U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 2001
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file no.: 000-31889
Bio-One Corporation
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(Name of small business issuer in its charter)
Nevada 65-0815746
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
310 Waymont Court, Suite 100
Lake Mary, Florida 32746
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number (407) 328-1611
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 the filing requirements for
the past 90 days.
Yes _ X _ No _____
Copies of Communications Sent to:
Newman & Pollock, LLP James G.Dodrill II, PA
2600 N. Military Trail, Suite 270 3360 NW 53rd Circle
Boca Raton, FL 33431 Boca Raton, FL 33496
Tel: (561) 997-9920 Tel: (561) 862-0529
Fax: (561) 241-4943` Fax: (561) 862-0927
Number of outstanding shares of the Issuer's common stock
as of September 30, 2001: 12,611,272
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BIO-ONE CORPORATION
Index
Page
Number
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PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets
September 30, 2001 (Unaudited)
and December 31, 2000 3-4
Statements of Operations
Three months and nine months ended
September 30, 2001 (Unaudited) and
September 30, 2000 (Unaudited) 5
Statements of Cash Flows
Nine months ended
September 30, 2001 (Unaudited) and
September 30, 2000 (Unaudited) 6
Notes to Financial Statements (Unaudited) 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II. OTHER INFORMATION
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PART I
Item 1. Financial Statements
BIO-ONE CORPORATION
Balance Sheets
Assets
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December 31, September 30, 2001
2000 (unaudited)
------------ ------------------
Current assets:
Cash and cash equivalents $ 19,832 100,927
Accounts receivable 1,930 2,841
Inventories 19,901 20,926
------------ -------------
Total current assets 41,663 124,694
Property and equipment, at cost, net
of accumulated depreciation and
amortization 14,906 22,919
Deposits 1,700 1,700
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TOTAL ASSETS $ 58,269 149,313
============ =============
See accompanying notes to financial statements.
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BIO-ONE CORPORATION
Balance Sheets
Liabilities and Shareholders' Equity
------------------------------------
December 31, September 30, 2001
2000 (unaudited)
------------ ------------------
Current liabilities:
Accounts payable $ 30,160 16,037
Accrued expenses 203,468 261,468
Current installments of note payable 124,502 74,502
------------ ------------
Total current liabilities 358,130 352,007
Shareholders' equity:
Common stock - $.001 par value, authorized
100 million shares; issued 9,844,999
and 12,611,272 shares 9,845 12,611
Additional paid in capital 279,255 899,589
Accumulated deficit (588,961) (1,114,894)
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Total Shareholders' Equity (299,861) (202,694)
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$ 58,269 149,313
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See accompanying notes to financial statements.
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BIO-ONE CORPORATION
Statement of Operations
Three Months Ended Nine Months Ended
September 30, September 30,
2001 2001 2000 2001
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
------------------------- ------------------------
Revenues:
Net sales $ 14,709 30,300 34,421 66,167
Consulting fees - - 18,958 -
---------- ----------- --------- --------
14,709 30,300 53,379 66,167
Costs and Expenses:
Cost of goods sold 3,834 5,570 18,021 26,027
Selling, general and
Administrative 174,220 346,358 315,620 557,854
---------- ----------- --------- ---------
178,054 351,928 333,641 583,881
---------- ----------- --------- ---------
Operating income (loss) (163,345) (321,628) (280,262) (517,714)
Non-operating revenue (expense):
Interest expense (977) (2,390) (1,070) (8,219)
---------- ----------- --------- ---------
Income before income taxes (164,322) (324,018) (281,332) (525,933)
Provision for income taxes - - - -
---------- ----------- --------- ---------
Net income $ (164,322) (324,018) (281,332) (525,933)
=========== =========== ========= =========
Basic earnings per share $ (0.03) (0.03) (0.05) (0.05)
=========== =========== ========= =========
Diluted earnings per share $ (0.03) (0.03) (0.05) (0.05)
Weighted average number
of shares outstanding 5,064,500 11,534,135 5,017,800 10,494,737
============ =========== ========== ===========
See accompanying notes to financial statements.
