-----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, PlQc1Fs0SWEkpVl4bSEDH3Jg1hoiEFbkfpwHmxdQzrj2B6bsoukNOdqLp38AG1gl eG1OIP+pi3pSKeOikBwYxQ== 0001005444-01-000038.txt : 20010228 0001005444-01-000038.hdr.sgml : 20010228 ACCESSION NUMBER: 0001005444-01-000038 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010226 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: 1554548 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 0001.txt QUARTERLY REPORT 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 December 31, 2000 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 (Internal Revenue Service incorporation or organization) Employer Identification No.) 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, 12,124,238 shares of common stock, par value $.01 per share as of February 21, 2001. ----------------------------------------------------------------- Transitional Small Business Disclosure Format (Check One) Yes No X --- --- 1 of 12 BIORELEASE CORP. INDEX PART I. FINANCIAL INFORMATION
Page Number ------ Item 1. Financial Statements .........................................................................3 Balance sheet as of December 31, 2000 (unaudited) and consolidated balance sheet at June 30, 2000...................................................3 Consolidated Statements of Operations for the Three Months and Six Months Ended December 31, 2000 (unaudited) and 1999 (unaudited), and from October 20, 1989 (inception) to December 31, 2000 (unaudited)..............................................................4 Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2000 (unaudited) and 1999 (unaudited), and from October 20, 1989 (inception) to December 31, 2000 (unaudited) ........................................5 Notes to Unaudited Consolidated 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.............................................................................9 Item 2. Changes in Securities ........................................................................9 Item 3. Defaults Upon Senior Securities ..............................................................9 Item 4. Submission of Matters to a Vote of Security Holders...........................................9 Item 5. Other Information.............................................................................9 Item 6. Exhibits and Reports on Form 8-K. ............................................................9
2 of 12 PART I. FINANCIAL INFORMATION Item 1. Financial Statement BIORELEASE CORP. (A DEVELOPMENT STAGE ENTERPRISE) BALANCE SHEETS December 31, 2000 and June 30, 2000
December 31, June 30, 2000 1999 ------------ -------- (Unaudited) (Consolidated) ASSETS Current Assets: Cash $ 940 $ 502 Accounts receivable - - Inventories - 16,012 Other receivables 28,549 29,447 Prepaid expenses and other current assets - ----------------- --------------- Total current assets 29,489 45,961 ----------------- --------------- Equipment and leasehold improvements, net 39 1,734 ----------------- --------------- Other assets: Intangible assets, net - - Investments in related party securities 9,131 - Other non current assets - ----------------- --------------- Total assets $ 38,659 $ 47,695 ================= =============== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCIES) Current liabilities: Notes payable $ - $ - Accounts payable 1,034 14,792 Accrued expenses 10,000 17,000 Notes payable stockholders,current - - Deferred Income - - Other current liabilities 5,000 5,000 ----------------- --------------- Total current liabilities 16,034 36,792 Notes payable stockholders, long term - - Notes payable others, long term - - Other liabilities - 1,000 ----------------- --------------- Total liabilities 16,034 37,792 ----------------- --------------- Stockholders' equity (Deficiency): Common stock of $.01 par value, 50,000,000 shares authorized, 12,124,238 and 12,124,238 issued and 12,124,238 and 12,124,238 Outstanding at December 31, 2000 and June 30, 2000 121,242 121,242 Additional paid-in capital 6,983,979 9,114,115 Development stage accumulated deficit (7,082,596) (9,212,078) ----------------- --------------- 22,625 23,279 Less: Deferred offering costs - (13,376) ----------------- --------------- Total Stockholder's Equity (Deficiencies) 22,625 9,903 ----------------- --------------- Total liabilities and stockholders' equity (deficiencies) $ 38,659 $ 47,695 ================= =============== The accompanying notes are an integral part of the consolidated financial statements.
