,000 is due upon
the signing of the JOA (paid subsequent to March 31, 2006) and
the remainder will be paid as costs are incurred on the well.
After the drilling of the first well is complete, the Company
will have the option whether to proceed with the project by
funding the drilling, testing and evaluation of another two
wells on the property for an additional $1,650,000.
Thereafter, the Company will have the option to pay for its
20% working interest share of the development and operation of
the project.
In the event the Company and the transacting parties decide
that the project is not feasible, the equipment acquired will
be sold and the Company will be entitled to 67% of the
proceeds.
The completion of a JOA is subject to certain due diligence
procedures to be carried out by the transacting parties.
ii) By a business consulting agreement dated April 1, 2006, the
Company will pay $10,000 per month for investor relations
services for a term of two years.
Radial Energy Inc.
(formerly BV Pharmaceutical, Inc.)
(An Exploration Stage Company)
Notes to the Financial Statements
March 31, 2006 and 2005
(Unaudited)
(Stated in US Dollars) - Page 5
NOTE 8 NON-CASH TRANSACTIONS
Investing and financing activities that do not have a direct
impact on current cash flows are excluded from the statements of
cash flows. During the period ended March 31, 2006, the following
transactions were excluded from the statement of cash flows:
i) the Company repurchased 116,000,000 common shares by the
issuance of a promissory note for $29,000.
ii) the Company recorded shares subscription receivable of
$100,000 pursuant to a share subscription agreement received.
ITEM 2 MANAGEMENT'S DISCUSSION OF OPERATIONS AND FINANCIAL CONDITION
DESCRIPTION OF BUSINESS
Radial Energy Inc. (formerly BV Pharmaceutical, Inc.) (the "Company")is a Nevada
corporation, which was originally formed on June 30, 2000 under the name of All
Printer Supplies.com. As All Printer Supplies.com, the company sought a
consulting opportunity for products and supplies to be offered on the internet,
but the economy at the time, due the demise of many "dot com" companies and
businesses, and the poor market conditions, was never able to launch its
business. On April 17, 2003, the Company changed its name to BV Pharmaceutical,
Inc. On March 29, 2006, the officers of the Company approved a plan of merger
between the Company and Radial Energy Inc., a wholly owned inactive subsidiary
of the Company incorporated by the Company in the State of Colorado on April 10,
2006, to facilitate the change of name to Radial Energy Inc. The Company was
issued 100 shares of the subsidiary for a consideration of $1.00. The 100 shares
were subsequently cancelled upon completion of the merger.
11
The Company's principal place of business is located at 1313 East Maple Street,
Bellingham, Washington, USA, 98225. The Company was organized to engage in any
lawful corporate business. The Company, has been in the exploration stage
since inception and has a very limited operating history and limited revenues.
The Company has a fully developed business plan, is operational and receiving
revenue. The company has $194,472 in losses to date.
The Company has had limited start-up operations and is considered an exploration
stage Company. The Company was originally capitalized at 100,000,000 shares of
Common Stock, with no par value. On May 25, 2004 the amended Articles of
Incorporation were filed with the state of Nevada to decrease the number of
authorized capital stock to 75,000,000 common shares with $0.001 par value. By
reducing the number of shares and establishing a par values for the shares, the
Company's annual filing fee with the Nevada Secretary of State was reduced. The
amendment was a cost-saving measure only. The only impact on the shareholders
was a reduction of the total authorized shares. While this reduced the shares
available for issuance, it also limited the possible dilution which could be
suffered by the shareholders. The Company believes the amendment had no material
impact on the Company, its operations, proposed operations or the rights of
shareholders.
ORGANIZATION
The Company was incorporated in the State of Nevada on June 30, 2000, for the
purpose of providing consulting services to businesses, and engaging in any
other lawful activity.
PRINCIPAL PRODUCTS AND SERVICES
The Company is currently building a new website at www.radialenergyinc.com to
reflect management's current strategic outlook and planned shift towards the
energy sector. The Company has abandoned its previous web-site of
www.yourcloneguard.com. The Company continues to provide information and
services in the areas of personal DNA collection, analysis, profiling, banking
and DNA profile database maintenance in addition to its seeking out interests in
the energy sector.
The Company currently offers two services. The first being an in home self test
DNA Profile Kit with banking (storage). The initial price for this service is
currently US$120. The second service, performed by a professional, allows for
the collection, analysis, profiling, banking, and DNA profile database
maintenance. This service will assist the client in establishing a chain of
custody. Through this service the Company will provide secure access to a
client's personal DNA profile, with documented chain of custody established,
should at some point in the future the need arise to provide evidence of prior
ownership. The initial price for this service is currently US $280.
