<PAGE>
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-SB/A-3
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or 12(g) of the Securities Exchange Act of 1934
BIOPULSE INTERNATIONAL, INC.
----------------------------------------------
(Name of Small Business Issuer in its charter)
NEVADA 87-0634278
------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10421 South Jordan Gateway, Suite 500, South Jordan, Utah 84095
----------------------------------------------------------- -------
(Address of principal executive Offices) (Zip Code)
Issuer's telephone number: (801) 523-0101
Securities to be registered under Section 12(b) of the Act: None
Securities to be registered under Section 12(g) of the Act:
Common Shares, par value $.001
--------------------------------
(Title of Class)
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
------------------------------------------------
This Form 10-SB contains certain forward-looking statements within the
meaning of the Private Securities Litigation reform Act of 1995. For this
purpose any statements contained in this Form 10-SB that are not statements
of historical fact may be deemed to be forward-looking statements. Without
limiting the foregoing, words such as "may," "will," "expect," "believe,"
"anticipate," "estimate" or "continue" or comparable terminology is
intended to identify forward-looking statements. These statement by their
nature involve substantial risks and uncertainties, and actual results may
differ materially depending on a variety of factors, many of which are not
within the Company's control. These factors include but are not limited to
economic conditions generally and in the industries in which the Company
may participate; competition within the Company's chose industry, including
competition from much larger competitors; technological advances and
failure by the Company to successfully develop business relationships.
PART 1
-------
Item 1. Description of Business
---------------------------------
Overview
--------
BioPulse International, Inc., (the "Company" or "BioPulse") was
incorporated in the state of Nevada on July 13, 1984 originally under the
name Universal Financial Capital Corp. The Company changed its name in
September 1985 to International Sensor Technologies, Inc. As International
Sensor Technologies, Inc., the Company incurred heavy losses and no revenue
from operations. The Company also experienced five years of inactivity. On
January 12, 1999, the Company again changed its name to BioPulse
International, Inc. when it acquired BioPulse, Inc. The company is
considered to be in its early stages of market development. The company is
in the business of managing drug and rehabilitation centers, integrated
medicine clinics, and medical research programs.
BioPulse offers a variety of alternative medicinal products and
services, including dietary supplements, clinical procedures, and medical
equipment from around the world. The Company's efforts focus on treatments
for degenerative diseases such as cancer.
During 1998, BioPulse identified the initial protocols to be included
in the BioPulse treatment programs. The Company evaluated a variety of
techniques and products before determining which ones were most
appropriate. Some of the selected treatments have not yet been approved by
the United States Food and Drug Administration ("the FDA"), so they can be
made available only outside the United States. As a result, the Company
made arrangements to manage clinics owned by licensed physicians in Mexico
and Germany that would utilize these protocols. BioPulse has also
developed a protocol for drug and alcohol treatment that can be used in the
United States and elsewhere.
BioPulse was founded to accomplish three objectives; (1) to identify,
improve and integrate alternative medicine technologies from around the
world; (2) to focus on treatment of debilitating diseases such as cancer;
and (3) to improve human well-being by making these treatments available in
clinics throughout the world.
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BioPulse accomplishes these objectives through three distinct ongoing
activities. First, the Company identifies beneficial medical treatments
from around the world. Second, the Company evaluates selected treatments
for inclusion in the BioPulse treatment programs. Third, the Company
manages clinics that offer the BioPulse treatment programs.
Industry Background - Alternative Medicine
------------------------------------------
Health care is one of the largest industries in the world, accounting
for over 10% of U.S. GNP. Pharmaceutical companies alone spend over $8
billion per year in marketing.
The "alternative medicine" industry includes a broad spectrum of
products and services, ranging from chiropractic and herbal remedies to
acupuncture and aroma therapy. Some segments of the industry are regulated
through board certification and/or government agencies such as the FDA.
Other segments are largely unregulated.
While the term "alternative medicine" can include everything from
herbal remedies to acupuncture, its meaning actually changes over time.
For example, herbal supplements that years ago were produced only by
specialized manufacturers and sold primarily through health food stores are
now produced by major pharmaceutical companies and sold in ordinary grocery
stores. Once considered "alternative," these supplements are now more
likely to be considered "traditional." Practices that are considered
"alternative" in the United States, such as acupuncture, are considered
"traditional" in other countries, such as China.
The fluid nature of these classifications has led many industry
observers to adopt the term "integrative medicine," reflecting the
combination of "alternative" and "traditional" medical procedures.
The integrated medicine industry as it currently exists presents
significant problems for prospective patients. A goal of BioPulse will be
to evaluate the effectiveness and safety of these modalities. The
challenges confronting persons seeking integrated modalities include:
Lack of standards.
-------------------
Many of the people seeking alternative medical treatment are motivated
by desperation and fear. They can be susceptible to illegitimate
practitioners who make unsubstantiated promises. There is a pressing need
for documenting results of other non-traditional protocols. BioPulse
intends to research and evaluate these results.
Fragmentation.
--------------
The market for alternative medicine is highly fragmented and diverse,
which leads to high costs. Most care is offered by stand-alone clinics
that specialize in one treatment or another. Patients often visit multiple
clinics searching for the appropriate treatment. There is a need for
consolidation and standardization so patients seeking care can find
effective treatment at an affordable cost.
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Regulatory environment.
-----------------------
In the U.S., medical treatment is highly regulated by the FDA and
other regulatory agencies. The FDA's objective is to assure that new
products are safe and effective. There is a need for a concerted effort to
conduct the research and provide the studies necessary to obtain U.S.
regulatory approval of these treatments.
Business Model.
---------------
BioPulse engages in clinic management as well as research and
development of alternative medicine.
The BioPulse treatment programs offered at these clinics are not
exclusively "alternative." A better term to describe the treatment
programs is "integrative medicine," because the programs are largely based
on traditional medicine.
The Company strives to accomplish its corporate objectives by
engaging in the following activities:
1. Identify beneficial medical treatments from around the world. These
treatments are often considered "alternative" in the United States,
although they may be practiced regularly in the country of origin. To
perform this function, the Company participates in health-oriented trade
shows and forums; invites lecturers and specialists to visit clinics that
use integrated treatment. BioPulse will engage in ongoing dialogue with
health care providers and leaders in the alternative medicine industry who
often introduce the Company to new medical treatments; visit clinics in
other countries to learn about other treatments; and reviews periodicals
that specialize in alternative treatments. For these purposes, "medical
treatments" may include nutritional supplements, therapeutic devices or
machines, and biofeedback devices, as well as treatment practices and
medications.
There is worldwide expansion of research and development in medical
technology and techniques. The Internet has made this knowledge more
widely available than ever before. Many of the new treatments could be
highly promising if documented properly.
The Company pays particular attention to identifying medical
treatments that:
(1) could show promise if documented properly in fighting cancer,
diabetes, and other degenerative diseases;
(2) are not unsafe as practiced by qualified medical personnel; and
(3) are cost effective for patients.
BioPulse is focusing on the continuing improvement and evaluation of
promising technology.
2. Evaluate selected treatments for inclusion in the BioPulse treatment
programs.
--------------------------------------------------------------------------
Medical treatments that have shown promising results are evaluated for
compatibility and suitability for inclusion in the treatment programs by
the medical staff of clinics BioPulse serves. Those treatments that comply
with the BioPulse treatment philosophy and are complementary to the
BioPulse treatment objectives may be added to the BioPulse treatment
programs.
