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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the period ended June 30, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT.
For the Transition period from ______________ to __________________
Commission file number 0-19693
BIO FLUORESCENT TECHNOLOGIES, INC.
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(exact name of Registrant as specified in its charter)
Nevada 87-0485320
- ------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8360 East Via De Ventura, Bldg. L200, Scottsdale, Arizona 85258
- --------------------------------------------------------- ----------
(Address of Principal Executive Offices) (Zip code)
Registrant's telephone number, including area code: 602-905-5579
7373 North Scottsdale Road, Suite C228, Scottsdale, Arizona 85253
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(Former name, former address and former fiscal year,
if changed since last report.)
As of June 30, 1997, the registrant had 5,645,710.67 shares of its common stock,
$0.001 par value, outstanding.
Transitional Small Business Disclosure Format (Check One): Yes [ ] No [X]
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<PAGE>
BIO FLUORESCENT TECHNOLOGIES, INC.
Table of Contents
PART I FINANCIAL INFORMATION Page No.
--------
Item 1 Financial Statements
Condensed Balance Sheet................................ 3
Condensed Statement of Operations...................... 4
Condensed Statement of Cash Flows...................... 5
Notes to Condensed Financial Statements................ 6
Item 2 Plan of Operations..................................... 8
PART II OTHER INFORMATION
Item 1 Legal Proceedings...................................... 9
Item 2 Changes in Securities.................................. N/A
Item 3 Defaults upon Senior Securities........................ N/A
Item 4 Submission and Matters to a Vote of Security
Holders................................................ N/A
Item 5 Other Information...................................... N/A
Item 6 Exhibits and Reports on Form 8-K....................... 9
SIGNATURES.......................................................... 10
2
<PAGE>
Bio Fluorescent Technologies, Inc.
(A Company in the Development Stage)
Condensed Balance Sheet
June 30, 1997
(Unaudited)
ASSETS
Current Assets:
Cash $ 15
Trade exchange receivable - barter 49,677
Media products and services receivable - current portion 250,000
-----------
Total current assets 299,692
Media Products and Services Receivable - non current portion 250,000
-----------
$ 549,692
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable:
Trade $ 254,305
Related party 193,236
Accrued expenses 55,000
-----------
Total current liabilities 502,541
-----------
Stockholders' Equity:
Common stock, $0.001 par value, Authorized
8,333,333 shares, issued and outstanding
5,655,070 shares 5,655
Additional paid-in capital 3,178,369
Subscription of common stock sales receivable (3,000)
Deficit accumulated during development stage (3,133,873)
-----------
Total stockholders' equity 47,151
-----------
$ 549,692
===========
The accompanying notes are an integral part of these
condensed financial statements.
3
<PAGE>
Bio Fluorescent Technologies, Inc.
(A Company in the Development Stage)
Condensed Statement of Operations
for the three and six month periods ended June 30, 1997 and 1996
and for the period from inception of development stage
(February 15, 1990) to June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Cumulative from the
Three month period Six month period inception of
ended June 30 ended June 30, Development stage
------------------------ ------------------------- (February 15, 1990)
1997 1996 1997 1996 to June 30,1996
---- ---- ---- ---- ---------------
<S> <C> <C> <C> <C> <C>
Net Sales $ 1,624 $ -0- $ 1,624 $ -0- $ 1,624
Selling, general &
administrative expenses 130,144 290,967 394,597 629,253 3,135,604
---------- ----------- ---------- ---------- -----------
Loss from operations (128,520) (290,967) (392,973) (629,253) (3,133,980)
Interest Income -0- 106 -0- 106 107
---------- ----------- ---------- ---------- -----------
Loss before provision for
income taxes (128,520) (290,967) (392,973) (629,147) (3,133,873)
Provision for income taxes -0- -0- -0- -0- -0-
---------- ----------- ---------- ---------- -----------
Net Loss $ (128,520) $ (290,967) $ (392,973) $ (629,147) $(3,133,873)
========== =========== ========== ========== ===========
Loss per common share $ (0.02) $ (0.07) $ (0.07) $ (0.16)
========== =========== ========== ==========
Weighted average number of
common shares outstanding 5,645,711 3,900,000 5,645,711 3,900,000
========== =========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements.
