-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FpVjXAu0D2/879xvCbpKQkVXnoueNsurHZIlGhD2AX7EymAI2WhTWXygsUqdV8D/ 5XcmfczOEE7/fcXSXCLfwA== 0000936392-99-000291.txt : 19990318 0000936392-99-000291.hdr.sgml : 19990318 ACCESSION NUMBER: 0000936392-99-000291 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990131 FILED AS OF DATE: 19990317 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYNTHETIC BLOOD INTERNATIONAL INC CENTRAL INDEX KEY: 0000034956 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH [8731] IRS NUMBER: 223067701 STATE OF INCORPORATION: NJ FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 002-31909 FILM NUMBER: 99567364 BUSINESS ADDRESS: STREET 1: 2685 CULVER AVE CITY: KETTERING STATE: OH ZIP: 45429 BUSINESS PHONE: 9372986070 MAIL ADDRESS: STREET 1: 2685 CULVER AVE STREET 2: SUITE 400 CITY: KETTERING STATE: OH ZIP: 45429 FORMER COMPANY: FORMER CONFORMED NAME: SINEQUANON CORP DATE OF NAME CHANGE: 19901219 FORMER COMPANY: FORMER CONFORMED NAME: FEDERATED FRANCHISES INC DATE OF NAME CHANGE: 19760907 FORMER COMPANY: FORMER CONFORMED NAME: RUDOMINER DAVID & ASSOCIATES INC DATE OF NAME CHANGE: 19690316 10-Q 1 FORM 10-Q DATED 1-31-99 1 SYNTHETIC BLOOD INTERNATIONAL, INC. FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934. FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 1999 COMMISSION FILE NUMBER 2-31909 SYNTHETIC BLOOD INTERNATIONAL, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) NEW JERSEY 22-3067701 (STATE OF INCORPORATION) (IRS EMPLOYER ID NUMBER) 2685 CULVER AVENUE KETTERING, OHIO 45429 937-298-6070 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) Indicate by the check mark whether the registrant (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). YES [X] NO [ ] and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of January 31, 1999. 51,259,302 shares of common stock par value $0.01 2 SYNTHETIC BLOOD INTERNATIONAL, INC. (A Development Stage Company) BALANCE SHEETS ASSETS
January 31, April 30, 1999 1998 ------------ ------------ (Unaudited) (Audited) Current Assets: Cash $ 170,960 $ 740,215 Prepaid Expense 95,954 19,525 ------------ ------------ Total Current Assets $ 266,914 $ 759,740 Property & Equipment, net 64,992 84,653 Other Assets: Patents and Technology 157,514 141,521 ------------ ------------ Total Assets $ 489,420 $ 985,914 ============ ============ LIABILITIES AND STOCKHOLDERS'S EQUITY Current Liabilities: Current portion of notes payable $ 138,576 $ 59,972 Accounts payable 311,126 339,540 Stockholders loans 14,900 15,000 Accrued expenses 104,823 116,828 ------------ ------------ Total Current Liabilities $ 569,425 $ 531,340 Notes Payable, less current $ 50,699 $ 103,021 Total Liabilities $ 620,124 $ 634,361 Stockholder's Equity: Common Stock Subscribed $ 55,000 $ -- 100,000,000 shares Issued & outstanding 51,259,302 and 50,729,302 512,594 507,293 Additional Paid in capital 9,486,879 9,412,424 Deficit Accumulated since Development Stage (10,185,177) (9,568,164) ------------ ------------ Total Stockholder's Equity (Deficit) $ (130,704) $ 351,553 ------------ ------------ Total Liabilities & Stockholders' Equity $ 489,420 $ 985,914 ============ ============
See accompanying notes to financial statements 2 3 SYNTHETIC BLOOD INTERNATIONAL, INC. (A Development Stage Company) STATEMENTS OF OPERATIONS
Accumulated during the Three Months Ended Nine Months Ended development January 31, January 31, stage 1999 1998 1999 1998 ------------ ----------------------------- ----------------------------- (Unaudited) Unaudited Unaudited Expenses: Research and development $ 3,019,227 $ 42,173 $ 26,733 $ 99,795 $ 109,011 General and administrative 7,096,368 117,507 122,949 525,221 630,711 Interest 143,619 4,516 442 14,106 3,731 ------------ ------------ ------------ ------------ ------------ Total Expense 10,259,214 164,196 150,124 639,122 743,453 Other Income (73,479) (12,248) (282) (22,109) (1,176) ------------ ------------ ------------ ------------ ------------ NET LOSS $(10,185,735) $ (151,948) $ (149,842) $ (617,013) $ (742,277) ============ ============ ============ ============ ============ NET LOSS PER SHARE, BASIC $ (0.003) $ (0.003) $ (0.012) $ (0.017) AND DILUTED WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING, BASIC AND DILUTED 51,132,128 46,276,391 50,971,548 44,404,874
See accompanying notes to financial statements 3 4 SYNTHETIC BLOOD INTERNATIONAL, INC. STATEMENT OF CASH FLOWS
Accumulated during Nine Months Ended development January 31, stage 1999 1998 ------------ ------------ CASH FLOWS FROM OPERATING: (Unaudited) (Unaudited) Net loss $(10,185,735) $ (617,013) $ (742,277) Adjustments to reconcile net loss to cash used in operating activities: Depreciation and amortization 350,967 41,410 62,117 Write down other assets 126,800 Issuance of compensatory stock options 248,906 Issuance of stock for services 1,022,221 32,705 Issuance of stock below FMV 695,248 180,000 Contribution of capital by stockholders 216,851 Changes in operating assets and liabilities: Prepaid expenses and other assets (95,954) (76,429) (6,424) Accounts payable and accrued expense 604,401 (15,419) 158,815 ------------ ------------ ------------ Net cash used in operating activities (7,016,295) (634,746) (347,769) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of other assets (383,415) (29,167) (38,304) Proceeds from the sale of equipment 15,457 Purchase of property and equipment (279,977) (8,575) ------------ ------------ ------------ Net cash used in investing activities (647,935) (37,742) (38,304) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from sale of common stock 6,160,271 22,051 