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One of the most prominent medical problems is cancer. There are a
variety of theories about the causes of cancer and the appropriate types of
treatment. BioPulse recognizes the difficulty and complexity of treating
cancer and encourages its clients to seek the best treatment they can get
anywhere they can get it.
Without criticizing any particular theory or treatment, BioPulse
focuses on proposed cancer treatments that may be effective for many people
while allowing them to maintain overall health. BioPulse has a similar
approach to other difficult diseases such as AIDS and heart disease. As a
result, there is an ongoing need for evaluation and further research and
development.
3. Manage clinics in various locations.
-----------------------------------------
The Company contracts with qualified medical care providers in various
locations who provide the integrated treatment programs. BioPulse assists
these providers by performing clinic management functions and research and
development functions. These medical care providers are licensed in their
respective jurisdictions for their respective fields of expertise and
actually own the local clinics. The Company receives a management fee for
its efforts and allows the clinics to use the BioPulse name to identify the
availability of the integrated treatment programs at its facilities deemed
acceptable to BioPulse and the medical personnel owning the clinics and
conducting the treatment programs.
Scope of BioPulse Treatment Programs.
-------------------------------------
The nature of medical care makes the industry one of the more heavily
regulated sectors. In the United States, a variety of governmental
agencies have jurisdiction over health care products and services. For
example, each state has licensing boards that regulate the ability of
individuals to work as physicians, nurses, or other health care providers.
The Food and Drug Administration (FDA) regulates the use of drugs and other
medicines within the United States. The Federal Trade Commission (FTC)
regulates certain aspects of the practice of medicine, including
advertising and marketing. Other countries have comparable regulatory
frameworks.
BioPulse strives to comply with all applicable laws, rules and
regulations in the various jurisdictions in which it operates. BioPulse
treatment programs focus on modalities that are allowed by the federal and
state governments.
The BioPulse treatment programs include a variety of "alternative" and
"traditional" protocols approved by the treating physician.
It is not feasible to describe all of the various protocols used in
the BioPulse treatment programs. As with any health care facility, the
treatment program for each patient depends on the physician's diagnosis of
that particular patient.
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Business Conditions
-------------------
The Company operates in a highly competitive environment. The Company
believes its competitors to consist of the established medical communities,
health spas and centers who provide similar health treatments and services,
and other alternative medicine clinics. The company must compete against
medical providers familiar with and controlling local markets. Further,
the Company faces the existing and anticipated danger from large, well-
established medical facilities and providers, which are powerful enough to
create market "barriers" against the Company's services.
The Company's objective is to provide affordable, effective
alternative medical treatment to as many people as possible. To do so, the
Company manages a comprehensive treatment program in Tijuana, Mexico that
includes room and board. Actual costs depend on the particular treatments
and tests provided for each patient. Patients are required to make a
deposit prior to commencing any treatment program. The amount of the
deposit depends on the nature of the treatment and the duration of the
program. The cost may vary at other locations. These prices are
competitive with known competition.
Marketing
---------
During 1999, BioPulse, Inc., engaged in a variety of marketing
efforts. While the Company believes the most effective marketing efforts
are through customer referrals and word of mouth, a variety of additional
marketing efforts are being undertaken. Among other things, the Company
placed full page advertisements in Alternative Medicine magazine,
Integrative Medicine magazine, and newsletters published by Clinical Pearls
and the International Council for Health Freedom. The Company exhibited at
several health industry trade shows during the year, including Whole Life
Expositions and Conferences, Del Mar Health Expo, National Nutritional
Foods Association Expo, and American Cancer Convention. It established a
web page, www.BioPulse.com, which explains the company's treatment
philosophy, protocols, and products. It made contacts with industry
leaders and specialists, and sponsored a series of radio call-in shows and
discussions. The Company is currently implementing a program of directly
informing physicians, chiropractors and other alternative health care
practitioners through both trade shows and trade publications. The Company
is also evaluating other referral programs that are consistent with
regulatory and ethical requirements.
The Company plans to continue these marketing activities in the
future, and is exploring a variety of additional marketing efforts,
including advertising in newsletters and general interest magazines as well
as industry magazines.
Principal Suppliers
-------------------
Principal suppliers for the clinic are Abbott Laboratories, Merit
Pharmaceuticals, Lakeside Pharmaceuticals, Water Oz of Idaho and Reliv
International.
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Patents, trademarks, licenses, etc.
-----------------------------------
None
Governmental Approval
---------------------
The nature of the Company's operation is international, spanning
several countries. The activity of the Company is likely to vary among the
different countries, due to different tax policy, and/or investment policy
to be mandated by external entities, in passive and/or active form. The
Company, in the course of its operation and during the planning phase, must
undertake an in-depth examination of the situation in general and of the
financial laws in particular, in each of the countries where the company
will operate.
Providing services and products require the provision of licenses by
the relevant authorities of each country in which the Company intends to
operate. The licenses required may vary among countries, but for most
countries, the required license is to be obtained from the local Food &
Drug Administration and the Department of Health. Meeting the particular
country requirements and the time involved may have a negative impact upon
the Company's activities in a specific country or area.
The Company plans on obtaining all required federal and state permits,
licenses, and bonds to operate its facilities. Compliance with such laws,
regulations and ordinances may affect the Company's operation and may
necessitate significant capital outlays. Failure to comply with applicable
regulatory requirements may result in criminal prosecution, civil
penalties, recall or seizure of products, total or partial suspension of
operations or injunction, as well as other regulatory action against the
Company or its potential products and services.
The company intends to operate a drug and alcohol rehabilitation
center in the state of Utah for several months before opening additional
facilities.
Environmental Law Costs and Effects
-----------------------------------
Compliance with federal, state and local regulations pertaining to the
discharge of materials into the environment or otherwise relating to the
protection of the environment is not anticipated to have an impact on the
company's capital expenditures, earning and competitive position.
Employees
---------
The Company currently employs six administrative personnel. Each
clinic employs its own staff. None of the Company's current employees are
under collective bargaining contracts.
Reports to Security Holders
---------------------------
Upon effectiveness of this registration statement, the Company will
file annual and quarterly reports with the Securities and Exchange
Commission ("SEC"). The public may read and copy any materials filed by
the Company with the SEC at the SEC's Public Reference Room at 450 Fifth
Street, N.W., Washington, D.C. 20549. The public may obtain information on
the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
The Company is an electronic filer and the SEC maintains an Internet
site that will contain reports and other information regarding the Company
which may be viewed at http://www.sec.gov.
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Item 2: Management's Discussion and Analysis or Plan of Operation
---------------------------------------------------------------------
The following discussion contains comments about the financial
condition of BioPulse International, Inc. for the Fiscal Year Ended July
31, 1999 and for the three months Ended October 21, 1999.
Results of Operations
---------------------
BioPulse International, Inc. restarted operations after its merger
with BioPulse Inc. during the fiscal year ended July 31, 1999. Operations
began in January 1999. There are no prior periods to compare operations
with for the Fiscal Year Ended July 31, 1999. There were no operations
during the first three months of the last fiscal year to compare with the
financial statements for the current fiscal year's interim period.
As is typical with most new businesses, there is a period of time
before the business is profitable. The market needs to be developed,
employees trained, policies and procedures fine-tunes and the company needs
to become known by and earn its reputation with its potential customers and
clients. At the end of the fiscal year and interim period, BioPulse was
still going through the startup process.
Since restarting operations, BioPulse has been refining its operations
and developing its market. BioPulse has advertised in periodicals
targeting its potential patients, rented booths at trade shows and
developed a good reputation by its results and by satisfied patients. Its
fees started low and have increased as its market developed and as demand
for its resources has increased.
