UNITED STATES
SECURITIES EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended February 29, 2004
BIOACCELERATE INC.
(Exact name of registrant as specified in its charter)
BIOACCELERATE INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-4032994
-------- ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
666 Third Avenue
New York, NY 10017
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number 646 723 8946
As of April 29, 2004, the following
shares of the Registrant's common
stock Were issued and outstanding:
24,893,114 shares of voting common stock
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements . . . . . . . . . . . . . . . . .3
CONDENSED CONSOLIDATED BALANCE SHEET . . . . . . . . .4
CONDENSED CONSOLIDATED INCOME STATEMENT. . . . . . . .5
STATEMENT OF CASH FLOWS. . . . . . . . . . . . . . . .6
STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT) . . . . . 6
Note 1. NATURE OF BUSINESS . . . . . . . . . . . . .7
Note 2. SIGNIFICANT ACCOUNTING POLICIES
AND BASIS OF PRESENTATION. . . . . . . . . .8
Note 3. MINORITY INTEREST. . . . . . . . . . . . . .9
Note 4. EQUITY INVESTMENTS. . . . . . . . . . . . .9
Note 5. LIQUIDITY . . . . . . . . . . . . . . . . .10
Item 2. Management's Discussion And Analysis or Plan of
Operations. . . . . . . . . . . . . . . . . . . . . .11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . 16
Item 2. Changes in Securities. . . . . . . . . . . . . . . . 16
Item 3. Defaults upon Senior Securities. . . . . . . . . . . 16
Item 4. Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . . . . . 16
Item 5. Exhibits . . . . . . . . . . . . . . . . . . . . . . 16
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . 17
PART I - FINANCIAL INFORMATION
BIOACCELERATE, INC.
(A Development Stage Company)
CONDENSED CONSOLIDATED BALANCE SHEET
As Of As Of
February 29, 2004 May 31, 2003
(Unaudited) (Audited)
----------------- ------------
ASSETS
Current Assets
Cash & cash Equivalents $ 4,169,432 $ 0
Investments 2,562,333 0
Other accounts receivable 0 3
Loans receivable 566,920 0
Tangible Fixed assets 32,099 0
Other long term investments 11,788 0
Intangible Assets, Net 1,681,464 0
Investments in Associates 2,167,153 0
------------ ------------
TOTAL ASSETS $ 11,191,189 $ 3
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 642,191 $ 883,656
Other Current Liabilities 259,554 0
Minority Interest 770,260 0
------------ ------------
Total Current Liabilities 1,672,005 883,656
Other Liabilities 263,893 0
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Total Liabilities $ 1,935,898 $ 883,656
Stockholders' Equity
Common Stock, $.001 par value,
Authorized 25,000,000 Shares;
Issued and Outstanding
24,725,014 Shares 24,725 3
Additional Paid in Capital 6,373,591 0
Other Comprehensive Income 5,428,529 (34,992)
Deficit Accumulated During the
Development Stage (2,571,554) (848,664)
------------ ------------
Total Stockholders' Equity 9,255,291 (883,653)
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 11,191,189 $ 3
============ ============
The accompanying notes are an integral part of these financial statements
BIOACCELERATE, INC.
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS)
For the 9 For the 9 For the 3 For the 3
Mons Ended Mons Ended Mons Ended Mons Ended From
Feb29,2004 Feb28,2003 Feb29,2004 Feb28,2003 Inception
------------ ------------ ------------ ------------ ------------
TOTAL REVENUES: $ 0 $ 0 $ 0 $ 0 $ 0
OPERATING EXPENSES:
Accounting 152,952 70,403 21,000 29,153 294,396
Legal 51,000 0 26,000 0 51,000
Rent 72,576 35,201 15,000 19,373 143,298
Research & Development 407,808 281,610 0 281,610 973,583
General 428,493 35,201 406,306 35,201 499,216
------------ ------------ ------------ ------------ ------------
Total Operating
Expenses 1,112,829 422,415 468,306 473,565 1,961,493
------------ ------------ ------------ ------------ ------------
Operating Loss (1,112,829) (422,415) (468,306) (473,565) (1,961,493)
Share of Losses in
Associates (610,061) 0 (130,468) 0 (610,061)
------------ ------------ ------------ ------------ ------------
NET LOSS (1,722,890) (422,415) (598,774) (473,565) (2,571,554)
============ ============ ============ ============ ============
NET LOSS PER SHARE (0.089) (0.023) (0.029) (0.026) (0.137)
Weighted Average
Number of Shares
Outstanding 19,416,667 18,000,000 20,625,000 18,000,000 18,796,875
The accompanying notes and accountant's report are an integral part of these
financial statements.
