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U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-SB
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.
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(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
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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
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Overview
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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
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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.
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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
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programs.
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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.
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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
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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
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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
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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.
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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
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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
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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
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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
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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
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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 pay shareholders of the
acquired company, BioPulse, Inc. for intangible assets brought to the
merger. 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
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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
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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 Percentage
Class Beneficial Owner (1) Beneficial Ownership 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 Netherlands, Antilles
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
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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.
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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
Awards
Other Restr-
Annual Compensation Annual icted Payouts
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-
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> 14
<PAGE>
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>
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
Fourth Quarter
(May 1-July 31) 0.005 0.005 0.25 0.25
16
<PAGE>
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
the 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.
Jones, Jensen & Company's report with respect to International Sensor
Technologies, Inc.'s balance sheet 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.
17
<PAGE>
In connection with the audit of the Company's financial statements for
the fiscal year ended July 31, 1999 and in the interim period thorough
October 31, 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: $ 58,000
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>
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>
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
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 See Attached
3.02 Bylaws See Attached
10.01 Contract with Dr. Jesus Omar Sanchez Tiznado See Attached
16.01 Letter on Change in Certifying Accountant See Attached
23.01 Consent of Accountant See Attached
27 Financial Data Schedule See Attached
</TABLE>
- --------------------------------------------------------------------------
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: January 12, 2000 By: /s/ Jonathan Neville
--------------------------------------
Jonathan Neville
President
Date: January 12, 2000 By: /s/ Jan Morse
--------------------------------------
Jan Morse
Secretary/Treasurer
21
<PAGE>
Biopulse International, Inc.
(a Development Stage Company)
Consolidated Financial Statements
October 31, 1999 (unaudited)
and
July 31, 1999 and 1998
<PAGE>
<TABLE>
<CAPTION>
C O N T E N T S
-----------------
<S> <C>
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
</TABLE>
<PAGE>
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. (a Development Stage Company) 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. (a Development Stage Company) 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.
Salt Lake City, Utah
December 23, 1999
<PAGE>
Biopulse International, Inc.
(a Development Stage Company)
Consolidated Balance Sheet
<TABLE>
Caption>
Assets
------
October 31, July 31,
1999 1999 1998
----------- ----------- -----------
(unaudited)
<S> <C> <C> <C>
Current assets
Cash $ 8,994 $ 3,988 $ -
Accounts receivable (net of allowance for
doubtful accounts of $0 and $0) 209 1,609 -
Inventory 10,425 - -
Note receivable - related party (Note 9) 74,620 - -
----------- ----------- -----------
Total Current Assets 94,248 5,597 -
----------- ----------- -----------
Property & Equipment, Net (Note 3) 208,058 125,127 -
----------- ----------- -----------
Other assets
Deposits 9,117 8,731 -
----------- ----------- -----------
Total Other Assets 9,117 8,731 -
----------- ----------- -----------
Total Assets $ 311,423 $ 139,455 $ -
=========== =========== ===========
Liabilities and Stockholders' Equity
-------------------------------------
Current Liabilities
Accounts payable $ 58,305 $ 100,729 $ -
Accrued expenses 8,084 37,160 -
Notes payable - related party (Note 8) - 190,628 -
----------- ----------- -----------
Total Current Liabilities 66,389 328,517 -
----------- ----------- -----------
Total Liabilities 66,389 328,517 -
----------- ----------- -----------
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 2,911,197 2,911,197 -
Less: Subscriptions receivable (301,000) (970,000) -
Deficit Accumulated During the
Development Stage (2,371,287) (2,136,383) -
----------- ----------- -----------
Total Stockholders' Equity 245,034 (189,062) -
----------- ----------- -----------
Total Liabilities and Stockholders' Equity $ 311,423 $ 139,455 $ -
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
4
<PAGE>
Biopulse International, Inc.
(a Development Stage Company)
Consolidated Statement of Operations
<TABLE>
<CAPTION>
From
Inception From
For the For For the June Inception
Three the Two 4, 1998 June 4,
Months Year Months through 1998
Ended Ended Ended through through
October July July October July
31, 1999 31, 1999 31, 1998 31, 1999 31, 1999
----------- ----------- ----------- ----------- -----------
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
Revenues: $ 228,208 $ 289,623 $ - $ 517,831 $ 289,623
Cost of Good Sold 185,066 179,870 - 364,936 179,870
----------- ----------- ----------- ----------- -----------
Gross Profit 43,142 109,753 - 152,895 109,753
----------- ----------- ----------- ----------- -----------
Operating Expenses:
General and
administrative 278,046 353,188 - 631,234 353,188
----------- ----------- ----------- ----------- -----------
Total Expenses 278,046 353,188 - 631,234 353,188
----------- ----------- ----------- ----------- -----------
Net Loss from
Operations (234,904) (243,435) - (478,339) (243,435)
----------- ----------- ----------- ----------- -----------
Net Loss Before Taxes (234,904) (243,435) - (478,339) (243,435)
----------- ----------- ----------- ----------- -----------
Provision for
Income taxes - - - - -
----------- ----------- ----------- ----------- -----------
Net Loss $ (234,904) $ (243,435) $ - $ (478,339) $ (243,435)
=========== =========== =========== =========== ===========
Net Loss Per Share $ (.04) $ (.07) $ - $ (.11) $ (.07)
=========== =========== =========== =========== ===========
Weighted average
shares outstanding 6,073,862 3,073,862 - 3,603,274 3,073,862
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
5
<PAGE>
Biopulse International, Inc.
(a Development Stage Company)
Consolidated Statement of Stockholders' Equity
<TABLE>
<CAPTION>
Deficit
Accumulated
During
Subscr- Additional the
Preferred Common Stock iptions paid-in Development
Shares Amount Shares Amount Receivable capital Stage
------- ------- ---------- ------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at
Inception - $ - - $ - $ - $ - $ -
Net loss for
the year ended
July 31, 1998 - - - - - - -
------- ------- ---------- ------- ---------- ---------- -----------
Balance,
July 31, 1998 - - - - - - -
Recapitalization
for accounting
purposes of
Biopulse, Inc. - - 4,073,862 4,074 - 1,892,874 (1,892,948)
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) 2,911,197 (2,136,383)
Collection of
subscriptions
receivable - - - - 669,000 - -
The accompanying notes are an integral part of these financial statements
6
</TABLE>
<PAGE>
Biopulse International, Inc.
(a Development Stage Company)
Consolidated Statement of Stockholders' Equity -Continued-
<TABLE>
<CAPTION>
Deficit
Accumulated
During
Subscr- Additional the
Preferred Common Stock iptions paid-in Development
Shares Amount Shares Amount Receivable capital Stage
------- ------- ---------- ------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net loss for
the three
months ended
October 31,
1999
(unaudited) - - - - - - (234,904)
------- ------- ---------- ------- ---------- ---------- -----------
Balance,
October 31,
1999
(unaudited) 50,374 $ 50 6,073,862 $6,074 $(301,000)$2,911,197 $(2,371,287)
======= ======= ========== ======= ===================== ============
The accompanying notes are an integral part of these financial statements
</TABLE>
6 -Continued-
<PAGE>
Biopulse International, Inc.