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BIO-ONE CORPORATION
Statement of Cash Flows
Nine Months Ended
September 30,
2000 2001
(Unaudited) (Unaudited)
------------------------------
Cash flows from operating activities:
Net loss $ (281,332) (525,933)
Adjustments to reconcile net income to net cash
provide by operating activities:
Depreciation and amortization 1,200 3,000
Common stock issued for services - 203,000
Changes in operating assets and liabilities:
Accounts receivable (4,397) (911)
Inventories (949) (1,025)
Accounts payable and accrued expenses 92,583 43,877
Other assets (7,000) -
Net cash used in operating activities $ (199,895) (277,992)
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Cash flows from investing activities:
Purchase of property and equipment (730) (11,013)
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Net cash used in investing activities (730) (11,013)
------------- ------------
Cash flows from financing activities:
Proceeds from sale of common stock 102,100 320,100
Payment of principal on note payable - (25,000)
Proceeds from note payable 99,502 75,000
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Net cash provided by financing activities 201,602 370,100
Increase in cash and cash equivalents 977 81,095
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Cash and cash equivalents - beginning of period 20 19,832
Cash and cash equivalents - end of period $ 997 100,927
============= ============
See accompanying notes to financial statements.
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BIO-ONE CORPORATION
Notes to Financial Statements
(1) Presentation of Unaudited Financial Statements
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The unaudited financial statements have been prepared in accordance
with rules of the Securities and Exchange Commission and, therefore,
do not include all information and footnotes necessary for a fair
presentation of financial position, results of operations and cash
flows, in conformity with generally accepted accounting principles.
The information furnished, in the opinion of management, reflects all
adjustments (consisting only of normal recurring accruals) necessary
to present fairly the financial position as of September 30, 2001, and
results of operations and cash flows for the nine-month periods ended
September 30, 2001 and 2000. The results of operations are not
necessarily indicative of results which may be expected for any other
interim period, or for the year as a whole.
(2) Sales to Major Customers
------------------------
During the nine months ended September 30, 2001, three customers
accounted for 48%, 24% and 18%, respectively, of total revenue.
(3) Inventories
-----------
Inventories consist of the following:
September 30,
December 31, 2001
2000 (Unaudited)
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Finished goods $ 19,901 20,926
============ =============
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Item 2. Management's Discussion and Analysis of Results of Operations.
General
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Bio-One Corporation, a Nevada corporation of which Crown
Enterprises, Inc., a Florida corporation ("Crown") is a wholly-owned
subsidiary (collectively 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 limitations on
resale and (vi) each of the parties was 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").
The Company relied upon Section 517.061(11) of the Florida Code
for several transactions. In each case, the facts relied upon to make
the Florida Exemption applicable include the following: (i) sales of
the shares of common stock were not made to more than 35 persons;
(ii) neither the offer nor the sale of any of the shares was
accomplished by the publication of any advertisement; (iii) all
purchasers either had a preexisting personal or business relationship
with one or more of the executive officers of the Company or, by
reason of their business or financial experience, could be reasonably
assumed to have the capacity to protect their own interests in
connection with the transaction; (iv) each purchaser represented
that he was purchasing for his own account and not with a view to or
for sale in connection with any distribution of the shares; and (v)
prior to sale, each purchaser had reasonable access to or was
furnished all material books and records of the Company, all material
contracts and documents relating to the proposed transaction, and
had an opportunity to question the executive officers of the
Company. Pursuant to Rule 3E-500.005, in offerings made under Section
517.061(11) of the Florida Statutes, an offering memorandum is not
required; however each purchaser (or his representative) must be
provided with or given reasonable access to full and fair disclosure
of material information. An issuer is deemed to be satisfied if such
purchaser or his representative has been given access to all material
books and records of the issuer; all material contracts and documents
relating to the proposed transaction; and an opportunity to question
the appropriate executive officer. In the regard, the Company
supplied such information and was available for such questioning (the
"Florida Exemption").
In January 2001, the Company entered into a consulting
agreement with Irwin Newman. Mr. Newman's objectives under the
agreement are to assist us in capital raising, revenue building and by
counseling management. In July 2001, the Company issued 285,624
shares and 31,735 shares of its restricted common stock to Mr. Newman
and Mr. Jeffrey Gerstein respectively, in compliance with this
agreement. For such offering, the Company relied upon the 506
Exemption and the Florida Exemption. Subsequently, in further
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compliance with this agreement, we issued Mr. Newman an additional
24,056 shares and Mr. Gerstein an additional 2,673 shares.
