-----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, UxbIYjYcRChZeF9miJNtnlqCVNHrNnxh/u99exaqk7FFk1hIwko3nkaQBFn/Twwx cD0++bGvd8VAX0ym3x410Q== 0001005444-99-000089.txt : 19990513 0001005444-99-000089.hdr.sgml : 19990513 ACCESSION NUMBER: 0001005444-99-000089 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BIORELEASE CORP CENTRAL INDEX KEY: 0000797662 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 880218411 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-15260 FILM NUMBER: 99618640 BUSINESS ADDRESS: STREET 1: 340 GRANITE STREET STREET 2: SUITE 200 CITY: MANCHESTER STATE: NH ZIP: 03102-4004 BUSINESS PHONE: 6036418443 MAIL ADDRESS: STREET 1: 340 GRANITE STREET STREET 2: SUITE 200 CITY: MANCHESTER STATE: NH ZIP: 13102-4004 FORMER COMPANY: FORMER CONFORMED NAME: OIA INC DATE OF NAME CHANGE: 19920703 10QSB 1 10QSB FOR BIORELEASE, CORP. ---------------------------------------------------------------------------- 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 quarterly period ended March 31, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission File No. 0-15260 Biorelease Corp. (Exact name of small business issuer as specified in its charter) Delaware 88-0218411 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 340 Granite St., Suite 200 Manchester, NH 03102 (Address of principal Executive offices) (Zip Code) (603) 641-8443 Issuer's telephone number, including area code Former name, former address and formal fiscal year, if changed since last report. Indicate by 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), 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 the last practicable date. There was 9,736,659 shares of common stock, par value $.01 per share, as of May 11, 1999. ---------------------------------------------------------------------------- Transitional Small Business Disclosure Format (Check One) Yes ____ No __X__ 1 of 10 BIORELEASE CORP. INDEX PART I. FINANCIAL INFORMATION Page Number ------ Item 1. Financial Statements Consolidated balance sheets as of March 31, 1999 (unaudited) and June 30, 1998 3 Consolidated Statements of Operations for the three months and nine months ended March 31, 1999 (unaudited) and 1998 (unaudited), and from October 20, 1989 (inception) to March 31, 1999 (unaudited) 4 Consolidated Statements of Cash Flows for the nine months ended March 31, 1999 (unaudited) and 1998 (unaudited), and from October 20, 1989 (inception) to March 31, 1999 (unaudited) 5 Notes to Unaudited Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation 8 PART II. OTHER INFORMATION Item 1. Legal Proceedings 10 Item 2. Changes in Securities 10 Item 3. Defaults Upon Senior Securities 10 Item 4. Submission of Matters to a Vote of Security Holders 10 Item 5. Other Information 10 Item 6. Exhibits and Reports on Form 8-K. 10 2 of 10 PART I. FINANCIAL INFORMATION Item 1. Financial Statement BIORELEASE CORP. (A DEVELOPMENT STAGE ENTERPRISE) CONSOLIDATED BALANCE SHEETS March 31, 1999 and June 30, 1998 --------
March 31, June 30, ASSETS 1999 1998 ------ --------- -------- (Unaudited) Cash $ 828 $ 1,320 Accounts receivable 2,370 8,455 Inventories 16,903 18,434 Other receivables - 745 Prepaid expenses and other current assets - - ----------- ---------- Total current assets $ 20,101 $ 28,954 Equipment and leasehold improvements, net 4,154 10,971 Intangible assets, net 12,571 20,449 Other noncurrent assets 300 300 ----------- ---------- Total assets $ 37,126 $ 60,674 =========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Notes payable $ 27,500 $ 27,500 Accounts payable 121,770 113,515 Accrued expenses 97,540 93,954 Notes payable - stockholders, current 46,100 46,100 Income taxes payable 1,549 1,549 Other current liabilities - - ----------- ---------- Total current liabilities 294,459 282,618 Notes payable - stockholder, long term 14,955 14,955 Notes payable - other, long term 16,000 16,000 Other liabilities 87,734 87,734 ----------- ---------- Total liabilities 413,148 401,307 ----------- ---------- Stockholders' equity: Common stock of $.01 par value, 50,000,000 shares authorized, 10,286,659 and 10,286,659 issued and 9,736,659 and 9,736,659 outstanding at March 31, 1999 and June 30, 1998 102,867 102,867 Additional paid-in capital 9,140,088 9,140,088 Stock warrants outstanding - - Development stage accumulated deficit ( 9,563,477) (9,528,088) Stock subscription receivable ( 50,000) ( 50,000) ------------ ----------- ( 370,522) ( 335,133) Less: Treasury stock 5,500 5,500 ----------- ---------- Total stockholders' equity (deficit) ( 376,022) ( 340,633) ------------ ----------- Total liabilities and stockholders' equity (deficiency) $ 37,126 $ 60,674 =========== ==========