(a Development Stage Company)
Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
From
Inception From
For the For For the June Inception
Three the Two 4, 1998 June 4,
Months Year Months through 1998
Ended Ended Ended through through
October July July October July
31, 1999 31, 1999 31, 1998 31, 1999 31, 1999
-----------------------------------------------------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
Cash Flows from Operating
Activities
Net loss $(234,904) $(243,435) $ - $(478,339) $(243,435)
Adjustments to reconcile
net loss to net cash
provided by operations:
Stock for services - 29,374 - 29,374 29,374
Depreciation &
Amortization 7,352 11,385 - 18,737 11,385
(Increase) decrease
in receivables 1,400 (1,609) - (209) (1,609)
(Increase) decrease
in inventory (10,425) - - (10,425) -
Increase (decrease)
in payables (42,424) 100,729 - 58,305 100,729
Increase (decrease)
in accrued expenses (29,076) 37,160 - 8,084 37,160
---------------------------------------------------------
Net Cash (Used) Provided
by Operating Activities (308,077) (66,396) - (374,473) (66,396)
--------------------------------------------------------
Cash Flows from Investment
Activities:
Purchase of Equipment (90,283) (136,513) - (226,796) (136,513)
Cash paid for Deposits (386) (8,731) - (9,117) (8,731)
Cash loan to related party (74,620) - - - -
-------------------------------------------------------
Net Cash (Used) Provided by
Investing Activities (165,289) (145,244) - (235,913) (145,244)
-------------------------------------------------------
Cash Flows from Financing
Activities:
Issued common stock for
cash /and subscription
receivable 669,000 25,000 - 694,000 25,000
Cash received from
debt financing - 190,628 - 190,628 190,628
Principal payments on
short term debt (190,628) - - (190,628) -
--------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements
7
<PAGE>
Biopulse International, Inc.
(a Development Stage Company)
Consolidated Statement of Cash Flows -Continued-
<TABLE>
<CAPTION>
From
Inception From
For the For For the June Inception
Three the Two 4, 1998 June 4,
Months Year Months through 1998
Ended Ended Ended through through
October July July October July
31, 1999 31, 1999 31, 1998 31, 1999 31, 1999
--------------------------------------------------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
Net Cash (Used) Provided by
Financing Activities 478,372 215,628 - 619,380 215,628
--------------------------------------------------------
Net increase (decrease)
in cash 5,006 3,988 - 8,994 3,988
--------------------------------------------------------
Cash, beginning of period 3,988 - - - -
--------------------------------------------------------
Cash, end of period $ 8,994 $ 3,988 $ - $ 8,994 $ 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
7 -Continued-
<PAGE>
Biopulse International, Inc.
(a Development Stage Company)
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 organized under the laws
of the State of Nevada on July 13,1984 as Universal Financial Capital Corp.
On January 1, 1999 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, therefore all historical
financial information is that of the accounting survivor Biopulse, Inc. On
January 12, 1999 the Company changed its name to Biopulse International,
Inc. The Company is currently engaged in providing alternative medical
procedures in its clinic located in Tijuana, Mexico.
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 October
31, 1999 and July 31, 1999 and 1998:
<TABLE>
<CAPTION>
October 31, July 31,
Deferred tax asset: 1999 1999 1998
--------- --------- ---------
<S> <C> <C> <C>
NOL carrryforward $800,000 $700,000 $ -
Valuation allowance (800,000) (700,000) -
--------- --------- ---------
Total $ - $ - $ -
========= ========= =========
</TABLE>
8
<PAGE>
Biopulse International, Inc.
(a Development Stage Company)
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 October 31, 1999, July 31, 1999 and 1998 no
allowance was considered necessary.
j. Inventory
Inventory is recorded at the lower of cost or market 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
Property and Equipment consists of the following at October 31, 1999,
July 31, 1999 and 1998:
<TABLE>
<CAPTION> October 31, July 31,
1999 1999 1998
--------- --------- ---------
<S> <C> <C> <C>
Furniture & Equipment $ 28,562 $ 20,935 $ -
Medical Equipment 182,626 110,606 -
Leasehold improvements 15,607 4,971 -
Accumulated Depreciation (18,737) (11,385) -
--------- --------- ---------
Total Property & Equipment $208,058 $125,127 $ -
========= ========= =========
</TABLE>
9
<PAGE>
Biopulse International, Inc.
(a Development Stage Company)
Notes to the Financial Statements
July 31, 1999 and 1998
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 October 31, 1999 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 October 31, 1999 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 October 31, 1999 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-interest bearing,
unsecured, and due within one year. The balance of the note at October 31,
1999 is $74,620.
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.
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.
10
<PAGE>
Biopulse International, Inc.
(a Development Stage Company)
Notes to the Financial Statements
July 31, 1999 and 1998
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>
October 31, July 31,
1999 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
<TABLE>
Notes receivable - related party are detailed as follows:
October 31, July 31,
1999 1999 1998
--------- --------- ---------
<S> <C> <C> <C>
Note receivable from a corporation, under
common ownership, non-interest bearing,
due within one year 74,620 - -
--------- --------- ---------
Total Notes receivable - Related Party $ 74,620 $ - $ -
========= ========= =========
</TABLE>
11
<PAGE>
Biopulse International, Inc.
(a Development Stage Company)
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.
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 three months ended October 31, 1999. The
information presented is not necessarily indicative of the results from
operations expected for the full fiscal year.
12
<PAGE>
EXHIBIT 3.01
Amended and Restated
Articles of Incorporation
<PAGE>
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
BIOPULSE INTERNATIONAL, INC.
Pursuant to the provisions of the Nevada Revised Statutes,
as amended, the undersigned corporation hereby adopts the
following Amended and Restated Articles of Incorporation (the
"Amended and Restated Articles"), consisting of Articles I
through VII.
FIRST: The name of the corporation is BioPulse International, Inc.,
(the "Corporation").
SECOND: The text of the Amended and Restated Articles follows:
ARTICLE I
NAME
The name of this Corporation shall be: BioPulse International, Inc.
ARTICLE II
PURPOSE
The purpose for which said Corporation is formed and the nature of the
objects proposed to be transacted and carried on by it is to engage in any
and all other lawful activity, as provided by the laws of the State of
Nevada.
ARTICLE III
CAPITAL STOCK
The aggregate number of shares which the corporation shall have the
authority to issue is one hundred and ten million (110,000,000) shares,
2
<PAGE>
which shall be divided into one hundred million (100,000,000) shares of
Common Stock have a par value of $.001 each ("Common Stock"); two million
(2,000,000) shares of Class A Preferred Stock have a par value of $.001
("Class A Preferred Stock"); two million (2,000,000) shares of Class B
Preferred Stock having a par value of $.001 ("Class B Preferred Stock");
two million (2,000,000) shares of Class C Preferred Stock having a par
value of $.001 ("Class C Preferred Stock"); two million (2,000,000) shares
of Class D preferred stock having a par value of $.001 ("Class D Preferred
Stock"); two million (2,000,000) shares of Class E preferred stock having a
par value of $.001 ("Class E Preferred Stock"). The rights of the various
classes of preferred stock shall be as determined by the Board of
Directors.
ARTICLE IV
GOVERNING BOARD
The members of the Governing Board of the Corporation are styled
Directors. The number of directors of the corporation may vary from two
(2) to seven (7) directors as prescribed by the bylaws. The directors
shall be chosen at the annual meeting of the shareholders, to be held at
the time and place provided for by the bylaws, by the plurality of the
votes cast at such election.
ARTICLE V
INDEMNIFICATION
No director or officer of the Corporation shall be personally liable
to the Corporation or any of its stockholders for damages for breach of
fiduciary duty as a director or officer; provided, however, that the
foregoing provision shall not eliminate or limit the liability of a
director or officer (i) for acts or omissions which involve intentional
misconduct, fraud or knowing violation of law, or (ii) the payment of
3
<PAGE>
dividends in violation of Section 78.300 of the Nevada Revised Statutes.
Any repeal or modification of an Article by the stockholders of the
Corporation shall be prospective only, and shall not adversely affect any
limitation of the personal liability of a director or officer of the
Corporation for acts or omissions prior to such repeal or modification.
ARTICLE VI
CONTROLLING INTEREST
The provisions of NRS 78.378 to 78.3793, inclusive shall not be
applicable to any acquisition of a controlling interest in the Corporation.
ARTICLE VII
RESIDENT AGENT
The address of the registered office of the corporation is 50 West
Liberty Street, Suite 880, Reno, Nevada 89501, and the name of its initial
registered agent as such address is THE NEVADA AGENCY AND TRUST COMPANY.