4
<PAGE>
Bio Fluorescent Technologies, Inc.
(A Company in the Development Stage)
Condensed Statement of Cash Flows
for the Six month periods ended June 30, 1997 and 1996 and
for the period from inception of development stage
(February 15, 1990) to June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Cumulative from the
Three month period Six month period inception of
ended June 30, ended June 30, Development stage
-------------------- ------------------- (February 15, 1990)
1997 1996 1997 1996 to June 30,1997
---- ---- ---- ---- ---------------
<S> <C> <C> <C> <C> <C>
Cash flows from operations:
Net loss $(128,520) $(290,861) $(392,973) $ (629,147) $(3,133,873)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Amortization -0- 25,500 -0- 51,000 136,000
Writedown of artwork 400,000
Common stock issued for services 689,248
Change in assets and liabilities:
Increase in trade exchange receivable 45 113 90 113 323
Increase in prepaid expenses 2,500 1,875
Increase in accounts payable and
accrued expenses 128,384 89,091 261,571 181,269 502,540
--------- --------- --------- ---------- -----------
Net cash used in operating activities (91) (173,657) (131,312) (394,530) (1,405,762)
--------- --------- --------- ---------- -----------
Cash flows from financing activities:
Sale and issue of common stock, net 172,590 125,000 375,796 1,405,777
Sale of stock subscriptions(net of
subscriptions receivable) -0- -0- -0- -0- -0-
--------- --------- --------- ---------- -----------
Cash provided by financing activities -0- 172,590 125,000 375,796 1,405,777
--------- --------- --------- ---------- -----------
Net increase(decrease) in cash funds (91) (1,067) (6,312) (18,734) 15
Cash, beginning of period 106 1,165 6,327 18,832 -0-
--------- --------- --------- ---------- -----------
Cash, end of period $ 15 $ 98 $ 15 $ 98 $ 15
========= ========= ========= ========== ===========
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements.
5
<PAGE>
Bio Fluorescent Technologies, Inc.
(A Development Stage Company)
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 1997
NOTE 1 - THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
HISTORY OF REPORTING ENTITY
Bio Fluorescent Technologies, Inc. ("the Company") is a development stage
company that was incorporated under the laws of the state of Nevada in February
1990 as Partisan Corporation. On March 10, 1995, the Company's name was changed
to Bio Fluorescent Technologies, Inc. The Company was inactive through February
1995 and prior to such time the Company had no activity other than that of
capitalization efforts.
BASIS OF PRESENTATION
The unaudited condensed financial statements and related notes have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission. Accordingly, certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to such rules and regulations.
The accompanying financial statements and related notes should be read in
conjunction with the audited financial statements of the company and notes
thereto, for the fiscal year ended December 31, 1996.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
LOSS PER COMMON SHARE
Loss per common share is computed by dividing the net loss by the weighted
average number of common shares outstanding during the period. Fully diluted
loss per common share is considered equal to primary loss per common share for
all periods presented.
REVERSE STOCK SPLIT AND COMPARABILITY
On December 2, 1996 the Company did a 1 for 3 reverse stock split and changed
the authorized stock from 25,000,000 to 8,333,334 shares of common stock. In
these statements all figures relating to shares of stock have been restated to
reflect the reverse split as if it had occur prior to periods presented for
comparison purposes.
6
<PAGE>
NOTE 2 - TRADE EXCHANGE RECEIVABLE - BARTER:
In August 1995, the Company issued 14,814 (4,938) shares of its common stock in
exchange for $50,000 worth of barter credit on the ITEX Retail Trade Exchange.
Management believes that they will be able to successfully utilize the barter
credit for the cost of hotels and travel over the next year.