266,270 Proceeds from common stock subscribed 55,000 55,000 Proceeds from stockholder notes payable 915,792 31,000 Contribution of capital by stockholder 40,700 Proceeds from notes and debentures 910,096 99,096 Payments on notes and lease obligations (246,669) (72,914) 37,808 ------------ ------------ ------------ Net cash provided by financing activities 7,835,190 103,233 335,078 Net change in cash and cash equivalents 170,960 (569,255) (50,995) Cash and cash equivalents, beginning -- 740,215 53,857 ------------ ------------ ------------ Cash and cash equivalents, ending 170,960 170,960 2,862 ============ ============ ============ Cash paid for Interest $ 102,387 $ 14,106 $ 3,731 Taxes 6,400 800 800 SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES- Common stock issued for accounts payable $ 25,000 $ 25,000 Common stock issued to retire notes $ 36,000 $ 36,000 Common stock issued to retire accrued wages $ 94,000 $ 94,000
See accompanying notes to financial statements 4 5 SYNTHETIC BLOOD INTERNATIONAL, INC. (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS JANUARY 31, 1999 1. BASIS OF PRESENTATION The accompanying unaudited financial statements contain all adjustments (consisting only of normal recurring adjustments) which in the opinion of management, are necessary to present fairly the financial position of the Company at January 31, 1999, and the results of its operations for the three and nine months periods ended January 31, 1999 and 1998 and its cash flows for the nine month periods ended January 31, 1999 and 1998. Certain information and footnote disclosures normally included in financial statements have been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission although the Company believes that the disclosures in the financial statements are adequate to make the information presented not misleading. The financial statements included herein should be read in conjunction with the financial statements of the Company, included in the Company's Annual Report on Form 10-K for the year ended April 30, 1998 filed with the Securities and Exchange Commission on August 28, 1998. Going Concern - The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the financial statements, the Company is in the development stage and, at January 31, 1999 has accumulated losses from operations amounting to $10,185,735 and a working capital deficit of $302,511. The Company is in the pre-clinical trial stage of its products. These products must undergo further development and testing prior to submission to the FDA for approval to market the products. The Company's continuation as a going concern is dependent on its ability to generate sufficient cash flow, to meet its obligations on a timely basis, to obtain additional financing as may be required, and ultimately to attain successful operations. However, no assurance can be given at this time as to whether the Company will achieve any of these conditions or that the FDA approval will be granted, once applied for. These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern for a reasonable period of time. Additional funding will be necessary which will require future private placements and/or joint ventures to enable the Company to continue the required testing through Phase I, II and III human testing. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Development Stage - Because the Company has not commenced principal operations, it is considered a "Development Stage Enterprise" as defined by Statement of Financial Accounting Standards No. 7, Accounting and Reporting by Development Stage Enterprises. Pricing of Common Stock and Options to Purchase Common Stock - The Company's Board of Directors determines the issuance price of its common stock and options to purchase common stock to be fair market value, derived from recent issuance of common stock to unrelated parties and/or from common stock market quotations. 5 6 Property and Equipment - Property is recorded at cost. Depreciation and amortization are computed using the straight-line method over the shorter of the estimated useful lives of the related assets, ranging from three to ten years, or lease term, if applicable. Patents - Patent costs are being amortized over the lesser of the remaining life of the patent or the estimated useful life of the related product, ranging from eight to ten years. The Company evaluates recoverability of patents on at least an annual basis by comparing the estimated resale value of the patents to the remaining carrying values. An adjustment to the carrying value of the patent rights would be made if the estimated resale value of the patents is determined to be insufficient to recover such value. 3. COMMITMENTS AND CONTINGENCIES Employment Contracts - The Company has employment agreements with a certain officer with aggregate future commitments of $271,000 through March 2001. Litigation - The Company is subject to litigation in the normal course of the business, none of which management believes will have a material adverse effect on the Company's financial statements as of January 31, 1999. 4. STOCKHOLDERS' EQUITY During the period ending January 31, 1999, the Company issued 210,000 shares of the Company's common stock to third party investors for $.125 per share, the fair market value at the date of purchase, plus options, which expire in November 1999, to purchase 210,000 shares of the common stock at $.20 per share. During the period ending January 31, 1999, the Company issued 25,000 shares of the Company's common stock to an outside consultant in exchange for services rendered. As a result of this transaction the Company recognized an expense of $2,625, representing the fair market value of the common stock issued. 