IN HOME SELF TEST DNA PROFILE KIT AND BANKING.
The Kit will contain buccal sample swabs, sample collection technique indicator,
pre-paid return envelope, a collection seal, along with easy to follow step by
step directions to take a sample.
The sample process of collection is simple, fast, and non-intrusive. Collection
takes place by way of a home self-test kit, where a cotton swab (a buccal
swab)is gently wiped across the inside of the Client's cheek. The swab, which
contains your saliva and the DNA sample, is then labeled and mailed to the
Company for banking (storage). The test process and results would not be
considered suitable for use in a court of law. A certificate with the owner's
name, reference and identification number and other information will be mailed
back to the client.
12
The reasons for the use of the in home self test DNA Profile Kit and banking
service would include the following: 1) storage of a person's DNA; 2) peace of
mind; 3) permanent identifier of family member's DNA; 4) a tool for
identification of missing persons; 5) a genetic history of an elder family
member that may provide clues to inherited diseases; and 6) other genetic
issues.
CHAIN OF CUSTODY DNA PROFILING AND BANKING
Upon receipt of the client's registration for the service, the Company will set
up a DNA sample collection appointment at a hospital, laboratory or clinic near
the client. At the time of collection, the client will be required to provide
identification in the form of birth certificate, social security card or drivers
license. A DNA sample will be collected by way of a buccal cheek swab and the
client will be fingerprinted and photographed. The sample will be labeled,
securely stored and then sent to an independent third party testing facility
where it will be analyzed and a DNA profile will be determined, thereby
establishing the DNA pattern in a format recognized by the international
scientific and legal communities. We currently intend to use Orchid Helix's
testing facilities to perform these services. We have no agreement with Orchid
Helix. This collection and testing procedure establishes a date and time of
submission as evidence of prior ownership. The sample will be sealed and, along
with the results, will be stored for a period of 20 years. The results will be
cross checked with our database for fraud and duplicate submissions and then
added to our database. The Company will provide the client with a DNA Profile
Bank Certificate outlining the results of the client's personal, unique and
original DNA profile.
Results from home DNA tests are normally not guaranteed admissible in a court of
law due to the lack of the "chain of custody". The chain of custody refers to
the legal requirements necessary to establish and document the various persons
and methods used to handle and process the individual sample. A legally
admissible "chain of custody" for a sample requires the samples to be collected
in the presence of a third neutral party at a lab or hospital facility where all
parties are photographed to verify their identity.
The reasons for the use of the Chain Of Custody DNA Profiling and Banking
service would include the following; 1) Use as evidence of DNA theft or
misappropriation; 2) Proof of prior ownership; 3) Maternity or paternity cases;
or 4) Forensic cases.
We estimate the entire DNA Process for either of the services will take
approximately four to eight weeks from the time of DNA sample collection.
These services will be charged by debit or credit card or purchased by cashier's
check or money order.
DNA CLONING
We believe the cloning issue is confusing and fraught with ethical concerns. We
plan to provide information to help simplify the issue and provide more
expansive information to familiarize persons concerned about the cloning issue
and protecting their personal DNA against cloning. The process of DNA
collection, analysis and profiling can be an invasive, frightening and confusing
process for many. We believe we can familiarize the potential client with the
required steps and the need for the Company's DNA profile and banking service.
We believe it is extremely difficult to prevent a determined collector from
obtaining samples of DNA, since all complex living creatures constantly leave
traces of DNA throughout their environment in the form of hair, skin, saliva,
etc. However, we believe you can help deter persons who have illegally obtained
a sample of your DNA from trafficking in these samples, or in pursuing illegal
activities, such as cloning of the samples, by establishing your personal DNA
profile to show prior ownership.
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DISTRIBUTION
We plan to deliver our services through licensing the service to third parties
on a geographic basis; that is, we will grant licenses to persons or business
entities to offer our services in certain, specific geographic areas, such as,
the Province of Alberta, Canada. We have not yet established any specific
geographic areas, and intend to do so only when we have a third party interested
in obtaining a license for a specific area. We do not currently have any
licenses or licensees, and have not been in contact with or negotiated with
anyone for any such license. We have not conducted any market testing to
determine the size of the market for our services.