BIORELEASE CORP. (A DEVELOPMENT STAGE ENTERPRISE) CONSOLIDATED STATEMENTS OF OPERATIONS For the Three Months and Six Months Ended December 31, 2000 and 1999, and the Cumulative Period from Inception to December 31, 2000 (Unaudited)
Inception Three Months Ended December 31, Six Months Ended December 31, (October 20, 1989) ------------------------------- ----------------------------- To 2000 1999 2000 1999 December 31, 1999 ---- ---- ---- ---- ----------------- (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenues $ 6,060 $ - $ 14,315 $ $ 588,816 Cost of goods sold 353 - 2,698 ( ) (31,251) ----------- ------- ----------- --------- ----------- Gross profit 5,707 - 11,617 - 557,565 Costs and expenses: Research and development - - - - (2,558,041) Purchased technology - - - - (690,000) General and administrative income (expense) 4,451 (9,670) (1,644) (15,307) (4,335,479) Biotech selling expenses - - - - (601,116) ----------- ------- ----------- --------- ----------- Total costs and expenses 4,4518 (9,670) (1,644) (15,307) (8,184,636) ----------- ------- ----------- --------- ----------- (Loss)/Gain from operations 10,158 (9,670) 9,973 (15,307) (7,627,071) ----------- ------- ----------- --------- ----------- Other Income (Costs): Interest, net - - - - 66,824 Lease commitment costs - - - - (315,000) Litigation costs - - - (99,242) Offering costs (1,697) - (10,441) - (346,887) Option compensation - - - - (219,375) Other income (cost) - 19,685 19,685 31,832 Realized loss for decline in value of investment (3,659,141) - (3,659,141) - (5,159,141) Gain on sale of assets 2,133 - 2,133 - 64,748 Income recognized on indemnified - - - - 241,636 Income recognized on settlements (821) - (821) 372,555 ----------- ------- ----------- --------- ----------- Total other income (cost) (3,658,705) 18,864 (3,667,449) 18,864 (5,362,050) ----------- ------- ----------- --------- -----------
4 of 12
Gain (loss) before provision for (benefit Provision for income taxes - - - - 343,873 ----------- ---------- ----------- ---------- ------------ Gain (loss) before cumulative effect of (3,648,547) 9,194 (3,657,476) 3,557 (13,332,994) Cumulative effect of change in accounting - - - - 463,440 ----------- ---------- ----------- ---------- ------------ Net gain (loss) $ (3,648,547) $ 9,194 $ (3,657,476) $ 3,557 $(12,869,554) =========== ========== =========== ========== ============ Weighted average shares 13,634,058 13,654,858 13,664,458 13,654,858 8,563,373 Basic and fully diluted loss per share $ (.27) $ (0.00) $ ($0.27) $ ($0.00) $ ($1.46) The accompanying notes are an integral part of the consolidated financial statements.
5 of 12 BIORELEASE CORP. (A DEVELOPMENT STAGE ENTERPRISE) CONSOLIDATED STATEMENT OF CASH FLOWS For the Six Months Ended December 31, 2000 and 1999 and the Cumulative Period from Inception to December 31, 2000 (Unaudited) ------------
Inception Six Months Ended (October 20, 1989) December 31, to December 31, 1999 1999 2000 ---- ---- ---- Cash flows from operating activities: Net (loss)/Gain $(3,657,476) $ 3,557 $(12,869,554) Adjustments to reconcile net loss to net cash used in Depreciation and amortization 314 726 285,929 Cumulative effect of change in accounting principle - - (463,440) Recognized loss on investment 3,659,141 - 5,159,141 (Gain) Loss on sale of assets (2,133) - (40,836) Loss on extinguishment of debt - - 42,000 Common Stock issued in exchange for Purchased technologies - - 605,000 Common Stock issued in exchange for services rendered - - 128,453 Common stock options issued in exchange of services rendered - - 52,300 Amortization of unearned compensation - - 140,625 Re-pricing of A Warrants - - 78,750 (Increase) Decrease in current assets: Accounts Receivable - - - Inventories 16,012 - - Other receivables 898 (19,685) (28,549) Prepaid expenses and other current assets - - 360 Deferred tax asset - - 463,440 Related party securities (9,131) (9,131) Other non-current assets - - - Increase (Decrease) in current liabilities: Accounts payable (13,758) 12,876 71,985 Accrued expenses (7,000) (4,695) 17,468 Other current liabilities - - 5,000 Other liabilities (1,000) (7,200) - ----------- -------- ------------ Net cash used in operating activities $(14,133) $(14,421) $(6,361,059) ----------- -------- ------------ The accompanying notes are an integral part of the consolidated financial statements.
