<PAGE> UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended July 31, 2000
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-27727
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BIOPULSE INTERNATIONAL, INC.
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(Name of small business issuer in its chapter)
Nevada 87-0634278
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(State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
10421 South Jordan Gateway, Suite 500, South Jordan, Utah 84095
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (801) 523-0101
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Securities registered pursuant to section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
$.001 par value, common voting shares
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(Title of class)
Check whether the Issuer (1) filed all reports required to be filed by
section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such
report(s), and (2) has been subject to such filing requirements for the
past 90 days. (1) Yes [X] No [ ]
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this form
10-KSB or any amendment to this Form 10-KSB. [ ]
The issuer's revenue for its most recent fiscal year was: $ 3,107,636.
The aggregate market value of the issuer's voting stock held as of July 31,
2000, by non-affiliates of the issuer was approximately $11,675,427.
As of July 31, 2000, issuer had 7,329,610 shares of its $.001 par value
common stock outstanding.
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Transitional Small Business Disclosure Format. Yes [ ] No [X]
Documents incorporated by reference: none
Exhibit Index is on page 20
This Form 10-KSB 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-KSB 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
chosen industry, including competition from much larger competitors;
technological advances and failure by the Company to successfully develop
business relationships.
PART 1
Item 1. Description of Business
OVERVIEW
BioPulse International, Inc., (the "Company" or "BioPulse") was
incorporated in the state of Nevada on July 13, 1984 originally under the
name Universal Financial Capital Corp. The Company changed its name in
September 1985 to International Sensor Technologies, Inc. As International
Sensor Technologies, Inc., the Company incurred heavy losses and no revenue
from operations. The Company also experienced five years of inactivity. On
January 12, 1999, the Company again changed its name to BioPulse
International, Inc. when it acquired BioPulse, Inc. The company is in the
business of managing 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.
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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.
BioPulse accomplishes these objectives through three distinct ongoing
activities. First, the Company identifies beneficial medical treatments
from around the world. Second, the Company evaluates selected treatments
for inclusion in the BioPulse treatment programs. Third, the Company
manages clinics that offer the BioPulse treatment programs.
INDUSTRY BACKGROUND - ALTERNATIVE MEDICINE
Health care is one of the largest industries in the world, accounting
for over 10% of U.S. GNP. Pharmaceutical companies alone spend over $8
billion per year in marketing.
The "alternative medicine" industry includes a broad spectrum of
products and services, ranging from chiropractic and herbal remedies to
acupuncture and aroma therapy. Some segments of the industry are regulated
through board certification and/or government agencies such as the FDA.
Other segments are largely unregulated.
While the term "alternative medicine" can include everything from
herbal remedies to acupuncture, its meaning actually changes over time.
For example, herbal supplements that years ago were produced only by
specialized manufacturers and sold primarily through health food stores are
now produced by major pharmaceutical companies and sold in ordinary grocery
stores. Once considered "alternative," these supplements are now more
likely to be considered "traditional." Practices that are considered
"alternative" in the United States, such as acupuncture, are considered
"traditional" in other countries, such as China.
The fluid nature of these classifications has led many industry
observers to adopt the term "integrative medicine," reflecting the
combination of "alternative" and "traditional" medical procedures.
The integrated medicine industry as it currently exists presents
significant problems for prospective patients. A goal of BioPulse will be
to evaluate the effectiveness and safety of these modalities. The
challenges confronting persons seeking integrated modalities include:
LACK OF STANDARDS. Many of the people seeking alternative medical
treatment are motivated by desperation and fear. They can be susceptible
to illegitimate practitioners who make unsubstantiated promises. There is
a pressing need for documenting results of other non-traditional protocols.
BioPulse intends to research and evaluate these results.
FRAGMENTATION. The market for alternative medicine is highly
fragmented and diverse, which leads to high costs. Most care is offered by
stand-alone clinics that specialize in one treatment or another. Patients
often visit multiple clinics searching for the appropriate treatment.
There is a need for consolidation and standardization so patients seeking
care can find effective treatment at an affordable cost.
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REGULATORY ENVIRONMENT. In the U.S., medical treatment is highly
regulated by the FDA and other regulatory agencies. The FDA's objective is
to assure that new products are safe and effective. There is a need for a
concerted effort to conduct the research and provide the studies necessary
to obtain U.S. regulatory approval of these treatments.
BUSINESS MODEL.
