SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10QSB/A
Quarterly Report under Section 13 or 15(d) of
the Securities Exchange Act of 1934
For Quarter Ended Commission File Number
----------------- ----------------------
September 30, 2000 000-28519
PATHOBIOTEK DIAGNOSTICS, INC.
(New Name)
-------------------------
INVESTRA ENTERPRISES, INC.
(Former Name)
Texas 76-0510754
------- ----------
(State of incorporation) (I.R.S. Employer
Identification No.)
7010 NW 100 DRIVE, BLDG. A, STE. #101, HOUSTON, TX 77092
---------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 939-1833
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to the filing
requirements for at least the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
12,517,868 common shares as of September 30, 2000
<PAGE>
Part I: FINANCIAL INFORMATION
PATHOBIOTEK DIAGNOSTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
<PAGE>
<TABLE>
<CAPTION>
PATHOBIOTEK DIAGNOSTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET - UNAUDITED
<S> <C> <C>
September 30, 2000 December 31, 1999
-------------------------- -------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 129,209 $ 24,135
Employee receivables 2,158 2,158
Receivable from parent company 13,185
Other receivables 270
-------------------------- -----------------
Total current assets 131,367 39,748
PROPERTY AND EQUIPMENT, at cost 142,533 131,361
Less: Accumulated depreciation (86,723) (67,848)
-------------------------- -----------------
55,810 65,513
OTHER ASSETS
Deposits 10,000
Patent costs 59,459 44,699
Less: Accumulated amortization (8,058) (6,039)
Other assets 300 300
-------------------------- -----------------
61,701 38,960
-------------------------- -----------------
$ 248,878 142,221
========================== =================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable and accrued expenses (Note 8) $ 1,497,051 1,116,412
Due to shareholder 46,651 87,290
-------------------------- -----------------
Total current liabilities 1,543,702 1,253,702
SHAREHOLDERS' EQUITY
Common stock, $.001 par value,
authorized 20,000,000 shares,
issued and outstanding 13,323,868 shares
stock subscribed but not issued 1,128,283 shares
(Note 6) 15,114 10,543
Additional paid in capital 1,741,906 1,248,394
Deficit accumulated during the development stage (3,051,844) (2,370,418)
-------------------------- -----------------
Total shareholders' equity (1,294,824) (1,111,481)
-------------------------- -----------------
$ 248,878 142,221
========================== =================
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
PATHOBIOTEK DIAGNOSTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT - UNAUDITED
<S> <C> <C>
August 5, 1996
Nine months ended through
September 30, 2000 September 30, 2000
---------------- -------------------------
Revenues $ 0 $ 1,850
Direct costs 0 0
---------------- -------------------------
Gross profit 0 1,850
Administrative and general expenses 660,052 2,946,194
Depreciation expense 18,875 86,723
---------------- -------------------------
678,927 3,032,917
---------------- -------------------------
Loss from operations (678,927) (3,031,067)
Other income 4,800
Interest expense (2,499) (25,577)
----------------
---------------- -------------------------
(2,499) (20,777)
---------------- -------------------------
Loss before income taxes (681,426) (3,051,844)
Federal income taxes - current expense (benefit) 0 0
---------------- -------------------------
Net loss (681,426) (3,051,844)
Accumulated deficit at beginning of period 2,370,418 0
---------------- -------------------------
Deficit accumulated during the development stage $ (3,051,844) $ (3,051,844)
================ =========================
Loss per share ($.44)
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
PATHOBIOTEK DIAGNOSTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS - UNAUDITED
<S> <C> <C>
From
August 5, 1996
3Q through
2000 September 30, 2000
------------------------- -----------------------------
OPERATING ACTIVITIES
Net loss $ (171,940) $ (3,051,844)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 7,467 94,781
Changes in operating assets and liabilities:
Receivable from parent - 13,185
Deposits (10,000) (10,000)
Patent costs (1,000) (15,030)
State tax refund receivable - (44,429)
Trade accounts payable and accrued expenses 88,703 1,497,201
------------------------- -----------------------------