6 of 12 BIORELEASE CORP. (A DEVELOPMENT STAGE ENTERPRISE) CONSOLIDATED STATEMENT OF CASH FLOWS For the Six Months Ended December 31, 2000 and 1999 and the Cumulative Period from Inception to December 31, 2000 (Unaudited)
Inception Three Months Ended (October 20, 1989) December 31, To December 31, 2000 1999 2000 ---- ---- ---- Cash flows from investing activities: Purchase of collateralized mortgage obligations - - (1,000,000) Proceeds from collateralized mortgage obligations - - 1,000,000 Purchase of fixed assets - - (333,187) Purchase of intangible assets - - (105,205) Proceeds from sale of assets 14,571 ( -) 204,313 -------- --------- --------- Net cash used in investing activities 14,571 ( -) (234,079) -------- --------- --------- Cash flows from financing activities: Advances from and amounts due to Stockholders - - 594,385 Payments of advances from stockholders - - (159,975) Notes receivable - - - Notes payable - - - Issuance of common stock, net - 12,000 2,153,868 Payment of deferred offering costs - (7,459) (13,376) Purchase of treasury stock - - (10,000) Re-capitalization - - 4,031,176 -------- --------- --------- Net cash provided by investing activities - 4,541 6,596,078 -------- --------- --------- Net increase (decrease) in cash 438 (9,880) 940 Cash at beginning of period 502 12,232 -------- --------- --------- Cash at end of period $ 940 $ 2,352 $ 940 ======== ========= ========= The accompanying notes are an integral part of the consolidated financial statements. Supplemental disclosure of non-cash transactions: Cash paid for interest - 7,752 Issuance of common stock for subscription receivable - - 50,000 Liabilities repaid through issuance of common stock - - 652,731 Non-marketable security acquired through the issuance - - 1,500,000 Of common stock
7 of 12 BIORELEASE CORP. (A DEVELOPMENT STAGE COMPANY) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE SIX MONTHS ENDED DECEMBER 31, 2000 and 1999 AND CUMULATIVE FROM INCEPTION (OCTOBER 20, 1989) TO DECEMBER 31, 2000 ITEM 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, 2000. 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 six months ended December 31, 2000 are not necessarily indicative of the results that may be expected for the year ended June 30, 2001. At December 31, 2000 the Company transferred sixty percent (60%) of the stock it held in Biorelease Technologies, Inc. (the Subsidiary) under provisions of an Asset Purchase Agreement dated April 1999. Prior to that date the Company owned approximately ninety percent (90%) of the subsidiaries common stock. At December 31, 2000 the statement of operations and cash flows through December 31, 2000 include the consolidated operations of Biorelease Corp and its Subsidiary. The accompanying balance sheet at December 31, 2000 includes only the assets and liabilities of Biorelease Corp at December 31, 2000. Future operations will be only those of Biorelease Corp. ITEM 2 Investment in related parted securities Under the terms of the Asset Purchase Agreement an option to acquire sixty percent (60%) of the Company's subsidiary was exercised effective December 31, 2000. Of the 4,582,122 shares of the subsidiaries common stock owned by the Company, 2,749,373 shares were sold to an entity that is controlled by family members of the Company's President. A onetime charge to the statement of operations in the amount of $3,659,141 represents the original cost of Biorelease's investment in the subsidiary. The remaining basis of the 1,832,749 shares of common stock of the subsidiary, Biorelease Technology, Inc., are computed utilizing the equity method of accounting. 