SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE OF 1934
For the transition period from to
Commission file number: 0-24736
BioProgress Technology International, Inc.
(formerly Famous Sam's Group Inc.)
(Exact name of small business issuer as specified in its charter)
Nevada
(State or other jurisdiction of 88-0361701
incorporation or organization) (I.R.S. employer
identification number)
9055 Huntcliff Trace, Atlanta, Georgia
(Address of Principal executive offices) 30350-1735
(Zip Code)
Registrant's telephone number, including area code: (770) 641-0264
Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes | | No |X|
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: As of May 14, 1998, there were
approximately 4,999,753 shares outstanding.
<PAGE>
I. PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
BIOPROGRESS TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
JUNE 30, 1998
ASSETS
Current assets
Cash 359
Payments in advance 96,994
------------
Total current assets 97,353
------------
Other assets
Distributorship agreement 4,000
Inter-company 0
------------
Total other assets 4,000
------------
TOTAL ASSETS 101,353
------------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities
Accounts payable 22,643
Inter-company 189,525
------------
Total current liabilities 212,168
------------
Shareholders' equity (deficit)
Common stock, $0.001 par value,
10,000,000 shares authorized, 4,999,753
outstanding in 1997/8 and 390,367 in 1996 5,000
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<PAGE>
Additional paid-in capital 4,313,065
Preferred stock, $0.01 par value, 1,000,000
shares authorized, no shares outstanding 0
Deficit accumulated during the development
stage -4,428,880
------------
Total Shareholders' Equity (deficit) -110,815
Less stock subscription receivable 0
------------
Total Liabilities and Shareholders' Equity
(Deficit) 101,353
------------
THE ACCOMPANYING NOTES FORM AN INTEGRAL PART OF THESE STATEMENTS.
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<PAGE>
BIOPROGRESS TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Total Income $ 0 $ 0 $ 0 $ 0
---------- ---------- ---------- ----------
Expenses
Legal 10,000 0 17,500 0
Audit and accountancy 4,200 0 9,200 0
Administrative expenses 152,529 0 328,006 0
Professional fees 31,909 1,971 32,579 1,971
Other 0 0 2,530 0
---------- ---------- ---------- ----------
Total expenses 198,638 1,971 389,815 1,971
---------- ---------- ---------- ----------
Income (loss) before provision for income taxes (198,638) (1,971) (389,815) (1,971)
Provisions for income taxes 0 0 0 0
---------- ---------- ---------- ----------
Net loss $ (198,638) $ (1,971) $ (389,815) $ (1,971)
========== ========== ========== ==========
Net loss per share $ (0.04) * $ (0.08) *
========== ========== ========== ==========
</TABLE>
* Less than ($.01) per share
THE ACCOMPANYING NOTES FORM AN INTEGRAL PART OF THESE STATEMENTS.
- 4 -
<PAGE>
BIOPROGRESS TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
--------
1998 1997
---- ----
$ $
<S> <C> <C>
Cash flows (used) by operating activities
Net loss -389,815 0
Adjustments to reconcile net gain (loss) to net cash
provided by operating activities
Increase in payments in advance -96,994 0
Decrease in inter-company receivable 120,000 0
Increase in inter-company payable 189,525 0
Increase in accounts payable 22,643 0
------------ ------------
Net cash flows (used)
by operating activities -154,641 0
----------- ------------
Proceeds from sale of stock 0 0
Stock issued in payment of liabilities 0 0
Less: stock subscription receivable 155,000 0
------------ ------------
Net cash flows from financing
activities 155,000 0
Increase (decrease) in cash 359 0
Cash at beginning of period 0 0
------------ ------------
Cash at end of period 359 0
============ ------------
</TABLE>
THE ACCOMPANYING NOTES FORM AN INTEGRAL PART OF THESE STATEMENTS.
- 5 -
<PAGE>
BIOPROGRESS TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
Notes to Financial Statements
(Unaudited)
In the opinion of management, all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation of the financial
condition of registrant have been included, and the disclosures are adequate to
make the information presented not misleading.
Note 1. A summary of significant accounting policies is currently on file with
the U.S. Securities and Exchange Commission in registrant's Form 10, which is
incorporated herein by reference.
Note 2. The loss per share was computed by dividing net loss by the weighted
average number of shares of common stock outstanding during the period.
Note 3. Registrant has not declared or paid dividends on its common shares since
inception.
Note 4. The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-QSB and do not include all
information and footnotes required by generally accepted accounting principles
for complete financial statements.
Note 5. Income taxes have not been provided for in that registrant has not had a
tax liability from inception to the date of these notes.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations:
The results during the period of the Registrant, BioProgress Technology
International, Inc., a Nevada corporation (together with its wholly-owned
subsidiary, BioProgress Technology, Inc., the "Company"), reflect its continuing
efforts to promote the initial line of products in the United States' natural
food and healthcare market pursuant to the Exclusive Distributorship Agreement
(the "Distributorship Agreement") between the Compnay's wholly-owned subsidiary
and BioProgress Technology, Limited, an entity incorporated in the United
Kingdom (the "Distributor") and an affiliate of the Company. The Distributor is
engaged in the development, manufacture, sale and distribution of materials and
processes used to replace gelatin in the manufacture of soft capsules. These
efforts by the Company are continuing as the other lines the company will be
distributing are developed and are introduced to the range of products.