Subsequent to the end of the interim period, BioPulse has entered into
a management agreement with an existing clinic in Germany. BioPulse will
acquire equipment for the Germany clinic as well as train its staff in its
methods and provide oversight of the clinic.
BioPulse's fees are now at a profitable level. BioPulse is developing
and is in the process of implementing financial and other management
controls and procedures. Management expects BioPulse to operate profitable
by the end of the current fiscal year and to show a profit for the fiscal
year ending July 31, 2001.
Significant Elements of Income or Loss That Do Not Arise From Continuing
Operations
-------------------------------------------------------------------------
At the time of the merger of BioPulse International, Inc. and
BioPulse, Inc. in January 1999, it was agreed to reimburse shareholders of
BioPulse International, Inc. for expenses totaling $100,000. Prior to the
merger, such expenses were incurred from accounting, legal and
organizational expenses in the recapitalization of the Company. These
payments were expensed on the Financial Statements for the fiscal year
ending July 31, 1999.
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Liquidity
---------
The company has no significant liabilities to unrelated parties other
than accounts payable. Funds were provided to finance the company during
its development stage primarily by notes payable from related parties. A
substantial block of stock (2,000,000 shares) was sold for $1,000,000 in
notes receivable, but no payments were received on those notes as of the
end of the fiscal year. By the end of the interim period, October 31,
1999, $669,000 has been collected. Subsequent to the end of the interim
period, substantially all of the notes relating to the sale of stock have
been collected.
The proceeds from the stock sale is expected to provide liquidity for
the company to carry the company through its development period.
Known Trends
------------
There are no known trends, events or uncertainties that have had or
that are reasonable expected to have a material impact on the net sales or
revenues or income from continuing operations.
Material Commitments for Capital Expenditures and Capital Resources
--------------------------------------------------------------------
There are no material commitments for capital expenditures. BioPulse
has made all of the capital expenditures necessary to carry on its
business. Any capital expenditures for expansion will be made when its
current operations are profitable and out of that cash flow.
Item 3. Description of Property
-----------------------------------
Property & Facilities
---------------------
The Company currently leases 5,514 square feet of space in South
Jordan, Utah for its administrative operations at a cost of $8,730.50 per
month, which is calculated at the lease rate of $19 per square foot. The
term of the lease is through the year 2003.
The Company manages a 6,000 square foot clinic in Tijuana, Mexico
owned by Dr. Jesus Omar Sanchez Tiznado. The Company owns medical
equipment valued at $150,000 which is located at the clinic in Tijuana,
Mexico.
BioPulse does not own and is not obligated on the premises or any
equipment utilized by the German clinic. The association between the
German clinic and BioPulse began in November, 1999.
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Item 4. Security Ownership of Certain Beneficial Owners and Management
-----------------------------------------------------------------------
The following table sets forth the name and the number of Common Stock
of the Company, owned of record or beneficially, by each person who owned
of record, or was known by the Company to own beneficially, more than 5% of
the Company's Common Stock ("Principal Shareholders"), and the name and
share holding of each officer and director, and all officers and directors
as a group:
<TABLE>
<CAPTION>
Title of Name and Address of Amount and Nature of
Class Beneficial Owner (1) Beneficial Ownership Percentage of Class
---------- ------------------------ -------------------- -------------------
<S> <C> <C> <C>
Common Stephen R. Fey (2) 336,500 5.54%
Ivy Lane Row
Provo, UT 84604
Common F. Briton McConkie (2) 336,500 5.54%
4014 Splendor Way
Salt Lake City, UT 84124
Common Loran Swensen(3) 1,004,200 16.53%
10070 Chattle Cir.
S. Jordan, UT 84095
Common Jonathan Neville (3) 1,089,200 17.93%
1089 Ridgetop Corp. Drive
S. Jordan, UT 84095
Common Robert Morrow (3) 317,600 5.23%
1360 Bryan Ave.
Salt Lake City, UT
Common Cisalpine NV 600,000 9.88%
Curacasbaaiweg 199
Curacao Netherland,
Antilles Island
Common Deliman Corporation LTD. 600,000 9.88%
P.O. Box 3161
Roadtown Tortla, B.V.I.
Common Montana Capital
International 800,000 9.88%
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Common Officers, Directors and 3,084,000 50.77%
Nominees as a Group:
(5 people)
------------------------------------------------------------------------------------
Total: 4,884,000 80.41%
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</TABLE>
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(1) The term "beneficial owner" refers to both the power of investment (the
right to buy and sell) and rights of ownership (the right to received
distributions from the company and proceeds from sales of the shares).
Inasmuch as these rights or shares may be held by more than one person,
each person who has a beneficial ownership interest in share is deemed to
be the beneficial owner of all the shares. Therefore, the chart indicates
that several persons may be deemed the beneficial owners of the same shares
because there is shared power or investment or share rights of ownership.
(2) Officers of the Company
(3) Directors of the Company
No beneficial owner of 5% or greater of the Company's stock or any
officer or director has the right to acquire any amount of the Company's
stock within sixty days, from options, warrants, rights, conversion
privilege or similar obligations.
Change in Control
-----------------
To the knowledge of the management, there are no present arrangements
or pledges of the Company's securities that may result in a change in
control of the Company.
Item 5. Directors, Executive Officers, Promoters and Control Persons.
------------------------------------------------------------------------
The following table sets forth the name, age, and position of each
executive officer and director and the term of office of each director of
the Corporation.
<TABLE>
<CAPTION>
NAME AGE POSITION DIRECTOR OR OFFICER SINCE
----------------- ----- ----------------------- --------------------------
<S> <C> <C> <C>
Stephen R. Fey 50 Chairman July 1998
Director
Jonathan Neville 45 President & January 1999
Director
Jan Morse 38 Secretary September 1999
F. Briton McConkie 53 Director July 1998
Loran Swensen 42 Director January 1999
Robert Morrow 59 Director January 1999
</TABLE>
Each director serves for a period of one year or until his successor
is duly elected and qualified. Officers serve at the will of the Board of
Directors.
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The following sets forth certain biographical information relating to
the Company's Officers and Directors:
Jonathan Neville, Director.
---------------------------
Mr. Neville is a graduate of Brigham Young University where he earned
a B.S. in Agricultural Economics, an M.S. in Agribusiness, and a J.D.
After graduating, he clerked for H. Vern Payne, Chief Justice of the New
Mexico Supreme Court. He then spent five years in the U.S. Air force as a
Judge Advocate General. He became General Counsel for Genesis Seed
Corporation in 1986, a national turf seed producer and distributor. In
1991, he co-founded Tempus Entertainment, Inc. After selling his interest
in Tempus in 1993, he co-founded Multi-Dimensional Studios in 1994, a
leading producer of 3D computer animation and videos. He has advised a
variety of other startups and small companies, including Advanced
Technologies Group, Inc., where he co-founded BioPulse, Inc., in 1998 with
Mr. Swensen and Mr. Morrow. Since 1980 he has written of 30 volumes of the
Legalines series for Harcourt Brace Jovanovich.
Stephen R. Fey, Director.
-------------------------
Mr. Fey graduated from Brigham Young University with a B.S. degree in
accounting. He received an MBA degree from the University of Southern
California. Along with Mr. McConkie, Mr. Fey was a co-founder of Newport
Equity Group, Inc., a financial planning and venture capital firm, and
MedGroup, Inc., a medical management corporation specializing in physical
and occupational rehabilitation. He served as CFO and director for seven
years and since 1992 has been a consultant to MedGroup. Along with Mr.