BIOACCELERATE, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS (UNAUDITED)
CASH FLOWS FROM OPERATING
ACTIVITIES:
For the 9 For the 9
Months Ended Months Ended From
Feb 29,2004 Feb 28,2003 Inception
------------ ------------ ------------
NET LOSS (1,722,890) (422,415) (2,571,554)
Adjustments to Reconcile Net Loss
to Net Cash Used in operating
Change in assets and liabilities net
of effects from purchase of subsidiary:
Increase in Loans receivable (1,167,633) 0 (1,167,636)
Increase/(Decrease)in accounts payable 2,359,251 426,708 3,242,907
Increase in other current liabilities 523,447 0 523,447
------------ ------------ ------------
Total adjustments 1,715,065 426,708 2,598,718
------------ ------------ ------------
Net cash provided by operating activities (7,825) 4,293 27,164
------------ ------------ ------------
Effect of exchange rate changes (232,145) (4,293) (267,137)
Cash flows utilised in investing activities:
Increase in Fixed Assets (32,099) 0 (32,099)
Increase in Investments (5,709,121) 0 (5,709,121)
Increase in Investments in Associates (4,167,153) 0 (4,167,153)
Increase in Intangible Assets (1,681,464) 0 (1,681,464)
Increase in Minority Interest 770,260 0 770,260
------------ ------------ ------------
Net cash used in investing activities (10,819,577) 0 (10,819,577)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
New shares issued - Common Stock 24,722 0 24,725
Additional paid in capital 6,373,591 0 6,373,591
Other Non-cash changes 5,695,666 0 5,695,666
------------ ------------ ------------
12,093,979 0 12,093,979
------------ ------------ ------------
Net Increase in Cash and Cash Equivalents $ 1,034,432 $ 0 $ 1,034,432
------------ ------------ ------------
Cash at Beginning of Period 0 0 0
------------ ------------ ------------
Cash at End of Period $ 1,034,432 $ 0 $ 1,034,432
------------ ------------ ------------
Supplemental Disclosure of
Cash Flow Information
Cash Paid During the Period for
Interest Expense 0 0 0
Corporate Taxes $ 0 0 0
The accompanying notes and accountant's report are an integral part of these
financial statements.
BIOACCELERATE INC.
(A Development Stage Company)
STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
FROM INCEPTION TO FEB 29, 2004
OTHER
COMMON STOCK ISSUED ADDITIONAL ACCUMULATED COMPREHENSIVE SHAREHOLDERS'
SHARES PAR VALUE PAID IN CAP DEFICIT INCOME EQUITY
----------- ----------- ----------- ----------- ----------- -----------
Balance
AUG 31,2002 2 $ 3 0 0 0 3
=========== =========== =========== =========== =========== ===========
Net Loss For The
Period Ended
MAY 31,2003 0 0 0 (883,656) 0 (883,656)
----------- ----------- ----------- ----------- ----------- -----------
Balance
MAY 31,2003 2 3 0 (883,656) 0 (883,653)
=========== =========== =========== =========== =========== ===========
Stock issue
August 1,2003 898 1,417 0 0 0 1,417
Net Loss for the
Period Ended
August 31, 2003 0 0 0 (537,042) 0 (537,042)
----------- ----------- ----------- ----------- ----------- -----------
Balance
August 31,2003 900 1,420 0 (1,420,698) 0 (1,419,278)
- -------------------------------------------------------------------------------------------------------------------------------
Reverse Merger
Bioaccelerate Inc
Sept 1,2003 (900) (1,420) 0 414,145 0 1,419,278
19,000,000 19,000 0 (564,114) 0 10,868
Issuance of
625,014 shares
Sept 1,2003 625,014 625 1,561,910 0 0
Net Loss for the
Period Ended
November 30,2003 0 0 0 (61,600) 0 (61,600)
Other Comprehensive
Income 0 0 0 0 1,405,000 1,405,000
- -------------------------------------------------------------------------------------------------------------------------------
Balance
November 30,2003
19,625,014 19,625 1,411,941 (1,482,298) 1,405,000 1,354,268
Issuance of
5,100,000 shares
of Common stock
February 2004
5,100,000 5,100 4,961,650 (1,089,256) 4,023,529 7,901,023
----------- ----------- ----------- ----------- ----------- -----------
Balance 24,725,014 24,725 6,373,591 (2,571,554) 5,428,529 9,255,291
=========== =========== =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements.
