<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal quarter ended: September 30, 2000
Commission file number: 000-27847
JACOBSON RESONANCE ENTERPRISES, INC.
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
NEVADA 65-0684400
--------------------------- --------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
JFK Medical Pavilion II
8200 Jog Road, Suite 100
Boynton Beach, Florida 33437
----------------------------------------
(Address of principal executive offices)
(561) 752-4141
----------------------------------------
(Issuer's telephone number)
Indicate by check mark whether 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 [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity: As of November 9, 2000, the issuer had 54,778,154 shares of common
stock, $.001 par value per share, outstanding.
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
2
<PAGE> 3
JACOBSON RESONANCE ENTERPRISES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEET
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
----------- -----------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and Cash Equivalents $ 406,018 $ 579,518
Accounts Receivable 13,300 --
Receivables - Officer 50,000 --
Prepaid Expenses and Other 17,068 31,317
----------- -----------
Total Current Assets 486,386 610,835
Property and Equipment, at Cost, (Net of Accumulated
Depreciation of $49,070 and $21,448, respectively) 166,450 116,685
Deposits 4,640 1,395
Receivables - Officer 200,000 --
Deferred Income Tax Asset, (Net of Valuation Allowance of $ 1,801,000 and
$1,332,000, respectively) -- --
----------- -----------
Total Assets $ 857,476 $ 728,915
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable and Accrued Expenses $ 107,723 $ 148,154
----------- -----------
Total Current Liabilities 107,723 148,154
----------- -----------
STOCKHOLDERS' EQUITY
Preferred Stock $.001 Par Value, 5,000,000 Shares Authorized;
Issued and Outstanding, 30,000 and 45,000 shares, respectively 30 45
Common Stock, $.001 Par Value, 100,000,000 Shares Authorized;
Issued and Outstanding, 54,615,336 and 37,169,127 Shares, respectively 54,615 37,169
Additional Paid in Capital 7,483,870 5,806,107
Deficit Accumulated During the Development Stage (6,744,088) (5,217,886)
Treasury Stock Common (600,000 Shares at Cost) (600) (600)
Subscriptions Receivable (44,074) (44,074)
----------- -----------
Total Stockholders' Equity 749,753 580,761
----------- -----------
Total Liabilities and Stockholders' Equity $ 857,476 $ 728,915
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 4
JACOBSON RESONANCE ENTERPRISES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the
For the Three Months Ended For the Nine Months Ended Period from
September 30, September 30, Inception to
---------------------------- ---------------------------- September, 30,
2000 1999 2000 1999 2000
------------ ------------ ------------ ------------ --------------
<S> <C> <C> <C> <C> <C>
REVENUES $ 23,361 $ 1,975 $ 30,611 $ 18,556 $ 177,764
------------ ------------ ------------ ------------ -----------
COSTS AND EXPENSES:
General and Administrative 494,968 319,157 1,477,379 1,011,893 4,111,786
Research and Development 33,402 105,327 159,067 196,204 920,552
Financing costs -- 6,976 -- 2,096,899 2,094,508
------------ ------------ ------------ ------------ -----------
Total Operating Expenses 528,370 431,460 1,636,446 3,304,996 7,126,846
------------ ------------ ------------ ------------ -----------
Other Income (Expense)
Interest Income 5,457 11,159 34,752 22,845 81,532
Gain on Sales of Resonance Machines 10,364 78,581 44,881 78,581 123,462
------------ ------------ ------------ ------------ -----------
NET LOSS $ (489,188) $ (339,745) $ (1,526,202) $ (3,185,014) $(6,744,088)
============ ============ ============ ============ ===========
PER SHARE INFORMATION:
Net Loss Per Share:
Basic $ (0.01) $ (0.01) $ (0.03) $ (0.10)
============ ============ ============ ============
Diluted $ (0.01) $ (0.01) $ (0.03) $ (0.10)
============ ============ ============ ============
Shares Used to Compute Net Loss Per Share
Basic 54,615,336 32,522,584 46,469,164 33,109,136
============ ============ ============ ============