In May 2001, the Company issued 100,000 shares of its common
stock and a warrant to purchase an additional 100,000 shares of its
common stock at an exercise price of $0.29 to Arthur Szatkowski for
$25,000. The warrants expire June 22, 2002. For such offering, the
Company relied upon the 506 Exemption and the Florida Exemption.
In June 2001, the Company issued 10,000 shares of its common
stock to Curt Jones, who served as a financial consultant to the
Company. For such offering, the Company relied upon the 506 Exemption
and the Florida Exemption.
In June 2001, the Company issued 2,000 shares of its common
stock to Charles A. Gaudio & MaryAnn Gaudio JTWROS for services in
connection with production of the Company's website. For such
offering, the Company relied upon the 506 Exemption and the Florida
Exemption.
In July 2001, the Company filed a Registration Statement on
Form S-8 to register its Year 2001 Employee/Consultant Stock
Compensation Plan. The Company registered 250,000 shares of its common
stock, all of which was issued to Donald F. Mintmire for legal fees.
In July 2001, the Company announced the formation of its
management team in a press release dated July 17, 2001. The release
may have been misleading, as a portion of the management team has been
selected by the Company's current officers and directors, but as of
yet has not been installed.
In August 2001, the Company issued 416,667 shares of its common
stock to JohnM. Moxen upon the conversion of Mr. Moxen's promissory
note dated May 25, 2001. For such offering, the Company relied upon
the 506 Exemption and the Florida Exemption
In August 2001, the Company issued 50,000 shares of its common
stock to each of Richard Friedman and Jeffrey Markowitz for services
in connection with certain financial advisory services rendered to the
Company. For such offering, the Company relied upon the 506 Exemption
and the Florida Exemption.
In August 2001, the Company issued 46,296 shares of its common
stock to each of Gloria Burkholder, Julie Gingrich and Sherry Schrock
upon the conversion of Margaret Schrock's promissory note dated
December 5, 2000. For such offering, the Company relied upon the 506
Exemption, the Florida Exemption and filed required documents in Iowa
pursuant to an exemption from registration.
In September 2001, the Company issued 100,000 shares of its
common stock to Robert Gingras upon the exercise of a warrant to
purchase shares of its common stock at an exercise price of $0.25 per
share, for a cumulative purchase price of $25,000. For such offering,
the Company relied upon the 506 Exemption and the Florida Exemption.
In September 2001, the Company issued 90,000 shares of its
common stock to the Margaret F. Schrock Family Trust upon the exercise
of a warrant to purchase shares of its common stock at an exercise
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price of $0.29 per share, for a cumulative purchase price of $26,100.
For such offering, the Company relied upon the 506 Exemption and the
Florida Exemption.
Discussion and Analysis
- -----------------------
The following discussion and analysis should be read in
conjunction with the Company's financial statements and the
accompanying notes appearing subsequently under the caption "Financial
Statements." 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's growth is expected to come primarily from the
private label manufacture and wholesale distribution of human and
animal health supplements and supply of ingredients (nutraceutical
based health supplements) for inclusion in health supplements. This
pattern of growth will closely correlate to increases in the Company's
health supplement manufacturing and distribution capacity and its
development of proprietary health supplement technologies.
On May 30, 2000, the Company acquired Crown. By acquiring
Crown, a "cottage" private label distributor of health supplements,
the Company acquired technology and a proprietary nutritional
supplements product line. The operation produced only nominal revenues
in 1999. Operations for private label manufacturing and distribution
are expected to begin after raising the funds necessary to purchase an
existing manufacturing facility and a distribution company. Company
management estimates that $20 million will be needed to purchase both
facilities. The Company expects to raise the funds needed through
private placement efforts through the investment community. The
Company is currently in negotiations with funding sources, although no
commitments have been made. The Company has also begun talks with two
(2) possible acquisition candidates, although no binding agreement has
been made.
In addition to private label distribution, the Company also
benefitted from its development of its Live Blood Cell Analysis
program the second half of 1999 and first half of 2000. The Company
conducted extensive experimentation to develop the trademarked GREEN
PEARLS(TM) product line and the process for the capsuling of BLUE
GREEN ALGAE FROM UPPER LAKE KLAMATH with extended shelf-life. GREEN
PEARLS(TM) is a unique natural food source, which is a standard health
food supplement for maintaining individual health. By mid-1999, the
Company had perfected a process for producing GREEN PEARLS(TM) with a
two (2) year shelf-life. The Company began distribution of GREEN
PEARLS(TM) to several customers in the second quarter of 1999.
