8-K/A 1 a8-ka.txt FORM 8-K/A SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A AMENDED REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) MARCH 10, 2000 --------------------------- AETHLON MEDICAL, INC. (Exact name of registrant as specified in its charter) Nevada 33-44567-NY 13-3632859 -------------------------------------------------------------------------------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No,) 7825 Fay Avenue, Suite 200, La Jolla, California 92037 -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including are code (858) 456-5777 -------------- Not applicable -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (a) Financial Statements of Businesses Acquired Audited financial statements of Syngen Research, Inc. years ended December 31, 1999 and 1998. (b) Pro Forma Financial Information Pro Forma Balance Sheet (unaudited) as of December 31, 1999 Pro Forma Statements of Operations for the nine months ended December 31, 1999 and the year ended March 31, 1999 SIGNATURES 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 hereunto duly authorized. Aethlon Medical, Inc. (Formerly Bishop Equities, Inc.) /s/ Franklyn S. Barry, Jr. ---------------------------- Franklyn S. Barry, Jr., President Date: July 17, 2000 The following unaudited pro forma financial statements give effect to the acquisition by Bishop Equities, Inc. ("Bishop") of all the outstanding common stock of Syngen Research, Inc. ("Syngen") in a transaction accounted for as a purchase. The unaudited pro forma balance sheet is based on the individual balance sheets of Bishop and Syngen as of December 31, 1999 to reflect the acquisition as of that date. The unaudited pro forma statements of operations are based on the individual statements of operations of Bishop for the nine months ended December 31, 1999 and the year ended March 31, 1999 and the statements of income of Syngen for the same two periods. The unaudited pro forma statements of operations combine the results of operations of Bishop and Syngen (acquired on January 6, 2000) as if the acquisition had occurred at the beginning of the respective periods. Audited Financial Statements of Syngen Research, Inc. years ended December 13, 1999 and 1998 INDEPENDENT AUDITOR'S REPORT To the Owner of Syngen Research San Diego, California We have audited the accompanying balance sheet of Syngen Research as of December 31, 1998, and the related statements of income and proprietor's deficit, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Syngen Research as of December 31, 1998, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. /s/ Delsen & Company LLP ----------------------------- Delsen & Company LLP San Diego, CA March 20, 2000 SYNGEN RESEARCH BALANCE SHEET DECEMBER 31, 1998 ASSETS Current assets: Cash $ 11,002 Accounts receivable, net of allowance for doubtful accounts 4,971 -------- Total current assets 15,973 -------- Property and equipment: Equipment 9,968 less accumulated depreciation (2,761) -------- Net property and equipment 7,207 -------- Total assets $ 23,180 ======== LIABILITIES & PROPRIETOR'S DEFICIT Current liabilities: Accounts payable $ 4,627 Credit cards payable 14,182 Sales tax payable 1,303 -------- Total current liabilities 20,112 Long term debt (Note 3) 25,000 -------- Total liabilities 45,112 Proprietor's deficit (21,932) -------- Total liabilities and proprietor's deficit $ 23,180 ========
(See accountant's report and accompanying notes) 2 SYNGEN RESEARCH STATEMENT OF INCOME & PROPRIETOR'S DEFICIT FOR THE YEAR ENDED DECEMBER 31, 1998 Income: Consulting fees $ 61,360 Grants 57,191 Sales 18,449 Interest earned 64 -------- Total income 137,064 -------- Expenses: Advertising 2,462 Auto 161 Cash discounts 835 Computer 1,463 Consulting 3,259 Depreciation 2,429 Dues and subscriptions 1,274 Equipment rental 258 Interest expense 2,253 Lab testing fees 450 Lab chemicals and supplies 29,708 Licenses and permits 69 Office supplies 4,439 Payroll taxes 1,346 Professional fees 4,395 Rent 750 Repairs and maintenance 4,653 Salaries 13,750 Shipping and postage 970 Telephone 1,108 Travel and entertainment 2,276 -------- Total expenses 78,308 -------- Net income 58,756 Proprietor's deficit at beginning of year (19,358) Capital contributions 12,608 Capital withdrawals (73,938) -------- Proprietor's deficit at end of year $(21,932) ========