On July 15, 2003, the Company entered into a license agreement with Mr. Matt
Sutton whereby we granted him a non-exclusive license to market services
relating to the collection of DNA samples and related data. The agreement is for
a term of one (1) year, commencing August 15, 2003, and the license fee due
under the agreement is US$2,000.00 per month. The agreement with Mr. Sutton has
terminated and will not be renewed. Mr. Sutton made no sales of the Company's
services. The license for Mr. Sutton was not renewed because he decided to
pursue other business interests. We do not believe this lack of renewal will
have any material impact on the Company. Since December 31, 2005, the Company
has received orders, sold and received full payment for Seventy-four(74)of its
In Home Self Test Kits. The most recent sale date for an In Home Self Test Kit
was March, 2006. During the period ending March 31, 2006, the Company received
payments of $8,500 for the sale in home test kits.
NEW PRODUCTS OR SERVICES
Other than the products and services described in this From 10-QSB, we currently
have no new products or services announced or planned to be announced to the
public.
COMPETITIVE BUSINESS CONDITIONS
We will face competition from all aspects of the emerging DNA-related business
and industry. We will compete with pharmaceutical and other science or
technology-related companies that have superior DNA-related experience and/or
services which they now, or may, in the future, offer to their potential or
existing customers. Many of these companies may in time offer free information
and DNA-related storage facilities to their customers. Many of these companies
have other sources of revenues and we rely only on the fees generated through
our proposed DNA information and database services. In addition, these companies
may have better marketing and distribution channels. There can be no assurance
that we will be able to compete effectively in this highly competitive industry,
which could have a material adverse impact upon market acceptance of our
proposed business.
Our main, existing and potential competitors for our proposed DNA testing,
profiling and banking business are any business in the pharmaceutical business
or distribution of pharmaceutical products business. Some of the primary DNA
service and information providers and competitors are: DNA Testing Centre, Inc.
- - - www.dnatestingcentre.com, GeneTree DNA Testing Center - www.genetree.com,
Metaphase Genetics - www.metaphasegenetics.com, and Genex Diagnostics SwabTest -
www.swabtest.com, and DNA Diagnostic Center - www.dnacenter.com.
OUR COMPETITIVE POSITION
We believe competition takes place on many levels, including pricing,
convenience in obtaining information, specialization, and breadth of services
offered. We intend to serve as a content aggregator for DNA-related information
and provide what we believe is an unbiased comprehensive information source, as
well as marketplace and facilitator for DNA-related information.
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Our objective is to provide a service that helps the consumer cut through the
often perceived clutter, confusion and noise of the marketplace and help them
confidentially and quickly bring each person to a point where they can make an
informed decision if the services offered are appropriate for them.
By offering a specialized DNA storage and information service, we will be
targeting those consumers who are looking to establish their DNA profile and
banking of that profile. We believe that consumers will pay for a service that
is specialized, unbiased and comprehensive and one that helps them cut through
the perceived clutter, confusion and noise of the marketplace and help them
confidentially and quickly make an informed decision if the DNA testing and
profiling services offered are appropriate for them.
SOURCES AND AVAILABILITY OF RAW MATERIALS
As of the date of this quarterly report, we have established initial contact
with DNA sample kit suppliers and DNA testing facilities. We have not entered
into any arrangement or agreements to date.
CUSTOMER BASE
From December 31, 2005 to March 31, 2006, the Company has received orders,
amounting to $8,500 in sales revenue, for its In Home Self Test Kit. We have
received payment in full for the orders. We do not anticipate we will depend on
one or a few major customers. There can be no assurance that this assumption is
correct.
Our intended principal market of customers is expected to be the people who are
aware of the problem with identity theft, those with concerns about the health
and health risk factors of their relatives and unborn children and those wishing
to preserve their DNA profile in a data bank for future uses. We have not
performed any marketing studies to assess whether a potential market exists for
our proposed services, but we believe that there is such a market based on the
existence of other data banks and the number of articles about DNA storage and
identity theft management as seen in the media. We do not intend to perform any
marketing studies prior to beginning operations. Based on the costs of similar
services, we believe we can sustain a market for our services.
INTELLECTUAL PROPERTY
We do not have any trademarks, patents, licenses, royalty agreements, or other
proprietary interests.
GOVERNMENTAL REGULATION ISSUES
We are not now affected by direct government regulation. Based on our research,
we do not believe the products and services we intend to offer require approval
from the Food and Drug Administration.
ENVIRONMENTAL LAW COMPLIANCE
To the extent which environmental compliance may be necessary, we do not
anticipate any significant compliance expense.
EMPLOYEES
The Company does not have any employees.