Diluted 54,615,336 32,522,584 46,469,164 33,109,136
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
JACOBSON RESONANCE ENTERPRISES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Period from Inception to September 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
COMMON STOCK PREFERRED STOCK ADDITIONAL
------------------- ----------------- PAID-IN
ISSUED AMOUNT ISSUED AMOUNT CAPITAL
------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C>
Issuance of Founders Stock at Par $.001 57,220,000 $ 57,220 -- $-- $ (57,220)
Recapitalization - June 4, 1996 4,905,000 4,905 -- -- (4,905)
Issuance of Common Stock at $.10 Per Share 10,000,000 10,000 -- -- 990,000
Issuance of Common Stock at $1.75 Per Share 18,857 19 -- -- 32,981
Purchase of Treasury Stock at Cost -- -- -- -- --
Conversion of Common Stock to Preferred Stock (45,000,000) (45,000) 45,000 45 44,955
Net Loss -- -- -- -- --
----------- -------- ------ --- -----------
Balance, December 31, 1996 27,143,857 27,144 45,000 45 1,005,811
Issuance of Common Stock for Services Rendered at
Prices Between $.15 and $1.75 Per Share 40,114 40 -- -- 12,744
Issuances of Common Stock from Private Placement at
Prices Between $.15 and $.25 Per Share 760,000 760 -- -- 139,240
Issuances of Common Stock out of Proceeds of
Subscription Receivable -- -- -- -- --
Net Loss -- -- -- -- --
----------- -------- ------ --- -----------
Balance, December 31, 1997 27,943,971 27,944 45,000 45 1,157,795
Reacquisition of Common Shares and (3,000,000) (3,000) -- -- (450,000)
Collection of Subscription Receivable
Cash Collection of Subscription Receivable -- -- -- -- --
Issuance of Common Stock from Private
Placement at a Price of $.15 per Share 4,675,850 4,676 -- -- 659,294
Issuance of Common Stock from Private
Placement at a Price of $.35 per Share 2,017,999 2,018 -- -- 690,156
Issuance of Common Stock for Services
Rendered at Prices between $.15 and
$.35 per Share 663,223 663 -- -- 176,415
Fair Value of Options Issued to Consultants -- -- -- -- 2,063
Net Loss -- -- -- -- --
----------- -------- ------ --- -----------
Balance December 31, 1998 32,301,043 32,301 45,000 45 2,235,723
</TABLE>
<TABLE>
<CAPTION>
DEFICT
ACCUMULATED
DURING
DEVELOPMENT SUBSCRIPTION TREASURY STOCKHOLDERS'
STAGE RECEIVABLE STOCK EQUITY
----------- ---------- -------- -------------
<S> <C> <C> <C> <C>
Issuance of Founders Stock at Par $.001 $ -- $ -- $ -- $ --
Recapitalization - June 4, 1996 -- -- -- --
Issuance of Common Stock at $.10 Per Share -- (526,550) -- 473,450
Issuance of Common Stock at $1.75 Per Share -- -- -- 33,000
Purchase of Treasury Stock at Cost -- -- (600) (600)
Conversion of Common Stock to Preferred Stock -- -- -- --
Net Loss (292,325) -- -- (292,325)
----------- --------- --------- ---------
Balance, December 31, 1996 (292,325) (526,550) (600) 213,525
Issuance of Common Stock for Services Rendered at
Prices Between $.15 and $1.75 Per Share -- -- -- 12,784
Issuances of Common Stock from Private Placement at
Prices Between $.15 and $.25 Per Share -- -- -- 140,000
Issuances of Common Stock out of Proceeds of
Subscription Receivable -- 5,000 -- 5,000
Net Loss (315,319) -- -- (315,319)
----------- --------- --------- ---------
Balance, December 31, 1997 (607,644) (521,550) (600) 55,990
Reacquisition of Common Shares and -- 450,000 -- (3,000)
Collection of Subscription Receivable
Cash Collection of Subscription Receivable -- 27,476 -- 27,476
Issuance of Common Stock from Private
Placement at a Price of $.15 per Share -- -- -- 663,970
Issuance of Common Stock from Private
Placement at a Price of $.35 per Share -- -- -- 692,174
Issuance of Common Stock for Services
Rendered at Prices between $.15 and
$.35 per Share -- -- -- 177,078
Fair Value of Options Issued to Consultants -- -- -- 2,063
Net Loss (952,276) -- -- (952,276)
----------- --------- --------- ---------
Balance December 31, 1998 (1,559,920) (44,074) (600) 663,475
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 6
JACOBSON RESONANCE ENTERPRISES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Continued)
For the Period from Inception to September 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
COMMON STOCK PREFERRED STOCK ADDITIONAL DURING