THIRD: The Amended and Restated Articles were adopted on September 30,
1999.
FOURTH: These Amended and Restated Articles supersede the original
Articles of Incorporation and all amendments thereto. Authority was given
to the below named officer of the corporation to file these Amended and
Restated Articles with the Nevada Secretary of State pursuant to the
consent of 3,581,500 of the 6,073,862 then issued and outstanding shares,
constituting a majority of the then issued and outstanding shares of the
Corporation.
4
<PAGE>
IN WITNESS WHEREOF, I have hereunto subscribed my name this 5th day of
October, 1999.
/s/ Stephen R. Fey
---------------------
Stephen R. Fey
President
/s/ F. Briton McConkie
-----------------------
F. Briton McConkie
Secretary
State of Utah )
:ss.
County of Salt Lake )
On the 5th day of October, 1999, personally appeared before me, a
notary public (or judge or other authorized person, as the case may be),
duly commissioned and sworn, Stephen R. Fey and F. Briton McConkie, the
President and Secretary respectively of BioPulse International, Inc.,
personally known or proven to me on the basis of satisfactory evidence to
be the person whose name is subscribed to the foregoing instrument and who
acknowledged that he executed the instrument.
IN WITNESS WHEREOF, I have executed this notary and affixed my
official seal.
NOTARY SEAL
/s/ Cletha A. Walstrand
- ---------------------------
NOTARY PUBLIC
My Commission Expires:3-4-02
5
<PAGE>
EXHIBIT 3.02
Bylaws
<PAGE>
BYLAWS
OF
BIOPULSE INTERNATIONAL, INC.
<PAGE>
TABLE OF CONTENTS
-----------------
ARTICLE I OFFICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
------
Section 1.1 Office. . . . . . . . . . . . . . . . . . . . . . . . . . . .1
- -------------------
ARTICLE II SHAREHOLDERS' MEETING . . . . . . . . . . . . . . . . . . .1
---------------------
Section 2.1 Annual Meetings. . . . . . . . . . . . . . . . . . . .1
Section 2.2 Special Meetings.. . . . . . . . . . . . . . . . . . .2
Section 2.3 Notice of Shareholders' Meetings.. . . . . . . . . . .2
Section 2.4 Waiver of Notice.. . . . . . . . . . . . . . . . . . .3
Section 2.5 Place of Meeting.. . . . . . . . . . . . . . . . . . .3
Section 2.6 Closing of Transfer Books or Fixing Records Date.. . .3
Section 2.7 Quorum of Shareholders.. . . . . . . . . . . . . . . .4
Section 2.8 Voting Lists.. . . . . . . . . . . . . . . . . . . . .5
Section 2.9 Voting.. . . . . . . . . . . . . . . . . . . . . . . .5
Section 2.10 Proxies. . . . . . . . . . . . . . . . . . . . . . . .5
Section 2.11 Informal Action by Shareholders. . . . . . . . . . . .6
ARTICLE III BOARD OF DIRECTORS. . . . . . . . . . . . . . . . . . . . .6
------------------
Section 3.1 General Powers.. . . . . . . . . . . . . . . . . . . .6
Section 3.2 Number, Tenure and Qualifications. . . . . . . . . . .6
Section 3.3 Election of the Board of Directors.. . . . . . . . . .6
Section 3.4 Regular Meetings.. . . . . . . . . . . . . . . . . . .6
Section 3.5 Special Meeting. . . . . . . . . . . . . . . . . . . .7
Section 3.6 Waiver of Notice.. . . . . . . . . . . . . . . . . . .7
Section 3.7 Quorum.. . . . . . . . . . . . . . . . . . . . . . . .7
Section 3.8 Manner of Acting.. . . . . . . . . . . . . . . . . . .8
Section 3.9 Powers of Directors. . . . . . . . . . . . . . . . . .8
Section 3.10 Specific Powers of Directors.. . . . . . . . . . . . .8
Section 3.11 Vacancies. . . . . . . . . . . . . . . . . . . . . . 10
Section 3.12 Removals.. . . . . . . . . . . . . . . . . . . . . . 10
Section 3.13 Resignations.. . . . . . . . . . . . . . . . . . . . 11
Section 3.14 Presumption of Assent. . . . . . . . . . . . . . . . 11
Section 3.15 Compensation.. . . . . . . . . . . . . . . . . . . . 11
Section 3.16 Emergency Power. . . . . . . . . . . . . . . . . . . 12
Section 3.17 Chairman. . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE IV OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . . 12
--------
Section 4.1 Number.. . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.2 Election and Term of Office. . . . . . . . . . . . . 12
Section 4.3 Resignation. . . . . . . . . . . . . . . . . . . . . 13
Section 4.4 Removal. . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.5 Vacancies. . . . . . . . . . . . . . . . . . . . . . 13
Section 4.6 President. . . . . . . . . . . . . . . . . . . . . . 13
Section 4.7 Vice President.. . . . . . . . . . . . . . . . . . . 14
Section 4.8 Secretary. . . . . . . . . . . . . . . . . . . . . . 14
Section 4.9 Treasurer. . . . . . . . . . . . . . . . . . . . . . 15
Section 4.10 General Manager. . . . . . . . . . . . . . . . . . . 15
Section 4.11 Other Officers.. . . . . . . . . . . . . . . . . . . 16
Section 4.12 Salaries.. . . . . . . . . . . . . . . . . . . . . . 16
Section 4.13 Surety Bonds.. . . . . . . . . . . . . . . . . . . . 16
ARTICLE V COMMITTEES . . . . . . . . . . . . . . . . . . . . . . . . . . 16
----------
Section 5.1 Executive Committee. . . . . . . . . . . . . . . . . 16
Section 5.2 Other Committees.. . . . . . . . . . . . . . . . . . 17
<PAGE>
ARTICLE VI CONTRACTS, LOANS, DEPOSITS AND CHECKS . . . . . . . . . . 17
-------------------------------------
Section 6.1 Contracts. . . . . . . . . . . . . . . . . . . . . . 17
Section 6.2 Loans. . . . . . . . . . . . . . . . . . . . . . . . 17
Section 6.3 Deposits.. . . . . . . . . . . . . . . . . . . . . . 18
Section 6.4 Checks and Drafts. . . . . . . . . . . . . . . . . . 18
Section 6.5 Bonds and Debentures.. . . . . . . . . . . . . . . . 18
ARTICLE VII CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . 19
-------------
Section 7.1 Certificate of Shares. . . . . . . . . . . . . . . . 19
Section 7.2 Transfer of Shares.. . . . . . . . . . . . . . . . . 19
Section 7.3 Transfer Agent and Registrar.. . . . . . . . . . . . 20
Section 7.4 Lost or Destroyed Certificates.. . . . . . . . . . . 20
Section 7.5 Consideration for Shares.. . . . . . . . . . . . . . 20
Section 7.6 Registered Shareholders. . . . . . . . . . . . . . . 20
ARTICLE VIII INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . 21
---------------
Section 8.1 Indemnification. . . . . . . . . . . . . . . . . . . 21
Section 8.2 Other Indemnification. . . . . . . . . . . . . . . . 21
Section 8.3 Insurance. . . . . . . . . . . . . . . . . . . . . . 22
Section 8.4 Settlement by Corporation. . . . . . . . . . . . . . 22
ARTICLE IX AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . 22
----------
ARTICLE X FISCAL YEAR . . . . . . . . . . . . . . . . . . . . . . . 23
-----------
ARTICLE XI DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . 23
---------
ARTICLE XII CORPORATE SEAL. . . . . . . . . . . . . . . . . . . . . . 23
--------------
<PAGE>
BYLAWS
OF
BIOPULSE INTERNATIONAL, INC.
ARTICLE I
OFFICE
--------
Section 1.1 Office The principal office of the Corporation outside
-------------------
the State of Nevada shall be located at 459 W. 9160 S., Sandy, Utah 84070.