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REPORTS TO SECURITY HOLDERS
As of February 11, 2005, the Company became effective and is a reporting company
under the requirements of the Exchange Act and will file quarterly, annual and
other reports with the Securities and Exchange Commission. Our annual report
will contain the required audited financial statements. We are not required to
deliver an annual report to security holders and will not voluntarily deliver a
copy of the annual report to the security holders. The reports and other
information filed by us will be available for inspection and copying at the
public reference facilities of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549.
Copies of the material may be obtained by mail from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. Information on the operation of the Public Reference Room may
be obtained by calling the SEC at 1-800-SEC-0330. In addition, the Commission
maintains a World Wide Website on the Internet at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission.
PLAN OF OPERATIONS
The discussion contained in this quarterly report contains "FORWARD-LOOKING
STATEMENTS" that involve risk and uncertainties. These statements may be
identified by the use of terminology such as "BELIEVES," "EXPECTS," "MAY,"
"SHOULD" or "ANTICIPATES" or expressing this terminology negatively or similar
expressions or by discussions of strategy. The cautionary statements made in
this quarterly report are applicable to all related forward-looking statements
wherever they appear in this quarterly report. Our actual results could differ
materially from those discussed in this quarterly report.
We are an exploration stage company with limited operations or revenues. We are
unable to satisfy cash requirements without management's financial support or
other funding. Our management and certain investors have made $149,975 of
capital contributions to our business. The Company has raised the total of
$99,975 through Private Placements (see page 32 of the SB-2 filing "Recent Sales
of Unregistered Securities") and in January of 2004 the Company issued two
convertible debentures in the principal amount of $25,000 each, at an interest
rate of 10% per annum, for a total principal amount of $50,000 to two separate
unrelated non-US parties. Subsequent to June 30, 2005, these convertible
debentures have been converted to the number of shares stated in the financials.
At March 31, 2006, the Company had not yet achieved profitable operations, has
accumulated losses of $194,472 since its inception and expects to incur further
losses in the development of its business, all of which casts substantial doubt
about the Company's ability to continue as a going concern. The Company's
ability to continue as a going concern is dependent upon its ability to generate
future profitable operations and/or to obtain the necessary financing to meet
its obligations and repay its liabilities arising from normal business
operations when they come due.
The Company has cash on hand in the amount of $191,244, which it currently
intends to use in furtherance of its proposed entry into the oil and gas
business. The Company has not yet determined the amount of funds it may allocate
to its DNA test kit business.
The plan of the Company is to obtain additional financing by the sale of its
common stock through a private placement which commenced on February 21, 2006.
The Company approved a private placement offering of up to 8,000,000 units at
$0.25 per unit for proceeds of $2,000,000. The minimum offering is $100,000.
Each unit consists of one common share and one stock purchase warrant
exercisable for two years into one common share at $0.30 per share. In March
2006, the Company received share subscriptions for $350,000. Of the $350,000
share subscriptions, cash consideration totalling $250,000 was received during
March 2006. There is no assurance we will be able to raise additional funds or
that we will be able to raise sufficient capital to pursue proposed operations
in the oil and gas business.
16
In the event we need to raise additional funds, we have not yet determined how,
where or when we will obtain these funds. There is no assurance that we will be
able to obtain financing for our business development, if, as and when required,
or on terms favorable to the Company. If adequate funds are not available to us,
we believe that our business development could be adversely affected.
Our future capital requirements will also depend on one or more of the following
factors: - market acceptance of our services; - the extent and progress of our
research and development programs; - competing technological and market
developments; and - the costs of commercializing our services.
There can be no assurance that funding will be available on favorable terms to
permit successful commercialization of our DNA services or be successful in our
proposed business operations.
In addition, we have no further credit facility or other committed sources of
capital. We may be unable to establish credit arrangements on satisfactory
terms, if at all. If capital resources are insufficient to meet our future
capital requirements, we may have to raise additional funds to continue
development of our website. There can be no assurance that the funds will be
available on favorable terms, if at all.
To the extent that additional capital is raised through the sale of equity
and/or convertible debt securities, the issuance of the securities will likely
result in dilution to our shareholders.
There is no assurance that we will be successful in the marketing our DNA
profile services or licensing. We have no other proposed sources of revenue.
Therefore, if we are not successful in this regard, we will be unable to achieve
revenues under our current business plan.
We do not anticipate any significant research and development expenses over the
next twelve months. We do not expect to purchase or sell any plant and
significant equipment or make any significant changes in the number of employees
over the next twelve months.