- 6 -
<PAGE>
The Company's expenses in the second quarter of fiscal 1998 have been largely
administrative. No meaningful comparison can be made between 1998 and 1997 as
the Company had no operations during 1997. The Company continues to investigate
other product lines and commercial opportunities presented to it.
Pursuant to the Distributorship Agreement, the Company has now introduced X-Gel
Moisturizing Bath Aromas, the first and only gelatin-free bath beads, to the
United States. The Company has made its first shipment from the United Kingdom
manufacturing facility to the United States The Company is currently proceeding
with private label supply contracts with two global retailers that together have
more than 3,500 outlets. XGel Moisturizing Bath Aromas are made from the
vegetable-based dispersing oils and refined emollients which the Company
believes naturally soften, repair, and protect the skin. XGel bath beads are
100% biodegradable, non-toxic, hypo-allergenic and contain no antioxidants.
Registered with the Vegan Society, XGel bath beads contain no animal byproducts
and have been tested on animals. XGel bath beads are available in four "mood
enhancing" fragrances that are designed to suit the demands of concerned, health
conscious individuals and the growing trends in aromatherapy.
During the second quarter of 1998, the Company's Board of Directors appointed
Malcolm D. Brown and James T.C. Longley to fill vacancies in the Board of
Directors. The Board of Directors now consists of three member.s In addition,
Mr. Brown was appointed Executive Vice President of Research and Development,
and Mr. Longley was appointed Chief Financial Officer, Treasurer and Secretary.
Mr. Brown holds an MSc in microbiology and is the inventor and developer of the
XGel Film System for which the Company, holds the exclusive distribution rights
within North America pursuant to the Distributorship Agreement. Mr. Longley
holds a B.Sc (Hons) in accounting and is a Fellow of the Institute of Chartered
Accounts in the United Kingdom. Mr. Longley has 16 years of financial management
experience with such organizations as Arthur Andersen, Touche Ross, and
Creditanstalt Bankverein.
During the quarter the Company also announced the appointment of three senior
consultants. The first, Marijo Clark, M.Sc, was Manager of Research and
Development for Banner Pharmaceuticals for seven years prior to founding her own
consultancy business. Ms. Clark has extensive experience in the field of soft
encapsulation and is widely published in the science. The second key appointment
is Mr. Graham Hind who will be responsible for developing the marketing strategy
to introduce the Company's proposed line of animal-free ingestible soft capsules
to the dietary supplement market. Mr. Hind has the exclusive rights within
Europe for the products of Martek Biosciences, Inc. (Nasdaq: MAKT), which
include DHA oil, a highly regarded supplement for mothers and their infants.
Prior to founding his own company, Mr. Hind was Managing Director of Nutricia
Foods. The Company has also appointed Dawn M. Franklin as its consultant to
advise on the development and protection of its intellectual property and brand
development. For twenty-one years Ms. Franklin was responsible for the
management of brand development and trademark protection for Mars, Inc. Ms.
Franklin serves as a Member of the Board of Directors of the International
Trademark Association and is Chairperson of its Membership Committee.
- 7 -
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company continues to fund its operations via inter-company loans and credit
management. The Company continues to investigate a number of long-term funding
scenarios and opportunities.
PART II - OTHER INFORMATION
Item 1. Litigation
No material legal proceedings to which the Company is a party or to which the
property of the Company is subject is pending and no such material proceeding is
known by management of the Company to be contemplated. No material legal
proceedings to which any director, officer or affiliate of the Company, any
owner of record or beneficially of more than five percent of any class of voting
securities of the Company, or security holder is a party adverse to the Company
or has a material interest adverse to the Company is pending.
Item 2. Change in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
Exhibit 27 - Financial Data Schedule
- 8 -
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized this 14th day of July,
1998.
BIOPROGRESS TECHNOLOGY INTERNATIONAL, INC.
(Registrant)
By: /s/ Barry J. Muncaster
----------------------
Barry J. Muncaster, President
and Chief Executive Officer
/s/ James T.C. Longley
----------------------
James T. C. Longley, Chief Financial
Officer
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 359
<SECURITIES> 0
<RECEIVABLES> 96,994
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 97,353
<PP&E> 4,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 101,353
<CURRENT-LIABILITIES> 212,168
<BONDS> 0
0
0
<COMMON> 5,000
<OTHER-SE> (110,815)
<TOTAL-LIABILITY-AND-EQUITY> 101,353
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 389,815
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (389,815)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (389,815)
<EPS-PRIMARY> (0.08)
<EPS-DILUTED> (0.08)
</TABLE>