The Corporation may maintain such other offices, within or without the
State of Nevada, as the Board of Directors may from time to time designate.
The location of the principal office may be changed by the Board of
Directors.
ARTICLE II
SHAREHOLDERS' MEETING
----------------------
Section 2.1 Annual Meetings The annual meeting of the shareholders of
---------------------------
the Corporation shall be held at such place within or without the State of
Nevada as shall be set forth in compliance with these Bylaws. The meeting
shall be held on the first Monday of April of each year beginning with the
year 2000 at 10:00 a.m. If such day is a legal holiday, the meeting shall
be on the next business day. This meeting shall be for the election of
directors and for the transaction of such other business as may properly
come before it.
No change of the time or place of a meeting for the election of
directors, as fixed by the Bylaws, shall be made within sixty (60) days
before the election is to be held. In case of any change in such time or
place for such election of directors, notice thereof shall be given to each
1
<PAGE>
stockholder entitled to vote, in person, or by letter mailed to his last
known post office address as shown on the Corporate books, ten (10) days
before the election is held.
In the event that such annual meeting is omitted by oversight or
otherwise on the date herein provided for, the directors shall cause a
meeting in lieu thereof to be held as soon thereafter as conveniently may
be called, and any business transacted or elections held at such meeting
shall be as valid as if transacted or held at the annual meeting. If the
election of directors shall not be held on the date designated herein for
an annual meeting of shareholders, or at any adjournment thereof, the Board
of Directors shall cause the election to be held at a special meeting of
shareholders as soon thereafter as may conveniently be called. Such
subsequent meetings shall be called in the same manner as is provided for
the annual meeting of shareholders.
Section 2.2 Special Meetings. Special meetings of shareholders,
------------------------------
other than those regulated by statute, may be called at any time by the
President, or by a majority of the directors, and must be called by the
President upon written request of the holders of not less than 10% of the
issued and outstanding shares entitled to vote at such special meeting.
Section 2.3 Notice of Shareholders' Meetings. The President, Vice
----------------------------------------------
President and Secretary shall give written notice stating the place, day
and hour of the meeting, and in the case of a special meeting the purpose
or purposes for which the meeting is called, which shall be delivered not
less then ten nor more than thirty days before the day of the meeting,
either personally or by mail to each shareholder of record entitled to vote
at such meeting. If mailed, such notice shall be deemed to be delivered
when deposited in the United States mail addressed to the shareholder at
his address as it appears on the books of the Corporation, with postage
thereon prepaid.
2
<PAGE>
Any meeting of which all shareholders shall at any time waive or have
waived notice in writing shall be a legal meeting for the transaction of
business notwithstanding that notice has not been given as hereinbefore
provided.
Section 2.4 Waiver of Notice. Whenever any notice is required to be
------------------------------
given by these Bylaws, or the Articles of Incorporation, or by any of the
Corporation Laws of the State of Nevada, a shareholder may waive the notice
of meeting by attendance, either in person or by proxy, at the meeting, or
by so stating in writing, either before or after such meeting. Attendance
at a meeting for the express purpose of objecting that the meeting was not
lawfully called or convened shall not, however, constitute a waiver of
notice.
Section 2.5 Place of Meeting. The Board of Directors may designate
-------------------------------
any place, either within or without the State of Nevada, as the place of
meeting for any annual meeting or for any special meeting called by the
Board of Directors. If no designation is made, or if a special meeting be
otherwise called, the place of meeting shall be the office of the
Corporation, in the City of Sandy, Utah.
Section 2.6 Closing of Transfer Books or Fixing Records Date. For
--------------------------------------------------------------
the purpose of determining shareholders entitled to notice or to vote at
any meeting of shareholders or any adjournment thereof, or shareholder
entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any other proper purpose, the Board of
Directors of the Corporation may provide that the stock transfer books be
closed for a period not to exceed in any case fifty (50) days. If the
stock transfer books shall be closed for the purpose of determining
shareholders, such books shall be closed for at least ten (10) days
3
<PAGE>
immediately preceding the date determined to be the date of record. In
lieu of closing the stock transfer books, the Board of Directors may fix in
advance a date as the record date for any such determination of
shareholders, such date in any case to be not more than sixty (60) days and
in case of a meeting of shareholders not less than ten (10) days prior to
the date on which the particular action requiring such determination of
shareholders is to be taken. If the stock transfer books are not closed
and no record date is fixed for the determination of shareholders entitled
to notice or to vote at a meeting of shareholders or shareholders entitled
to receive payment of a dividend, the date on which the resolution of the
Board of Directors declaring such dividend is adopted, as the case may be,
shall be deemed the record for such determination of shareholders. When a
determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination
shall apply to any adjournment thereof.
Section 2.7 Quorum of Shareholders. Except as herein provided and as
------------------------------------
otherwise provided by law, at any meeting of shareholders a majority in
interest of all the shares issued and outstanding represented by
shareholders of record in person or by proxy shall constitute a quorum, but
a less interest may adjourn any meeting and the meeting may be held as
adjourned without further notice; provided, however, that directors shall
not be elected at the meeting so adjourned.
If notice of such adjourned meeting is sent to the stockholders
entitled to receive the same, such notice also containing a statement for
the purpose of the meeting and that the previous meeting failed for lack of
a quorum, and that under the provisions of this Section it is proposed to
hold the adjourned meeting with a quorum of those present, then any number
of stockholders, in person or by proxy, shall constitute a quorum at such
meeting unless otherwise provided by statute. When a quorum is present at
4
<PAGE>
any meeting, a majority in interest of the shares represented there at shall
decide any question brought before such meeting, unless the question is one
upon which the express provision of law or of the Articles of Incorporation
or of these Bylaws a larger or different vote is required, in which case
such express provision shall govern and control the decision of such
question.
Section 2.8 Voting Lists. The officer or agent having charge of the
--------------------------
stock transfer books for shares of the Corporation shall make a complete
list of the shareholders entitled to vote at such meeting or any
adjournment thereof, arranged in alphabetical order, with the address of
and the number of shares held by each, which list shall be produced and
kept open at the time and place of the meeting and shall be subject to the
inspection of any shareholder, for any purpose germane to the meeting,
during the whole time of the meeting. The original stock transfer books
shall be prima-facie evidence as to which shareholders are entitled to
examine such list or transfer books or to vote at any meeting of
shareholders.
Failure to comply with the requirements of this section shall not
affect the validity of any action taken at such meeting of the
shareholders.
Section 2.9 Voting. A holder of an outstanding share entitled to
--------------------
vote at a meeting may vote at such meeting in person or by proxy. Except
as may otherwise be provided in the Articles of Incorporation, every
shareholder shall be entitled to one vote for each share outstanding in his
name on the record of shareholders. Except as herein or in the Articles of
Incorporation otherwise provided, all corporate action shall be determined
by a majority of the votes cast at a meeting of shareholders by the holders
of shares entitled to vote thereon.
Section 2.10 Proxies. At all meetings of shareholders, a shareholder
----------------------
may vote in person or by proxy executed in writing by the shareholder or by
5
<PAGE>
his duly authorized attorney in fact. Such proxy shall be filed with the
secretary of the Corporation before or at the time of the meeting. No
proxy shall be valid after eleven months from the date of its execution,
unless otherwise provided in the proxy.
Section 2.11 Informal Action by Shareholders. Any action required to
----------------------------------------------
be taken at a meeting of the shareholders, or any action which may be taken
at a meeting of the shareholders, may be taken without a meeting of the
shareholders, if a consent in writing, setting forth the action so taken,
shall be signed by all of the shareholders entitled to vote with respect to
the subject matter thereof.
ARTICLE III
BOARD OF DIRECTORS
------------------
Section 3.1 General Powers. The business and affairs of the
----------------------------
Corporation shall be managed by its Board of Directors. The Board of
Directors may adopt such rules and regulations for the conduct of their
meetings and the management of the Corporation as they deem proper.