McConkie, Mr. Fey is co-founder of Wasatch Capital, a venture capital and
management consulting firm.
F. Briton McConkie, Jr., Director.
----------------------------------
Mr McConkie is a graduate of the University of Utah. For seven years
he was a marketing and product manager for Searle/Will Ross in Salt Lake
City, Utah and Milwaukee, Wisconsin. He co-founded Newport Equity Group,
Inc., of Provo, Utah, and served a Group Vice President from 1980 through
1985. Mr. McConkie also co-founded MedGroup, Inc., of Los Angeles,
California, where he served as CEO from 1985 through 1993. Since then, he
has been the Director of Venture Capital/Funding for First Securities,
Inc., of Salt Lake City. Mr. McConkie is also a co-founder of Wasatch
Capital.
Loran Swensen, Director.
------------------------
Mr. Swensen has been an entrepreneur since 1980 when he started his
own company, Alternate Energy Corp., where he developed high insulating
security windows. Mr. Swensen sold the business in 1981 and developed Home
Based Business News. In 1984, Mr. Swensen co-founded three companies,
Enhanced Simulation where he co-developed and patented a rotating motion
simulator for the amusement industry, Multi-Dimensional Studios where he
co-developed the MDS 3D EFX Thunder Theater and 3D movies, and Advanced
technology Group were is co-developed the Realeyes 3D box. In 1985, Mr.
Swensen founded Swensen Research Company where he developed Brain Neuro-
Simulators which were sold throughout the medical industry.
Robert E. Morrow, M.D., Director.
---------------------------------
Dr. Morrow is a graduate of the University of Florida where he earned
a B.S. in Chemistry, Biology and Psychology. He earned his M.D. from
Jefferson Medical College and did a Rotating Internship at St. Vincent's
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Hospital in Indianapolis. Dr. Morrow participated in the Orthopedic
Surgeon Residency Program with Indiana University Medical Center from 1965
until 1960, including a second year of Children's Orthopedics. Dr. Morrow
worked as a full-time Faculty Instructor for the Department of Surgery
Medical Center and Shiners Children's Hospital. He also worked as a part
time Clinical Instructor and Assistant Clinical Professor at the Department
of Orthopedic Surgery University of Utah Medical Center for 1961 until
1986. Dr. Morrow is a member of many groups and societies including a
member of the American Academy of Orthopedic Surgeons, the Orthopedic
Research Society, the American College of Surgeons, the American Academy of
Anti-aging Medicine, and a founding member and officer of the American
Spine Society. He has also served as a diplomat of the American Board of
Orthopedic Surgery and as past President of the American Academy of
Neurological and Orthopedic Surgeons. He has participated in various post-
graduate and special courses including courses in: Advanced Neurophysiology
in association with Harvard University, Electrodermal Testing and
Homeopathy, Nutritional Medicine and Alternative Therapies. Additionally,
Dr. Morrow has participated in the Post-graduate Neurological Surgery Laser
Workshop at Northwestern University Medical School. Dr. Morrow has
presented an exhibit to the Scoliosis Research Society and given a
presentation on Nutritional therapy for Downs Syndrome. He has also done
extensive studies of mentally and physically handicapped children and
adults Dr. Morrow has served as the Medical Director of the National
Association of Child Development.
Jan Morse, Secretary/Treasurer.
-------------------------------
Ms. Morse is the Secretary/Treasurer and current Director of
Operations at the BioPulse International, Inc. corporate offices. Her
duties include overseeing the running of the BioPulse business offices,
managing staff, payroll and book keeping. From 1997 to the present, Ms.
Morse worked at Multi-Dimensional Studios as Executive assistant and
Director of Operations. Before joining Multi-Dimensional Studios, Ms.
Morse worked as a customer service representative with U.S. West. Ms.
Morse attended Southern Utah State College (now Southern Utah University)
from 1979 to 1981.
Involvement in Legal Proceedings
--------------------------------
To the knowledge of management, during the past five years, no present
or former director, executive officer or person nominated to become a
director or an executive officer of the Company:
(1) filed a petition under the federal bankruptcy laws or any state
insolvency law, nor had a receiver, fiscal agent or similar officer
appointed by a court for the business or property of such person, or any
partnership in which he was a general partner at or within two years before
the time of such filing, or any corporation or business association of
which he was an executive officer at or within two years before the time of
such filing;
(2) was convicted in a criminal proceeding or named subject of a
pending criminal proceeding (excluding traffic violations or other minor
offenses);
(3) was the subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining him from or otherwise
limiting, the following activities;
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(i) acting as a futures commission merchant, introducing broker,
commodity trading advisor, commodity pool operator, floor broker, leverage
transaction merchant, associated person of any of the foregoing, or as an
investment advisor, underwriter, broker or dealer in securities, or as an
affiliate person, director or employee of any investment company, or
engaging in or continuing any conduct or practice in connection with such
activity;
(ii) engaging in any type of business practice; or
(iii) engaging in any activity in connection with the purchase
or sale of any security or commodity or in connection with any violation of
federal or state securities laws or federal commodities laws;
(4) was the subject of any order, judgment, or decree, not
subsequently reversed, suspended, or vacated, of any federal or state
authority barring, suspending, or otherwise limiting for more than 60 days
the right of such person to engage in any activity described above under
this Item, or to be associated with persons engaged in any such activity;
(5) was found by a court of competent jurisdiction in a civil action
or by the Securities and Exchange Commission to have violated any federal
or state securities law, and the judgment in such civil action or finding
by the Securities and Exchange Commission has not been subsequently
reversed, suspended, or vacated
(6) was found by a court of competent jurisdiction in a civil action
or by the Commodity Futures Trading Commission to have violated any federal
commodities law, and the judgment in such civil action or finding by the
Commodity Futures Trading Commission has not been subsequently reversed,
suspended or vacated.
Item 6. Executive Compensation.
--------------------------------
The following chart sets forth the planned compensation payable to
each Officer and Director of the Company from the Company during the next
twelve months.
SUMMARY COMPENSATION TABLE
--------------------------
<TABLE>
<CAPTION>
Long Term Compensation
Other Awards
Name & Annual Compensation Annual Restricted Payouts
Principal Bonus Compen- Stock Options Other
Position Year Salary $ sation Awards /SARs LTIP Payout
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jonathan
Neville 1999 60,000 -0- -0- -0- -0- -0- -0-
President
Jan Morse 1999 24,000 -0- -0- -0- -0- -0- -0-
Secretary/
Treasurer
Loren Swensen 1999 60,000 -0- -0- -0- -0- -0- -0-
14
</Page>
<PAGE>
Stephen R. Fey 1999 -0- -0- -0- -0- -0- -0- -0-
F. Briton
McConkie 1999 -0- -0- -0- -0- -0- -0- -0-
Robert Morrow 1999 -0- -0- -0- -0- -0- -0- -0-
</TABLE>
No other compensation has been paid directly or accrued to any other
officer or director of the Company to date. Although the Company has
determined an annual salary for its officers, the Company does not plan to
pay any of its officers or directors until April 1, 2000, at which time
salary for officers and directors are not anticipated to exceed $5,000 per
month per officer. The Company has no policy for compensating its
directors for attendance at Board of Directors meetings or for other
services as directors.
Compensation of officers and directors is determined by the Company's
Board of Directors and is not subject to shareholder approval. The Company
has no agreement at this time, with any officer, director or key employee,
regarding employment with the Company or compensation for services.
The Company has no retirement, pension, or benefit plan at the present
time, however, the Board of Directors may adopt plans as it deems to be
reasonable under the circumstances.