The accompanying notes are an integral part of the consolidated financial statements. 3 of 10
BIORELEASE CORP. (A DEVELOPMENT STAGE ENTERPRISE) CONSOLIDATED STATEMENTS OF OPERATIONS For the Three Months and Nine Months Ended March 31, 1999 and 1998, and the Cumulative Period from Inception to March 31, 1999 ----------- Three Months Ended Nine Months Ended March 31, March 31, Inception ---------------------------- ---------------------------- (October 20, 1989) To 1999 1998 1999 1998 March 31, 1999 ---- ---- ---- ---- ------------------ (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenues $ 5,350 $ 13,558 $ 6,956 $ 53,558 $ 566,177 Cost of Goods Sold ( 1,354) - ( 1,531) - ( 26,868) ---------- -------- ---------- -------- ---------- Gross Profit 3,996 13,558 5,425 53,558 539,309 Operating expenses: Cell culture operations - - - - ( 601,116) Research and development - - - - (2,558,041) Purchased technologies - - - - ( 690,000) General and administrative ( 11,260) ( 26,929) ( 35,284) (53,955) (4,302,799) Other - - - - - ----------- ------- ---------- --------- ----------- (Loss)/Gain from operations ( 7,264) ( 13,371) ( 29,859) ( 397) ( 7,612,647) ----------- --------- ----------- --------- ----------- Other costs: Interest, net ( 1,728) ( 9,725) ( 5,182) (12,949) 66,823 Lease commitment cost - - - - ( 315,000) Litigation costs - - - - ( 99,242) Other income (costs) - - - - ( 23,034) Gain (Loss) on sale of assets - - ( 500) - 62,116 Offering costs - - - - ( 336,446) Option compensation - - - - ( 219,375) Income on settlements - - 154 - 293,761 Realized loss for decline in value of investment - - - - ( 1,500,000) ---------- --------- ----------- -------- ----------- Total other costs ( 1,728) ( 9,725) ( 5,528) ( 12,949) ( 2,070,397) ----------- ---------- ------------ -------- ----------- Income (loss) before provision for (benefit from) income taxes and cumulativeeffect of change in accounting principle ( 8,992) ( 23,096) ( 35,387) ( 13,346) (9,683,044) Provision for income taxes - - - - ( 343,873) ---------- --------- ----------- -------- ---------- Income (loss) before cumulative effect ofaccounting principle ( 8,992) ( 23,096) ( 35,387) ( 13,346) (10,026,917) Cumulative effect of change in accounting principle - - - - 463,440 ---------- --------- ----------- -------- ---------- Net income (loss) $( 8,992) $( 23,096) $( 35,387) $( 13,346) $( 9,563,477) =========== ========== ============ ========= =========== Weighted average shares 9,736,659 9,669,992 9,736,659 9,444,992 7,634,139 Basic and fully diluted (loss) per share $ .00 $ .00 $ .00 $ .00 $(1.25)
The accompanying notes are an integral part of the consolidated financial statements. 4 of 10 BIORELEASE CORP. (A DEVELOPMENT STAGE ENTERPRISE) CONSOLIDATED STATEMENT OF CASH FLOWS For the Nine Months Ended March 31, 1999 and 1998 and the Cumulative Period from Inception to March 31,1999 (Unaudited) ---------------
Inception Nine Months Ended (October 20, 1989) March 31, to March 31, 1999 1998 1999 -------------- -------------- -------------- Cash flows from operating activities: Net (Loss)/Gain $( 35,387) $ ( 13,346) $ ($9,563,477) Adjustments to reconcile net loss to net cash used in development activities: Depreciation and amortization 14,193 22,500 270,125 Cumulative effect of change in accounting principle - - ( 463,440) (Gain) loss on sale of assets 500 - ( 38,204) Recognized loss on investment - - 1,500,000 Loss on extinguishment of debt - - 42,000 Common stock issued in exchange for purchased technology - - 605,000 Common stock issued in exchange for