Section 3.2 Number, Tenure and Qualifications. The number of
------------------------------------------------
directors for the Board of Directors of the Corporation shall be not less
than three (3) and no more than nine (9). Each director shall hold office
until the next annual meeting of the shareholders and until his successor
shall have been elected and qualified. Directors need not be residents of
the State of Nevada or shareholders of the Corporation.
Section 3.3 Election of the Board of Directors. The Board of
------------------------------------------------
Directors shall be chosen by ballot at the annual meeting of shareholders
or at any meeting held in place thereof as provided by law.
Section 3.4 Regular Meetings. A regular meeting of the Board of
------------------------------
Directors shall be held without other notice than by this Bylaw,
immediately following and at the same place as the annual meeting of the
shareholders. The Directors may hold their meetings and have one or more
offices, and keep the books of the corporation outside the State of Nevada,
6
<PAGE>
at any office or offices of the Corporation or at any other place as they
may from time to time by resolution determine.
Members of the Board of Directors may participate in a meeting of the
Board by means of conference telephone or similar communications equipment
by which all persons participating in the meeting can hear each other and
participation in a meeting under this subsection shall constitute presence
in person at the meeting, pursuant to Nevada Revised Statute, Section
78.315.
Section 3.5 Special Meeting. Special meetings of the Board of
-----------------------------
Directors may be called by order of the Chairman of the Board, the
President or by any two directors. The Secretary shall give notice of the
time, place and purpose or purposes of each special meeting by mailing the
same at least one day before the meeting or by telephoning or telegraphing
the same at least one day before the meeting to each director.
Section 3.6 Waiver of Notice. Whenever any notice whatsoever is
------------------------------
required to be given by these Bylaws, or the Articles of Incorporation of
the Corporation, or by any of the Corporation Laws of the State of Nevada,
a director may waive the notice of meeting by attendance in person at the
meeting, or by so stating in writing, either before or after such meeting.
Attendance at a meeting for the express purpose of objecting that the
meeting was not lawfully called or convened shall not, however, constitute
a waiver of notice.
Section 3.7 Quorum. A majority of the members of the Board of
--------------------
Directors shall constitute a quorum for the transaction of business, but
less than a quorum may adjourn any meeting from time to time until a quorum
shall be present, whereupon the meeting may be held, as adjourned, without
further notice. At any meeting at which every director shall be present,
even though without any notice, any business may be transacted.
7
<PAGE>
Section 3.8 Manner of Acting. At all meetings of the Board of
------------------------------
Directors, each director shall have one vote. The act of a majority
present at a meeting shall be the act of the Board of Directors, provided a
quorum is present. Any action required to be taken or which may be taken
at a meeting of the Board of Directors, may be taken without a meeting of
the Directors, if a consent in writing setting forth the action so taken
shall be signed by all the directors. The directors may conduct a meeting
by means of a conference telephone or any similar communication equipment
by which all persons participating in the meeting can hear each other.
Section 3.9 Powers of Directors. The Board of Directors shall have
---------------------------------
the responsibility for the entire management of the business of the
Corporation. In the management and control of the property, business and
affairs of the Corporation, the Board of Directors is hereby vested with
all of the powers possessed by the Corporation itself so far as this
delegation of authority is not inconsistent with the laws of the State of
Nevada and with the Articles of Incorporation or with these Bylaws. The
Board of Directors shall have the power to determine what constitutes net
earnings, profits and surplus, respectively, and what amounts shall be
reserved for working capital and for any other purpose and what amounts
shall be declared as dividends, and such determination by the Board of
Directors shall be final and conclusive.
Section 3.10 Specific Powers of Directors. Without prejudice to such
-------------------------------------------
general powers, it is hereby expressly declared that the directors shall
have the following powers to-wit:
(1) To adopt and alter a common seal of the corporation.
(2) To make and change regulations, not inconsistent with these By-
Laws, for the management of the corporation's affairs and
business.
8
<PAGE>
(3) To purchase or otherwise acquire for the corporation any
property, rights or privileges which the corporation is
authorized to acquire.
(4) To pay for any property purchased for the corporation either
wholly or partly in money, stock, bonds, debentures or other
securities of the corporation.
(5) To borrow money and to make and issue notes, bonds, and other
negotiable and transferable instruments, mortgages, deeds of
trust and trust agreements, and to do every act and thing
necessary to effectuate the same.
(6) To remove any officer for cause, or any officer other than the
President summarily without cause, and in their discretion, from
time to time, to develop the powers and duties of any officer
upon any other person for the time being.
(7) To appoint and remove or suspend such subordinate officers,
agents or factors as they may deem necessary and to determine
their duties and fix, and from time to time change their salaries
or remuneration, and to require security as and when they think
fit.
(8) To confer upon any officer of the corporation the power to
appoint, remove and suspend subordinate officers, agents and
factors.
(9) To determine who shall be authorized on the corporation's behalf
to make and sign bills, notes, acceptances, endorsements, checks,
releases, receipts, contracts and other instruments.
(10) To determine who shall be entitled to vote in the name and behalf
of the corporation, or to assign and transfer, any shares of
stock, bonds, or other securities of other corporations held by
this corporation.
9
<PAGE>
(11) To delegate any of the powers of the Board in relation to the
ordinary business of the corporation to any standing or special
committee, or to any officer or agent (with power to sub-
delegate), upon such terms as they think fit.
(12) To call special meetings of the stockholders for any purpose or
purposes.
(13) The directors shall have the right and the power to propose any
amendment to the By-Laws of this corporation at any meeting
whether called for that purpose or not and to submit to the next
regular meeting of directors said proposal or amendment to the
By-Laws of this corporation.
Section 3.11 Vacancies. A vacancy in the Board of Directors shall be
------------------------
deemed to exist in case of death, resignation or removal of any director,
or if the authorized number of directors be increased, or if the
shareholders fail at any meeting of shareholders at which any director is
to be elected, to elect the full authorized number to be elected at that
meeting.
Any vacancy occurring in the Board of Directors may be filled by an
affirmative vote of the majority of the remaining directors though less
than a quorum of the Board of Directors, unless otherwise provided by law
or the Articles of Incorporation. A director elected to fill a vacancy
shall be elected for the unexpired term of his predecessor in office. Any
directorship to be filled by reason of an increase in the number of
directors shall be filled by election at the annual meeting or at a special
meeting of shareholders called for that purpose.
Section 3.12 Removals. Directors may be removed at any time, at a
-----------------------
meeting called expressly for that purpose by a vote of the shareholders
holding a majority of the shares issued and outstanding and entitled to
vote. Such vacancy shall be filled by the directors then in office, though
less than a quorum, to hold office until the next annual meeting or until
10
<PAGE>
his successor is duly elected and qualified, except that any directorship
to be filled by reason of removal by the shareholders may be filled by
election, by the shareholders, at the meeting at which the director is
removed. No reduction of the authorized number of directors shall have the
effect of removing any director prior to the expiration of his term of
office.
Section 3.13 Resignations. A director may resign at any time by
---------------------------
delivering written notification thereof to the President or Secretary of
the Corporation. Such resignation shall become effective upon its
acceptance by the Board of Directors; provided, however, that if the Board
of Directors has not acted thereon within ten days from the date of its
delivery, the resignation shall upon the tenth day be deemed accepted.
Section 3.14 Presumption of Assent. A director of the Corporation
------------------------------------
who is present at a meeting of the Board of Directors at which action on
any corporate matter is taken shall be presumed to have assented to the
action taken unless his dissent shall be entered in the minutes of the
meeting or unless he shall file his written dissent to such action with the
person acting as the Secretary of the meeting before the adjournment
thereof or shall forward such dissent by registered mail to the Secretary
of the Corporation immediately after the adjournment of the meeting. Such
right to dissent shall not apply to a director who voted in favor of such
action.
Section 3.15 Compensation. By resolution of the Board of Directors,
---------------------------
the directors shall be paid their expenses, if any, of attendance at each
meeting of the Board of Directors, and may be paid a fixed sum for
attendance at each meeting of the Board of Directors or a stated salary as
director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor.