Employment Contracts and Termination of Employment and Change in Control
Arrangement
------------------------------------------------------------------------
The Company has no employment agreements with its employees or
executive officers. No executive officer has received in the last three
years any amounts in connection with an executive officer's resignation,
retirement, or other termination. No executive officer received any
amounts in the last three years in connection with a change in control of
the Company of a Change in the executive officer's responsibilities after a
change in control.
Item 7. Certain Relationships and Related Transactions.
-------------------------------------------------------
The Company is not expected to have significant dealings with
affiliates. However, if there are such dealings the parties will attempt
to deal on terms competitive in the market and on the same terms that
either party would deal with a third person.
Item 8. Description of Securities.
----------------------------------
The Company is presently authorized to issue one hundred and ten
million (110,000,000) shares, which shall be divided into one hundred
million (100,000,000) of Common Stock having a par value of $.001 each; two
million (2,000,000) shares of Class A Preferred Stock having a par value of
$.001; two million (2,000,000) shares of Class B Preferred Stock having a
par value of $.001; two million (2,000,000) shares of Class C Preferred
Stock having a par value of $.001: two million (2,000,000) shares of Class
D Preferred Stock having a par value of $.001; two million (2,000,000)
shares of Class E Preferred Stock.
15
</Page>
<PAGE>
Common Stock
------------
The holders of common stock are entitled to equal dividends and
distributions, per share, with respect to the common stock when, as and if
declared by the Board of Directors from funds legally available therefor.
No holder of any shares of common stock has a preemptive right to subscribe
for any securities of the Company. Upon liquidation, dissolution or
winding up of the Company, and after payment of creditors and preferred
stockholders, if any, the assets will be divided pro-rata on a share-for-share
basis among the holders of the shares of common stock. All shares of
common stock now outstanding are fully paid, validly issued and non-assessable.
Each share of common stock is entitled to one vote with
respect to the election of any director or any other matter upon which
shareholders are required or permitted to vote. Holders of the Company's
common stock do not have cumulative voting rights, so that the holders of
more than 50% of the combined shared voting for the election of directors
may elect all of the directors, if they choose to do so and, in that event,
the holder of the remaining shares will not be able to elect members to the
Board of Directors.
Preferred Stock
---------------
The rights of the various classes of preferred stock shall be
determined by the Board of Directors as approved by a majority of the
shareholders. To date, 50,374 Preferred Shares have been issued.
The Company has appointed Interwest Transfer Company, 1981 E. 4800 S., Salt
Lake City, Utah 84117, as the transfer agent and registrar for the
Company's securities.
PART II
-------
Item 1. Market Price of and Dividends on the Registrant's Common Equity
and Other Shareholder Matters.
-------------------------------------------------------------------------
The Company's common stock is listed on the Over the Counter Bulletin
Board ("OTCBB"), under the symbol "BIOP." As of July 31, 1999, the Company
had 169 shareholders holding 6,073,862 shares of common stock. Of the
issued and outstanding common stock 2,031,486 are free trading, the balance
are restricted sock as that term is used in rule 144. The Company has
never declared a dividend on its Common Stock.
The following quotations, as provided by the National Quotation
Bureau, LLC., represent prices between dealers and do not include retail
markup, markdown or commission. In addition, these quotations do not
represent actual transactions.
<TABLE>
<CAPTION>
CLOSING BID CLOSING ASK
HIGH LOW HIGH LOW
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
1998
----
First Quarter
(Aug 1 - Oct 31) ---- ---- 0.15 0.15
Second Quarter
(Nov 1 - Jan 31) 0.005 0.005 0.25 0.15
Third Quarter
(Feb 2 - Apr 30) 0.005 0.005 0.25 0.25
16
</Page>
<PAGE>
<PAGE>
Fourth Quarter
(May 1 - July 31) 0.005 0.005 0.25 0.25
1999
----
First Quarter
(Aug 1 - Oct 31) ---- ---- 0.25 0.25
Second Quarter
(Nov 1 - Jan 31) ---- ---- 0.25 0.25
Third Quarter
(Feb 1 - Mar 16) 0.01 0.01 1 .25
(Mar 17-Apr 30) UNPRICED
Fourth Quarter
(May 1 - July 31) 4.75 2 5.50 2.3125
2000
----
First Quarter
(Aug 1 - Oct 31) 7.875 4 9.50 5
</TABLE>
On November 19, 1998, a 400 to 1 reverse split took place on the
outstanding shares of the Company.
The Company has not paid, nor declared, any dividends since its
inception and does not intend to declare any such dividends in the
foreseeable future. The Company's ability to pay dividend is subject to
limitations imposed by Nevada law. Under Nevada law, dividends may be paid
to the extent that the corporation's assets exceed it liabilities and it is
able to pay its debts as they become due in the usual course of business.
The present intention of management is to utilize all available funds
for the development of the Company's business.
Item 2. Legal Proceedings.
----------------------------
The Company is not a party to any pending material legal proceeding.
To the knowledge of management, no federal, state, or local governmental
agency is presently contemplating any proceeding against the Company. To
the knowledge of the management, no director, officer or affiliate of the
Company or owner of record or beneficiary of more than 5% of the Company's
common stock is a party adverse to the Company or has a material interest
adverse to the Company in any proceeding.
Item 3. Changes in and Disagreements with Accountants.
Jones, Jensen & Company were previously the principal accountants for
BioPulse International, Inc., f/k/a International Sensor Technologies, Inc.
On November 10, 1999, the Company terminated the engagement of Jones,
Jensen & Company and appointed Crouch Bierwolf & Chisholm as the Company's
independent auditor and certifying accountant. The Board of Directors of
the Company approved the decision to change accountants.
17
</Page>
<PAGE>
Jones, Jensen & Company's report with respect to BioPulse
International, Inc. balance sheets for the fiscal years ended July 31, 1998
and 1997 and the related statements of operations, stockholder's equity
(deficit), and cash flows for the years ended July 31, 1998, 1997 and 1996
and from inception of July 13, 1984 through July 31, 1998 did not contain
an adverse opinion or a disclaimer of opinion and was not qualified as to
uncertainty, audit scope or accounting principles, but was modified as to
going concern.
In connection with the audit of the Company's financial statements for
the fiscal years ended July 31, 1998 and July 31, 1999 and the interim
period through November 10, 1999 preceding the date of the Jones, Jensen &
Company termination, there were no disagreements, as that term is defined
in Item 304 of Regulation S-B, with Jones, Jensen & Company on any matter
of accounting principles or practices, financial statement disclosure or
auditing scope or procedures which, if not resolved to the satisfaction of
Jones, Jensen & Company would have caused Jones, Jensen & Company to make
reference to the matter in their report. Jones, Jensen & Company did not
advise the Company regarding any "reportable events" as defined in Item 304
(a)(1)(iv)(B) of Regulation S-B.
Item 4. Recent Sales of Unregistered Securities.
------------------------------------------------
<TABLE>
<CAPTION>
(a) Date of Sale Title Amount of Securities Sold
---------------- ------------- ---------------------------
<S> <C> <C>
April 6, 1999 Common Stock 2,000,000 shares
</TABLE>
(b) The securities were not publicly offered, they were issued to
private individuals in exchange for cash.
(c) Share Offering Price:
$.485 per Share
(d) This offering was made in reliance upon the exemption from
registration provided by section 3(b) of the 1933 Securities and Exchange
Act and provisions of Regulation D, Rule 504 promulgated under the 1933
Act("Regulation D").