BIOACCELERATE, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
February 29, 2004
NOTE 1 - NATURE OF BUSINESS
A. DESCRIPTION OF COMPANY: Bioaccelerate Inc., ("the Company") is a for-profit
corporation incorporated under the laws of the State of Delaware on December 29,
1995 as Tallman Supply Corp. On January 14, 1999 the Company changed its name to
Westminster Auto Retailers Inc. On December 10, 2002 the Company changed its
name to Westminster Medical Inc. On July 25, 2003 the Company changed its name
to Bioaccelerate Inc.
The Company is a development stage company examining opportunities in both start
ups and developing companies in the biopharmaceutical sector. On 31st August
2003 the holders of Common stock agreed to a 5 for 1 reverse of the issued
shares capital. This had the effect of reducing the Common stock from 5million
shares to 1million shares. The Company entered into a letter of intent to
acquire Pharma Manufacturing Services Limited during the quarter ending 31st
August 2003 and the acquisition was completed on September 1st 2003 by the issue
of 18,000,000 post reverse split shares of Common Stock. This has the effect of
transferring control of the company to the former shareholders of Pharma
Manufacturing Services Limited and the Directors consider that this makes Pharma
Manufacturing Services the acquirer for accounting purposes.
Bioaccelerate was formed to take advantage of the burgeoning biopharmaceutical
marketplace through the development of compounds and also the companies that
will commercialize those compounds. The Companies in which it currently has
equity interests focus on five medical areas, being Cancer, Cardiovascular,
Lifestyle, Central Nervous System, and Anti-viral, areas with a current combined
market value of $200 billion. Bioaccelerate is a company that acquires and
develops pharmaceutical assets, both corporate and physical. As at February 29,
2004 the Company has equity interests in 8 Biopharmaceutical companies. The
eight companies referred to, all private and were founded by PMSL. As they are
all private, development stage companies involved in licensing technology, that
is then developed, the Directors consider that these companies should not be
valued in the accounts. In addition to the equity interests in the eight private
companies above, Pharma Manufacturing Services Ltd has, through its subsidiary
Bioaccelerate Limited a BVI corporation, an option to purchase 500,000 shares of
Common stock of Bioenvision Inc an AMEX quoted corporation. The option was
granted at $1.25 per share and has been valued in the balance sheet at the price
on February 29, 2004 of $6.27 per share. Further to the September 1st
acquisition agreement of PMSL the company completed the assignment of shares in
two quoted companies, Enhance Biotech Inc and Evolve Oncology Inc, during
January 2004. Enhance Biotech Inc has a number of Lifestyle compounds in
development and its shares were quoted at $2.87 on February 29, 2004 valuing the
investment at $15,491,781. The Company also owns 1,000,000 options and 1,333,333
warrants to acquire shares of Enhance Biotech, Inc. at an exercise price of
$1.50. The options are exercisable through February 12, 2008 and the warrants
are exercisable through November 2, 2008. The options and warrants are carried
at market value in excess of the option and warrant price of $3,189,666. Evolve
Oncology, Inc holds licenses to develop a number of Cancer treatment compounds.
Its common stock was quoted at $3.55 on February 29, 2004 valuing the investment
at $41,268,750 which has been accounted for using the equity method.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
A. BASIS OF PRESENTATION: Financial statements are prepared on the accrual basis
of accounting. Accordingly revenue is recognized when earned and expenses when
incurred. The unaudited condensed consolidated financial statements of
Bioaccelerate, Inc., a Delaware corporation (the "Company"), presented herein
have been prepared in accordance with accounting principles generally accepted
in the United States of America for the interim financial information and with
the instructions to Form 10-Q. Accordingly, they do not include all of the
information and note disclosures required to be presented for complete financial
statements. The accompanying financial statements reflect all adjustments
(consisting only of normal recurring accruals), which are, in the opinion of
management, necessary for a fair presentation of the results for the interim
periods presented.
Results for the interim periods are not necessarily indicative of the results
for the full years.
The Company has experienced significant quarterly fluctuations in operating
results and it expects that these fluctuations will continue.
Research and Development
Research and development costs are expensed as incurred, including raw material
costs required to manufacture products for clinical trials.
B. USE OF ESTIMATES: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from these estimates. Significant
estimates in the financial statements include the assumption that the Company
will continue as a going concern. See Note 5.