NOTE 3 - MEDIA PRODUCTS AND SERVICES RECEIVABLE:
In October 1995, the Company issued 200,000 (66,667) shares of its common stock
in exchange for script writing, music scoring, radio commercial production and
radio advertising time to be received in the future valued at approximately
$500,000. Management believes that they will be able to successfully utilize the
entire balance during 1998.
NOTE 4 - RELATED PARTY TRANSACTIONS:
The Company paid a related party $123,407 for management services and expenses
for the three month period ended June 30, 1997. At June 30, 1997, the Company
owed the related company $193,236 which is included in accounts payable in the
accompanying financial statements.
The Company has entered into consulting agreements with individuals. No payments
have yet been earned under these agreements.
The Company subleases a 1,000 square foot facility in Scottsdale, Arizona,
including office personnel and supplies from a related party for its principal
executive offices.
In January 1997, the Company negotiated contract extensions with Cactus
Consultants International, Inc. To continue to supply public relations support
services and office staff support for an additional year through March 31, 1998,
at a total cost of $295,280.
DEVELOPMENT STAGE ACTIVITY AND MANAGEMENT'S PLANS
To date the Company's operations have consisted primarily of obtaining a license
for a system, assembling a management team and raising capital. From the
Company's inception through June 30, 1997, the Company's business development
costs have totaled approximately $3,136,000. These expenditures have been funded
primarily with the proceeds from the private sales of its equity securities as
well as with the issuance of its common stock in exchange for services.
The Company plans to research and gather data on companies and products that
would lend themselves to the acquisition through licensing agreements or
mergers. Companies and products will be evaluated on technology or proven sales
and operating histories which are compatible with corporate strategies. Until
the outstanding lawsuit and counter-suit is resolved the Company plans to
nonaggressive in this area. The Company plans to expand its core market to
include a broader range of industries to shorten the lead time to become
operational once a successful conclusion is reached in the referred to legal
matters.
The Company reorganized its management team in May 1996 to proceed with the
implementation of its business plan and the acquisition of compatible products
to establish the Company as an operating Company as soon as possible.
7
<PAGE>
The Company will need to raise additional operating capital to satisfy its
obligations and to fund other operating expenses. The Company will continue its
efforts to raise capital to fund its operations, including private placements of
its common stock. However, there is no assurance that such efforts will be
successful. Failure by the Company to obtain such additional financing would
have a material adverse effect on the Company.
ITEM 2. PLAN OF OPERATIONS
The Company is presently abiding its time awaiting the conclusion of
the lawsuit described in PART II, Item 1 Legal Proceedings.
The Company had secured worldwide rights to manufacture, market and
sell the Mehica GP120 System in February 1995. On July 19, 1996, the Company
filed a complaint in the United States District Court for the District of
Maryland (Civil Action No. CCB 96-2266) against the licensor, The Avriel Group
and others, seeking declaratory relief, damages and other relief in respect to
certain agreements relating to the rights to a proprietary automated system for
detection of the HIV virus and for use in mass screening of individuals, the
Packaged Antigen Kit or "PAK" and the Mehica GP120. On July 30, 1996, the
defendants filed an answer, counter-claim and third party complaint, seeking
declaratory relief in respect of the agreements and damages. The Company misread
the legal counsels opinion that a settlement was eminent and began vigorous
activities to secure products or mergers to complete the Company's business plan
objectives.
In order to be in a better negotiating position with future merger
candidates on November 27, 1996, the Company approved a 3 for 1 reverse stock
split. On February 11, 1997, the Company announced intent to merge with Immune
Network Research, Ltd. ("INR"). As merger advanced to the discovery stage the
lawsuit proceedings stalled and the merger intentions were terminated. The
Company is cautiously optimistic that the dispute can be resolved by and through
a negotiated settlement without further litigation. The outcome of this
litigation may have a material adverse effect on the Company.
