<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d)
of the Securities and Exchange Act of 1934
For the Quarter Ended: Commission File Number
April 30, 2000 0-28973
-------------- ---------
BioPulse International, Inc.
--------------------------------------------
(Name of small business issuer in its chapter)
Nevada 87-0634278
------------------------------- --------------------------
(State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
10421 South Jordan Gateway, Suite 500, South Jordan, Utah 84095
------------------------------------------------------------ ----------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (801) 523-0101
----------------
Securities registered pursuant to section 12(b) of the Exchange Act: None
Check whether the Issuer (1) filed all reports required to be filed by
section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such
report(s), and (2) has been subject to such filing requirements for the
past 90 days. (1) Yes [X ] No [ ]
State the number of shares outstanding of each of the registrants classes
of common equity, as of the latest practicable date:
As of April 30, 2000, issuer had 6,073,862 shares of its $.001 par value
common stock outstanding.
</Page>
<PAGE>
PART I FINANCIAL INFORMATION
-------------------------------
Item 1 Financial Statements
------------------------------
See pages F-1 through F-8 directly following the signature page of
this Form 10-QSB.
Consolidated Balance Sheet as of April 30, 2000
and April 30, 1999 F-3
Consolidated Statement of Operations for the nine
months ended April 30, 2000 and 1999, and for
the Quarters then ended F-4
Consolidated Statement of Stockholders' Equity for
April 30, 2000 F-5
Consolidated Statement of Cash Flows for the nine
months ended April 30, 2000 and 1999. F-6
Notes to Financial Statements F-7
Item 2 Managements Discussion and Analysis
---------------------------------------------
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.
2
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<PAGE>
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.
The following discussion contains comments about the financial
condition of BioPulse International, Inc. for the nine months ended April
30, 2000 and 1999 and for the Quarters then ended.
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.
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 through December 1999, 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.
In November 1999 BioPulse entered into a management agreement with an
existing clinic in Germany. BioPulse acquired equipment for the Germany
clinic and trained its staff in its methods and provide oversight of the
clinic.
Biopulse has outgrown its facilities and in March 2000 moved into a
new larger clinic about 1/2 mile from its original location. The clinic
space is leased and Biopulse has financed the improvements and equipment
purchases through its cash flow. The lease allows Biopulse to deduct the
cost of improvements from rent until the cost has been recovered.
BioPulse's is now operating profitibly. BioPulse is developing and is
in the process of implementing financial and other management controls and
procedures.
Revenue from operations for the has increased dramatically during the
current fiscal year. For the nine months ended April 30, 2000 revenues
were over $ 2,250,000 million compared to approximately $ 125,000 for the
same period last year. Biopulse became profitable during January 2000 and
for the quarter ended April 30, 2000 it showed a net profit of over
$385,000 which recovered losses incurred during the first two quarters of
the fiscal year and generated a net profit of $96,000 for the first nine
months of the fiscal year.
3
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<PAGE>
PART II OTHER INFORMATION
---------------------------
Item 1 Legal Proceedings
--------------------------------
None
Item 2 Changes in Securities
------------------------------------
None
Item 3 Defaults Upon Senior Securities
----------------------------------------------
None
Item 4 Submission of Matters to Vote of Security Holders
----------------------------------------------------------------
None
Item 5 Other Information
--------------------------------
None
Item 6 Exhibits and Reports on Form 8-k
-----------------------------------------------
(a) Exhibits Financial Statement Data Schedule
(b) Reports on Form 8-k No reports on Form 8-k were filed
during the quarter
4
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<PAGE>
--------------------------------------------------------------------------
Signatures
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
Biopulse International, Inc.
Date: June 19, 2000 By: /s/ Jonathan Neville
-------------------------
President
Date: June 19, 2000 By:/s/ Jan Morse
-------------------------
Secretary
5
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<PAGE>
BioPulse International, Inc.
Financial Statements
as of April 30, 2000 and July 31, 1999
and for the nine months ended April 30, 2000 and 1999
(Unaudited)
F-1
</Page>
<PAGE>
BioPulse International, Inc.