services rendered - 20,500 52,300 Common stock options issued in exchange of services rendered - 6,750 128,453 Amortization of unearned compensation - - 140,625 Repricing of Class A warrants - - 78,750 (Increase) decrease in current assets: Cash - escrow - - - Accounts receivable 6,085 8,099 ( 2,370) Other receivables 745 - - Inventories 1,531 - ( 16,903) Prepaid expenses and other current assets - - 360 Deferred tax asset - - 463,440 Other non-current assets - - ( 300) Increase (decrease) in current liabilities: Accounts payable 8,255 ( 17,295) 192,721 Deferred revenue - ( 20,000) - Accrued expenses 3,586 ( 6,298) 105,008 Other current liabilities - - 1,549 Other liabilities - 1,500 87,734 ----------- ------------ ----------- Net cash provided (used) In operating activities ( 492) 2,410 ( 6,416,629) ----------- ----------- ----------- Cash flows from investing activities: Purchase of government backed securities - - ( 1,000,000) Proceeds from collateralized mortgage obligations - - 1,000,000 Purchase of fixed assets - - ( 333,187) Proceeds from sale of assets - - 189,742 Purchase of intangible assets - - ( 105,205) ---------- ---------- ---------- Net cash used in investing activities - - ( 248,650) ---------- ------------ -------------
The accompanying notes are an integral part of the consolidated financial statements. 5 of 10 BIORELEASE CORP. (A DEVELOPMENT STAGE ENTERPRISE) CONSOLIDATED STATEMENT OF CASH FLOWS For the Nine Months Ended March 31, 1999 and 1998 and the Cumulative Period from Inception to March 31, 1999 --------
Inception Nine Months Ended (October 20, 1989) March 31, to March 31, 1999 1998 1999 (Unaudited) (Unaudited) Unaudited) ----------- ----------- ----------------- Cash flows from financing activities: Advances from stockholders - - 594,385 Payments of advances from stockholders - - ( 159,975) Loans payable - - - Notes payable (paid) - ( 12,475) 104,555 Issuance of common stock, net - - 2,105,966 Purchase of investments in issuance of common stock - - ( 10,000) Notes receivable - - - Recapitalization - - 4,031,176 ---------- ----------- --------- Net cash provided by investing activities - ( 12,475) 6,666,107 ----------- ------------- ----------- Net increase (decrease) in cash ( 492) ( 10,065) 828 Cash at beginning of period 1,320 15,278 - ----------- ------------ ------------- Cash at end of period $ 828 $ 5,213 $ 828 =========== ============ ============= Supplemental disclosure of non-cash transactions: Cash paid for interest - - 7,752 Marketable securities acquired through issuance of common stock - - - - Issuance of common stock for subscription receivable - - 50,000 Liabilities repaid through issuance of common stock - - 616,214 Non-marketable security acquired through the issuance of common stock - - 1,500,000
The accompanying notes are an integral part of the consolidated financial statements. BIORELEASE CORP. (A DEVELOPMENT STAGE COMPANY) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE NINE MONTHS ENDED MARCH 31, 1999 AND 1998 AND CUMULATIVE FROM INCEPTION (OCTOBER 20, 1989) TO MARCH 31,1999 1. Basis of presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Rule 310 of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete consolidated financial statements and should be read in conjunction with the Company's audited consolidated financial statements at and for the fiscal year ended June 30, 1998. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended March 31, 1999 are not necessarily indicative of the results that may be expected for the year ended June 30, 1999. 