Since acquiring Crown, 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
Company expects that the increase in operating expenses will be
matched by a concurrent increase in revenues. However, the Company's
net loss may continue even if revenues increase and operating expenses
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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.
Results of Operations - For the Three Months Ending September 30, 2001
- ------------------------------------------------------------------------
and September 30, 2000
- ----------------------
Financial Condition, Capital Resources and Liquidity
- ----------------------------------------------------
For the 3rd quarter ended September 30, 2001 and September 30,
2000, the Company recorded revenues of $30,300 and $14,709
respectively.
For the 3rd quarter ended September 30, 2001 and September 30,
2000, the Company had selling, general and administrative expenses and
total operating expenses of $346,358 and $174,220 respectively.
This increase of $172,138 or nearly 99% was due to employment
contract fees accrued for the Company's management as well as legal,
accounting and consultants' expenses.
For the 3rd quarter ended September 30, 2001 and September 30,
2000, the cost of goods sold was $5,570 and $3,834 respectively.
Net Losses
- ----------
For the 3rd quarter ended September 30, 2001 the Company
reported a net loss of $324,018. For the 3rd quarter ended September
30, 2000 the Company reported a net loss of $164,322. The increased
loss is primarily due to employment contract fees accrued for the
Company's management as well as legal, accounting and consultants'
expenses.
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
continue its planned operations and is presently negotiating
investment terms and conditions.
Employees
- ---------
At September 30, 2001, the Company employed two (2) persons.
Neither of these employees are represented by a labor union for
purposes of collective bargaining. The Company considers its
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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
- ------------------------
Health Supplement Development: The Company develops products
requested by customers, and/or develops new product concepts that it
licenses to customers. The Company also actively seeks and reviews new
nutraceutical materials and delivery technologies developed by
independent researchers. There is no assurance that this research
and development effort will result in marketable products or services.
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.
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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 of any unsatisfied judgments
against the Company.
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Defaults in Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted during the quarter ending September 30,
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:
3.(i).1 [1] Articles of Incorporation of Bio-One Corporation
filed February 24, 1998.
3.(i).2 [1] Certificate of Amendment of Articles of
Incorporation increasing authorized capital stock filed
August 7, 2000.
3.(ii).1 [1] Bylaws of Bio-One Corporation
4.1 [1] Form of Private Placement Offering of 1,600,000
common shares at $0.01 per share.
4.2 [1] Promissory Note in favor of Kevin Thomas dated
August 8, 2000.
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4.3 [2] Convertible Note in favor of Margaret Schrock dated
December 5, 2000.
10.1 [1] Share Exchange Agreement between the Company and
Crown Enterprises, Inc. dated May 20, 2000.
10.2 [1] Employment Agreement between the Company and Armand
Dauplaise dated May 30, 2000.
10.3 [1] Employment Agreement between the Company and Kevin
Lockhart dated May 30, 2000.
10.4 [1] Lease Agreement between Crown Enterprises and Daniel
Jack Co. dated August 15, 2000.
10.5 [2] Removed.
10.6 [3] Bio-One Corporation Year 2001 Employee/Consultant
Stock Compensation Plan.
10.7 [4] Consulting Agreement between the Company and Irwin
Newman dated January 17, 2001.
10.8 [5] Consulting Agreement between the Company and Frank
Clark dated ______.
23.1 [3] Consent of Parks, Tschopp, Whitcomb & Orr, P.A.
- -------------------------------------------------
[1] Incorporated herein by reference to the Company's Registration
Statement on Form 10-SB filed November 3, 2000.
[2] Incorporated herein by reference to the Company's amended
Registration Statement on Form 10-SB filed January 5, 2001.
[3] Incorporated herein by reference to the Company's Registration
Statement on Form S-8 filed July 20, 2001.
[4] Incorporated herein by reference to the Company's Form 10-QSB for
the quarter ended June 30, 2001, filed August 14, 2001.
[5] Filed herewith.
(b) No reports on Form 8-K have been filed.
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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-One Corporation
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(Registrant)
Date: November 13, 2001 By: /s/ Armand Dauplaise
------------------------
Armand Dauplaise, President and Chairman
By: /s/ Kevin Lockhart
----------------------
Kevin Lockhart, Secretary
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