11
<PAGE>
Section 3.16 Emergency Power. When, due to a national disaster or
------------------------------
death, a majority of the directors are incapacitated or otherwise unable to
attend the meetings and function as directors, the remaining members of the
Board of Directors shall have all the powers necessary to function as a
complete Board and, for the purpose of doing business and filling
vacancies, shall constitute a quorum until such time as all directors can
attend or vacancies can be filled pursuant to these Bylaws.
Section 3.17 Chairman. The Board of Directors may elect from its own
-----------------------
number a Chairman of the Board, who shall preside at all meetings of the
Board of Directors, and shall perform such other duties as may be
prescribed from time to time by the Board of Directors.
ARTICLE IV
OFFICERS
--------
Section 4.1 Number. The officers of the Corporation shall be a
--------------------
President, one or more Vice Presidents, a Secretary, and a Treasurer, each
of whom shall be elected by a majority of the Board of Directors. Such
other officers and assistant officers as may be deemed necessary may be
elected or appointed by the Board of Directors. In its discretion, the
Board of Directors may leave unfilled for any such period as it may
determine any office except those of President and Secretary. Pursuant to
Nevada Revised Statute, Section 78.130 any two or more offices may be held
by the same person, including the offices of the President and Secretary.
Officers may or may not be directors or shareholders of the Corporation.
Section 4.2 Election and Term of Office. The officers of the
-----------------------------------------
Corporation are to be elected by the Board of Directors at the first
meeting of the Board of Directors held after each annual meeting of the
shareholders. If the election of officers shall not be held at such
meeting, such election shall be held as soon thereafter as convenient.
12
<PAGE>
Each officer shall hold office until his successor shall have been duly
elected and shall have qualified or until his death or until he shall
resign or shall have been removed in the manner hereinafter provided.
Section 4.3 Resignation. Any officer may resign at any time by
-------------------------
delivering a written resignation either to the President or to the
Secretary. Unless otherwise specified therein, such resignation shall take
effect upon delivery.
Section 4.4 Removal. Any officer or agent may be removed by the
---------------------
Board of Directors whenever in its judgment the best interests of the
Corporation will be served thereby but such removal shall be without
prejudice to the contract rights, if any, of the person so removed.
Election or appointment of an officer or agent shall not of itself create
contract rights. Any such removal shall require a majority vote of the
Board of Directors, exclusive of the officer in question if he is also a
director.
Section 4.5 Vacancies. A vacancy in any office because of death,
----------------------
resignation, removal, disqualification or otherwise, or if a new office
shall be created, may be filled by the Board of Directors for the unexpired
portion of the term.
Section 4.6 President. The President shall be the chief executive
-----------------------
and administrative officer of the Corporation. He shall preside at all
meetings of the shareholders and, in the absence of the Chairman of the
Board, at meetings of the Board of Directors. He shall exercise such
duties as customarily pertain to the office of President and shall have
general and active supervision over the property, business and affairs of
the Corporation and over its several officers. He may appoint officers,
agents or employees other than those appointed by the Board of Directors.
He may sign, execute and deliver in the name of the Corporation, powers of
attorney, certificates of stock, contracts, bonds, deeds, mortgages and
other obligations and shall perform such other duties as may be prescribed
from time to time by the Board of Directors or by the Bylaws.
13
<PAGE>
Section 4.7 Vice President. The Vice President shall have such
----------------------------
powers and perform such duties as may be assigned to him by the Board of
Directors or the President. In the absence or disability of the President,
the Vice President designated by the board or the President shall perform
the duties and exercise the powers of the President. In the event there is
more than one Vice President and the Board of Directors has not designated
which Vice President is to act as President, then the Vice President who
was elected first shall act as President. A Vice President may sign and
execute contracts and other obligations pertaining to the regular course of
his duties.
Section 4.8 Secretary. The Secretary shall keep the minutes of all
-----------------------
meetings of the shareholders and of the Board of Directors and to the
extent ordered by the Board of Directors or the President, the minutes of
meetings of all committees. He shall cause notice to be given of the
meetings of shareholders, of the Board of Directors and any committee
appointed by the Board. He shall have custody of the corporate seal and
general charge of the records, documents and papers of the Corporation not
pertaining to the performance of the duties vested in other officers, which
shall at all reasonable times be open to the examination of any director.
He may sign or execute contracts with the President or Vice President
thereunto authorized in the name of the Corporation and affix the seal of
the Corporation thereto. He shall perform such other duties as may be
prescribed from time to time by the Board of Directors or by the Bylaws.
He shall be sworn to the faithful discharge of his duties. Assistant
Secretaries shall assist the Secretary and shall keep and record such
minutes of meetings as shall be directed by the Board of Directors.
14
<PAGE>
Section 4.9 Treasurer. The Treasurer shall have general custody of
-----------------------
the collection and disbursement of funds of the Corporation for collection
checks, notes, and other obligations, and shall deposit the same to the
credit of the Corporation in such bank or banks or depositories as the
Board of Directors may designate. He may sign, with the President, or such
other persons as may be designated for the purpose by the Board of
Directors, all bills of exchange or promissory notes of the Corporation.
He shall enter or cause to be entered regularly in the books of the
Corporation full and accurate accounts of all monies received and paid by
him on account of the Corporation; shall at all reasonable times exhibit
his books and accounts to any director of the Corporation upon application
at the office of the Corporation during business hours; and, whenever
required by the Board of Directors or the President, shall render a
statement of his accounts. Upon request by the Board of Directors, he
shall give the corporation a bond for the faithful discharge of his duties
in such amount and with such surety as the Board shall prescribe. He shall
perform such other duties as may be prescribed from time to time by the
Board of Directors or by the Bylaws.
Section 4.10 General Manager. The Board of Directors may employ and
------------------------------
appoint a General Manager who may, or may not, be one of the officers or
directors of the Corporation. If employed by the Board of Directors he
shall be the chief operating officer of the Corporation and, subject to the
directions of the Board of Direction, shall have general charge of the
business operations of the Corporation and general supervision over its
employees and agents. He shall have the exclusive management of the
business of the Corporation and of all of its dealings, but at all times
subject to the control of the Board of Directors. Subject to the approval
of the Board of Directors or the executive committee, he shall employ all
employees of the Corporation, or delegate such employment to subordinate
15
<PAGE>
officers, or such division officers, or such division chiefs, and shall
have authority to discharge any person so employed. He shall make a
quarterly report to the President and directors, or more often if required
to do so, setting forth the result of the operations under his charge,
together with suggestions looking to the improvement and betterment of the
condition of the Corporation, and to perform such other duties as the Board
of Directors shall require.
Section 4.11 Other Officers. Other officers shall perform such
-----------------------------
duties and have such powers as may be assigned to them by the Board of
Directors.
Section 4.12 Salaries. The salaries or other compensation of the
-----------------------
officers of the Corporation shall be fixed from time to time by the Board
of Directors except that the Board of Directors may delegate to any person
or group of persons the power to fix the salaries or other compensation of
any subordinate officers or agents. No officer shall be prevented from
receiving any such salary or compensation by reason of the fact that he is
also a director of the Corporation.
Section 4.13 Surety Bonds. In case the Board of Directors shall so
---------------------------
require, any officer or agent of the Corporation shall execute to the
Corporation a bond in such sums and with sureties as the Board of Directors
may direct, conditioned upon the faithful performance of his duties to the
Corporation, including responsibility for negligence and for the accounting
for all property, monies or securities of the Corporation which may come
into his hands.