NOTE 3 - MINORITY INTEREST
The Company consolidated its majority owned subsidiaries and records a minority
interest for the interest of third parties in the assets of certain subsidiary
companies. Evolve Oncology, Inc. is a 54.2% owned subsidiary and is included in
the consolidated financial statement at the historical cost of $11,625. The
company owns 11,625,000 shares of Common Stock of Evolve Oncology, Inc. At
February 29, 2004, the last sale price quoted for shares of Evolve Oncology,
Inc. was $3.55 or a market value of $41,268,750.
NOTE 4 - EQUITY INVESTMENTS
The Company owns 5,397,833 shares (27.5%) of Enhance Biotech, Inc a publicly
held biotech company. The Company carries its investment at a historical cost of
$2,776,547, accounts for its investment in Enhance on the equity method and
recorded a loss of $130,468 and $610,061 for the three months and nine months
ended February 29, 2004. At February 29, 2004, the last sale price quoted for
the Common Stock of Enhance Biotech, Inc. was $2.87 indicating a market value of
$15,491,781. The Company also owns 1,000,000 options and 1,333,333 warrants to
acquire shares of Enhance Biotech, Inc. at an exercise price of $1.50. The
options are exercisable through February 12, 2008 and the warrants are
exercisable through November 2, 2008. The options and warrants are carried at
market value in excess of the option and warrant price of $3,189,666.
NOTE 5 - LIQUIDITY
The Company's viability as a going concern is dependent upon developing its
subsidiary companies by raising additional capital, and ultimately, having net
income. The Company's limited operating history, including its losses and no
revenues, primarily reflect the operations of its early stage. As a result, the
Company had from time of inception to February 28, 2004 no revenue and a net
loss from operations of
$2,571,554.
The Company has raised capital through a Private Placement in February of its
Common Stock. To date 5,100,000 shares of Common Stock were sold at $1.00 per
share capital realizing approximately $5.1 million of net funds for general and
administrative expenses and to fund costs associated with its further
development. Bioaccelerate, Inc. does not have a working capital line of credit
with any financial institution and therefore, future sources of liquidity will
be limited to the Company's ability to continue equity funding.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION AND RESULTS OF
OPERATIONS
OVERVIEW
The Company up until February 29, 2004 was a development stage company and its
principal business purpose was to develop assets in the pharmaceutical industry.
The Company entered into a letter of intent to acquire Pharma Manufacturing
Services Limited during the quarter ending 31st August 2003 and the acquisition
was completed on September 1st 2003 by the issue of 18,000,000 post reverse
split shares of Common Stock. This has the effect of transferring control of the
company to the former shareholders of Pharma Manufacturing Services Limited and
the Directors consider that this makes Pharma Manufacturing Services the
acquiror for accounting purposes.
The Financial Statements filed in Item 1 of this 10QSB filing, reflect the
financial condition of the company as at the end of its last fiscal year at 31st
May 2003 and the subsequent nine month period.
The Company filed a Form 8-K on September 19, 2003 reporting that the company
had acquired UK based Pharma Manufacturing Services Limited. Amendment to Form
8-K were filed on November 28, 2003 and March 12, 2004 which included further
information and the required financial statements of Pharma Manufacturing
Services Limited.
BUSINESS
Bioaccelerate Inc. ("Bioaccelerate" or the "Company") is a company that acquires
and develops pharmaceutical compounds that have substantial medical and
commercial value. As at February 28th the Company has majority equity interests
in eight Biotech companies, and also holds minority equity interests in three
Biotech companies. The Companies that Bioaccelerate currently has equity
interests in focus on five vertical therapeutic areas; Cancer, Cardiovascular,
Lifestyle, Central Nervous System, and Anti-Viral, these therapeutic areas have
a current combined market value in excess of $200 billion.
Bioaccelerate's strategy utilizes a corporate infrastructure to accelerate the
development of multiple early-stage compounds to Phase II/III clinical
development. The company believes this creates a lower risk business model as
Bioaccelerate's network enables a timely and cost effective passage through the
initial clinical process up to Phase II/III where substantial incremental value
is created.
Bioaccelerate's objective is to become a leading innovator, utilizing the latest
technologies to cut down the cost and the amount of time that a drug spends in
development. Bioaccelerate's strategy for achieving this objective is to create
value by continuing to aggressively develop its existing companies and
compounds, as well as;
o to identify additional compounds for portfolio companies;
o to enter into partnering and co-development and marketing agreements with
large pharmaceutical and other biotech companies, to speed time to market
for the compounds being developed;
o use industry expertise, business contacts and insights of in house
scientific and business management to develop synergies and establish
collaborative agreements;
o making acquisition and strategic investments in companies that provide
synergistic services to the portfolio companies; and
o to create substantial shareholder value through the development of
existing and further portfolio companies, by making use of the deep asset
base of identified compounds that Bioaccelerate has access to via
established relationships.
