UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
Mark One)
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2005
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 000-30546
BIO-LIFE LABS, INC.
(Exact name of small business issuer as specified in its charter)
Nevada 33-0714007
------ ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
16 Concord Road
El Paso, Texas 79909
--------------- ---------
(Address of Principal Executive Offices) (Zip Code)
(915) 843-2044
--------------
(Registrant's telephone number, including area code)
9911 West Pico Boulevard, Suite 1410, Los Angeles, California 90035
-------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the registrant (1) filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the last 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 _____
The number of shares of Common Stock, $0.001 par value, outstanding on June 2,
2005, was 64,065,983 shares, held by approximately 901 shareholders.
Transitional Small Business Disclosure Format (check one): Yes ______ No __X
BIO-LIFE LABS, INC
Quarterly Report on Form 10-QSB for the
Quarterly Period Ending March 31, 2005
Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets: 3-4
March 31, 2005 (Unaudited) and June 30, 2004
Condensed Consolidated Statements of Operations:
Three and Nine Months Ended March 31, 2005 and 2004
(Unaudited) and the period from July 11, 2003 to March 31, 2005 5
Condensed Consolidated Statements of Cash Flows:
Nine Months Ended March 31, 2005 and 2004 (Unaudited) and the
period from July 11, 2003 to March 31, 2005 6
Notes to Unaudited Condensed Consolidated Financial Information:
March 31, 2005 7-14
Item 2. Management Discussion and Analysis 15
Item 3. Controls and Procedures 18
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 19
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 19
Item 3. Defaults Upon Senior Securities 19
Item 4. Submission of Matters to a Vote of Security Holders 19
Item 5. Other Information 20
Item 6. Exhibits 20
Signatures 21
2
PART I
Item 1. Financial Statements
BIO-LIFE LABS, INC.
(Formerly TecScan International, Inc.)
(A Development Stage Company)
BALANCE SHEETS
(Unaudited)
March 31, June 30,
2005 2004
------------------- -------------------
ASSETS:
Current Assets
Cash $ 4,601 $ 125,030
Other receivable - 5,800
------------------- -------------------
Total Current Assets 4,601 130,830
------------------- -------------------
Fixed Assets
Furniture and Fixtures 10,663 10,417
Computer Equipment 3,015 3,015
Lab Equipment 75,000 -
Less Accumulated Depreciation (5,026) (239)
------------------- -------------------
Net Fixed Assets 83,652 13,193
------------------- -------------------
Intangible Assets
Product Rights 279,610 279,610
Less Accumulated Amortization (16,310) (5,825)
------------------- -------------------
Net Intangible Assets 263,300 273,785
------------------- -------------------
Other Assets
Deposits - 10,778
------------------- -------------------
Total Assets $ 351,553 $ 428,586
=================== ===================
The accompanying notes are an integral part
of these financial statements.
3
BIO-LIFE LABS, INC.
(Formerly TecScan International, Inc.)
(A Development Stage Company)
BALANCE SHEETS
(continued)
(Unaudited)
March 31, June 30,
2005 2004
------------------- -------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 80,029 $ 79,439
Related party loans 300,000 -
------------------- -------------------
Total Current Liabilities 380,029 79,439
------------------- -------------------
Stockholders' equity
Series A convertible preferred stock (par value $.01),
5,000,000 shares
authorized, no shares issued or
Outstanding at March 31, 2005 and June 30, 2004 - -
Common Stock (par value $.001), 100,000,000 shares
Authorized, 47,091,805 shares issued and outstanding at
March 31, 2005 and June 30, 2004 47,092 47,092
Paid in capital in excess of par value 746,731 746,630
Deficit accumulated during development stage (822,299) (444,575)
------------------- -------------------
Total Stockholders' Equity (Deficit) (28,476) 349,147
------------------- -------------------
Total Liabilities and Stockholders' Equity $ 351,553 $ 428,586
=================== ===================
The accompanying notes are an integral part of these
financial statements.
4
BIO-LIFE LABS, INC.
(Formerly TecScan International, Inc.)