------------------- ----------------- PAID-IN DEVELOPMENT
ISSUED AMOUNT ISSUED AMOUNT CAPITAL STAGE
------ ------ ------ ------ ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance December 31, 1998 32,301,043 32,301 45,000 45 2,235,723 (1,559,920)
Issuance of Common Stock for Services
Rendered at Prices between $.18 and
$2.69 per Share 1,313,903 1,314 -- -- 420,375 --
Issuance of Common Stock for Repayment
of Debt 291,305 291 -- -- 60,883 --
Issuance of Common Stock for Exercise
of Warrants 900,000 900 -- -- 1,754,100 --
Sales of Shares at $.20 per Share 500,000 500 -- -- 99,500 --
Beneficial Conversion Feature on
Convertible Debentures -- -- -- -- 333,332 --
Issuance of Common Stock for
Conversion of Debentures 1,862,876 1,863 -- -- 902,194 --
Net Loss -- -- -- -- -- (3,657,966)
---------- ------- -------- ---- ----------- -----------
Balance, December 31, 1999 37,169,127 37,169 45,000 45 5,806,107 (5,217,886)
Issuance of Common Stock for Services
Rendedered at Prices between $.35
and $1.52 per Share 335,342 335 -- -- 367,665 --
Sales of Shares at $.20 to $.65 per Share 1,970,867 1,971 -- -- 1,075,647 --
Fair Value of Options Issued to Consultants -- -- -- -- 198,801 --
Issuance of Common Stock for Exercise of Options 140,000 140 -- -- 50,635 --
Issuance of Common Stock Upon Conversion of
Preferred Stock 15,000,000 15,000 (15,000) (15) (14,985) --
Net Loss -- -- -- -- -- (1,526,202)
---------- ------- -------- ---- ----------- -----------
Balance, September 30, 2000 54,615,336 $54,615 30,000 $ 30 $ 7,483,870 $(6,744,088)
========== ======= ======== ==== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
SUBSCRIPTION TREASURY STOCKHOLDERS'
RECEIVABLE STOCK EQUITY
------------ --------- -------------
<S> <C> <C> <C>
Balance December 31, 1998 (44,074) (600) 663,475
Issuance of Common Stock for Services
Rendered at Prices between $.18 and
$2.69 per Share -- -- 421,689
Issuance of Common Stock for Repayment
of Debt -- -- 61,174
Issuance of Common Stock for Exercise
of Warrants -- -- 1,755,000
Sales of Shares at $.20 per Share -- -- 100,000
Beneficial Conversion Feature on
Convertible Debentures -- -- 333,332
Issuance of Common Stock for
Conversion of Debentures -- -- 904,057
Net Loss -- -- (3,657,966)
--------- ----- -----------
Balance, December 31, 1999 (44,074) (600) 580,761
Issuance of Common Stock for Services
Rendedered at Prices between $.35
and $1.52 per Share -- -- 368,000
Sales of Shares a $.20 to $.75 per Share -- -- 1,077,618
Fair Value of Options Issued to Consultants -- -- 198,801
Issuance of Common Stock for Exercise of Options -- -- 50,775
Issuance of Common Stock Upon Conversion of
Preferred Stock -- -- --
Net Loss -- -- (1,526,202)
--------- ----- -----------
Balance, September 30, 2000 $ (44,074) $(600) $ 749,753
========= ===== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE> 7
JACOBSON RESONANCE ENTERPRISES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months For the Period
Ended September 30, from Inception
-------------------------- to September 30,
2000 1999 2000
----------- ----------- ---------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(1,526,202) $(3,185,014) $(6,744,088)
Adjustments to Reconcile Net Loss to Net Cash Flows
Used in Operating Activities:
Depreciation 27,622 4,634 49,070
Amortization of Deferred Debt Costs -- 7,241 7,742
Write off of Licensing Costs -- -- 126,582
Fair Value of Common Stock Issued for Services Rendered 368,000 331,849 979,769
Fair Value of Common Stock Issued for Interest Expense -- 3,628 6,781
Stock Issued for Conversion of Warrants Attributed to Interest -- 1,753,200 1,754,100
Beneficial Conversion Feature of Debentures -- 333,333 333,332
Fair Value of Options Issued 198,801 -- 200,864
Changes is Operating Assets and Liabilities:
Accounts Receivable (13,300) (13,300)
Prepaid Expenses 14,249 2,959 (17,068)
Deposits (3,245) 16,000 (4,640)
Accounts Payable (40,431) (21,633) 107,723
----------- ----------- -----------
Net Cash Flows Used in Operating Activities (974,506) (753,803) (3,213,133)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Fixed Assets (77,387) (49,592) (215,520)
Loans made to Shareholder and Employee (250,000) (250,000)