BioPulse engages in clinic management as well as research and
development of alternative medicine.
The BioPulse treatment programs offered at these clinics are not
exclusively "alternative." A better term to describe the treatment
programs is "integrative medicine," because the programs are largely based
on traditional medicine.
The Company strives to accomplish its corporate objectives by engaging
in the following activities:
1. IDENTIFY BENEFICIAL MEDICAL TREATMENTS FROM AROUND THE WORLD. These
treatments are often considered "alternative" in the United States,
although they may be practiced regularly in the country of origin. To
perform this function, the Company participates in health-oriented trade
shows and forums and 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, including treatments and techniques commonly called "biotech."
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.
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BioPulse is focusing on the continuing improvement and evaluation of
promising technology.
2. EVALUATE SELECTED TREATMENTS FOR INCLUSION IN THE BIOPULSE TREATMENT
PROGRAMS. Medical treatments that have shown promising results are
evaluated for compatibility and suitability for inclusion in the treatment
programs by the medical staff of clinics BioPulse serves. Those treatments
that comply with the BioPulse treatment philosophy and are complementary to
the BioPulse treatment objectives may be added to the BioPulse treatment
programs.
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. When promising technology is identified, the Company may
acquire intellectual property rights as appropriate, such as through
licensing.
3. MANAGE CLINICS IN VARIOUS LOCATIONS. The Company contracts with
qualified medical care providers in various locations who provide the
integrated treatment programs. BioPulse assists these providers by
performing clinic management functions and research and development
functions. These medical care providers are licensed in their respective
jurisdictions for their respective fields of expertise and actually own the
local clinics. The Company receives a management fee for its efforts and
allows the clinics to use the BioPulse name to identify the availability of
the integrated treatment programs at its facilities deemed acceptable to
BioPulse and the medical personnel owning the clinics and conducting the
treatment programs.
SCOPE OF BIOPULSE TREATMENT PROGRAMS.
The nature of medical care makes the industry one of the more heavily
regulated sectors. In the United States, a variety of governmental
agencies have jurisdiction over health care products and services. For
example, each state has licensing boards that regulate the ability of
individuals to work as physicians, nurses, or other health care providers.
The Food and Drug Administration (FDA) regulates the use of drugs and other
medicines within the United States. The Federal Trade Commission (FTC)
regulates certain aspects of the practice of medicine, including
advertising and marketing. Other countries have comparable regulatory
frameworks.
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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.
BUSINESS CONDITIONS
The Company operates in a highly competitive environment. The Company
believes its competitors include the established medical communities,
health spas and centers who provide similar health treatments and services,
and other alternative medicine clinics. The company must compete against
medical providers familiar with and controlling local markets. Further,
the Company faces the existing and anticipated danger from large, well-
established medical facilities and providers, which are powerful enough to
create market "barriers" against the Company's services.
The Company's objective is to provide affordable, effective
alternative medical treatment to as many people as possible. To do so, the
Company manages a comprehensive treatment program in Tijuana, Mexico that
includes room and board. Actual costs depend on the particular treatments
and tests provided for each patient. Patients are required to make a
deposit prior to commencing any treatment program. The amount of the
deposit depends on the nature of the treatment and the duration of the
program. The cost may vary at other locations. These prices are
competitive with known competition.
MARKETING
During 1999, BioPulse, Inc., engaged in a variety of marketing
efforts. While the Company believes the most effective marketing efforts
are through customer referrals and word of mouth, a variety of additional
marketing efforts are being undertaken. Among other things, the Company
placed full page advertisements in ALTERNATIVE MEDICINE magazine,
INTEGRATIVE MEDICINE magazine, and newsletters published by Clinical Pearls
and the International Council for Health Freedom. The Company exhibited at
several health industry trade shows during the year, including Whole Life
Expositions and Conferences, Del Mar Health Expo, National Nutritional
Foods Association Expo, and American Cancer Convention. It established a
web page, www.BioPulse.com, which explains the Company's treatment
philosophy, protocols, and products. It made contacts with industry
leaders and specialists, and sponsored a series of radio call-in shows and
discussions. The Company is currently implementing a program of directly
informing physicians, chiropractors and other alternative health care
practitioners through both trade shows and trade publications. The Company
is also evaluating other referral programs that are consistent with
regulatory and ethical requirements.
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The Company plans to continue these marketing activities in the
future, and is exploring a variety of additional marketing efforts,
including advertising in newsletters and general interest magazines as well
as industry magazines.