Net cash (used in) operating activities (86,770) (1,516,136)
INVESTING ACTIVITIES
Capital expenditures (2,194) (142,533)
Other assets - (300)
Related parties - (15,343)
------------------------- -----------------------------
Net cash (used in) investing activities (2,194) (158,176)
FINANCING ACTIVITIES
Principal payments on long-term debt (7,900) (45,236)
Related parties - 91,887
Proceeds from issuance of stock 226,073 1,756,870
------------------------- -----------------------------
Net cash provided by financing activities 218,173 1,803,521
------------------------- -----------------------------
INCREASE IN CASH 129,209 129,209
Cash and cash equivalents at beginning of period - -
-------------------------
------------------------- -----------------------------
Cash and cash equivalents at end of period $ 129,209 $ 129,209
========================= =============================
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
PATHOBIOTEK DIAGNOSTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF SHAREHOLDERS' EQUITY - UNAUDITED
For the Period August 5, 1996 (Inception) through September 30, 2000
<S> <C> <C> <C> <C> <C>
Deficit
Accumulated
Additional During the
Common Paid in Development
Stock Capital (3) Stage Total
-------------------------------------------------------------------------
Issuance of 4,000,000 shares - August 7, 1996 4,000,000 $ 4,000 $ $ 4,000
Issuance of 77,320 shares - January 23, 1997 77,320 77 9,923 10,000
Issuance of 300,000 shares - January 23, 1997 300,000 300 300
Issuance of 86,800 shares - Various dates in 1997 86,800 87 35,118 35,205
Issuance of 480,000 shares - Various dates in 1997 480,000 480 254,520 255,000
Net loss for the period August 5, 1996 (Inception)
through July 31, 1997 (325,680) (325,680)
--------------------------------------------------------------------------
Balance at July 31, 1997 4,944,120 4,944 299,561 (325,680) (21,175)
Issuance of 970,193 shares - Various dates in 1998 970,193 970 417,927 418,897
Repurchase of 225,000 shares - Various dates in 1998 225,000) (225) (99,775) (100,000)
Issuance of 129,500 shares - Various dates in 1998 129,500 130 18,390 18,520
Reduction of paid in capital for management fees (8,377) (8,377)
Net loss for the year ended July 31, 1998 (778,556) (778,556)
--------------------------------------------------------------------------
Balance at July 31, 1998 5,818,813 5,819 627,726 (1,104,236) (470,691)
Issuance of 178,000 shares - Various dates in 1998 178,000 178 72,372 72,550
Repurchase of 73,000 shares - Various dates in 1998 (73,000) (73) (5,227) (5,300)
Issuance of 43,000 shares - Various dates in 1998 43,000 43 87,442 87,485
Reduction of paid in capital for management fees (16,215) (16,215)
Net loss for 5 months ended December 31, 1998 (403,184 (403,184)
--------------------------------------------------------------------------
Balance at December 31, 1998 5,966,813 5,967 766,098 (1,507,420) (735,355)
Issuance of 4,576,555 shares - Various dates in 1999 4,576,555 4,576 482,296 486,872
Net loss for the year ended December 31, 1999 (862,998) (862,998)
--------------------------------------------------------------------------
Balance at December 31, 1999 10,543,368 $ 10,543 $ 1,248,394 $(2,370,418) $(1,111,481)
Issuance of 1,974,500 shares and 1,184,283 shares
subscribed but not yet issued - Various dates
in 1Q00 (Note 6) 3,158,783 3,159 268,701 271,860
Net loss 1Q2000 (288,774) (288,774)
--------------------------------------------------------------------------
Balance at March 31, 2000 13,702,151 13,702 1,517,095 (2,659,192) (1,128,395)
Issuance of 260,000 shares - June 21, 2000 260,000 260 260
Cancellation of 200,000 shares issued in a prior
quarter (200,000) (200) (200)
Issuance of 90,000 shares for services rendered 90,000 90 90
Net Loss 2Q2000 (220,712) (220,712)
--------------------------------------------------------------------------
Balance at June 30, 2000 13,852,151 13,852 1,517,095 (2,879,904) (1,348,957)
Shares subscribed but not issued - Various dates
in 3Q00 1,262,000 1,262 224,811 226,073
Net Loss 3Q2000 (171,940) (171,940)
--------------------------------------------------------------------------
Balance at September 30, 2000 15,114,151 15,114 1,741,906 (3,051,844) (1,294,824)
==========================================================================
</TABLE>
(1) See Note 5 to the financial statements.