8 of 12 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations The following discussion includes the business of Biorelease Technologies, Inc. (the "Subsidiary"), since the Company, prior to its acquisition of the Subsidiary, had no operations other than raising capital and searching for an acquisition candidate (i.e., the Subsidiary). Where relevant, all numbers retroactively take into account the acquisition of the Subsidiary by the Company. Three Months Ended December 31, 2000 and 1999 For the three months ended December 31, 2000, the Company had revenues of $6,060, cost of goods sold of $353, a reduction of administrative expenses of $4,451, offering costs associated with a terminated merger agreement with POLAR of $1,697, a realized loss for the decline in value of its investment in the subsidiary of $3,659,141, a gain in the sale of assets of $2,133 therein yielding a net loss of $3,648,547 as compared with the three months ended December 31, 1999 in which the Company had revenues of $0, costs of goods sold of $0, general and administrative expenses of $9,670, other income of $19,685, costs on settlements of $821 and no income taxes, resulting in a net income of $9,194. Six Months Ended December 31, 2000 and 1999 For the six months ended December 31, 2000 the Company had revenues of $14,315, cost of goods sold of $2,698, net administrative expenses of $1,644, offering costs of $10,441, a realized loss for decline in value of investment of $3,659,141, a gain on sale of assets of $2,133 and no income taxes resulting in a net loss of $3,657,476 as compared with the six months ended December 31, 1999 wherein the Company had no revenues, no cost of goods sold, general and administrative expenses of $15,307, other income of $19,685, a loss on settlements of $821 and no income taxes resulting in an income of $3,557. Without the one time charge off of the decline in value of investment in the subsidiary totaling $3,659,141 the Company would have a net income of $1,665 for the six months ended December 31, 2000. Inception to December 31, 1999 From October 20, 1989, the initial date of the Subsidiary's activity, through December 31, 2000, the Company, including the Subsidiary, had revenues of $588,816, cost of goods sold of $31,251, selling expenses of $601,116, research and developmental expenses of $2,558,041, purchased technology costs of $690,000, general and administrative expenses of $4,335,479, other costs in the aggregate of $5,362,050 including a charge of realized loss for decline in value of investments of $5,159,141, income taxes of $343,873 and a cumulative effect of change in accounting principle of $463,440 thereby yielding an accumulated net loss of $12,869,554. Liquidity and Capital Resources From inception until the closing of the Reorganization, the Subsidiary's primary source of funds has been the proceeds from private offerings of its Common and Preferred Stock. Since the Reorganization, the primary sources of current capital have been the Company's funds and revenues. Dividend Policy The Company has not declared or paid any cash 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. 9 of 12 Effect of Inflation Management believes that inflation has not had a material effect on its operations for the periods presented. 10 of 12 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 (See Item 5) Item 5. Other Information On February 7, 2001 the Company announced the signing of a letter of intent pursuant to which Biorelease would reverse merge with Electric Energy Storage Corp., a Nevada corporation ("EES"). The terms of the agreement call for issuing enough shares of common stock to transfer control of Biorelease to EES management. Thereafter, Biorelease is to reverse split its outstanding common shares on a 1 for 12 basis. After the reverse stock split, and upon the issuance of common shares to the shareholders of EES, Biorelease would then have approximately 38,900,000 share of common stock issued and outstanding, of which 35,800,000 shares would be owned by EES shareholders. Biorelease extended the period for due diligence and the signing of a definitive agreement by an additional two weeks until March 3, 2001 in order to more fully evaluate the EES technologies. Holders of record on March 31, 2001 will participate in the reverse merger and be eligible for spin off shares of Biorelease Technology, Inc. presently held by the Company On January 30, 2001 the Company filed Form S-8 registering 5,800,000 shares of its common stock for services renders by the Company's officers, directors and counsel. Item 6. Exhibits and Reports on form 8-K. None. 11 of 12 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. February 21, 2001 By: /s/ R. Bruce Reeves -------------------------------------- R. Bruce Reeves, President and Principal Financial Officer 12 of 12 -----END PRIVACY-ENHANCED MESSAGE-----