Table of Contents
Consolidated Balance Sheet as of April 30, 2000
and April 30, 1999 F-3
Consolidated Statement of Operations for the nine
months ended April 30, 2000 and 1999, and for
the Quarters then ended F-4
Consolidated Statement of Stockholders' Equity for
April 30, 2000 F-5
Consolidated Statement of Cash Flows for the nine
months ended April 30, 2000 and 1999. F-6
Notes to Financial Statements F-7
F-2
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<PAGE>
Biopulse International, Inc.
Consolidated Balance Sheet
(Unaudited)
<TABLE>
<CAPTION>
Assets
April July
30, 2000 31, 1999
----------- -----------
<S> <C> <C>
Current Assets
Cash $51,135 $3,988
Accounts receivable (net of allowance for
doubtful accounts) 6,435 1,609
Inventory 79,445 -
Note Receivable - Related Party (note 9) 48,725 -
Prepaid Rent, Current 113,400 -
----------- -----------
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 8,731 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 -
Note 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,
50,734 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>
F-3
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<PAGE>
Biopulse International, Inc.
Consolidated Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended April 30, Nine Months April 30,
------------------------ ----------------------
2000 1999 2000 1999
------------------------ ----------------------
<S> <C> <C> <C> <C>
Revenues $1,119,915 $94,288 $2,256,573 $128,373
Cost of Goods Sold 360,062 76,225 994,728 93,525
------------------------ ----------------------
Gross Profit 759,313 18,063 1,262,345 34,848
------------------------ ----------------------
Operating Expenses:
General and Administrative 373,770 44,358 1,151,040 145,322
------------------------ ----------------------
Total Expenses 373,770 44,358 1,151,040 145,014
------------------------ ----------------------
Net Loss From Operations 385,543 (26,295) 111,305 (116,166)
Loss from abandonment of
Leasehold Improvements - - 15,003 -
------------------------ ----------------------
Net Income before taxes 385,543 (26,295) 96,302 (116,166)
Provisions for Income Taxes 0 0 0 0
------------------------ ----------------------
Net Income $385,543 ($26,295) $96,302 ($116,166)
======================== ======================
Net Income Per Share $0.08 (0.01) $0.02 (0.03)
Weighted Average Shares Outstanding 6,073,860 4,073,862 6,073,862 4,073,862
</TABLE>
F-4
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<PAGE>
Biopulse International, Inc.
Consolidated Statement of Stockholders' Equity
<TABLE>
<CAPTION>
Subscr-
iptions Additional
Preferred Stock Common Stock Recei- paid-in Retained
Shares Amount Shares Amount vable capital earnings
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at inception - $ - - $ - $ - $ - $ -
Net loss for the year
ended July 31, 1998 - - - - - - -
---------------------------------------------------------------
Stock for cash to
organizers - - - - - - -
Recapitalization for
accounting purposes
of Biopulse, Inc. - - 4,000,000 4,000 - - -
Recapitalization for
accounting purposes
of Biopulse, Inc. - - 73,862 74 - (74) -
Stock issued for
subscriptions
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)
Collection of
subscriptions
receivable - - - - 870,434 - -
Net profit for the
nine months ended
April 30, 2000
(Unaudited) - - - - - - 96,302
---------------------------------------------------------------
Balance,
April 30, 2000 50,374 $50 6,073,862 $6,074 ($99,566)$1,018,249 ($147,133)
</TABLE>
F-5
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<PAGE>
Biopulse International, Inc.
Consolidated Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For nine For nine
months ended months ended
April 30, 2000 April 30, 1999
--------------- ---------------
<S> <C> <C>
Cash flows from operating activities
Net Income $ 96,302 ($116,166)
Adjustments to reconcile net income
to cash provided by operations
Depreciation and Amortization 35,552 5,692
(Increase) decrease in receivables (4,826) 0
(Increase) decrease in Inventory (79,445) 0
Increase (decrease) in payables 54,996 34,936
Increase (decrease) in accrued expenses (11,320) 3,563
Increase (decrease) in unearned fees 84,635 750
--------------- ---------------
Net cash provided by operating activities 175,894 (71,225)
--------------- ---------------
Cash flows from investment activities
Purchase of Equipment (429,574) (45,041)
Cash paid for deposits 0 0
Cash loan (to) from related party (48,725) 73,916
Cash for prepaid rent (330,254) 0
--------------- ---------------
Net Cash (used) provided by investing activities (808,553) 28,875
--------------- ---------------
Cash flows from Financing Activities
Issued common stock for cash 870,434 54,373
Principal payments on short term debt (190,628) -
--------------- ---------------
Net Cash (used) provided by financing activities 679,806 54,373
--------------- ---------------
Net increase (decrease) in cash 47,147 12,023
Cash, beginning of period 3,988 0
--------------- ---------------
Cash, end of period $ 51,153 $ 12,023
--------------- ---------------
</TABLE>
F-6
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<PAGE>
Biopulse International, Inc.