Patent Costs -- (5,011) (126,582)
----------- ----------- -----------
Net Cash Flows Used in Investing Activities (327,387) (54,603) (592,102)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of Treasury Stock -- -- (600)
Proceeds from Note Payable -- -- 60,000
Proceeds From Issuance of Debentures -- 890,490 890,490
Proceeds From Exercise of Warrants -- 900 900
Proceeds from Issuance of Common Stock
from Subscriptions Receivable -- -- 653,976
Proceeds From Exercise of Options 50,775 -- 50,775
Proceeds from Issuance of Common Stock 1,077,618 -- 2,555,712
----------- ----------- -----------
Net Cash Flows Provided by Financing Activities 1,128,393 891,390 4,211,253
----------- ----------- -----------
Net Increase (Decrease) in Cash and Cash Equivalents (173,500) 82,984 406,018
Cash and Cash Equivalents - Beginning of Period 579,518 642,680 --
----------- ----------- -----------
Cash and Cash Equivalents - End of Period $ 406,018 $ 725,664 $ 406,018
=========== =========== ===========
NONCASH INVESTING AND FINANCING ACTIVITIES:
Issuance of Common Stock for Repayment of Debt $ -- $ 60,350 $ 60,350
=========== =========== ===========
Subscriptions Receivable for Issuance of Common Stock $ -- $ -- $ 698,050
=========== =========== ===========
Conversion of debentures into common stock $ -- $ -- $ 1,000,000
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE> 8
JACOBSON RESONANCE ENTERPRISES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
(UNAUDITED)
Note 1 - BASIS OF PRESENTATION
The accompanying financial statements for the interim period are unaudited and
reflect all adjustments (consisting only of normal recurring adjustments) which
are, in the opinion of management, necessary for a fair presentation of the
financial position and operating results for the periods presented. These
financial statements should be read in conjunction with the financial statements
and notes thereto, together with Management's Discussion and Analysis or Plan of
Operation, contained in the Annual Report on Form 10-KSB for the year ended
December 31, 1999, of Jacobson Resonance Enterprises, Inc. (the "Company" ) as
filed with the Securities and Exchange Commission. The results of operations for
the three and nine months ended September 30, 2000, are not necessarily
indicative of the results for the full fiscal year ending December 31, 2000.
Note 2 - STOCKHOLDERS' EQUITY
In December 1999, the Company entered into an agreement to sell 5,000,000
restricted shares of its common stock to an investor at the price of $.20 per
share. Payments for such shares began in 1999 and will continue to be made to
the Company at various times in 2000. As of December 31, 1999, this investor had
purchased 500,000 shares of common stock for $100,000. In addition, the Company
granted this investor an option to purchase 2,222,222 shares of its common stock
at a price of $.45 per share. This option requires the investor to advise the
Company of his intent to exercise the option by January 31, 2001, and exercise
and execute the option on or before June 30, 2001 according to a defined
schedule. During the nine months ended September 30, 2000, the investor
purchased 300,000 shares for an aggregate of $60,000. In the Company's opinion,
this investor has not met the defined terms of the agreement and the Company
does not intend to issue any additional shares under this agreement.
In addition to the foregoing, the Company sold 54,750 shares of common stock for
an aggregate of $16,295 on January 21, 2000; 375,000 shares of common stock for
an aggregate of $212,500 on February 16, 2000; 307,693 shares of common stock
and a warrant to purchase an additional 307,693 shares of common stock at an
exercise price of $.85 per share for an aggregate of $200,000 on April 7, 2000;
664,193 shares of common stock and a warrant to purchase an additional 664,193
shares of common stock at an exercise price of $.90 per share for an aggregate
of $413,823 on April 10, 2000, and 269,231 shares of common stock and a warrant
to purchase an additional 269,231 shares of common stock at an exercise price of
$.90 per share for an aggregate of $175,000 on April 11, 2000.
