<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended JUNE 30, 2000 .
---------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ________________ to _________________
Commission file number 0-30252
-----------------------------------------
BIOLABS, INC.
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(Name of small business issuer in its charter)
NEW YORK 98-0163232
--------------------------------------------- -------------------------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
1A-3033 KING GEORGE HIGHWAY, SURREY B.C. CANADA V4P 1B8
----------------------------------------------- -------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (604) 542-0820
--------------------------------
-----------------------------------------------------------------
Former name, former address and former fiscal year, if changed since
last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
CLASS OUTSTANDING AT AUGUST 9, 2000
Common Stock, par value $0.0001 9,474,524
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BIOLABS, INC. - FORM 10QSB - QUARTERLY REPORT
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
PART I - FINANCIAL INFORMATION
Item 1 Financial Statements.......................................................................................3
Item 2 Management's Discussion and Analysis or Plan of Operation..................................................9
PART II - OTHER INFORMATION
Item 1 Legal Proceedings.........................................................................................12
Item 2 Changes in Securities.....................................................................................12
Item 3 Defaults Upon Senior Securities...........................................................................12
Item 4 Submission of Matters to a Vote of Security Holders.......................................................12
Item 5 Other Information.........................................................................................12
Item 6 Exhibits and Reports on Form 8-K..........................................................................12
SIGNATURES ..........................................................................................................13
</TABLE>
SAFE HARBOR
This report contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, including statements made with
respect to the result of operations and businesses of the Company. Words such as
"may", "should", "believe", "anticipate", "estimate", "expect", "intend",
"plan", and similar expressions are intended to identify forward-looking
statements. These forward-looking statements are based upon management's current
plans, expectations, estimates and assumptions and are subject to a number of
risks and uncertainties that could significantly affect current plans,
anticipated actions and the Company's financial condition and results of
operations. Factors that may cause actual results to differ materially from
those discussed in such forward-looking statements include, among others, the
following possibilities: (i) fluctuations in foreign currency exchange rates;
(ii) heightened competition; (iii) the inability to carry out development plans
or to do so without delays; (iv) the loss of key executives; and (v) general
economic and business conditions. The Company does not intend to update these
cautionary statements.
Page 2
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BIOLABS, INC. - FORM 10QSB - QUARTERLY REPORT
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PART I
ITEM 1 FINANCIAL STATEMENTS
BIOLABS, INC.
(a New York Corporation)
(a development stage company)
BALANCE SHEETS
(Unaudited)
(U.S.$)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
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<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $2,489,051 $ 411,272
Accounts receivable 18,436 19,540
Prepaid expenses 32,045 30,929
---------------------------------------------------------------------------------------------------------
2,539,532 461,741
DEPOSIT ON PURCHASE 50,000 50,000
INVESTMENT IN I.D. CERTIFY, INC. - Preferred shares 800,160 800,160
CONVERTIBLE PROMISSORY NOTE - Biotherapies Incorporated 400,000 -
LONG-TERM INVESTMENT IN:
Biomedical Diagnostics, LLC 2,671,237 2,809,814
Biotherapies Incorporated - shares (12.6%; 1999-11.1%) 1,735,000 1,335,000
OFFICE EQUIPMENT, net 16,039 17,814
---------------------------------------------------------------------------------------------------------
$8,211,968 $5,474,529
=========================================================================================================
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 92,928 $ 371,470
Promissory notes payable - related parties - 40,132
Promissory notes payable - shareholders 1,500,000 -
---------------------------------------------------------------------------------------------------------
1,592,928 411,602
---------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Preferred stock, $.0001 par value.
Authorized 100,000,000 shares;
Issued: 2000 - 1,681,737; 1999 - 2,000,000 168 200
Common stock, $.0001 par value.
Authorized 100,000,000 shares;
Issued: 2000 - 9,433,374; 1999 - 8,178,997 943 818
Additional paid-in capital 10,385,443 7,922,442
Accumulated deficit (3,767,514) (2,860,533)
----------------------------------------------------------------------------------------------------------
6,619,040 5,062,927
----------------------------------------------------------------------------------------------------------
$8,211,968 $5,474,529
=========================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 3
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BIOLABS, INC. - FORM 10QSB - QUARTERLY REPORT
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BIOLABS, INC.