PRINCIPAL SUPPLIERS
Principal suppliers for the clinic are Abbott Laboratories, Merit
Pharmaceuticals, Lakeside Pharmaceuticals, Water Oz of Idaho and Reliv
International.
PATENTS, TRADEMARKS, LICENSES, ETC.
None
GOVERNMENTAL APPROVAL
The nature of the Company's operation is international, spanning
several countries. The activity of the Company is likely to vary among the
different countries, due to different tax policy, and/or investment policy
to be mandated by external entities, in passive and/or active form. The
Company, in the course of its operation and during the planning phase, must
undertake an in-depth examination of the situation in general and of the
financial laws in particular, in each of the countries where the company
will operate.
Providing services and products require the provision of licenses by
the relevant authorities of each country in which the Company intends to
operate. The licenses required may vary among countries, but for most
countries, the required license is to be obtained from the local Food &
Drug Administration and the Department of Health. Meeting the particular
country requirements and the time involved may have a negative impact upon
the Company's activities in a specific country or area.
The Company plans on obtaining all required federal and state permits,
licenses, and bonds to operate its facilities. Compliance with such laws,
regulations and ordinances may affect the Company's operation and may
necessitate significant capital outlays. Failure to comply with applicable
regulatory requirements may result in criminal prosecution, civil
penalties, recall or seizure of products, total or partial suspension of
operations or injunction, as well as other regulatory action against the
Company or its potential products and services.
ENVIRONMENTAL LAW COSTS AND EFFECTS
Compliance with federal, state and local regulations pertaining to the
discharge of materials into the environment or otherwise relating to the
protection of the environment is not anticipated to have an impact on the
Company's capital expenditures, earning and competitive position.
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EMPLOYEES
The Company currently employs six administrative personnel. Each
clinic employs its own staff. None of the Company's current employees are
under collective bargaining contracts.
REPORTS TO SECURITY HOLDERS
The Company files 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.
ITEM 2: DESCRIPTION OF PROPERTY
PROPERTY & FACILITIES
The Company currently leases 5,514 square feet of space in South
Jordan, Utah for its administrative operations at a cost of $8,730.50 per
month, which is calculated at the lease rate of $19 per square foot. The
term of the lease is through the year 2003.
The Company manages a 12,000 square foot clinic in Tijuana, Mexico
owned by Dr. Jesus Omar Sanchez Tiznado. The Company owns medical and
office equipment valued at $650,000 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.
ITEM 3. 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.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR 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, 2000, the Company
had 201 shareholders holding 7,329,610 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>
1998-1999
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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
1999-2000
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First Quarter
(Aug 1-Oct 31) 7.875 4 9.50 5
Second Quarter
(Nov 1-Jan 31) 9 4.50 10.75 6.50
Third Quarter
(Feb 1-Apr 30) 6 3 9.75 5
Fourth Quarter
(May 1-July 31) 3.75 2 6.50 3
</TABLE>
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Ask Adam???
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.
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.
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.
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.
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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 At July 31,
2000 25,000 Preferred Shares are outstanding.
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.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion contains comments about the financial
condition of BioPulse International, Inc. for the Fiscal Year Ended July
31, 2000.
RESULTS OF OPERATIONS
BioPulse International, Inc. restarted operations after its merger
with BioPulse Inc. during the fiscal year ended July 31, 1999. Operations
began in January 1999.
As is typical with most new businesses, there is a period of time
before the business is profitable. The market needs to be developed,
employees trained, policies and procedures fine-tunes and the company needs
to become known by and earn its reputation with its potential customers and
clients. At the end of the its last fiscal year and during the first half
of its current fiscal year, 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. BioPulse has also been developing new
treatments to offer its patients and expand its market.
During the current fiscal year, the company became profitable. For
the current fiscal year ended July 31, 2000, the company had a net profit
of $ 155,031 and revenues of $ 3,107,635 compared to a net loss of $
243,435 and revenues of $ 289,623 during the last fiscal year.
SIGNIFICANT ELEMENTS OF INCOME OR LOSS THAT DO NOT ARISE FROM CONTINUING
OPERATIONS
There are no significant elements of income or loss that do not arise
from continuing operation during the current fiscal year.
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LIQUIDITY
The company has one note payable to unrelated parties other than
accounts Payable of $86,000. 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
approximately $1,000,000 in notes receivable, of which the Company has
collected approximately $900,000. As of the end of the fiscal year, an
additional $100,000 was remaining in notes receivable.