6 7 SYNTHETIC BLOOD INTERNATIONAL, INC. (A Development Stage Company) PART I- FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Except for the historical information contained herein, the following discussion contains forward-looking statements that involve risks and uncertainties. The Company's actual results could differ materially from those projected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this section and those discussed in the Company's Annual Report on Form 10K. RESULTS OF OPERATIONS Three months ended January 31, 1999 and 1998: The Research and Development expense for the three months period ended January 31, 1999 was $42,173, compared to $ 26,733 for the same period in the prior year. This increase was due to an increase in research supplies and the addition of a research laboratory in California. General and Administrative expenses for the three months period ended January 31, 1999 were $117,507, compared to $122,949 for the same period in the prior year. During the period salaries and contract labor and professional fees down due to a reduction in services provided. Depreciation decreased as certain fixed assets became fully depreciated. These decreases were offset by an increase in liability insurance due to increased premiums and an increase in offices expenses. The net loss for the three months ended January 31, 1999 was $151,948, compared to $149,842 for the same period in the prior year. Although total expenses were up $14,000 for the period, this increase was offset by $10,000 of other income related the forfeiture of a stock subscription fee. Nine months ended January 31, 1999 and 1998: The Research and Development expenses for the nine months period ended January 31, 1999 was $99,795, compared to $109,011 for the same period in the prior year. This decrease was due to a reduction in research personnel and supplies. General and Administrative expenses for the nine months period ended January 31, 1999 were $525,221, compared to $630,711 for the same period in the prior year. This decrease was due primarily to an expense related to stock issued below fair market value of $180,000. This decrease was offset by an increases in insurance expense and an increase in payroll and contract services. The net loss for the nine months ended January 31, 1999 was $617,013, compared to $742,277 for the same period in the prior year. This decrease represented the combined effect of a decrease in administrative expense of $105,000 and an increase in other income of $10,000 relating to a forfeiture of a stock subscription fee. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK The Company has no derivative financial instruments and no exposure to foreign currency exchange rates or interest rate risk. 7 8 LIQUIDITY AND CAPITAL RESOURCES The Company has financed its operations since September 1990, when the current management became involved, through the issuance of debt and equity securities and loans from stockholders. As of January 31, 1999 the Company had $266,914 in total current assets and a working capital deficit of $302,511. The Company is in the pre-clinical trial stage in the development of its products. These products must undergo further development and testing prior to submission to the FDA for approval to market its products. This additional development and testing and if approved, the FDA required clinical testing will require significant additional financing. Management is actively pursuing strategic alliance and joint venture agreements to enable the Company to develop its products. There can be no assurance that FDA approval will be granted, once applied for, or that necessary funding will be obtained. The Company does not have any firm commitments for additional financing as of January 31, 1999. 8 9 SYNTHETIC BLOOD INTERNATIONAL, INC. (A Development Stage Company) PART II-OTHER INFORMATION Item 1. Legal Proceedings. Described in Financial Statement Note 3. Item 2. Changes in Securities. In December 1998, the Company issued 210,000 shares of common stock plus stock options expiring in November 1999 for the purchase of 210,000 additional shares of common stock. The common stock was issued pursuant to the exemptions provided by Section 4(2) of the Securities Act of 1933 and/or Regulation D. In January 1999, the Company issued 25,000 shares of common stock to an outside consultant in exchange for services rendered, and recorded a expense of $2,625 which represents the fair market value of the common stock. The common stock was issued pursuant to the exemptions provided by Section 4(2) of the Securities Act of 1933 and/or Regulation D. Item 3. Defaults Upon Senior Securities. None. Item 4. Submission of Matter to a Vote of Security Holders. None. Item 5. Other Information. None. Item 6. Exhibits and Reports on Form 8-K. None. Pursuant to the requirements 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. SYNTHETIC BLOOD INTERNATIONAL, INC. ----------------------------------- (Registrant) 3/15/99 /s/ DAVID H. JOHNSON - ------------ ------------------------------------------ (Date) David H. Johnson, Chief Financial Officer 9 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THIRD QUARTER ENDED JANUARY 31, 1999 SYNTHETIC BLOOD INTERNATIONAL, INC. 9-MOS APR-30-1999 MAY-01-1998 JAN-31-1999 170,960 0 0 0 0 266,914 301,592 236,600 489,420 569,425 0 0 0 512,594 (642,298) 489,420 0 22,109 0 0 625,016 0 14,106 (617,013) 0 0 0 0 0 (617,013) ($0.012) ($0.012)
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