(a New York Corporation)
(a development stage company)
STATEMENT OF OPERATIONS
(Unaudited)
(U.S.$)
<TABLE>
<CAPTION>
FOR THE 3 MONTHS ENDED FOR THE 6 MONTHS ENDED TOTAL FROM
---------------------- ---------------------- INCEPTION TO
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2000 1999 2000 1999 2000
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<S> <C> <C> <C> <C> <C>
REVENUE $ - $ - $ - $ - $ -
EXPENSES
Automobile 4,341 1,191 5,541 2,676 50,409
Depreciation and amortization 1,532 1,350 3,064 3,921 17,770
Interest and bank charges 27,883 1,189 28,426 3,123 46,565
Investor relations 70,343 29,850 149,538 90,979 272,867
Legal and accounting 65,206 33,477 150,925 58,215 436,318
Listing and share transfer fees 11,578 1,413 18,840 4,693 104,435
Management and consulting fees 122,888 103,271 233,341 182,308 1,701,232
Office and miscellaneous 25,816 36,140 65,332 62,620 169,304
Rent and occupancy costs 6,948 6,786 14,373 14,076 44,913
Salaries and benefits 10,835 6,048 18,259 9,175 41,040
Telephone 8,088 6,734 13,539 9,884 49,174
Travel and promotion 34,392 19,997 83,267 46,165 528,516
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389,850 247,446 784,445 487,835 3,462,543
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LOSS BEFORE OTHER ITEMS (389,850) (247,446) (784,445) (487,835) (3,462,543)
Interest and miscellaneous income 14,492 2,628 16,041 3,366 23,792
Equity in loss of biomedical diagnostics, LLC (64,908) (54,458) (138,577) (54,458) (328,763)
--------------------------------------------------------------------------------------------------------------------------
NET LOSS $(440,266) $(299,276) $(906,981) $(538,927) $(3,767,514)
==========================================================================================================================
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 8,897,658 8,102,531 8,609,931 7,774,630
=========================================================================================================================
LOSS PER COMMON SHARE $ (0.05) $ (0.04) $ (0.11) $ (0.07)
=========================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 4
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BIOLABS, INC. - FORM 10QSB - QUARTERLY REPORT
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BIOLABS, INC.
(a New York Corporation)
(a development stage company)
STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited)
(U.S.$)
JUNE 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Common stock Preferred shares Additional Total
------------------ ----------------
Number Number paid-in Accumulated stockholders'
of Shares Amount of Shares amount Capital Deficit Equity
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<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1999 8,178,997 $ 818 2,000,000 $ 200 $7,922,442 $(2,860,533) $5,062,927
Issue of common stock for settlement
of debt 242,528 24 - - 320,982 - 321,006
Stock options exercised 55,000 5 - - 80,995 - 81,000
Issue of common stock for cash 629,586 63 - - 1,998,025 - 1,998,088
Stock purchase warrants exercised 9,000 1 - - 62,999 - 63,000
Preferred stock converted to common 318,263 32 (318,263) (32) - - -
Net loss - - - - - (906,981) (906,981)
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Balance, June 30, 2000 9,433,374 $ 943 1,681,737 $ 168 $10,385,443 $(3,767,514) $6,619,040
=========================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 5
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BIOLABS, INC. - FORM 10QSB - QUARTERLY REPORT
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BIOLABS, INC.