(e) Proceeds of the offering are being used as follows:
<TABLE> <CAPTION>
Description Offering
------------------------------- -------------------
<S> <C>
Total Proceeds: $970,000
Less:
Commissions $100,000
Offering Expenses $12,000
Net Proceeds: $858,000
Start-Up Costs $100,000
Marketing/ Advertising $200,000
Clinic Set-Up
Tijuana, Mexico $450,000
Research & Development $40,000
Working Capital $68,000
Total Expenditures $970,000
------------------------------------------------------------------------
</TABLE> 18 </Page>
<PAGE>
None of the above expenses were paid directly or indirectly to
directors, officers, general partners of the Company or its associates, or
to persons owning more that 10% of any class of equity security of the
Company or to affiliates of the Company.
Item 5. Indemnification of Directors and Officers.
----------------------------------------------------
There are no provisions in the Nevada corporation law or the Articles
of Incorporation of the Registrant requiring the corporation indemnify any
of the Registrant officers and directors. The articles of incorporation of
the registrant provide for indemnification as follows:
1) No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for any action
taken or an failure to take any action as a director, except as
provided in this Article.
2) The limitation of liability contemplated in this Article shall not
extend to (a) the amount of a financial benefit received by a director
to which he is not entitled, (b) an intentional infliction of harm on
the corporation or the shareholders, (c) an intentional violation of
criminal law, or (d) unlawful distributions.
3) Any repeal or modification of this Article by the stockholders of
the corporation shall not adversely affect any right or protection of
a director of the corporation existing at the time of such repeal or
modification.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to officers and directors of the
Company pursuant to the provisions of the Company's Certificate of
Incorporation, the Company has been informed that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is therefore
unenforceable.
[Left blank intentionally]
19
</Page>
<PAGE>
PART F/S
BIOPULSE INTERNATIONAL, INC.
(A Development Stage Company)
INDEX TO FINANCIAL STATEMENTS
Report of Independent Accountants
Balance Sheet as of July 31, 1999
Statement of Operations from inception, June 4, 1998 through July 31, 1999
Statement of Stockholder's Equity
Statements of Cash Flows for the year ended July 31, 1999 and for the
Period from inception through July 31, 1999
Notes to the Financial Statements
20
</Page>
<PAGE>
PART III
---------
Item 1. Index and Description of Exhibits.
------------------------------------------
<TABLE>
<CAPTION>
Exhibit
Number Title of Document Location
----------- ----------------------------------------------------- ------------
<S> <C> <C>
3.01 Amended and Restated Articles of Incorporation, As filed
as amended
3.02 Bylaws As filed
10.01 Contract with Dr. Jesus Omar Sanchez Tiznado As filed
16.01 Letter on Change in Certifying Accountant As filed
23.01 Consent of Accountant See attached
21
</TABLE>
</Page>
<PAGE>
--------------------------------------------------------------------------
SIGNATURES
--------------------------------------------------------------------------
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its
behalf, thereunto duly authorized.
BioPulse International, Inc.
Date: June 21, 2000 /s/ Jonathan Neville
---------------------------------
Jonathan Neville
President
Date: June 21, 2000 /s/ Jan Morse
---------------------------------
Jan Morse
Secretary/Treasurer
22
</Page>
<PAGE>
-------------------------------------------------------------------------
SIGNATURES
-------------------------------------------------------------------------
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its
behalf, thereunto duly authorized.
BioPulse International, Inc.
Date: June 21, 2000 /s/ Jonathan Neville
----------------------------------
Jonathan Neville
President
Date: June 21, 2000 /s/ Jan Morse
----------------------------------
Jan Morse
Secretary/Treasurer
23
</Page>
<PAGE>
Biopulse International, Inc.
Consolidated Financial Statements
April 30, 2000 (unaudited)
and
July 31, 1999 and 1998
F-1
</Page>
<PAGE>
CONTENTS
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . .3
Consolidated Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . .4
Consolidated Statement of Operations . . . . . . . . . . . . . . . . . . .5
Consolidated Statement of Stockholders' Equity . . . . . . . . . . . . . .6
Consolidated Statement of Cash Flows . . . . . . . . . . . . . . . . . . .7
Notes to the Consolidated Financial Statements . . . . . . . . . . . . . .8
F-2
</Page>
<PAGE>
[Letter Head]
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders of
Biopulse International, Inc.
We have audited the accompanying consolidated balance sheets of Biopulse
International, Inc., as of July 31, 1999 and 1998 and the related
consolidated statements of operations, stockholders' equity and cash flows
for the year ended July 31, 1999, for the two months ended July 31, 1998
and from inception on June 4, 1998 through July 31, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Biopulse International, Inc. as of July 31, 1999 and 1998 and the results
of its operations and cash flows for the year ended July 31, 1999, the two
months ended July 31, 1998 and from inception on June 4, 1998 through July
31, 1999 in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2, the
Company's operating loss and lack of working capital raise substantial
doubt about its ability to continue as a going concern. Management's plans
in regard to those matters are also described in Note 2. The financial
statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ Crouch, Bierwolf & Chisholm
---------------------------------------
Salt Lake City, Utah
December 23, 1999
F-3
</Page>
<PAGE>
Biopulse International, Inc.
Consolidated Balance Sheet
<TABLE>
<CAPTION>
Assets
April 30 July 31,
2000 1999 1998
------------ ------------ ------------
<S> <C> <C> <C>
(unaudited)
Current assets
Cash $ 51,135 $ 3,988 $ -
Accounts receivable (net of allowance for
doubtful accounts of $0 and $0) 6,435 1,609 -
Inventory 79,445 - -
Prepaid rent, Current portion 113,400 - -
Note receivable - related party (Note 9) 48,725 - -
------------ ------------ ------------
Total Current Assets 299,140 5,597
------------ ------------ ------------
Property & Equipment, Net (Note 3) 541,789 125,127 -
------------ ------------ ------------
Other assets
Prepaid rent - Net of current portion 216,854 - -
Deposits 9,117 8,731 -
------------ ------------ ------------
Total Other Assets 225,585 8,731 -
------------ ------------ ------------
Total Assets $ 1,066,514 $ 139,455 $ -
============ ============ ============
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable $ 155,725 $ 100,729 $ -
Accrued expenses 48,480 37,160 -
Unearned patient fees 84,635 - -
Notes payable - related party (Note 8) - 190,628 -
------------ ------------ ------------
Total Current Liabilities 288,840 328,517 -
------------ ------------ ------------
Total Liabilities 288,840 328,517 -
------------ ------------ ------------
Stockholders' Equity
Preferred Stock, Class A, authorized
2,000,000 shares of $.001 par value,
50,374 issued and outstanding 50 50 -
Common Stock, authorized
100,000,000 shares of $.001 par value,
6,073,862 issued and outstanding 6,074 6,074 -
Additional Paid in Capital 1,018,249 1,018,249 -
Less: Subscriptions receivable (99,566) (970,000) -
Accumulated Deficit (147,133) (243,435) -
------------ ------------ ------------
Total Stockholders' Equity 777,674 (189,062) -
------------ ------------ ------------
Total Liabilities and Stockholders' Equity $ 1,066,514 $ 139,455 $ -
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements
F-4
</Page>
<PAGE>
Biopulse International, Inc.