The proceeds from the stock sale provided liquidity for the company to
carry the company through its development period. The company is currently
generating sufficient cash flow to finance operations.
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. BioPulse is exploring raising additional equity to finance
expansion at an greater pace than can be financed from current operations.
ITEM 7. FINANCIAL STATEMENTS
Reference is made to the financial statements and supplementary data
set forth in this Form 10-KSB report as indexed in Part IV, Item 13, and by
such reference such information is
incorporated herein.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The following table sets forth the name, age, and position of each
executive officer and director and the term of office of each director of
the Corporation.
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<TABLE>
<CAPTION>
NAME AGE POSITION DIRECTOR OR OFFICER SINCE
---------------- ---- ---------- -------------------------
<S> <C> <C> <C>
Stephen R. Fey 51 Chairman July 1998
Director
Jonathan Neville 46 President & January 1999
Director
Jan Morse 39 Secretary September 1999
F. Briton McConkie 54 Director July 1998
Loran Swensen 43 Director January 1999
Robert Morrow 60 Director January 1999
Michael L. Jones 47 Treasurer January 2000
</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.
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. 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.
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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 Hospital in Indianapolis. Dr. Morrow
participated in the Orthopedic Surgeon Residency Program with Indiana
University Medical Center from 1960 until 1965, 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. Ms. Morse is the Secretary 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.
14
</Page>
<PAGE>
MICHAEL L. JONES, TREASURER. Mr. Jones is a graduate of Brigham Young
University in Business Management and attended Graduate School at
California State University, Northridge in accounting. He worked in public
accounting for over 15 years and was vice president of the accounting firm
of Tanner + Co. He served three terms as chairman of the Utah Association
of CPAs Taxation Committee. He was listed by Money Magazine as one of
America's Best Tax Practitioners. He served for five years as Treasurer of
the Utah Republican Party. Mr. Jones has also worked as a management
consultant and computer consultant.
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;
(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
15
</Page>
<PAGE>
(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 10. 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>
Annual Compensation Long Term Compensation
Awards Payouts
Restr
Name and icted All
Principal Bonus Compen Stock Options Other
Position Year Salary $ sation Awards /SARs LTIP Payout
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jonathan Neville 2000 60,000 -0- -0- -0- -0- -0- -0-
President
Jan Morse 2000 24,000 -0- -0- -0- -0- -0- -0-
Secretary/Treasurer
Loren Swensen 2000 60,000 -0- -0- -0- -0- -0- -0-
Stephen R. Fey 2000 -0- -0- -0- -0- -0- -0- -0-
F. Briton McConkie 2000 -0- -0- -0- -0- -0- -0- -0-
Robert Morrow 2000 36,000 -0- -0- -0- -0- -0- -0-
Michael L. Jones 2000 49,400 -0- -0- -0- -0- -0- -0-
</TABLE>
No other compensation has been paid directly or accrued to any other
officer or director of the Company to date. 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.
16
</Page>
<PAGE>
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 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the name and the number of Common Stock
of the Company, owned of record or beneficially, by each person who owned
of record, or was known by the Company to own beneficially, more than 5% of
the Company's Common Stock ("Principal Shareholders"), and the name and
share holding of each officer and director, and all officers and directors
as a group:
<TABLE>
<CAPTION>
Title of Name and Address of Amount and Nature of Percentage
Class Beneficial Owner (1) Beneficial Ownership of Class
----------- -------------------- -------------------- ----------
<S> <C> <C> <C>
Common Stephen R. Fey (2) 336,500 4.59%.
Ivy Lane Row
Provo, UT 84604
Common F. Briton McConkie (2) 336,500 4.59%
4014 Splendor Way
Salt Lake City, UT 84124
Common Loran Swensen(3) 1,004,200 13.70%
10070 Chattle Cir.
S. Jordan, UT 84095
Common Jonathan Neville (3) 1,089,200 14.86%
1089 Ridgetop Corp. Drive
S. Jordan, UT 84095
Common Robert Morrow (3) 317,600 4.33%
6814 E. 300 N
Huntsville, UT 84317
Common Cisalpine NV 600,000 8.19%
Curacasbaaiweg 199
Curacao Netherland,
Antilles Islands
Common Deliman Corporation LTD. 600,000 8.19%
P.O. Box 3161
Roadtown Tortla, B.V.I.