(a New York Corporation)
(a development stage company)
STATEMENT OF CASH FLOWS
(Unaudited)
(U.S.$)
<TABLE>
<CAPTION>
FOR THE 3 MONTHS ENDED FOR THE 6 MONTHS ENDED TOTAL FROM
---------------------- ---------------------- INCEPTION TO
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2000 1999 2000 1999 2000
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<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(440,266) $(299,276) $(906,981) $(538,927) $(3,767,514)
Adjustment to reconcile net loss to cash
used in operating activities:
Depreciation and amortization 1,532 1,350 3,064 3,921 17,770
Equity in loss of Biomedical Diagnostics LLC 64,908 54,458 138,577 54,458 328,763
Expenses paid by issuance of stock - 60,000 - 60,000 68,817
Changes in operating assets and liabilities:
Accounts receivable (1,067) (4,675) 1,104 (18,970) (18,436)
Prepaid expenses (22,500) 11,038 (1,116) (12,833) (32,045)
Promissory notes payable - - - - 387,527
Accounts payable 11,663 (41,617) 2,332 90,376 1,366,302
-------------------------------------------------------------------------------------------------------------------------
(385,730) (218,722) (763,020) (361,975) (1,648,816)
--------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures on equipment - (2,716) (1,289) (14,158) (24,992)
Purchase of shares of Biotherapies Inc. - - (400,000) - (1,495,000)
Investment in Biomedical Diagnostics LLC - (500,000) - (1,000,000) (3,000,000)
Investment in I.D. Certify, Inc. - - - - (800,160)
Convertible promissory note (400,000) - (400,000) - (400,000)
Deposit on purchase - - - - (50,000)
Organizational costs - - - - (8,817)
--------------------------------------------------------------------------------------------------------------------------
(400,000) (502,716) (801,289) (1,014,158) (5,778,969)
--------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Common stock issued for cash 1,263,748 - 2,142,088 - 2,850,925
Preferred stock subscriptions - (300,000) - (114,000) -
Preferred stock issued for cash - 683,888 - 1,729,325 5,565,911
Promissory note payable 1,500,000 - 1,500,000 - 1,500,000
-------------------------------------------------------------------------------------------------------------------------
2,763,748 383,888 3,642,088 1,615,325 9,916,836
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN CASH 1,978,018 (337,550) 2,077,779 239,192 2,489,051
CASH, BEGINNING 511,033 658,895 411,272 82,153 -
-------------------------------------------------------------------------------------------------------------------------
CASH, ENDING $2,489,051 $321,345 $2,489,051 $321,345 $2,489,051
=========================================================================================================================
NON-CASH FINANCING AND INVESTING ACTIVITIES:
Common stock issued to settle debt $ 286,006 $ - $ 321,006 $872,500 $1,660,901
Common stock issued for shares of
Biotherapies Inc. $ - $ - $ - $ - $ 240,000
Common stock issued for services $ - $ 60,000 $ - $ 60,000 $ 68,817
=========================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 6
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BIOLABS, INC. - FORM 10QSB - QUARTERLY REPORT
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BIOLABS, INC.
(a New York Corporation)
(a development stage company)
NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)
(U.S.$)
JUNE 30, 2000
--------------------------------------------------------------------------------
1. UNAUDITED FINANCIAL STATEMENTS
The accompanying unaudited condensed financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with instructions for Form 10-QSB and Item 310 of
Regulation S-B. Accordingly, they do not include all the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring adjustments) considered necessary for a fair
presentation of results of operations have been included in the financial
statements. Results of operations for the six months ended June 30, 2000 are
not necessarily indicative of the results that may be expected for the
fiscal year ended December 31, 2000.
The balance sheet at December 31, 1999 has been derived from audited
financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. A summary of the Company's
significant accounting policies and other information necessary to
understand the consolidated financial statements is included in the
Company's audited financial statements for the year ended December 31, 1999
and 1998 as contained in the Company's Form 10-KSB for its year ended
December 31,1999. Such financial statements should be read in connection
with these financial statements.
2. INCOME TAXES
The Company has reviewed its net deferred tax asset for the six month period
ended June 30, 2000, together with net operating loss carryforwards, and has
decided to forego recognition of potential tax benefits arising therefrom.
In making this determination, the Company has considered the Company's
history of tax losses incurred since inception and the fact that the Company
is still within the development stage. As a result, the Company's net
deferred tax has been fully reserved.
3. NEW ACCOUNTING STANDARD
In June 1998, the Financial Standards Board issued Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and
Hedging Activities" (SFAS 133) which established accounting and reporting
standards for derivative instruments and hedging activities. Effective for
all fiscal quarters in years beginning after June 15, 2000. SFAS 133
requires the Company to recognize all derivative instruments as either
assets or liabilities in the statement of financial position and measure
those instruments at fair value on an on-going basis. The Company is
considering the effect of adopting SFAS 133 on its financial statements and
has preliminarily determined that it will have no effect on the Company's
financial condition or results of operations. The Company plans to adopt the
statement on July 1, 2000.
4. RECLASSIFICATION
Certain reclassifications of prior year balances have been made to conform
to current year classifications.