(2) Stock issued in exchange for legal expenses, administrative fees and
commissions relating to the stock offering.
(3) Stock issue costs deducted from additional paid in capital related to the
offering/sale totaled $53,697.
<PAGE>
PATHOBIOTEK DIAGNOSTICS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS - UNAUDITED
September 30, 2000
Note 1 - Organization and Business Activity
Pathobiotek Diagonstics, Inc., (the "Company") was formed on August 5, 1996
under the laws of the State of Texas for the purpose of developing, producing,
distributing, selling and/or performing diagnostics for various virus and
bacterium. The Company is a developmental stage company under Statement of
Financial Accounting Standard ("SFAS") No 7, "Accounting and Reporting by
Development State Enterprises". Pathobiotek Diagnostics, Inc. was a subsidiary
of Pacific Biotech International, Inc. (the "Parent"), a Texas Corporation until
May 16, 2000, Pacific Biotech International, Inc. no longer owns any shares of
the Company. On March 6, 2000, the Company completed a Share Purchase Agreement
with shareholders of Investra Enterprises, Inc. (IEI) in which the Company
acquired all 672,000 issued and outstanding shares of IEI for $150,000] for
purposes of completing a merger of the Company IEI. The Company was the
surviving entity.
Note 2 - Summary of Significant Accounting Policies
Cash and Cash Equivalents:
--------------------------
The Company considers all highly liquid investments with maturities of three
months or less when purchased to be cash equivalents.
Supplemental schedule of non-cash investing and financing activities: Equipment
totaling $91,887 was acquired through a note payable financing agreement.
Property and Equipment:
-----------------------
Property and equipment, consisting primarily of lab and computer equipment, is
stated at cost. Depreciation is computed using the straight-line method over
estimated lives ranging from 5 to 7 years.
Maintenance and repairs are expensed as incurred; major renewals and
improvements are capitalized.
Use of Estimates:
-----------------
Management uses estimates and assumptions in preparing financial statements.
Those estimates and assumptions affect the reported revenues and expenses.
Actual results could differ from the estimates.
<PAGE>
PATHOBIOTEK DIAGNOSTICS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS - UNAUDITED - Continued
September 30, 2000
Concentration of Credit Risk:
-----------------------------
The Company's financial instruments that are subject to concentrations of credit
risk consist of cash. The Company places its cash in a high credit quality
institution. At some times, such balances may be in excess of the FDIC insurance
limits.
Asset Valuation:
----------------
The carrying amounts of long-lived assets are reviewed periodically. If the
asset carrying amount is not recoverable, the asset is considered to be impaired
and the value is adjusted.
Amortization of Patent Related Costs:
-------------------------------------
In connection with the issuance of shares of stock to the parent (Note 5), the
Company was assigned and licensed all technological applications of one U.S.
Patent Application. Legal costs related to the application incurred by the
Company are capitalized in accordance with management's estimation and
expectation of securing a patent.
Capitalized patent related costs are amortized on a straight-line basis over the
expected life of the patent starting from the application date.
The patent process may take from several months to several years. Should the
patent be denied or its value impaired, the balance of unamortized costs will be
expensed at that date.
Income Taxes:
-------------
The Company utilizes Statement of Financial Accounting Standard No. 109,
"Accounting for Income Taxes" ("SFAS 109"). Under SFAS 109, the liability method
is used in accounting for income taxes. Under this method, deferred tax assets
and liabilities are determined based on differences between financial reporting
and tax bases of assets and liabilities and are measured sing the enacted
statutory tax rates and laws that will be in eff3ect when the differences
reverse.
Fair Value of Financial Instruments:
------------------------------------
The carrying amounts of cash, receivables, and payables approximate their fair
values due to the short-term maturities of these instruments.
<PAGE>
PATHOBIOTEK DIAGNOSTICS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS - UNAUDITED - Continued
September 30, 2000
Note 3 - Note Payable - Related Party
In connection with the purchase of lab equipment and supplies from the Parent
totaling $91,887, the Company entered into a promissory note payable agreement.
The remaining balance of $43,651 and any unpaid interest was due on or before
maturity of July 31, 2000. The note is secured by the lab equipment. Effective
May 16, 2000,Pacific Biotech International, Inc. transferred the note receivable
to the President of the Company.