8
<PAGE> 9
Note 2 -STOCKHOLDERS' EQUITY (CONTINUED)
Furthermore, on February 14, 16 and 22, and April 7, 2000, respectively, the
Company issued 22,500 shares, 200,000 shares, 700 shares and 112,142 shares,
respectively, of common stock. The Company issued these shares to employees and
consultants for services. The Company has recorded a charge to operations for
the fair value of these shares on the dates of their issuances, which amounted
to $368,000.
On April 4, 2000 the Company issued options to purchase 599,000 shares of common
stock to employees and consultants. These options are exercisable at $1.28 per
share. Of the 599,000 options issued, 99,000 have been granted to non-employees
and have been valued using the Black-Scholes option pricing model which has
resulted in a charge to operations of approximately $55,000.
On September 15, 2000, the Company issued options to purchase 690,000 shares of
common stock to employees and consultants. Of the 690,000 options issued,
350,000 have been issued to non-employees and have been valued using the
Black-Scholes option pricing model which has resulted in a charge to operations
of approximately $143,000.
Additionally, the Company issued 40,000 shares of common stock for an aggregate
of $16,000 on February 16, 2000, and 100,000 shares of common stock for an
aggregate of $34,725 on May 9, 2000. The Company issued these shares upon
exercise of outstanding options.
On May 18, 2000, an officer of the Company converted 15,000 shares of preferred
stock into 15,000,000 shares of common stock.
Note 3 - RECEIVABLES - OFFICERS
The majority stockholder of the Company is involved in litigation whereby the
court ordered the transfer of 12,000,000 shares of common stock of the Company
to the plaintiffs. This transfer is being appealed by the majority stockholder.
In addition, the litigation may further require payments by this stockholder and
the issuance of warrants by the Company. See Item 5 in Part II of the Form
10-QSB for the quarter ended March 31, 2000, for a more detailed description of
this litigation and Item 5 in Part II of this Form 10-QSB for an update on it.
Any impact on the accompanying financial statements as a result of the
resolution of this contingency cannot be determined at this time. During the
second quarter, the Company loaned $200,000 to this officer. The loan bears
interest at the prime rate. The loan and any interest accrued on the loan are
due on May 13, 2002.
During the second quarter another officer received a loan of $50,000 from the
Company. This loan bears interest at the rate of 6.5% per annum. The loan was
due September 10, 2000, and has been extended to January 6, 2001. The loan is
secured by this officer's common stock of the Company.
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Certain statements contained in this report, including, without
limitation, statements containing the words "believes," "anticipates," "expects"
and words of similar import constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks and uncertainties.
The Company's actual results may differ materially from those anticipated in
these forward-looking statements as a result of certain factors, including the
success and subsequent acceptance of new medical research and development; the
regulatory framework of the health care industry; the Company's ability to
create, sustain, manage or forecast its growth; its ability to attract and
retain key personnel; its ability to protect technology; changes in the business
strategy or development plans; competition; demographic changes; business
disruptions; adverse publicity; and international, national and local general
economic and market conditions.
PLAN OF OPERATION
The company is in the development stage and has not had any significant
revenue from operations to date. It incurred losses of $489,188 for the quarter
ended September 30, 2000 and of $1,526,202 for the first nine months of 2000. It
has incurred losses of $6,744,088 since its inception in 1996. Of that amount,
(i) $2,094,508 is attributable to the non-cash financing cost of the Company's
sale of securities, (ii) $1,180,415 represents the non-cash expense resulting
from the issuance of common stock and options to purchase common stock to
members of the Company's management and third parties for services rendered and
(iii) $920,552 represents monies spent on research and development.
In early May 2000, the company launched its marketing campaign for
resonated drinking products at The Brett Favre Forward Foundation Charity
Celebrity Golf Tournament in Biloxi, Mississippi. Brett Favre is the official
spokesperson for the resonated Spring Water and Real-Pro Hi-Energy Sports Drink
produced by RealPure Beverage Group, LLC, a licensee of the Company. The Company
has begun receiving limited royalties from RealPure. At the end of August 2000,
at the Company's annual shareholders meeting in Las Vegas, Nevada, the President
of RealPure Beverage Group, LLC, Mr. David Cox, provided the Company with
marketing and distribution plans covering fourth quarter 2000 and 2001 product
development and distribution efforts. Of particular interest would be the
introduction during 2001 of a pediatric supplement beverage to aid newborns and
infants in the assimilation and digestion of food as well as to provide energy
and reduce gas.