The Company plans to aggressively pursue the acquisition of other
products through licensing and/or acquiring businesses with technology or proven
sales and operating history which are compatible with corporate strategies.
The Company re-organized its management team in May 1996 to proceed
with the implementation of its business plan and the acquisition of compatible
products to establish the Company as an operating Company as soon as possible.
One of the growth strategies of the business plan is to expand the
Company's core market to include a broader range of products and industries.
To date, the Company's operations have consisted primarily of obtaining
a license for a system, assembling a management team and raising capital. From
the Company's inception to June 30, 1997, the Company's business development
costs have totaled approximately $3,134,000. These expenditures have been funded
primarily with the proceeds from the private sales of its equity securities as
well as with the issuance of its common stock in exchange for services.
8
<PAGE>
From inception to June 30, 1997, the Company's development activities
resulted in a deficit in cash flow of approximately $1,406,000. This deficit was
primarily the result of cumulative net operating loss of approximately
$3,134,000 offset by noncash charges totaling approximately $1,226,000 related
to the write off of artwork purchased with common stock, common stock issued for
services and amortization associated with the Company's license to the Mehica
GP120 System. Additionally, the deficit in cash flow from operating activities
was offset by an increase in accounts payable and accrued liabilities of
approximately $503,000.
On January 20, 1997, the Company negotiated contract extensions with
Cactus Consultants International, Inc. To continue to supply public relations
support services, office staff support and office space for an additional year
through March 31, 1998, at a total cost of $295,280.
The Company will need to raise additional operating capital to satisfy
its obligations and to fund other operating expenses of the business. As of the
date of this filing, the Company has not obtained such financing. Failure by the
Company to obtain such additional financing would have a material adverse effect
on the Company.
In a subsequent event on December 1, 1997, the Company moved its office
to 8630 East Via de Ventura, Bldg. L200, Scottsdale, Arizona 85258, and entered
into a telecommuting work arrangement. It is the Company's intent to maintain
this work environment until the activities out grow this arrangement.
PART II
ITEM 1 LEGAL PROCEEDINGS
The Company had secured worldwide rights to manufacture, market and
sell the Mehica GP120 System in February 1995. On July 19, 1996, the Company
filed a complaint in the United States District Court for the District of
Maryland (Civil Action No. CCB 96-2266) against the licensor, The Avriel Group
and others, seeking declaratory relief, damages and other relief in respect to
certain agreements relating to the rights to a proprietary automated system for
detection of the HIV virus and for use in mass screening of individuals, the
Packaged Antigen Kit or "PAK" and the Mehica GP120 System. On July 30, 1996, the
defendants filed an answer, counter-claim and third party complaint, seeking
declaratory relief and recision of the licensing agreement. On January 31, 1997,
the Company filed an amended complaint for recision of the license agreement.
The Company is cautiously optimistic that the dispute can be resolved by and
through a negotiated settlement without further litigation. If a settlement
cannot be reached the Company intends to vigorously press its claims and defend
its position.
The Company plans to hold any future alliances in abeyance until the
Company's legal position in the above legal proceedings is made secure.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
27 - Financial Data Schedule
(b) REPORTS ON FORM 8-K
None.
9
<PAGE>
SIGNATURES
Pursuant to the regulation requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
Date: March 30, 1998 Bio Fluorescent Technologies, Inc.
(Registrant)
By: /s/ Jan J. Olivier
---------------------------------
Jan J. Olivier
President, Director
By: /s/ Wynn J. Bott
---------------------------------
Wynn J. Bott
Controller
10
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 15
<SECURITIES> 0
<RECEIVABLES> 299,677
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 299,692
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 549,692
<CURRENT-LIABILITIES> 502,541
<BONDS> 0
0
0
<COMMON> 5,655
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 41,496
<SALES> 0
<TOTAL-REVENUES> 1,624
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 394,597
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (392,973)
<INCOME-TAX> 0
<INCOME-CONTINUING> (392,973)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (392,973)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> (.07)
</TABLE>