Common Montana Capital
International 600,000 8.19%
---------------------------------------------------------------------------
17
</Page>
<PAGE>
Common Officers, Directors and 3,084,000 42.08%
Nominees as a Group:
(5 people)
Total: 4,884,000 66.63%
</TABLE>
(1) The term "beneficial owner" refers to both the power of investment (the
right to buy and sell) and rights of ownership (the right to received
distributions from the company and proceeds from sales of the shares).
Inasmuch as these rights or shares may be held by more than one person,
each person who has a beneficial ownership interest in share is deemed to
be the beneficial owner of all the shares. Therefore, the chart indicates
that several persons may be deemed the beneficial owners of the same shares
because there is shared power or investment or share rights of ownership.
(2) Officers of the Company
(3) Directors of the Company
No beneficial owner of 5% or greater of the Company's stock or any
officer or director has the right to acquire any amount of the Company's
stock within sixty days, from options, warrants, rights, conversion
privilege or similar obligations.
CHANGE IN CONTROL
To the knowledge of the management, there are no present arrangements
or pledges of the Company's securities that may result in a change in
control of the Company.
ITEM 12. 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 4. RECENT SALES OF UNREGISTERED SECURITIES.
On April 6, 1999, 2,000,000 common shares were issued to sophisticated
investors in a private placement pursuant to an 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"). The Company received approximately $970,000 in cash.
In October of 1999, 600,000 restricted common shares were issued to
Celtic Ltd., pursuant to an exemption from registration under section 4(2)
of the Securities Act of 1933, for services rendered, no cash was received
by the Company.
In February of 2000, 600,000 restricted common shares were issued to
Paramo Investment pursuant to an exemption from registration under section
4(2) of the Securities Act of 1933, pursuant to a subscription agreement,
$60,000 was received by the Company.
18
</Page>
<PAGE>
In June of 2000, 5,000 restricted common shares were issued to David
J. Weaver, a sophisticated investor, pursuant to an exemption from
registration under section 4(2) of the Securities Act of 1933, $15,000 was
received by 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.
19
</Page>
<PAGE>
PART IV
ITEM 13. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-
K.
(a) The financial statements filed as part of this report are listed
separately in the Index to Financial Statements.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed by the Registrant during the fourth
quarter ended December 31, 1999.
(c) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Title of Document Location
------- ------------------------------------ ----------
<S> <C> <C>
3.01 Amended and Restated Articles of Incorporation, As filed
as amended
3.02 Bylaws As filed
10.01 Contract with Dr. Jesus Omar Sanchez Tiznado As filed
23.01 Consent of Accountant See attached
27.01 Financial Data Schedule See attached
</TABLE>
20
</Page>
<PAGE>
--------------------------------------------------------------------------
SIGNATURES
--------------------------------------------------------------------------
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf,
thereunto duly authorized.
BioPulse International, Inc.
Date: November 10, 2000 /s/ Jonathan Neville
------------------------------
Jonathan Neville
President
Date: November 10, 2000 /s/ Jan Morse
------------------------------
Jan Morse
Secretary
21
</Page>
<PAGE>
--------------------------------------------------------------------------
SIGNATURES
--------------------------------------------------------------------------
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf,
thereunto duly authorized.
BioPulse International, Inc.
Date: November 10, 2000
------------------------------
Jonathan Neville
President
Date: November 10, 2000
------------------------------
Jan Morse
Secretary
22
</Page>
<PAGE>
INDEX TO FINANCIAL STATEMENTS
The following documents are filed as part of this report:
Report of Independent Accountants.
Financial Statements and Schedules:
Balance Sheet as of July 31, 2000
Statement of Operations from inception, June 4, 1998 through July 31,
2000
Statement of Stockholder's Equity
Statements of Cash Flows for the year ended July 31, 2000 and for the
Period from inception through July 31, 2000
Notes to the Financial Statements
All schedules omitted are not applicable, not required or the required
information is included in the financial statements thereto.
23
</Page>
<PAGE>
Biopulse International, Inc.
Consolidated Financial Statements
July 31, 2000
</Page>
<PAGE>
C O N T E N T S
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
</Page>
<PAGE>
/Letterhead/
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders of
Biopulse International, Inc.