Notes to the Financial Statements
April 30, 2000 and 1999
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.
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:
F-7
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<PAGE>
Biopulse International, Inc.
Notes to the Financial Statements
April 30, 2000 and 1999
NOTE 1 - Summary of Significant Accounting Policies (continued)
---------------------------------------------------------------
<TABLE>
<CAPTION>
April 30, July 31,
2000 1999
Deferred tax asset: ----------- -----------
<S> <C> <C>
NOL carrryforward $ 700,000 $ 700,000
Valuation allowance ( 700,000) ( 700,000)
----------- ------------
Total $ - $ -
=========== ============
</TABLE>
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.
g. 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.
h. Accounts Receivable Allowance
The Company periodically reviews accounts receivable and the allowance
for doubtful accounts. At April 30, 2000, and April 30, 1999 no allowance
was considered necessary.
i. 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.
F-8
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<PAGE>
Biopulse International, Inc.
Notes to the Financial Statements
April 30, 2000 and 1999
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.
Property and Equipment consists of the following at October 31, 1999,
July 31, 1999 and 1998:
<TABLE>
<CAPTION>
April 30, April 30,
2000 1999
----------- -----------
<S> <C> <C>
Furniture & Equipment $ 129,204 $ 20,465
Medical Equipment 453,130 17,564
Leasehold Improvements 5,892 7,011
Accumulated Depreciation (46,437) (5,692)
----------- ------------
Total Property & Equipment $ 541,789 $ 39,349
=========== ============
</TABLE>
NOTE 4 - Not Used
-----------------
NOTE 5 - Related Party Transactions
-----------------------------------
A corporation under common ownership loaned the Company $73,916 during
the nine months ended April 30, 2000. The note is non-interest bearing,
unsecured, and due within one year. The balance of the note at April, 30,
2000 and April 30, 1999 is $0 and $73,916.
The Company loaned a corporation under common ownership $48,725 during
the nine months ended April 30, 2000. The note is non-interest 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.
(Left blank Intentionally)
F-9 </Page>
<PAGE>
Biopulse International, Inc.
Notes to the Financial Statements
April 30, 2000 and 1999
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 commenced March 1, 2000 and is for a period
of 5 years with 3 - 5 year options for renewal and requires the Company to
pay monthly rent of $7,500 increasing to $13,108 in the fifth year.
Future minimum operating lease payments are as follows at July 31,
1999:
2000 $ 183,248
2001 234,668
2002 236,253
2003 255,992
2004 159,131
------------
Total $ 1,069,292
NOTE 8 - Notes Payable-Related Party
------------------------------------
<TABLE>
<CAPTION>
Notes payable - related party are detailed as follows:
April 30, April 30,
2000 1999
----------- -----------
<S> <C> <C>
Note payable to a corporation under
common ownership, non-interest bearing,
due within one year and unsecured - 73,916
Total Notes Payable - Related Party $ - $ 73,916
=========== ===========
</TABLE>
NOTE 9 - Note Receivable - Related Party
----------------------------------------
Notes receivable - related party are detailed as follows:
<TABLE>
<CAPTION>
April 30, April 30,
2000 1999
----------- -----------
<S> <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-10
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<PAGE>
Biopulse International, Inc.
Notes to the Financial Statements
April 30, 2000 and 1999
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 April 30, 2000, 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 $.49 per
share at the commitment date, no beneficial conversion feature was
accounted for.
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-11
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