5. STOCK TRANSACTIONS
During the quarter ended June 30, 2000, the Company completed private
placements of additional securities to two purchasers. Net proceeds from
these placements totalled $1,218,750. The securities were sold in units.
Each unit consisted of one common share and a one-half share purchase
warrant. Each share purchase warrant entitles the holder to purchase a
common share of the Company at prices ranging from $4.00 to $4.75. A total
of 488,636 units were involved in the transactions.
Also during the quarter ended June 30, 2000, stock options at $1.00 per
share to purchase 45,000 Common Shares were exercised by an option holder to
net the Company $45,000.
The Company also issued 237,528 common shares during the quarter ended June
30, 2000, to settle debts totalling $286,006.
Page 7
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204,013 preferred shares were converted into 204,013 common shares during
the quarter ended June 30, 2000.
6. SUBSEQUENT EVENTS
Subsequent to June 30, 2000, the Company converted the promissory note
receivable from Biotherapies, Inc. into 16,000 common shares of
Biotherapies, Inc. and purchased an additional 28,000 shares for $700,000,
increasing its equity interest in Biotherapies, Inc. from 12.6% to 17.3%.
Subsequent to June 30, 2000, 41,150 preferred shares were converted into
41,150 common shares.
Page 8
<PAGE>
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
GENERAL
BioLabs, Inc., (the "Company" or "BioLabs") is a development stage company
formed to manufacture and market certain cancer therapy tests developed by
others. The Company entered into a joint venture agreement dated as of November
4, 1998 with an unrelated entity, Biotherapies Incorporated ("Biotherapies") to
develop and commercialize a Mammastatin Serum Assay (the "MSA") diagnostic. The
joint venture operates as a Michigan Limited Liability corporation. The name of
such entity is Biomedical Diagnostics, LLC (the "Joint Venture"). The Company
also owns a 12.6% minority interest in Biotherapies.
As of December 31, 1999, June 30, 2000, and currently, BioLabs holds a 50%
equity interest in the Joint Venture with Biotherapies. The Joint Venture holds
the exclusive worldwide rights to manufacture, market and distribute the MSA
diagnostic for breast cancer. The MSA is presently undergoing Phase I Clinical
Trials which are designed to provide sufficient data to seek Pre-Market Approval
("PMA") from the U.S. Food and Drug Administration ("FDA"). FDA determination
for MSA is anticipated by the first quarter of 2001.
As noted, in addition, the Company holds a 12.6% equity interest in
Biotherapies. Biotherapies is a privately held biotechnology company
specializing in the development of innovative cancer diagnostic and therapeutic
products. Biotherapies holds the exclusive rights, through the University of
Michigan, to patent applications for the use of Mammastatin as a diagnostic and
therapeutic for breast cancer. On June 15, 1999, with the financial support of
BioLabs, Biotherapies began Phase I/II of Clinical Trials utilizing Mammastatin
to treat Stage IV breast cancer, at the M.D. Anderson Cancer Center, Department
of Breast Medical Oncology, at the University of Texas. Biotherapies has advised
the Company that the Clinical trials have been put on hold by the FDA pending
resolution of certain production control issues.
Currently, Biotherapies is working with officials at MD Anderson Cancer Center,
the FDA, and the Company's Contract Research Organization (CRO) to satisfy the
FDA and to have the clinical hold released as soon as possible.
The Company intends to seek additional collaborative relationships to locate and
develop cancer inhibitor proteins associated with other common forms of cancer,
as well as continuing to fund existing research projects with Biotherapies to
discover other related proteins that perform similar growth inhibitory functions
in other frequently cancerous tissues, such as the prostate, ovary, colon and
lung.
PLAN OF OPERATION/CAPITAL REQUIREMENTS
The Company has no revenue from operations, is in the start-up phase with its
existing assets and has no significant assets, tangible or intangible, other
than the opportunities for the Joint Venture described herein. There is no
assurance that the Company will ever earn revenue, operate profitability or
provide a return on investment to its security holders. The Company's activities
to date have consisted primarily of efforts to raise funds, establish a joint
venture relationship with Biotherapies for the manufacture and sale of the MSA
test, and acquire an equity interest in Biotherapies. As currently structured,
the Company proposes to derive all its revenue from its 50% partnership in the
Joint Venture. A critical part of the Company's business plan requires the
Company to fund 50% of the costs to develop, manufacture, market and distribute
the MSA test.