7 of 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Three Months Ended March 31, 1999 and 1998 For the three months ended March 31, 1999 the Company, including it's subsidiary, Biorelease Technologies, Inc., (the Subsidiary) had revenues of $5,350, cost of good sold of $1,354, general and administrative expenses of $11,260, interest expense of $1,728 and no income taxes resulting in a net loss of $8,992 as compared to the three months ended March 31, 1998 in which the Company, including its subsidiary, had revenues of $13,558, cost of good sold of $0, general and administrative expenses of $26,929, interest expense of $9,725 and no income taxes resulting in a net loss of $23,096. The loss for the current quarter, as compared to the loss in the same period last year, was attributed to reduced general and administrative expenses and reduced interest expense. Nine Months Ended March 31, 1999 and 1998 For the nine months ended March 31, 1999, the Company had revenues of $6,956, cost of goods sold of $1,531, general and administrative expenses of $35,284, interest expense of $5,182, loss on sale of asset of $500, income on settlements of $154 and no income taxes resulting in a let loss of $35,387 as compared to the nine months ended March 31, 1998 wherein the Company had revenues of $53,558, no cost of goods sold, general and administrative expenses of $53,955, interest expense of $12,949, no gain on sale of assets, no income on settlement and no income taxes resulting in a net loss of $13,346. The increase in the net loss for the nine months resulted primarily from the discontinuation of grant research revenues net of reduced costs. Inception (October 20, 1989) to March 31, 1999 From October 20, 1989, the date of the Subsidiary's initial activity, through March 31, 1999, the Company had revenues of $566,177 cost of goods sold of $26,868, cell culture expenses of $601,116, research and developmental expenses of $2,558,041, purchased technology costs of $690,000, general and administrative expenses of $4,302,799, interest income, net of interest expense of $66,823, lease commitment cost of $315,000, litigation costs of $99,242, other costs of $23,034, gain on sale of assets of $62,116, offering cost of $336,446, Option Compensation of $219,375, income recognized on settlements of $293,761, realized loss for decline in value of investment of $1,500,000, income tax expense of $343,873 and a cumulative effect of change in accounting principle of $463,440, thereby resulting in an accumulated net loss of $9,563,477. 8 of 10 Liquidity and Capital Resources From inception until the date on which the subsidiary was combined with the Company (the Reorganization), the Subsidiary's primary sources of funds were the proceeds from private offerings of its Common Stock and Stock in the Subsidiary. Since the Reorganization, the primary source of capital has been the Company's funds and revenues. The Company continues to seek a company to combine with to increase its liquidity and asset levels and/or to contribute to the development of the Company's technologies. Dividend Policy The Company has not declared or paid any dividends on its common stock since its inception and does not anticipate the declaration or payment of cash dividends in the foreseeable future. The Company intends to retain earnings, if any, to finance the development and expansion of its business. Future dividend policy will be subject to the discretion of the Board of Directors and will be contingent upon future earnings, if any, the Company's financial condition, capital requirements, general business conditions, and other factors. Therefore, there can be no assurance that dividends of any kind will ever be paid. Effect of Inflation Management believes that inflation has not had a material effect on its operations for the periods presented. 9 of 10 PART II OTHER INFORMATION Item 1. Legal Proceedings. None Item 2. Changes in Securities. None Item 3. Defaults Upon Senior Securities. None Item 4. Submission of Matters to a Vote of Securities Holders. None Item 5. Other Information. None Item 6. Exhibits and Reports of Form 8-K. None SIGNATURE Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BIORELEASE CORP. May 12, 1999 By: /s/ Richard F. Schubert --------------------------------- Richard F. Schubert, Chairman and Principal Financial Officer 10 of 10 EX-27 2 FDS BIORELEASE, CORP.
5 0000797662 BIORELEASE, CORP. 1 US DOLLARS 3-MOS JUN-30-1999 JAN-01-1999 MAR-31-1999 1.0 828 0 2,370 0 16,903 20,101 80,201 76,047 37,126 294,459 0 0 0 102,867 0 37,126 5,350 5,350 1,354 1,354 11,260 0 1,728 0 (8,992) 0 0 0 0 (8,992) 0 0
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