In addition, the Company anticipates CE Marking of its 18-inch and
seven-foot clinical Jacobson Resonators for treatment of chronic pain of the
knee during the first half of 2001. It also expects FDA approval of its 18-inch
clinical Jacobson Resonator sometime in mid 2001 for treatment of chronic pain
from osteoarthritis of the knee and CE Marking of those resonator models for
treatment of the entire spectrum of chronic pain sometime in late 2001. Receipt
of those approvals will allow the Company's licensees to make, market,
distribute and sell those clinical products on a commercial basis in the United
States of America and Europe. In other news, the Company's agricultural and
aquaculture initiatives have shown tremendous potential and interest in the Pan
Asian market. As a result, the Company is working on licensing and joint venture
10
<PAGE> 11
opportunities in the region, from which it expects to generate additional
revenue. Research at Texas A&M University, Mississippi State University and the
University of Oklahoma have shown positive results that Jacobson Resonance
Technology can beneficially affect the growth cycle of vegetables and fruits.
The foregoing combination of events is expected to generate ongoing revenue for
the Company and thereby bring it out of the development stage into the operating
stage during the middle of 2001.
Other possible sources of revenue for the Company during the rest of
2000 and 2001 includes the following:
1. Licensing revenue from a larger medical products company for the
development, marketing and distribution rights in connection with
the use of Jacobson Resonance in the treatment of cardiac
arrhythmias. The Company thinks that interest in such licensing
arrangement will be generated by the publication of the results of
the completed research in cardiac pacing at the University of
Oklahoma Health Sciences Center that Jacobson Resonance is effective
in the treatment of cardiac arrhythmias on dogs.
2. Licensing revenue from Genesis Group International ("GGIC") for the
use of Jacobson Resonance in the development, distribution,
marketing and sale of GGIC's all-natural and resonated family of
nasal sprays worldwide. The Company signed a letter of intent with
GGIC in February 2000.
3. Licensing revenue from O2 Marketing Group, Inc., a manufacturer of
consumer-oriented oxygen products for the cosmetics, nutraceutical
and pharmaceutical industries, for an exclusive license to use
Jacobson Resonance for not less than ten years covering the Republic
of South Africa. The Company has a letter of intent with O2 and is
currently negotiating a definitive license arrangement.
4. Licensing revenue from Palmer Natural Products, Inc. and Perfect
Living Systems, Inc., two nutraceutial laboratories and formulary
companies located in southern California. Theses companies plan to
use Jacobson Resonance technology and equipment on the formulary of
multiple nutraceuticals, as well as client-specific products, for
manufacture, marketing, distribution and sale. The Company signed a
letter of intent with these companies in April 2000.
11
<PAGE> 12
5. Licensing revenue from Comercializadora de Calidad S.A. of
Guatemala, for the distribution of resonators and the establishment
of treatment centers throughout Panama, El Salvador, Costa Rica and
Guatemala. The company signed a letter of intent with the Guatemalan
distributor in March 2000.
6. Increases in revenue from its existing licensees for the clinical
Jacobson Resonators because of additional FDA approvals and CE
Marking. After receipt of the currently pending applications for FDA
approvals and CE Marking, the Company plans to seek additional FDA
approvals for the other three clinical models of the Jacobson
Resonator and for treatment of the entire chronic pain spectrum, not
just osteoarthritis of the knee. It also plans to seek CE Marking of
the other two clinical models of the Jacobson Resonator. These
approvals would broaden the product line in both the United States
of America and Europe and would broaden the applications for the
clinical Jacobson Resonators in the United States of America.
The Company will continue both use and product research and development
for Jacobson Resonance. The Company estimates that the currently ongoing
university research will require about $65,000 of the Company's funds for the
rest of 2000. It anticipates continued prototyping of additional models of the
Jacobson Resonator for varying uses if additional funds become available for
that purpose. It estimates that the costs to the Company of such prototyping
will be approximately $40,000 for the rest of 2000.
RESULTS OF OPERATIONS FOR THE QUARTER ENDED SEPTEMBER 30, 2000
The Company had a net loss for the quarter ended September 30, 2000 of
$489,188 as compared to a loss for the quarter ended September 30, 1999 of
$339,745, an increase of $149,443 or 44%. The increase is attributable to an
increase in general and administrative expenses as the Company prepares to make
the transition from the development stage company to the operating stage.