Consolidated Statement of Operations
<TABLE>
<CAPTION>
April July July April April
30, 2000 31, 1999 31, 1998 30, 2000 30, 1999
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenues: $2,256,573 $ 289,623 $ - $2,546,196 $ 289,623
Cost of Good Sold 994,228 179,870 - 1,174,098 179,870
----------- ----------- ----------- ----------- -----------
Gross Profit 1,262,345 109,753 - 1,372,098 109,753
----------- ----------- ----------- ----------- -----------
Operating Expenses:
General and
administrative 1,151,040 353,188 - 1,504,228 353,188
----------- ----------- ----------- ----------- -----------
Total Expenses 1,151,040 353,188 - 1,504,228 353,188
Net Profit from
Operations (111,305) (243,435) - (132,130) (243,435)
Loss from abandonment
of leasehold
improvements 15,003 - - 15,003 -
----------- ----------- ----------- ----------- -----------
Net Profit Before
Taxes 96,302 (243,435) - (147,133) (243,435)
----------- ----------- ----------- ----------- -----------
Provision for
Income taxes - - - - -
----------- ----------- ----------- ----------- -----------
Net Profit $ 96,302 $ (243,435) $ - $ (147,133) $ (243,435)
=========== =========== =========== =========== ===========
Net Profit Per Share $ .02 $ (.05) - $ (.03) $ (.05)
=========== =========== =========== =========== ===========
Weighted average
shares outstanding 6,073,862 4,709,752 - 5,391,807 4,709,752
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statemetns
F-5
</Page>
<PAGE>
Biopulse International, Inc.
Consolidated Statement of Stockholders' Equity
<TABLE>
<CAPTION>
Additional
Susbscriptions
Preferred Stock Common Stock Recei-
Shares Amount Shares Amount vable capital deficit
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at
Inception -
Stock to
organizers - $ - 4,000,000 $ 4,000 $ - $ - $ -
Net loss
for the year
ended
July 31,
1998 - - - - - - -
-----------------------------------------------------------------------
Balance,
July 31,
1998 - - 4,000,000 4,000 - - -
Recapital
-ization for
accounting
purposes of
Biopulse,
Inc. - - 73,862 74 - (74) -
Stock
issued for
subscrip-
tions
receivable
at $.49
per share - - 2,000,000 2,000 (970,000) 968,000 -
Stock issued
for cash
at $1.00
per share 25,000 25 - - - 24,975 -
Stock issued
for services
at $1.00 per
share 25,374 25 - - - 25,348 -
Net loss for
the year
ended July
31, 1999 - - - - - - (243,435)
-----------------------------------------------------------------------
Balance,
July 31,
1999 50,374 50 6,073,862 6,074 (970,000)1,018,249 (243,435)
</Page>
<PAGE>
Collection
of
subscrip-
tions
receivable - - - - 870,434 - -
Net profit
for the
nine months
ended April
30, 2000
(unaudited) - - - - - - 96,302
-----------------------------------------------------------------------
Balance,
April 30,
2000
(unaudited) 50,374 $ 50 6,073,862 $ 6,074 $(99,566)$1,018,249 $(147,133)
=======================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements
F-6
</Page>
<PAGE>
Biopulse International, Inc.
Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
2000 1999 1998 2000 1999
----------- ----------- ----------- ----------- -----------
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
Cash Flows from
Operating Activities
Net profit $ 96,302 $ (243,435) $ - $ (147,133) $ (243,435)
Adjustments to
reconcile net loss
to net cash provided
by operations:
Stock for services - 29,374 - 29,374 29,374
Depreciation &
Amortization 35,552 11,385 - 46,937 11,385
(Increase) decrease
in receivables (4,826) (1,609) - (6,435) (1,609)
(Increase) decrease
in inventory (79,445) - - (79,445) -
Increase (decrease)
in payables 54,996 100,729 - 155,725 100,729
Increase (decrease)
in unearned fees 84,635 - - 84,635 -
Increase (decrease)
in accrued expenses (11,320) 37,160 - 25,840 37,160
----------- ----------- ----------- ----------- -----------
Net Cash (Used)
Provided by
Operating Activities (175,894) (66,396) - 109,498 (66,396)
Cash Flows from Investment
Activities:
Purchase of Equipment (429,574) (136,513) - (566,087) (136,513)
Cash paid for Deposits - (8,731) - (8,731) (8,731)
Cash for prepaid rent (320,254) - - (320,254) -
Cash loan to related
party (48,725) - - (48,725) -
----------- ----------- ----------- ----------- -----------
Net Cash (Used)
Provided by
Investing Activities (808,553) (145,244) - (953,797) (145,244)
Cash Flows from
Financing Activities:
Issued common stock
for cash /and
subscription
receivable 870,434 25,000 - 895,434 25,000
Cash received from
debt financing - 190,628 - 190,628 190,628
Principal payments
on short term debt (190,628) - - (190,628) -
----------- ----------- ----------- ----------- -----------
Net Cash (Used)
Provided by
Financing Activities 679,806 215,628 - 895,434 215,628
</Page>
<PAGE>
Net increase
(decrease) in cash 47,147 3,988 - 51,135 3,988
Cash, beginning
of period 3,988 - - - -
----------- ----------- ----------- ----------- -----------
Cash, end of period $ 51,135 $ 3,988 $ - $ 51,135 $ 3,988
=========== =========== =========== =========== ===========
Supplemental Cash
Flow Information:
Cash paid for
Interest $ - $ - $ - $ - $ -
Cash paid for
Income Taxes $ - $ - $ - $ - $ -
Stock issued for
Services $ - $ 29,374 $ - $ 29,374 $ 29,374
</TABLE>
The accompanying notes are an integral part of these financial statements
F-7
</Page>
<PAGE>
<PAGE>
Biopulse International, Inc.
Notes to the Financial Statements
July 31, 1999 and 1998
NOTE 1 - Summary of Significant Accounting Policies
a. Organization
Biopulse International, Inc. (the Company) was incorporated in the
State of Nevada on July 13,1984 originally under the name of Universal
Financial Capital Corp. The Company changed its name in September
1985 to International Sensor Technologies, Inc. As International
Sensor Technologies, Inc. the Company incurred heavy losses and no
revenue from operations. The Company also experienced five years of
inactivity. On January 12, 1999, the Company again changed its name
to BioPulse International, Inc. when it acquired BioPulse, Inc. The
Company is in the business of managing drug and rehabilitation
centers, integrated medicine clinics, and medical research programs.
The Company issued 4,000,000 common shares in exchange for 100 percent
of the outstanding stock of Biopulse Inc., a Utah corporation
organized June 4, 1998. The share exchange with Biopulse, Inc. was
accounted for as a reverse acquisition (recapitalization), therefore
all historical financial information is that of the accounting
survivor Biopulse, Inc.
The Company also paid $100,000 to an officer/director of the Company
for accounting, legal and organization expenses to recapitalize the
Company. This was expensed during the period ended July 31, 1999.
b. Recognition of Revenue
The Company recognizes income and expense on the accrual basis of
accounting. Revenue from services to patients is recognized as
services are performed.
c. Earnings (Loss) Per Share
The computation of earnings per share of common stock is based on the
weighted average number of shares outstanding at the date of the
financial statements.
d. Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of
three months or less to be cash equivalents.
e. Provision for Income Taxes
No provision for income taxes has been recorded due to net operating
loss carryforwards totaling approximately 2,370,000 that will be
offset against future taxable income. These NOL carryforwards begin
to expire in the year 2000. No tax benefit has been reported in the
financial statements because the Company believes there is a 50% or
greater chance the carryforward will expire unused.