We have audited the accompanying consolidated balance sheets of Biopulse
International, Inc. as of July 31, 2000 and the related consolidated
statements of operations, stockholders' equity and cash flows for the years
ended July 31, 2000 and 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Biopulse International, Inc. as of July 31, 2000 and the results of its
operations and cash flows for the years ended July 31, 2000 and 1999 in
conformity with generally accepted accounting principles.
/S/ Crouch, Bierwolf & Associates
Crouch Bierwolf & Associates
Salt Lake City, Utah
November 8, 2000
</Page>
<PAGE>
Biopulse International, Inc.
Consolidated Balance Sheet
ASSETS
<TABLE>
<CAPTION> July 31,
2000
-----------
<S> <C>
Current assets
Cash $ 42,055
Accounts receivable - related party (Note 8) 19,032
Accounts receivable (net of allowance for
doubtful accounts of $8,435) 17,030
Inventory 77,094
Note receivable - employee 9,800
Prepaid expense - current portion 133,925
-----------
Total Current Assets 298,936
-----------
Property & Equipment, Net (Note 2) 659,729
-----------
Other assets
Deposits 8,731
Prepaid expense - net of current portion 182,749
-----------
Total Other Assets 191,480
-----------
Total Assets $1,150,145
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 104,787
Accrued expenses 30,146
Notes payable (Note 7) 86,000
Unearned revenue 77,784
-----------
Total Current Liabilities 298,717
-----------
Total Liabilities 298,717
-----------
Stockholders' Equity
Preferred Stock, Class A, authorized
2,000,000 shares of $.001 par value,
25,000 issued and outstanding 25
Common Stock, authorized
100,000,000 shares of $.001 par value,
7,329,610 issued and outstanding 7,329
Additional Paid in Capital 1,092,044
Less: Subscriptions receivable ( 159,566)
Accumulated Deficit ( 88,404)
-----------
Total Stockholders' Equity 851,428
Total Liabilities and Stockholders' Equity $1,150,145
===========
</TABLE>
The accompanying notes are an integral part of these financial statements
4
</Page>
<PAGE>
Biopulse International, Inc.
Consolidated Statement of Operations
<TABLE>
<CAPTION>
For the Year For the Year
Ended Ended
July 31, July 31,
2000 1999
------------- -------------
<S> <C> <C>
Revenues $ 3,107,636 $ 289,623
Cost of Operations 1,163,598 179,870
------------- -------------
Gross Profit 1,944,038 109,753
Operating Expenses:
General and administrative 1,695,007 353,188
Royalties 94,000 -
------------- -------------
Total Expenses 1,789,007 353,188
Net Income (Loss) from Operations 155,031 (243,435)
------------- -------------
Net Income (Loss) Before Taxes 155,031 (243,435)
------------- -------------
Provision for Income taxes (Note 1) - -
------------- -------------
Net Income (Loss) $ 155,031 $ (243,435)
============= =============
Net Income (Loss) Per Share $ .023 $ (.07)
============= =============
Weighted average shares outstanding 6,825,610 3,073,862
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements
5
</Page>
<PAGE>
Biopulse International, Inc.
Consolidated Statement of Stockholders' Equity
<TABLE>
<CAPTION>
Deficit
Accumulated
During
Subscr- the
iptions Additional Develop-
Preferred Stock Common Stock Recei- Paid In opment
Shares Amount Shares Amount vable 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 - - - - - - -
Stock for cash
tO organizers - - 4,000,000 4,000 - - -
Recapitalization
for accounting
purposes of
Biopulse, Inc. - - 73,862 74 - (74) -
Stock issued for
subscriptions
receivable at
$.49 per share - - 2,000,000 2,000 (970,000) 968,000 -
Stock issued for
cash at $1.00
per share 25,000 25 - - - 24,975 -
Stock issued for
services at
$1.00 per share 25,374 25 - - - 25,348 -
Net loss for the
year ended
July 31, 1999 - - - - - - (243,435)
-------------------------------------------------------------------
Balance, July
31, 1999 50,374 50 6,073,862 6,074 (970,000) 1,018,249 (243,435)
Conversion of
preferred
stock to
common
stock (25,374) (25) 50,748 50 - - -
Stock issued for
services - - 600,000 600 - (600) -
Stock issued for
subscription
receivable at
$.10 per share - - 600,000 600 (60,000) 59,400 -
</Page>
<PAGE>
<PAGE>
Stock issued for
$3 per share - - 5,000 5 - 14,995 -
Collection of
subscription
receivable - - - - 870,434 - -
Net Income for
the year ended
July 31, 2000 - - - - - - 155,031
-------------------------------------------------------------------
Balance,
July 31, 2000 25,000 $ 25 7,329,610 $ 7,329 $(159,566)$1,092,044 $(88,404)
===================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements
6
</Page>
<PAGE>
Biopulse International, Inc.
Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
For the Year For the Year
Ended Ended
July 31, July 31,
2000 1999
------------- -------------
<S> <C> <C>
Cash Flows from Operating Activities
Net Income (Loss) $ 155,031 $ (243,435)
Adjustments to reconcile
net loss to net cash
provided by operations:
Stock for services - 29,374
Depreciation & Amortization 60,508 11,385
(Increase) decrease in receivables (15,421) (1,609)
(Increase) decrease in prepaid expenses (316,674) (1,609)
(Increase) decrease in inventory (77,094) -
(Increase) decrease in notes receivable (9,800) (1,609)
Increase (decrease) in payables 4,058 100,729
Increase (decrease) in
accrued expenses (7,014) 37,160
------------- -------------
Net Cash (Used) Provided by
Operating Activities (206,406) (66,396)
Cash Flows from Investment
Activities:
Purchase of Equipment (555,365) (136,513)
Cash paid for Deposits - (8,731)
Cash loan to related party 19,032 -
------------- -------------
Net Cash (Used) Provided by
Investing Activities (536,333) (145,244)
------------- -------------
Cash Flows from Financing
Activities:
Issued common stock for
cash /and subscription receivable 885,434 25,000
Cash received from debt financing 86,000 190,628
Principal payments on short term debt (190,628) -
------------- -------------
Net Cash (Used) Provided by
Financing Activities 780,806 215,628
Net increase (decrease) in cash 38,067 3,988
Cash, beginning of period 3,988 -
------------- -------------
Cash, end of period $ 42,055 $ 3,988
============= =============
Supplemental Cash Flow Information:
Cash paid for Interest $ - $ -
Cash paid for Income Taxes $ - $ -
Stock issued for Services $ - $ 29,374
</TABLE>
The accompanying notes are an integral part of these financial statements
7
</Page>
<PAGE>
<PAGE>
Biopulse International, Inc.
Notes to the Financial Statements
July 31, 2000 and 1999
NOTE 1 - Summary of Significant Accounting Policies
a. Organization
Biopulse International, Inc. (the Company) was incorporated in
the State of Nevada on July 13,1984 originally under the name of
Universal Financial Capital Corp. The Company changed its name in
September 1985 to International Sensor Technologies, Inc. As
International Sensor Technologies, Inc. the Company incurred heavy
losses and no revenue from operations. The Company also experienced
five years of inactivity. On January 12, 1999, the Company again
changed its name to BioPulse International, Inc. when it acquired
BioPulse, Inc. The Company is in the business of managing drug and
rehabilitation centers, integrated medicine clinics, and medical
research programs.
The Company issued 4,000,000 common shares in exchange for 100
percent of the outstanding stock of Biopulse Inc., a Utah corporation
organized June 4, 1998. The share exchange with Biopulse, Inc. was
accounted for as a reverse acquisition (recapitalization), therefore
all historical financial information is that of the accounting
survivor Biopulse, Inc.
The Company also paid $100,000 to an officer/director of the
Company for accounting, legal and organization expenses to
recapitalize the Company. This was expensed during the period ended
July 31, 1999.
b. Recognition of Revenue
The Company recognizes income and expense on the accrual basis of
accounting. Revenue from services to patients is recognized as
services are performed.
c. Earnings (Loss) Per Share
The computation of earnings per share of common stock is based on
the weighted average number of shares outstanding at the date of the
financial statements.
d. Cash and Cash Equivalents
The Company considers all highly liquid investments with
maturities of three months or less to be cash equivalents.
e. Provision for Income Taxes
No provision for income taxes has been recorded due to net
operating loss carryforwards totaling approximately 2,370,000 that
will be offset against future taxable income pursuant to limitations
of the Internal Revenue Code. 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, and are limited pursuant
to the Internal Revenue Code. The loss from the year ended July 31,
1999 can be used to offset income for the period ended July 31, 2000.
Accordingly, no tax provision has been recorded.
8
</Page>
<PAGE>
<PAGE>
BioPulse International, Inc.