ARTICLE V
COMMITTEES
-----------
Section 5.1 Executive Committee. The Board of Directors may appoint
---------------------------------
from among its members an Executive Committee of not less than three (3)
nor more than nine (9) members, one of whom shall be the President, and
shall designate one or more of its members as alternates to serve as a
member or members of the Executive Committee in the absence of a regular
16
<PAGE>
member or members. The Board of Directors reserves to itself alone the
power to declare dividends, issue stock, recommend to shareholders any
action requiring their approval, change the membership of any committee at
any time, fill vacancies therein, and discharge any committee either with
or without cause at any time. Subject to the foregoing limitations, the
Executive Committee shall possess and exercise all other powers of the
Board of Directors during the intervals between meetings.
Section 5.2 Other Committees. The Board of Directors may also
------------------------------
appoint from among its own members such other committees as the Board may
determine, which shall in each case consist of not less than two directors,
and which shall have such powers and duties as shall from time to time be
prescribed by the Board. The President shall be a member ex officio of
each committee appointed by the Board of Directors. A majority of the
members of any committee may fix its rules of procedure.
ARTICLE VI
CONTRACTS, LOANS, DEPOSITS AND CHECKS
---------------------------------------
Section 6.1 Contracts. The Board of Directors may authorize any
-----------------------
officer or officers, agent or agents, to enter into any contract or execute
and deliver any instrument in the name of and on behalf of the Corporation,
and such authority may be general or confined to specific instances.
Section 6.2 Loans. No loan or advances shall be contracted on behalf
-------------------
of the Corporation, no negotiable paper or other evidence of its
obligations under any loan or advance shall be issued in its name, and no
property of the Corporation shall be mortgaged, pledged, hypothecated or
transferred as security for the payment of any loan, advance, indebtedness
or liability of the Corporation unless and except as authorized by the
Board of Directors. Any such authorization may be general or confined to
specific instances.
17
<PAGE>
Section 6.3 Deposits. All funds of the Corporation not otherwise
----------------------
employed shall be deposited from time to time to the credit of the
Corporation in such banks, trust companies or other depositories as the
Board of Directors may select, or as may be selected by any officer or
agent authorized to do so by the Board of Directors.
Section 6.4 Checks and Drafts. All notes, drafts, acceptances,
-------------------------------
checks, endorsements and evidences of indebtedness of the Corporation shall
be signed by such officer or officers of such agent or agents of the
Corporation and in such manner as the Board of Directors from time to time
may determine. Endorsements for deposit to the credit of the Corporation
in any of its duly authorized depositories shall be made in such manner as
the Board of Directors from time to time may determine.
Section 6.5 Bonds and Debentures. Every bond or debenture issued by
----------------------------------
the Corporation shall be evidenced by an appropriate instrument which shall
be signed by the President or a Vice President and by the Treasurer or by
the Secretary, and sealed with the seal of the Corporation. The seal may
be facsimile, engraved or printed. Where such bond or debenture is
authenticated with the manual signature of an authorized officer of the
Corporation or other trustee designated by the indenture of trust or other
agreement under which such security is issued, the signature of any of the
Corporation's officers named thereon may be facsimile. In case of any
officer who signed, or whose facsimile signature has been used on any such
bond or debenture, shall cease to be an officer of the Corporation for any
reason before the same has been delivered by the Corporation, such bond or
debenture may nevertheless be adopted by the Corporation and issued and
delivered as though the person who signed it or whose facsimile signature
has been used thereon had not ceased to be such officer.
18
<PAGE>
ARTICLE VII
CAPITAL STOCK
--------------
Section 7.1 Certificate of Shares. The shares of the Corporation
-----------------------------------
shall be represented by certificates prepared by the Board of Directors and
signed by the President or the Vice President, and by the Secretary, or an
Assistant Secretary, or the Treasurer, and sealed with the seal of the
Corporation or a facsimile. The signatures of such officers upon a
certificate may be facsimiles if the certificate is countersigned by a
transfer agent or registered by a registrar other than the Corporation
itself or one of its employees. All certificates for shares shall be
consecutively numbered or otherwise identified. The name and address of
the person to whom the shares represented thereby are issued, with the
number of shares and date of issue, shall be entered on the stock transfer
books of the Corporation. All certificates surrendered to the Corporation
for transfer shall be canceled and no new certificate shall be issued until
the former certificate for a like number of shares shall have been
surrendered and canceled, except that in case of a lost, destroyed or
mutilated certificate a new one may be issued therefor upon such terms and
indemnity to the Corporation as the Board of Directors may prescribe.
Section 7.2 Transfer of Shares. Transfer of shares of the
--------------------------------
Corporation shall be made only on the stock transfer books of the
Corporation by the holder of record thereof or by his legal representative,
who shall furnish proper evidence of authority to transfer, or by his
attorney thereunto authorized by power of attorney duly executed and filed
with the Secretary of the Corporation, and on surrender for cancellation of
the certificate for such shares. The person in whose name shares stand on
the books of the Corporation shall be deemed by the Corporation to be the
owner thereof for all purposes.
19
<PAGE>
Section 7.3 Transfer Agent and Registrar. The Board of Directors
------------------------------------------
shall have power to appoint one or more transfer agents and registrars for
the transfer and registration of certificates of stock of any class, and
may require that stock certificates shall be countersigned and registered
by one or more of such transfer agents and registrars.
Section 7.4 Lost or Destroyed Certificates. The Corporation may
--------------------------------------------
issue a new certificate to replace any certificate theretofore issued by it
alleged to have been lost or destroyed. The Board of Directors may require
the owner of such a certificate or his legal representatives to give the
Corporation a bond in such sum and with such sureties as the Board of
Directors may direct to indemnify the Corporation and its transfer agents
and registrars, if any, against claims that may be made on account of the
issuance of such new certificates. A new certificate may be issued without
requiring any bond.
Section 7.5 Consideration for Shares. The capital stock of the
--------------------------------------
Corporation shall be issued for such consideration, but not less than the
par value thereof, as shall be fixed from time to time by the Board of
Directors. In the absence of fraud, the determination of the Board of
Directors as to the value of any property or services received in full or
partial payment of shares shall be conclusive.
Section 7.6 Registered Shareholders. The Corporation shall be
-------------------------------------
entitled to treat the holder of record of any share or shares of stock as
the holder thereof in fact, and shall not be bound to recognize any
equitable or other claim to or on behalf of the Corporation, any and all of
the rights and powers incident to the ownership of such stock at any such
meeting, and shall have power and authority to execute and deliver proxies
and consents on behalf of the Corporation in connection with the exercise
by the Corporation of the rights and powers incident to the ownership of
such stock. The Board of Directors, from time to time may confer like
powers upon any other person or persons.
20
<PAGE>
ARTICLE VIII
INDEMNIFICATION
---------------
Section 8.1 Indemnification. No officer or director shall be
-----------------------------
personally liable for any obligations arising out of any acts or conduct of
said officer or director performed for or on behalf of the Corporation.
The Corporation shall and does hereby indemnify and hold harmless each
person and his heirs and administrators who shall serve at any time
hereafter as a director or officer of the Corporation from and against any
and all claims, judgments and liabilities to which such persons shall
become subject by reason of any action alleged to have been heretofore or
hereafter taken or omitted to have been taken by him as such director or
officer, and shall reimburse each such person for all legal and other
expenses reasonably incurred by him in connection with any such claim or
liability; including power to defend such person from all suits as
provided, however, that no such person shall be indemnified against, or be
reimbursed for, any expense incurred in connection with any claim or
liability arising out of his own negligence or willful misconduct. The
rights accruing to any person under the foregoing provisions of this
section shall not exclude any other rights to which he may lawfully be
entitled, nor shall anything herein contained restrict the right of the
Corporation to indemnify or reimburse such person in any proper case, even
though not specifically herein provided for. The Corporation, its
directors, officers, employees and agents shall be fully protected in
taking any action or making any payment or in refusing so to do in reliance
upon the advice of counsel.
Section 8.2 Other Indemnification. The indemnification herein
-----------------------------------
provided shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under any bylaw, agreement, vote of
shareholders or disinterested directors, or otherwise, both as to action in
21
<PAGE>
his official capacity and as to action in another capacity while holding
such office, and shall continue as to a person who has ceased to be a
director, officer or employee and shall inure to the benefit of the heirs,
executors and administrators of such a person.