SUBSEQUENT EVENTS
In May, 2006, the Company received share subscriptions for $1,000,000 for which
full cash consideration of $1,000,000 was received. The subscriptions are part
of the private placement which commenced on February 21, 2006. The Company
approved the private placement offering of up to 8,000,000 units at $0.25 per
unit for proceeds of $2,000,000. The minimum offering is $100,000. Each unit
consists of one common share and one stock purchase warrant exercisable for two
years into one common share at $0.30 per share.
On April 19, 2006, the Company entered into a Letter of Intent and thereafter on
May 11, 2006, into a Joint Operating Agreement (collectively the "Agreement")
with Zeigler-Peru, Inc. to form a joint venture for an oil drilling project in
Peru. Pursuant to the terms of the Agreement, the Company will obtain a 20%
working interest, and 18% revenue interest, in the Peruvian Huaya Anticline
Project, Block 100, oil prospect located near the analogous Maquia Field.
As consideration for this interest, which is only for one well, the Company will
pay US$1,650,000. On May 12, 2006, US$900,000 of the US$1,650,000 consideration
was paid.
Pursuant to the Agreement, upon completion and review of the drilling results of
the first well, the Company will have the option to participate in the drilling
of two additional wells. Should the Company opt to participate in the drilling
of the two additional wells, the Company will pay a further US$1,650,000.
17
Upon the completion of the drilling of well three, the Company will own a
pro-rata percentage of the drilling rig and related equipment. In the event the
joint venture is abandoned after drilling well three, the drilling rig and
related equipment will be sold for a reasonable amount and the Company will
receive 67% of the proceeds of sale.
After completion of the drilling and review of well three results, the Company
will have the option to participate in the drilling of additional wells, at a
cost of 20% of the development and operation costs of the new wells.
The Company will be a minority investor only in the project, and will not be the
operator.
Management believes the prospect is a low-risk opportunity to discover and
develop a field with production potential, but there can be no assurance the
prospect will achieve such potential.
It is anticipated that the first well will be drilled by the end of the 3rd
quarter of 2006, with production anticipated by year end.
The project encompasses a structural closure of 534 acres, with the potential
for 41 well locations. The Company believes there is currently an established
oil market offering international prices and an existing transportation network
with refineries nearby.
The Company contracted Gustavson and Associates of Boulder, Colorado, to perform
a reserve assessment which has reported favorable information.
There are no material relationships between the registrant or its affiliates and
any of the parties, other than in respect of the agreement.
The Company will seek to obtain the remaining funds necessary to perform under
the terms of the Agreement (US$1,650,000) through the private placement it
commenced on February 21, 2006.
DESCRIPTION OF PROPERTY
We do not own any real property at this time, and we conduct our business from
an office at the offices of our President, rent-free at this time.
The Company intends to lease space in the near future and will attempt to secure
space can on commercially reasonable terms and without undue operational
disruption.
ITEM 3. - CONTROLS AND PROCEDURES
Our management, with the participation of our chief executive officer and chief
financial officer, evaluated the effectiveness of our disclosure controls and
procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 as
amended (the "Exchange Act"). In designing and evaluating the disclosure
controls and procedures, management recognized that any controls and procedures,
no matter how well designed and operated, can provide only reasonable assurance
of achieving the desired control objectives. In addition, the design of
disclosure controls and procedures must reflect the fact that there are resource
constraints and that we are required to apply our judgment in evaluating the
benefits of possible controls and procedures relative to our costs.
Based on that evaluation, our chief executive officer and chief financial
officer concluded that, as of March 31, 2006, our disclosure controls and
procedures are effective to provide reasonable assurance that information
required to be disclosed by us in the reports that we file or submit under the
Exchange Act (i) is accumulated and communicated to our management, including
our chief executive officer and chief financial officer, as appropriate, to
allow timely decisions regarding required disclosure, and (ii) is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission rules and forms.
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There were no changes in our internal control over financial reporting that
occurred during the period covered by this Quarterly Report on Form 10-QSB that
have materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting.
PART II OTHER INFORMATION
ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K
There was a report on Form 8-K filed on February 17, 2006. In a subsequent
material event, on April 21, 2006, the Company filed a report on Form 8-K.
The following exhibits are filed with this report:
31.1 Certification of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification of Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification of Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
32.2 Certification of Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
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ITEM 7. SIGNATURES
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.
RADIAL ENERGY INC.
(formerly BV Pharmaceutical, Inc.)
DATE: February 20, 2007 /s/ G. LEIGH LYONS
__________________________
G. Leigh Lyons
President and Director
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