Notes to the Financial Statements
July 31, 2000 and 1999
NOTE 1 - Summary of Significant Accounting Policies (continued)
Deferred tax assets and the valuation account is as follows at
July 31, 2000 and 1999:
<TABLE><CAPTION> July 31,
Deferred tax asset: 2000 1999
--------- ---------
<S> <C> <C>
NOL carrryforward $700,000 $700,000
Valuation allowance (700,000) (700,000)
--------- ---------
Total $ - $ -
========= =========
</TABLE>
f. Principles of Consolidation
These financial statements include the books of Biopulse
International, Inc and its wholly owned subsidiary Biopulse, Inc. All
intercompany transactions and balances have been eliminated in the
consolidation.
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 July 31, 2000 the allowance was
$8,435.
j. Inventory
Inventory is recorded at the lower of cost or market on the
first-in, first-out basis, and consists primarily of nutrition
supplements and medical supplies.
NOTE 2 - Property and Equipment
The Company capitalizes purchases of long lived assets that are
expected to give benefit to the Company over the life of the asset.
The Company also capitalizes improvements and costs that increases the
value of or extend the life of the asset.
Capitalized assets are depreciated over the estimated useful
lives of the assets (five to seven years for furniture and fixtures
and leasehold improvements, three to five years for computer
equipment) on the straight line basis.
9
</Page>
<PAGE>
Biopulse International, Inc.
(a Development Stage Company)
Notes to the Financial Statements
July 31, 2000 and 1999
NOTE 2 - Property and Equipment (continued)
Property and Equipment consists of the following at July 31, 2000
and 1999:
<TABLE>
<CAPTION>
July 31,
2000 1999
--------- ---------
<S> <C> <C>
Furniture & Equipment $144,228 $20,935
Medical Equipment 543,087 110,606
Leasehold improvements 44,306 4,971
Accumulated Depreciation (71,892) (11,385)
--------- ---------
Total Property & Equipment $659,729 $125,127
========= =========
</TABLE>
Depreciation expense was $60,508 and $11,385 for the years ended
July 31, 2000 and 1999, respectively.
NOTE 3 - 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 4 - 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.
10
</Page>
<PAGE>
<PAGE> Biopulse International, Inc.
(a Development Stage Company)
Notes to the Financial Statements
July 31, 2000 and 1999
NOTE 4 - Equity (continued)
During the year ended July 31, 2000 the Company has the following
equity transactions:
- Issued 600,000 shares to the underwriter for services rendered in
the offering.
- Issued 600,000 shares at $.10 per share pursuant to a
subscription agreement.
- Issued 5,000 shares for $3 per share.
NOTE 5 - 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 requires the payment of 11,000 per
month adjusted each March 1st by the consumer price index, and expires
February 28, 2005. For purposes of computing future obligations a CPI
increase of 3.5% is assumed.
Future minimum operating lease payments are as follows at July
31, 2000:
2000 $ 98,655
2001 240,622
2002 245,372
2003 250,288
2004 150,620
2005 25,246
-------------
Total $ 1,010,803
=============
NOTE 6 - Notes Payable-Related Party
Notes payable - related party are detailed as follows:
<TABLE><CAPTION>
July 31,
----------------------
2000 1999
---------- ----------
<S> <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>
11 </Page>
<PAGE>
Biopulse International, Inc.
(a Development Stage Company)
Notes to the Financial Statements
July 31, 2000 and 1999
NOTE 7 - Note Payable
The Company borrowed $86,000 to be paid back on or before
September 5, 2000 along with $8,600 in interest. The Company is
currently in default on this note.
NOTE 8 - Note Receivable - Related Party
Notes receivable - related party are detailed as follows:
<TABLE><CAPTION> July 31,
2000 1999
---------- ----------
<S> <C> <C>
Note receivable from a corporation, under
common ownership, non-interest bearing,
due within one year 19,032 -
---------- ----------
Total Notes receivable - Related Party $ 19,032 $ -
========== ==========
</TABLE>
NOTE 9 - 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 25,000 shares of Class A convertible preferred
stock outstanding. These shares are convertible into common stock at
a rate of two shares of common stock for each share of preferred stock
any time after January 8, 2000. Since the Company's common stock was
valued at $.49 per share at the commitment date, no beneficial
conversion feature was accounted for.
NOTE 10 - 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 11 - Royalties
The Company has an agreement to pay $450 in royalties per patient
who participates in a three week treatment program or $21 per day for
treatments of less than three weeks.
12
</Page>