Deferred tax assets and the valuation account is as follows at April
30, 2000 and July 31, 1999 and 1998:
April 30, July 31, July 31,
Deferred tax asset: 2000 1999 1998
----------- ----------- -----------
NOL carrryforward $ 700,000 $ 700,000 $ -
Valuation allowance (700,000) (700,000) -
----------- ----------- -----------
Total $ - $ - $ -
=========== =========== ===========
F-8</Page>
<PAGE>
Biopulse International, Inc.
Notes to the Financial Statements
July 31,1999 and 1998
NOTE 1 - Summary of Significant Accounting Policies (continued)
f. Principles of Consolidation
These financial statements include the books of Biopulse
International, Inc and its wholly owned subsidiary Biopulse, Inc.
All intercompany transactions and balances have been eliminated
in the consolidation.
h. Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect reported amounts of
assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements and expenses
during the reporting period. In these financial statements,
assets, liabilities and expenses involve extensive reliance on
management's estimates. Actual results could differ from those
estimates.
I. Accounts Receivable Allowance
The Company periodically reviews accounts receivable and the
allowance for doubtful accounts. At April 30, 2000, July 31,
1999 and 1998 no allowance was considered necessary.
j. Inventory
Inventory is recorded at the lower of cost or market on the
first-in, first-out basis, and consists primarily of nutrition
supplements and medical supplies.
NOTE 2 - Going Concern
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. The Company has
had recurring operating losses and is dependent upon financing to
continue operations. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
It is management's plan to continue developing its medical clinics,
thus creating necessary operating revenue.
NOTE 3 - Property and Equipment
The Company capitalizes purchases of long lived assets that are
expected to give benefit to the Company over the life of the asset.
The Company also capitalizes improvements and costs that increases the
value of or extend the life of the asset.
Capitalized assets are depreciated over the estimated useful
lives of the assets (five to seven years for furniture and fixtures
and leasehold improvements, three to five years for computer
equipment) on the straight line basis.
F-9
</Page>
<PAGE>
<PAGE> Biopulse International, Inc.
Notes to the Financial Statements
July 31, 1999 and 1998
NOTE 3 - Property and Equipment (continued)
Property and Equipment consists of the following at April 30,
2000, July 31, 1999 and 1998:
<TABLE><CAPTION>
April 30, July 31,
2000 1999 1998
----------- ----------- -----------
<S> <C> <C> <C>
Furniture & Equipment $ 129,204 $ 20,935 $ -
Medical Equipment 453,130 110,606 -
Leasehold improvements 5,892 4,971 -
Accumulated Depreciation (46,437) (11,385) -
----------- ----------- -----------
Total Property & Equipment $ 541,789 $ 125,127 $ -
=========== =========== ===========
</TABLE>
NOTE 4 - Development Stage Company
The Company is a development stage company as defined in
Financial Accounting Standards Board Statement No. 7. It is
concentrating substantially all of its efforts in raising capital and
defining its business operation in order to generate significant
revenues.
NOTE 5 - Related Party Transactions
An officer loaned the Company $90,000 during the year ended July
31, 1999. The note is non-interest bearing, unsecured, and due
within one year. The balance of the note at April 30,2000 and July
31, 1999 is $0 and $90,000.
A shareholder loaned the Company $10,628 during the year ended
July 31, 1999. The note is non-interest bearing, unsecured, and due
within one year. The balance of the note at April 30, 2000 and July
31, 1999 is $0 and $10,628.
A corporation under common ownership loaned the Company $90,000
during the year ended July 31, 1999. The note is non-interest
bearing, unsecured, and due within one year. The balance of the note
at April 30, 2000 and July 31, 1999 is $0 and $90,000.
The Company loaned a corporation under common ownership $74,620
during the three months ended October 31, 1999. The note is non-
nterest bearing, unsecured, and due within one year. The balance of
the note at April 30,2000 is $48,725.
NOTE 6 - Equity
During January, 1999, the Company issued 4,000,000 shares of
common stock for 100 percent of the outstanding stock of Biopulse,
Inc. The shares were valued at $4,000.
During April 1999, the Company issued 2,000,000 shares of common
stock for subscriptions receivable of $970,000.
During April 1999, the Company issued 25,000 shares of preferred
stock, class "A" for cash of $25,000.
During April 1999, the Company issued 25,374 shares of preferred
stock, class "A" for services valued at $25,374.
F-10 </Page>
<PAGE>
<PAGE>
Biopulse International, Inc.
Notes to the Financial Statements
July 31, 1999 and 1998
NOTE 7 - Commitments and Contingencies
The Company is committed to an operating lease for office space
in Sandy, Utah. The lease requires the Company to pay monthly rent of
$8,731 and expires December 2003.
The Company is committed to an operating lease for office space
in Tijuana, Mexico. The lease is month to month and requires the
Company to pay monthly rent of $3,532.
Future minimum operating lease payments are as follows at July
31, 1999:
1999 $ 43,655
2000 104,772
2001 104,772
2002 104,772
2003 104,772
-------------
Total $ 462,743
NOTE 8 - Notes Payable-Related Party
Notes payable - related party are detailed as follows:
<TABLE> <CAPTION>
April 30, July 31,
2000 1999 1998
<S> <C> <C> <C>
Note payable to an officer of the Company,
non-interest bearing, due within one year
and unsecured - 90,000 -
Note payable to a corporation under
common ownership, non-interest bearing,
due within one year and unsecured - 90,000 -
Note payable to a shareholder of the
Company, non-interest bearing, due
within one year and unsecured - 10,628 -
----------- ----------- -----------
Total Notes Payable- Related Party $ - $ 190,628 $ -
=========== =========== ===========
</TABLE>
NOTE 9 - Note Receivable - Related Party
Notes receivable - related party are detailed as follows:
<TABLE><CAPTION>
April 30, July 31,
2000 1999 1998
----------- ----------- -----------
<S> <C> <C> <C>
Note receivable from a corporation, under
common ownership, non-interest bearing,
due within one year 48,725 - -
----------- ----------- -----------
Total Notes receivable - Related Party 48,725 $ - $ -
=========== =========== ===========
</TABLE>
F-11
</Page>
<PAGE>
Biopulse International, Inc.
Notes to the Financial Statements
July 31, 1999 and 1998
NOTE 10 - Preferred Stock
The Company has authorized five classes of Preferred Stock,
each class has 2,000,000 shares authorized at $.001 par value. At
July 31, 1999, the Company has 50,374 shares of Class A convertible
preferred stock outstanding. These shares are convertible into common
stock at a rate of two shares of common stock for each share of
preferred stock any time after January 8, 2000. Since the Company's
common stock was valued at $0.49 per share at the commitment date
(based on actual sales of 2,000,000 shares of common stock at $0.49
per share), no beneficial conversion feature was accounted for.
NOTE 11 - Subsequent Events
In December 1999, the Company entered into an agreement with
Wicker Medical Clinic in Bad Nauheim, Germany. The agreement consists
of Biopulse selling wicker medical equipment and training staff
members how to perform the alternative medical procedures developed by
Biopulse. Biopulse will receive $3,000 of each treatment performed in
the Wicker clinic. The two entities will also refer patients to one
another under the terms of the agreement.
NOTE 12 - Reverse Stock Split
In November 1998, the board of directors authorized a 1 for 400
reverse stock split. These financial statements have been
retroactively restated to reflect the reverse split.
NOTE 13 - Unaudited Information
The information furnished herein was taken from the books and
records of the Company without audit. However, such information
reflects all adjustments which are, in the opinion of management,
necessary to properly reflect the results of the nine months ended
April 30, 2000. The information presented is not necessarily
indicative of the results from operations expected for the full fiscal
year.
F-12
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