(See accountant's report and accompanying notes) 3 SYNGEN RESEARCH STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1998 Cash flows from operating activities: Net income $ 58,756 Non-cash transactions included in net income: Depreciation 2,429 Change in: Accounts receivable (4,971) Accounts payable 4,627 Credit cards payable 13,469 Sales tax payable 1,303 --------- Net cash provided by (used in) operating activities 75,613 Cash flows from investing activities: Change in fixed assets (4,198) --------- Net cash provided by (used in) investing activities (4,198) Cash flows from financing activities: Proprietor's contribution 12,608 Proprietor's distribution (73,939) --------- Net cash provided by (used in) financing activities (61,331) Cash at beginning of year 918 --------- Cash at end of year $ 11,002 =========
(See accountant's report and accompanying notes) 4 SYNGEN RESEARCH NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1998 Note 1. NATURE OF OPERATIONS The Company is a sole-proprietorship, which performs consulting and research activities in the biomedical field. Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Depreciation Depreciation of equipment is computed using accelerated methods with estimated useful lives of 5 years. Income Taxes The company is not subject to income taxes since it is a sole proprietorship and the income is taxable directly to the owner. Note 3. NOTE PAYABLE The Company owes $25,000 to a relative of the owner. The note is payable upon demand. The Company has been making interest payments of $125 monthly, totaling $1,500 for the current reporting period. Note 4. RENT The rent was paid by an affiliated company. Note 5. SALE OF THE COMPANY As of October 11, 1999 the Company had signed a letter of intent to be acquired by Bishop Equities, Inc. dba Aethlon Medical, Inc., a publicly held company. Under the agreement, Aethlon Medical acquired all the shares of Syngen Research after incorporation in exchange for 65,000 shares of Aethlon Medical common stock. Aethlon Medical also employs the former owner pursuant to an employment agreement. As a condition of acquisition, the rights to a certain technology developed by the former owner in a contract with another publicly held company was transferred to Aethlon Medical. On January 9, 2000 a merger agreement was signed and Syngen Research, Inc. became a wholly owned subsidiary of Aethlon Medical. 5 INDEPENDENT AUDITOR'S REPORT To the Shareholder of Syngen Research, Inc. San Diego, California We have audited the accompanying balance sheet of Syngen Research, Inc. as of December 31, 1999, and the related statements of income and retained earnings, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Syngen Research, Inc. as of December 31, 1999, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. /s/ Delsen & Company LLP ----------------------------- Delsen & Company LLP San Diego, CA March 20, 2000 2 SYNGEN RESEARCH, INC. BALANCE SHEET DECEMBER 31, 1999 ASSETS Current assets: Cash $ 8,442 Accounts receivable, net of allowance for doubtful accounts 62,666 --------- Total current assets 71,108 --------- Property and equipment: Equipment 12,010 less accumulated depreciation (6,461) --------- Net property and equipment 5,549 --------- Total assets $ 76,657 ========= LIABILITIES & SHAREHOLDER'S EQUITY Current liabilities: Accounts payable $ 2,299 Credit cards payable 21,112 Sales tax payable 1,029 Income taxes payable 2,530 --------- Total current liabilities 26,970 Long term debt (Note 3) 25,000 --------- Total liabilities 51,970 Shareholder's equity Common stock, no par value 1,000 shares authorized, 100 shares issued and outstanding 100 Retained earnings 24,587 --------- Total shareholder's equity 24,687 --------- Total liabilities and shareholder's equity $ 76,657 =========
(See accountant's report and accompanying notes) 2 SYNGEN RESEARCH, INC. STATEMENT OF INCOME & RETAINED EARNINGS FOR THE YEAR ENDED DECEMBER 31, 1999 Income: Consulting fees $ 142,097 Grants 139,035 Sales 15,007 Reimbursed expenses 2,143 Interest earned 4 --------- Total income 298,286 --------- Expenses: Auto 78 Computer 789 Consulting 2,100 Depreciation 3,700 Dues and subscriptions 2,103 Insurance 1,237 Interest expense 3,155 Lab chemicals and supplies 23,756 Legal and accounting 6,607 Licenses and permits 22 Office supplies 1,728 Owner's compensation 58,908 Meetings 1,550 Payroll taxes 5,845 Professional fees 59,811 Rent 2,000 Repairs and maintenance 5,419 Salaries 60,855 Shipping and postage 1,739 Telephone 1,790 Travel and entertainment 6,045 --------- Total expenses 249,237 --------- Income before income taxes 49,049 Income taxes: Current income taxes 2,530 --------- Total income taxes 2,530