Note 4 - Income Taxes
The Company has incurred net operating losses of $3,051,844 since inception. No
tax benefit has been recorded relating to these losses because realization of
the carryforward benefit is uncertain. For tax purposes, the net operating loss
carryforwards will expire beginning in the year 2012.
Note 5 - Related Party Transactions
On August 7, 1996, the Company issued 4,000,000 shares of stock to the Parent,
Pacific Biotech International, Inc., exchange for certain intangible assets
consisting primarily of licenses rights and technological applications. In
accordance with APB 16 and 29, the exchange was recorded at the Parent company's
historical capitalized basis, which was not considered material at August 7,
1996.
In March 1999, the Company issued an additional 2,000,000 shares of stock to the
Parent in exchange for certain intangible assets as described above. The
exchange was recorded at the Parent company's historical capitalized basis,
which was not considered material at March 1999. An additional 2,000,000 shares
was due to the Parent as of March 31, 2000. The right to receive the 2,000,000
shares was transferred to two executives of the Company effective May 16, 2000.
This exchange will not have a material affect on the Company's financial
position.
<PAGE>
PATHOBIOTEK DIAGNOSTICS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS - UNAUDITED - Continued
September 30, 2000
Note 6 - Subscribed Stock
In addition to the 2,000,000 shares due to two executives related to the
transfer of stock from the former Parent (Note 5) and the 3,110,25 shares due to
executives of the company for compensation (Note 8), at September 30, 2000,
there were 1,790,283 shares subscribed but not yet issued.
Note 7- Leases
The Company leases office space and certain equipment under operating leases.
Future minimum lease payments are as follows:
Year
Ended
December 31,
------------
2000 $ 9,266
2001 725
-------------
9,991
=============
Rent expense for the quarter ended September 30, 2000, was $5,453.
Rent expense from August 5, 1996 through September 30, 2000, was $119,383.
Note 8 - Stock-Based Compensation
Stock-based compensation plans are accounted for using the intrinsic value
method prescribed in Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees." Under this method, compensation cost is recognized
based on the fair value at the grant dates for awards under those plans. The
accompanying financial statements include compensation costs of $82,031 for the
quarter ended September 30, 2000, and $1,166,484 for the period from August 5,
1996 (Inception) through September 30, 2000, representing a total of 3,110,625
shares due for stock-based compensation.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPT. 30, 2000
The Company is in the development stage and had no revenues for the nine month
period ended September 30, 2000 but incurred expenses totalling $678,927 and
interest cost of $2,499. The net loss of the nine month period was ($681,426)
and the per share loss was ($.44).
The Company has had minimal revenues since inception in August 1996, but has
incurred $3,031,067 in expenses during the period since inception to September
30, 2000, for a net loss, including interest costs of $20,777O, of ($3,051,844.
The Company expects the trend of losses to continue in the forseeable future due
to the lack of developed, marketable products or technology.
RESULTS OF OPERATIONS FOR THE QUARTER ENDED SEPTEMBER 30, 2000
The Company had no revenues in the quarter ended September 30, 2000 but incurred
operating expenses of $171,515 and interest expenses of $425. The Company had a
net loss of ($171,940) for the quarter. The Company is in the development stage
and has had only $1,850 in revenues since inception in August 1996. The Company
has incurred $3,031,067 in expenses during the period since inception to
September 30, 2000 for a net loss, including interest costs of $20,777, of
($3,051,844).
The Company loss per share for the quarter was ($.20). The Company expects the
trend of losses to continue in the forseeable future due to the lack of
developed, marketable products or technology.
LIQUIDITY AND CAPITAL RESOURCES
The Company had $129,209 in cash capital at the end of the period. The Company
has current liabilities in the amount of $1,497,051 consisting of $330,567 in
accounts payable and $1,166,484 in deferred executive compensation, at the end
of the period with the result of a net deficit in operating capital of
($1,367,842). The Company will be forced to either borrow or make private
placements of stock in order to fund operations. No assurance exists as to the
ability to achieve loans or make private placements of stock.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULT UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None
<PAGE>
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.
Date: November 21, 2000
PATHOBIOTEK
/s/ Robert Simpson
--------------------------
Robert Simpson, President