Critical features of the MSA test (certain antibodies) are currently being
developed by the Joint Venture for use in clinical trials. The results of these
trials will be submitted in an application to the FDA for approval of the MSA
test as a medical device. It is anticipated that this application will be
submitted by the end of the third quarter of 2000 with FDA action with respect
to the application expected during the first quarter of 2001. Based on such
timetable, the MSA test is not expected to be launched in North America until
the second quarter of 2001, at the earliest.
Final product development manufacturing, marketing, sales and distribution of
the MSA test is expected to require a significant amount of additional capital.
Under the terms of the Joint Venture Agreement, each member of the Joint Venture
is obligated to fund its 50% portion of additional capital requirements. The
Company intends to finance its portion of these expenses through the proceeds of
the sales of securities by future private placements of securities or registered
public offering transactions.
Page 9
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BIOLABS, INC. - FORM 10QSB - QUARTERLY REPORT
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At the current time, the Company's only sources for additional capital are
through transactions relating to prospective participations (licensing or other
affiliations) in its development stage assets and rights, or additional
placements of the Company's securities. In order to raise the capital required
for its future activities, until such time as the Joint Venture can generate
revenues from operations, the Company anticipates placing additional securities
with investors in registered offerings or exempt transactions.
Although the Company is also exploring licensing opportunities which would, if
consummated, enable it to pay such sums to Biotherapies, when due, without
future capital raise-ups, there can be no assurance thereof. The potential
insufficiency of funds is a significant risk factor. The Company is unable to
assure that sufficient funds will be available, when necessary, to meet its
obligations to Biotherapies, or that such funds, if available, will be available
on terms and conditions which are favourable to pre-existing investors in the
Company. The failure of the Company to meeting its obligations to Biotherapies,
when due, can result in a dilution of the Company's interest in the Joint
Venture.
SHORT-TERM BORROWING - PROMISSORY NOTE PAYABLE
The Company has borrowed, from a major shareholder, $1,500,000 at 10% interest,
compounded semi-annually secured by a promissory note. The note is due and
payable on the earlier of one year from the date of issue or ten days after the
Company completing a net financing of not less than $10,000,000. As
consideration the shareholder also received the right to acquire up to 300,000
shares of the Company at $6.50 per share expiring October 27, 2001.
LIQUIDITY
Based on the current state of affairs, Management believes that the Company has
adequate current cash resources, if appropriately allocated, to continue current
operations as is, for approximately 12 months or such sooner date, if sooner,
that the MSA test is launched as a commercial product. The Company's viability
is dependent on the achievement of certain commercialization goals and
milestones by the Joint Venture within that time period, and, even then,
continued viability may be dependent at least for some undetermined period, on
the Company's ability to attract additional investment capital. There can be no
assurance that the Company will be able to successfully raise the capital
required, when required, to meet its proportionate costs in the future. The
potential insufficiency of funds is a significant risk factor.
None of the Company's current officers are employed directly by the Company.
Although such officers are engaged substantially full-time for the Company, in
accordance with Canadian practice, they are employed by the Company through a
personal services holding company. The Company has three full-time persons
engaged through the holding Company, and two other administrative employees,
employed directly.
ADDITIONAL CAPITAL REQUIREMENTS OF THE JOINT VENTURE
In the event that additional capital is required by the Joint Venture, each
member of the Joint Venture is obligated to funds its 50% portion of the total
requirements. As noted, the Company is not aware whether Biotherapies has the
financial capacity to pay its portion of the Joint Venture expenses. Should
either member of the Joint Venture fail to fund the shortfall within 60 days of
the due date, the other member has the option to fund the shortfall and
correspondingly dilute the non-funding member's ownership interest in the Joint
Venture. The Company currently has no way of raising its portion of the Joint
Venture capital otherwise than through the sale of securities by future private
placements or registered public offering transactions.