Large Pharmaceutical companies need additional products to fill depleted
pipelines, Bioaccelerate believes it has developed a cost effective process
which provides a link between early stage drug candidates and large
Pharmaceutical companies. Currently funding is increasingly only available from
the capital markets for later stage companies. Bioaccelerate develops and
consolidates multiple early stage products in stand alone companies in vertical
therapeutic areas until critical mass and development milestones are achieved.
At this stage the company is then ready to access further funding from the
capital markets. This enables orphan/individual technologies an opportunity to
be developed and gives academic institutions/scientists access to development
capital for early stage compounds.
Bioaccelerate's drug development strategy includes in-licensing compounds from
various academia, research centers, and medical centers where the company has
developed extensive relationships. Bioaccelerate is constantly reviewing these
development opportunities, to establish which products would be best suited to
which company within the Bioaccelerate portfolio of companies.
Bioaccelerate has a proven management team with a broad base of experience in
both pharmaceutical & biotechnology companies, as well as capital markets. The
management team is responsible for company-wide initiatives, significant
operating decisions and policymaking; working alongside a scientific advisory
board whose function is to advise the Company on the scientific aspect of
product selection and development.
REVENUE
For the nine month period ended February 29, 2004, the Company had no revenue.
OPERATING EXPENSES
During the three month period ending February 29, 2004 we incurred $468,306 of
operating expenses, as compared to $473,565 for the three month period ended
February 28, 2003.
NET LOSS
Our net loss for the three month period ending February 29, 2004 was $598,774 as
compared to a net loss for the three month period ending February 28, 2003 of
$473,565.
LIQUIDITY AND CAPITAL RESOURCES
To date, we have incurred significant and increasing net losses. In the event
that our current business plan does not meet expectations we anticipate that we
may continue to incur significant operating losses.
We have an accumulated deficit of $2,571,554 as at February 29, 2004. We plan to
meet our working capital needs and finance our growth plan during the coming
fiscal year through a combination of financing, equity capital and the possible
realization of assets in the Company's holdings. There can be no assurance as to
whether or when we will generate material revenues or achieve profitable
operations. We have insufficient relevant operating history upon which an
evaluation of our performance and prospects can be made. We are still subject to
all of the business risks associated with a new enterprise, including, but not
limited to, risks of unforeseen capital requirements, lack of fully-developed
products, failure of market acceptance, failure to establish business
relationships, reliance on outside contractors for the manufacture and
distribution, and competitive disadvantages against larger and more established
companies. The likelihood of our success must be considered in light of the
development cycles of new products and technologies and the competitive
environment in which we operate.
The Company's viability as a going concern is dependent upon raising additional
capital, and ultimately, having net income. Our limited operating history,
including our losses, primarily reflects the operations at this early stage in
its development.
Before our operating plan can be effected, we will require additional financing.
Furthermore, in the event our plans change or our assumptions change or prove to
be inaccurate, we could be required to seek additional financing sooner than
currently anticipated. Any additional financing may not, however, be available
to us when needed on commercially reasonable terms, or at all. If this were to
occur, our business and operations would be materially and adversely affected.
Based on our operating plan, we are seeking arrangements for long-term funding
through additional capital raising activities. The Company is actively reviewing
various avenues to raise finance and we are currently visiting with and meeting
a number of potential investors.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are currently no pending legal proceedings against the company.
ITEM 2. CHANGES IN SECURITIES
There has been no change in the Company's securities.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
There has been no default in the payment of principal, interest, sinking or
purchase fund installment.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter has been submitted to a vote of security holders during the period
covered by this report.
ITEM 5. EXHIBITS
Exhibit
31.1 Certification of Basil Parker, President , as adopted pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of Linden Boyne, Director and Secretary, as adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of Basil Parker , President pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
32.2 Certification of Linden Boyne, Director and Secretary, pursuant to 18
U.S.C. Section 1350, as adopted pursuant Section 906 of the Sarbanes-Oxley
Act of 2002.
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
BIOACCELERATE INC
(Registrant) Date: April 29, 2004
By: /s/ B.R. Parker
-----------------
President