Section 8.3 Insurance. The Corporation may purchase and maintain
-----------------------
insurance on behalf of any person who is or was a director, officer or
employee of the Corporation, or is or was serving at the request of another
corporation, partnership, joint venture, trust or other enterprise against
any liability asserted against him and incurred by him in any liability in
any capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against liability under
the provisions of this Article 8 or the laws of the State of Nevada.
Section 8.4 Settlement by Corporation. The right of any person to be
---------------------------------------
indemnified shall be subject always to the right of the Corporation by its
Board of Directors, in lieu of such indemnity, to settle any such claim,
action, suit or proceeding at the expense of the Corporation by the payment
of the amount of such settlement and the costs and expenses incurred in
connection therewith.
ARTICLE IX
AMENDMENTS
------------
These Bylaws may be altered, amended, repealed, or added to by the
affirmative vote of the holders of a majority of the shares entitled to
vote in the election of any director at an annual meeting or at a special
meeting called for that purpose, provided that a written notice shall have
been sent to each shareholder of record entitled to vote at such meetings
at least ten (10) days before the date of such annual or special meetings,
which notice shall state the alterations, amendments, additions, or changes
which are proposed to be made in such Bylaws. Only such changes shall be
22
<PAGE>
made as have been specified in the notice. The Bylaws may also be altered,
amended, repealed, or new Bylaws adopted by a majority of the entire Board
of Directors at any regular or special meeting. Any Bylaws adopted by the
Board may be altered, amended, or repealed by a majority of the
shareholders entitled to vote.
ARTICLE X
FISCAL YEAR
-------------
The fiscal year of the Corporation shall be July 31 and may be varied
by resolution of the Board of Directors.
ARTICLE XI
DIVIDENDS
----------
The Board of Directors may at any regular or special meeting, as they
deem advisable, declare dividends payable out of the unreserved and
unrestricted earned surplus of the Corporation, such declaration shall be
made in accord with Nevada Revised Statutes Section 78.288 thru 78.300.
ARTICLE XII
CORPORATE SEAL
--------------
The corporate seal may be used by causing it or a facsimile thereof to
be impressed affixed or reproduced or otherwise.
Adopted by resolution of the Board of Directors this 30th day of
September, 1999.
/s/ Jan Morse
--------------------------------------
Jan Morse, Secretary
23
<PAGE>
EXHIBIT 10.01
Contract with
Dr. Jesus Omar Sanchez Tiznado
<PAGE>
Clinic Management Agreement
BioPulse International, Inc.
Dr. Sanchez
December 31, 1999
This Clinic Management Agreement ("Agreement") is made and entered into
effective December 31, 1999, by and between BioPulse International, Inc.
("BioPulse") and Dr. Omar Sanchez ("Sanchez).
Sanchez is a licensed physician who owns and operates a medical clinic in
Tijuana, Mexico ("Clinic"). Sanchez desires to hire BioPulse to provide
management and marketing services for the Clinic. BioPulse is a clinic
management and marketing company that desires to provide management
services for the Clinic.
Therefore, in consideration of the mutual promises contained in this
Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. Sanchez duties. Sanchez agrees to perform the following services for
the Clinic:
1.1 Clinic lease. Sanchez agrees to lease such space as shall be
necessary and appropriate for the operations of the Clinic.
1.2 Medical services. Sanchez agrees to provide such medical services as
he deems necessary and appropriate for the effective functioning of the
Clinic. This includes supervising the medical staff, interviewing,
treating, and monitoring the progress of Clinic patients, writing
prescriptions, specifying needed equipment, supplies, and medications, and
assuring compliance with applicable laws, rules, and regulations.
2. BioPulse duties. BioPulse agrees perform the following services for
the Clinic:
2.1 Clinic development. BioPulse shall provide design and engineering
services to assist Sanchez in the construction and build-out of the Clinic.
This shall include such services as necessary to expand or move the Clinic
as needed.
2.2 Personnel. BioPulse shall assist Sanchez in hiring medical and non-
medical personnel to staff the clinic and provide medical services to
patients. As part of its duties, BioPulse shall administer payroll, track
sick leave and vacation time, monitor performance, and perform other
employee-related functions.
2.3 Equipment and Supplies. BioPulse shall provide all the equipment and
supplies necessary for the Clinic to operate properly. The equipment and
supplies shall remain the property of BioPulse.
2.4 Financial services. BioPulse shall receive all deposits, insurance
proceeds, and other income from patients and other clinic operations.
BioPulse shall also pay all Clinic expenses, including rent, payroll,
utilities, and other expenses.
2.5 Patient services. BioPulse shall provide transportation, lodging and
meal services for Clinic patients and shall provide scheduling services to
assure an orderly processing and steady patient flow.
<PAGE>
2.6 Marketing services. BioPulse shall provide marketing services,
including but not limited to advertising in appropriate magazines,
newspapers, and other media; maintaining a web page to explain the services
available at the Clinic; and providing telephone answering services to
respond to inquiries and schedule patient visits and admissions. BioPulse
shall also interface with media inquiries on behalf of the Clinic and
manage public relations.
2.7 Clinic operations services. BioPulse shall provide general clinic
operations services, including procurement, accounting, file management,
communications, security, cleaning, and other services.
3. Compensation. As compensation for its services, BioPulse shall retain
all funds generated by the operations of the clinic except $1,500, which
shall be retained monthly by Sanchez.
4. Technology. BioPulse shall retain ownership of all its intellectual
property, including trade names, trademarks, copyrights, patents, trade
secrets, proprietary processes and procedures, software programs, designs,
and systems. This shall include all intellectual property associated with
the insulin-induced hypoglycemic treatment (IHT) and other technology
introduced to the Clinic by BioPulse.
5. Additional Provisions. This Agreement shall be governed and construed
in accordance with the laws of the State of Utah in the United States.
This Agreement may be executed in separate counterparts and by facsimile.
Each counterpart when so executed and delivered shall be an original, and
all counterparts together shall constitute one in the same instrument.
This Agreement shall become effective as of the day set forth above.
BIOPULSE INTERNATIONAL, INC.
By /s/ Jonathan Neville
- -----------------------
Its President
----------
SANCHEZ
/s/ Omar Sanchez
- -----------------------
Dr. Omar Sanchez
<PAGE>
EXHIBIT 16.01
Letter on
Change in Certifying Accountant
<PAGE>
[Letterhead]
January 12, 2000
Securities & Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Gentlemen:
We have read Item 3 of Part 2 of the Form 10-SB of International Sensor
Technologies, Inc. and are in agreement with the statements contained
therein in so far as they related to our firm. We have no basis to agree
or disagree with other statements of the registrant contained therein.
Very truly yours,
/s/ Jones, Jensen & Company
- ----------------------------------
Jones, Jensen & Company
<PAGE>
EXHIBIT 23.01
Consent of Accountant
<PAGE>
[Letterhead]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANT
We hereby consent to the use of our audit report of BioPulse
International, Inc. dated December 23, 1999, in the Form 10-SB dated
January 12, 2000 for BioPulse International, Inc.
/s/ Couch, Bierwolf & Chisholm
- --------------------------------------
Salt Lake City, Utah
January 11, 2000
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<CIK> 0001102939
<NAME> BIOPULSE INTERNATIONAL, INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1999
<PERIOD-START> AUG-01-1999
<PERIOD-END> OCT-31-1999
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<RECEIVABLES> 209
<ALLOWANCES> 0
<INVENTORY> 10,425
<CURRENT-ASSETS> 94,248
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<CURRENT-LIABILITIES> 66,389
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<COMMON> 6,074
<OTHER-SE> 238,910
<TOTAL-LIABILITY-AND-EQUITY> 311,423
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<TOTAL-REVENUES> 228,208
<CGS> 185,066
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