PROPOSED TRANSACTIONS
As of June 30, 2000, the Company owned a 12.6% limited stock interest in
Biotherapies. The Company proposes to further increase its stock interest in
Biotherapies. In 1999, the Company acquired 800,000 Series C preferred shares of
I.D. Certify for $800,160. The Company proposes to exchange the 800,000 Series C
preferred shares and issue 1,100,000 BioLabs Common Shares, subject to
finalization, for 100,000 Biotherapies' shares owned by an unrelated seller,
Dynamed, Inc., a Washington State privately owned corporation, plus Dynamed's
interest in a separate joint venture with Biotherapies relating to a test for
prostrate cancer. The Company has paid a non-refundable $50,000 deposit to
Dynamed Inc. There is no assurance that the transaction will be completed, or
that if completed, it will prove to be beneficial to the Company or its security
holders. If the transaction is completed, it will increase the Company's equity
interest in Biotherapies to approximately 27%, and heighten the Company's
dependence upon the uncertain future progress of Biotherapies.
Page 10
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BIOLABS, INC. - FORM 10QSB - QUARTERLY REPORT
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SUBSEQUENT EVENT
Subsequent to June 30, 2000, the Company converted a $400,000 promissory note
receivable from Biotherapies, Inc. into 16,000 common shares of Biotherapies,
Inc. and purchased an additional 28,000 shares for $700,000, increasing its
equity interest in Biotherapies, Inc. from 12.6% to 17.3%.
RESULTS OF OPERATIONS
Three months ended June 30, 2000 compared to three months ended June 30, 1999.
For the quarter ended June 30, 2000, the Company incurred a loss of $440,266
compared to $299,276 for the three months ended June 30, 1999, an increase of
$140,990. The increase in the loss is primarily due to; increases in investor
relations of $40,493 for the provision of stockholder services, increases in
professional fees of $31,729 for regulatory matters, increases in management and
consulting fees and travel and promotion of $34,012 as the company investigated
potential investment opportunities and an increase in interest charges of
$26,694 which is attributable to interest on new short-term borrowings of
$1,500,000 which bears interest at 10%.
Six months ended June 30, 2000 compared to six months ended June 30, 1999.
For the six months ended June 30, 2000, the Company incurred a loss of $906,981
compared to $538,927 for the six months ended June 30, 1999, an increase of
$368,054. The increase in the loss is primarily due to; increases in
professional fees of $92,710 for matters relating to regulatory filings and
financings, an increase in the Company's 50% share of the Biomedical Diagnostics
LLC loss of $84,119, increase in investor relations of $58,559 for the provision
of stockholder services, increase in management and consulting fees and travel
of $88,135 as the Company investigated potential investment opportunities, an
increase in interest charges of $25,303 which is attributable to interest on new
short-term borrowings of $1,500,000 which bears interest at 10% and an increase
in salaries and benefits of $9.084 reflecting the addition of one full time
office staff.
Page 11
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PART II
ITEM 1 LEGAL PROCEEDINGS
None
ITEM 2 CHANGES IN SECURITIES
During the fiscal quarter ended June 30, 2000, the Company issued additional
Common Stock and other securities for cash and received $1,218,750.
The securities issuances consisted of private placements of additional Common
Stock and warrants to two purchasers. The securities were sold in units
consisting of one Common Share and a one-half share purchase warrant. Each share
purchase warrant entitles the holder to purchase a common share of the Company
at prices ranging from $4.00 to $4.75 per share. A total of 488,636 units were
involved in the transactions.
Also during the quarter ended June 30, 2000, stock options at $1.00 per share to
purchase 45,000 Common Shares were exercised by an option holder to net the
Company $45,000.
The units issuances, and the option exercise, did not involve an underwriter or
other placement agent. The Company received 100% of the purchase price/exercise
price of such securities. The Company relied under Section 4(2) of the
Securities Act of 1993 for its exemption from the registration requirements with
respect to such placements.
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 SUBMISSION OF MATTERS OF A VOTE OF SECURITY HOLDERS
None
ITEM 5 OTHER INFORMATION
None
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
There were no reports on Form 8-K filed by the Company during the quarter.
The following exhibits are filed herewith:
Financial Data Schedule
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BIOLABS, INC. - FORM 10QSB - QUARTERLY REPORT
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SIGNATURES
In accordance with the requirements of the Securities Exchange Act, the
registrant caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
BIOLABS, INC.
(Registrant)
Dated August 9, 2000 /s/ E. GREG MCCARTNEY
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E. Greg McCartney
President, Chief Executive Officer
and Chairman
Dated August 9, 2000 /s/ LAWRENCE J. PASEMKO
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Lawrence J. Pasemko
Chief Financial Officer
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