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
The Company had a net loss for the nine months ended September 30, 2000
of $1,526,202 as compared to a loss for the nine months ended September 30, 1999
of $3,185,014, a decrease of $1,658,812 or 52%. The decrease in the loss
primarily results from a one-time, non-cash interest expense of $2,089,099
during the second quarter of 1999 that was the result of the Company's sale of
convertible debentures and warrants to purchase common stock in early June 1999,
which was partially offset by an increase in general and administrative expenses
of $465,486. This latter increase is primarily due to a $368,000 non-cash
expense in the first half of the year for the fair value of common stock of the
Company issued for services rendered.
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LIQUIDITY AND CAPITAL RESOURCES AS OF SEPTEMBER 30, 2000
The Company's cash on hand at September 30, 2000 was $406,018 as
compared to $579,518 at December 31, 1999. Revenues for the first nine months of
2000 were $30,611 as compared to $18,556 for the first nine months of 1999. The
Company had a net loss of $1,526,202 for the first nine months of 2000.
Since the beginning of the year, the Company has received $1,128,393
from the sale of securities and the exercise of stock options. The Company
anticipates that its existing resources will be sufficient to fund its plan of
operations through the end of 2000 and into the first quarter of 2001. However,
if the Company is not, by the middle of the first quarter of 2001, generating
sufficient revenue to fund its operations, then the Company may have to seek
additional funds through either debt or equity financing. There is no assurance
that the Company would be able to raise sufficient funds for that purpose due to
the pending litigation against Dr. Jerry I. Jacobson, the principal shareholder,
Chairman of the Board, President and Chief Executive Officer of the Company. See
"Item 5. Other Information" in Part II of this report.
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PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES.
The Company issued options to purchase 690,000 shares of common stock
on September 15, 2000. These options are exercisable at $0.50 per share. Of the
total amount, the Company granted options to purchase (a) 495,000 shares of
common stock to the directors and officers of the Company and (b) 195,000 shares
of common stock to 14 consultants, including six members of the Company's
Scientific Advisory Board. The Company relied upon the exemption from
registration contained in Section 4(2) of the Securities Act of 1933, as amended
(the "Securities Act") for these option issuances.
ITEM 5. OTHER INFORMATION.
In the litigation styled ERIC HEWKO AND PATRICK J. CASEY V. JERRY I.
JACOBSON, Case No. CL-97-4255AE, in the Circuit Court of the Fifteenth Judicial
Circuit in and for Palm Beach County, Florida, enforcement of the damages awards
to each of Messrs. Hewko and Casey in the amount of $6,446,250, or a total of
$12,892,500, has been stayed to date because of the filing by Dr. Jacobson, the
principal shareholder, Chairman of the Board, President and Chief Executive
Officer of the Company, of a personal Chapter 11 proceeding pursuant to the
United States Bankruptcy Code.
A hearing in the bankruptcy proceeding is scheduled for December 4,
2000, on a motion by the U.S. Trustee to either dismiss the Chapter 11
proceeding or convert it to a Chapter 7 proceeding. If the hearing results in
the dismissal of the bankruptcy proceeding, the current stay of any enforcement
of the damage awards will be terminated. In that event, certain of Dr.
Jacobson's property may be subject to public sale pursuant to the state court
litigation, despite the pending appeal of the trial court's order against Dr.
Jacobson. If a significant portion of Dr. Jacobson's stock ownership in the
Company is publicly sold, there may be a change of control of the Company. If
the hearing results in a conversion of the bankruptcy proceeding to a Chapter 7
proceeding, a trustee would be appointed to administer Dr. Jacobson's assets,
including his stock ownership in the Company. Whether a Chapter 7 proceeding
would eventually result in a change of control of the Company is unknown at this
time, but that would be one possible result.
With respect to the pending appeal by Dr. Jacobson of the trial court's
order against him, all briefs from both sides have been filed with the appellate
court. The parties are currently awaiting a date for oral argument.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
JACOBSON RESONANCE ENTERPRISES, INC.
Dated: November 13, 2000 By: /s/ Jerry I. Jacobson
------------------------------------------
Jerry I. Jacobson, Chairman of the Board
and Chief Executive Officer
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION LOCATION
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27 Financial Data Schedule *1
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*1 Filed electronically pursuant to Item 401 of Regulation S-T.
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