(See accountant's report and accompanying notes) 3 SYNGEN RESEARCH, INC. STATEMENT OF INCOME & RETAINED EARNINGS FOR THE YEAR ENDED DECEMBER 31, 1999 Net income 46,519 --------- Beginning deficit (21,932) --------- Ending retained earnings $ 24,587 =========
(See accountant's report and accompanying notes) 4 SYNGEN RESEARCH, INC. STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1999 Cash flows from operating activities: Net income $ 46,519 Non-cash transactions included in net income: Depreciation 3,700 Change in: Accounts receivable (57,695) Accounts payable (2,328) Credit cards payable 6,930 Sales tax payable (274) Income taxes payable 2,530 --------- Net cash provided by (used in) operating activities (618) Cash flows from investing activities: Change in fixed assets (2,042) --------- Net cash provided by (used in) investing activities (2,042) Cash flows from financing activities: Issuance of common stock 100 --------- Net cash provided by (used in) financing activities 100 Cash at beginning of year 11,002 Cash at end of year $ 8,442 =========
(See accountant's report and accompanying notes) 5 SYNGEN RESEARCH, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1999 Note 1. NATURE OF OPERATIONS The Company performs consulting and research activities in the biomedical field. Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Entity The Company operated as a sole proprietorship until October 14, 1999. On that date the sole proprietor transferred the company's assets and liabilities to Syngen Research, Inc., a corporation, in exchange for all of the corporation's stock. Depreciation Depreciation of equipment is computed using accelerated methods with estimated useful lives of 5 years. Income Taxes Income for the period through October 13, 1999 is taxable directly to the sole proprietor. Income taxes for the period October 14, 1999 through December 31, 1999 have been accrued and are based on the year's income taxable for federal and state income tax reporting purposes. Note 3. NOTE PAYABLE The Company owes $25,000 to a relative of the owner. The note is payable upon demand. The Company has been making interest payments of $125 monthly, totaling $1,500 for the current reporting period. Note 4. RENT The rent was paid by an affiliated company. The company also paid rent for lab space at another location. Note 5. SALE OF THE COMPANY As of October 11, 1999 the Company had signed a letter of intent to be acquired by Bishop Equities, Inc. dba Aethlon Medical, Inc., a publicly held company. Under the agreement, Aethlon Medical acquired all the shares of Syngen Research after incorporation in exchange for 65,000 shares of Aethlon Medical common stock. Aethlon Medical also employs the former owner pursuant to an employment agreement. As a condition of acquisition, the rights to a certain technology developed by the former owner in a contract with another publicly held company was transferred to Aethlon Medical. On January 9, 2000 a merger agreement was signed and Syngen Research, Inc. became a wholly owned subsidiary of Aethlon Medical. 6 BISHOP EQUITIES, INC. (DBA AETHLON MEDICAL, INC.) Proforma Balance Sheet (Unaudited) December 31, 1999
Aethlon Syngen Proforma Medical Research Adjustments Combined ASSETS Current Assets: Cash $ 25,461 $ 8,442 $ -- $ 33,903 Accounts receivable -- 62,666 -- 62,666 Prepaid insurance 32,349 -- -- 32,349 Employee advances 15,800 -- -- 15,800 -------------------------- -------------------------- Total current assets 73,610 71,108 -- 144,718 Property and Equipment, Net 34,211 5,549 -- 39,760 Other Assets: Goodwill -- -- (a) 507,783 507,783 Patents, net 39,284 -- -- 39,284 Deferred debt expense 46,874 -- -- 46,874 Other 1,330 -- -- 1,330 -------------------------- -------------------------- Total other assets 87,488 -- 507,783 595,271 -------------------------- -------------------------- Total assets $ 195,309 $ 76,657 $ 507,783 $ 779,749 ========================== ========================== LIABILITIES Current Liabilities: Accounts payable: Trade $ 418,061 $ 24,440(a)$ 15,000 $ 457,501 Related parties 230,742 25,000 -- 255,742 Notes payable 574,500 -- -- 574,500 Accrued liabilities 181,423 2,530(a) (2,530) 181,423 Deferred compensation 325,835 -- -- 325,835 -------------------------- -------------------------- Total current liabilities 1,730,561 51,970 12,470 1,782,531 STOCKHOLDERS' DEFICIT Common stock 2,595 100(a) 65 2,660 Additional paid in capital 2,670,943 -- (a) 519,935 3,190,878 Deficit accumulated during development stage (4,208,790) 24,587(a) (24,587) (4,208,790) -------------------------- -------------------------- Total stockholders' deficit (1,535,252) 24,687 495,313 (1,015,252) -------------------------- -------------------------- Total liabilities and stockholders' deficit $ 195,309 $ 76,657 $ 507,783 $ 779,749 ========================== ==========================
(a) To reflect the acquisition of the common stock of Syngen Research, Inc. in exchange for 65,000 shares of common stock of Aethlon Medical, Inc. valued at $4.80 per share. BISHOP EQUITIES, INC. (DBA AETHLON MEDICAL, INC.) Pro Forma Statement of Operations (Unaudited) Nine Months Ended December 31, 1999
Pro Forma Aethlon Syngen Medical Research Adjustments Combined REVENUE Consulting fees $ -- $ 112,094 $ -- $ 112,094 Grant income -- 72,281 -- 72,281 Subcontract income -- -- -- -- Sale of research and development -- 12,547 -- 12,547 Other income -- 2,143 -- 2,143 Interest income -- 3 -- 3 ---------------------------- ---------------------------- Total revenue -- 199,068 -- 199,068 EXPENSES Personnel costs 314,940 92,660 (a) 18,842 426,442 Repairs and maintenance -- 3,186 -- 3,186 Rent and office expense 53,733 6,049 -- 59,782 Professional fees 153,179 33,838 -- 187,017 Miscellaneous 3,815 -- -- 3,815 Depreciation 7,319 3,700 -- 11,019 Travel and meetings 19,009 7,189 -- 26,198 Insurance 19,409 1,237 -- 20,646 Laboratory supplies -- 16,099 -- 16,099 Interest 16,862 2,530 -- 19,392 Amortization-patents 6,129 -- -- 6,129 Amortization of goodwill -- -- (b) 38,084 38,084 Consulting 55,257 2,100 -- 57,357 Debt expense 111,876 -- -- 111,876 Dues and subscriptions -- 1,748 -- 1,748 ---------------------------- ---------------------------- Total expenses 761,528 170,336 56,926 988,790 ---------------------------- ---------------------------- LOSS BEFORE INCOME TAXES (761,528) 28,732 (56,926) (789,722) PROVISION FOR INCOME TAXES 228 2,530 (c) (2,530) 228 ---------------------------- ---------------------------- NET LOSS $ (761,756) $ 26,202 $ (54,396) $ (789,950) ============================ ============================ PER SHARE: Net loss $ (0.29) $ (0.30) Weighted average number of common shares outstanding 2,595,000 2,660,000
(a) Adjust officer's compensation to reflect terms of post-acquisition employment. (b) Amortization of goodwill over a period of 10 years. (c) Eliminate income taxes of Syngen due to offset by Aethlon loss. BISHOP EQUITIES, INC. (DBA AETHLON MEDICAL, INC.) Pro Forma Statement of Operations (Unaudited) Fiscal Year Ended March 31, 1999
Aethlon Syngen Pro Forma Medical Research Adjustments Combined REVENUE Consulting fees $ -- $ 68,013 $ -- $ 68,013 Grant income -- 123,945 -- 123,945 Sale of research and development -- 20,909 -- 20,909 Interest income -- 65 -- 65 ---------------------------- ---------------------------- Total revenue -- 212,932 -- 212,932 EXPENSES Personnel costs 221,779 48,044 (a) 62,250 332,073 Repairs and maintenance 1,674 6,807 -- 8,481 Rent and office expense 38,144 11,122 -- 49,266 Professional fees 45,887 36,906 -- 82,793 Miscellaneous 3,131 2,174 -- 5,305 Depreciation 16,287 2,429 -- 18,716 Travel and meetings 5,325 2,856 -- 8,181 Insurance (2,347) -- -- (2,347) Laboratory supplies 180 35,869 -- 36,049 Interest 13,823 2,189 -- 16,012 Amortization-patents 8,171 -- -- 8,171 Amortization of goodwill -- -- (b) 50,778 50,778 Consulting -- 3,259 -- 3,259 Debt expense -- -- -- -- Dues and subscriptions -- 1,349 -- 1,349 ---------------------------- ---------------------------- Total expenses 352,054 153,004 113,028 618,086 ---------------------------- ---------------------------- LOSS BEFORE INCOME TAXES (352,054) 59,928 (113,028) (405,154) PROVISION FOR INCOME TAXES 625 -- -- 625 ---------------------------- ---------------------------- NET LOSS $ (352,679) $ 59,928 $ (113,028) $ (405,779) ============================ ============================ PER SHARE: Net loss $ (0.23) $ (0.26) Weighted average number of common shares outstanding 1,506,833 1,571,833
(a) Adjust officer's compensation to reflect terms of post-acquisition employment. (b) Amortization of goodwill over a period of 10 years.