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
Deficit
For the Period Accumulated
For the from Since
Nine Months July 11, 2003 July 11, 2003
For the Three Months Ended Ended to Inception of
March 31, March 31, March 31, Development
2005 2004 2005 2004 Stage
------------------ -------------------- ------------------ ----------------- ---------------
Revenue: $ - $ - $ - $ - $ -
------------------ -------------------- ------------------ ----------------- ---------------
Operating Expenses
Professional Fees 11,728 2,306 123,506 15,200 542,759
General and Administrative 159,835 - 254,219 2,370 279,541
------------------ -------------------- ------------------ ----------------- ---------------
Total Operating Expenses 171,563 2,306 377,725 17,570 822,300
------------------ -------------------- ------------------ ----------------- ---------------
Net Operating Income (Loss) (171,563) (2,306) (377,725) (17,570) (822,300)
Other Income (Expense)
Interest Income 1 - 1 - 1
------------------ -------------------- ------------------ ----------------- ---------------
Net Income (Loss) $ (171,562) $ (2,306) $ (377,724) $ (17,570) $ (822,299)
================== ==================== ================== ================= ===============
Income (Loss) Per Common
Share $ - $ - $ (0.01) $ -
================== ==================== ================== =================
Weighted Average Shares
Outstanding 47,091,805 21,267,460 47,091,805 7,089,165
================== ==================== ================== =================
The accompanying notes are an integral part of these
financial statements.
5
BIO-LIFE LABS, INC.
(Formerly TecScan International, Inc.)
STATEMENTS OF CASH FLOW
(Unaudited)
Deficit
For the Period Accumulated
For the from Since
Nine Months July 11, 2003 July 11, 2003
Ended to Inception of
March 31, March 31, Development
Cash Flows From Operating Activities: 2005 2004 Stage
--------------------- --------------------- ---------------------
Net income (loss) $ (377,724) $ (17,570) $ (822,299)
Adjustments to reconcile net income (loss) to net cash
Provided by (Used in) operating activities:
Depreciation and amortization 15,272 - 21,336
Stock issued for services - - 333,777
Change in operating assets and liabilities:
(Increase) Decrease in other receivable 5,800 - -
(Increase) Decrease in deposits 10,778 - -
Increase (Decrease) in accounts payable 590 17,570 32,489
--------------------- --------------------- ---------------------
Net cash used in operating activities (345,284) - (434,697)
--------------------- --------------------- ---------------------
Cash Flows From Investing Activities:
Purchase of property and equipment (75,246) - (88,678)
Purchase of product rights - - (250,000)
--------------------- --------------------- ---------------------
Net cash used in investing activities (75,246) - (338,678)
--------------------- --------------------- ---------------------
Cash Flows From Financing Activities:
Proceeds from related party loans 300,000 - 300,000
Capital contributed by shareholder 101 - 101
Proceeds from sale of stock - - 477,875
--------------------- --------------------- ---------------------
Net cash provided by (used in) financing activities 300,101 - 777,976
--------------------- --------------------- ---------------------
Net increase (decrease) in cash and cash equivalents (120,429) - 4,601
Cash and cash equivalents at beginning of period 125,030 - -
--------------------- --------------------- ---------------------
Cash and cash equivalents at end of period $ 4,601 $ - $ 4,601
===================== ==================== =====================
Supplemental Disclosure of Cash Flow Information:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
Supplemental Schedule of Non-Cash Investing and Financing Activities: None
The accompanying notes are an integral part of
these financial statements.
6
BIO-LIFE LABS, INC.
(Formerly TecScan International, Inc.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES
This summary of accounting policies of Bio-Life Labs, Inc. (formerly
TecScan International, Inc.) (a development stage company) is presented to
assist in understanding the Company's financial statements. The accounting
policies conform to generally accepted accounting principles and have been
consistently applied in the preparation of the financial statements.
Interim Reporting
The unaudited financial statements as of March 31, 2005, and for the three
and nine month periods then ended reflect, in the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
fairly state the financial position and results of operations for the three and
nine months. Operating results for interim periods are not necessarily
indicative of the results which can be expected for full years.
Organization and Basis of Presentation
The Company was organized under the laws of the State of Utah on December
5, 1985 as Bullseye Corp. On June 22, 1992 the name of the Company was changed
to Natural Solutions, Ltd. and the corporate domicile was changed to the State
of Nevada. On March 25, 1994, the Company name was changed to Phoenix Media
Group, Ltd. On June 10, 2003, the Company discontinued its then-current
operations, and transitioned to a development stage company. The Company did not
proceed with its planned principal operations. On June 10, 2003, the Company
name was changed to TecScan International, Inc.
On February 18, 2004, the Company acquired 100% of the outstanding common
stock of Very Basic Media, Inc., a company that was incorporated under the laws
of the State of Nevada on October 28, 2003, in a reverse acquisition. On April
5, 2004, the acquisition of Very Basic Media, Inc. was rescinded. The Company
returned 5,000,000 shares of Very Basic Media, Inc. common stock to Very Basic
Media, Inc. in exchange for 35,000,000 shares of the Company's common stock; the
Company then cancelled the 35,000,000 shares.
On April 5, 2004, the Company acquired 100% of the outstanding common stock
of Bio-Life Laboratories Corporation in a reverse acquisition. Bio-Life
Laboratories Corporation was incorporated under the laws of the State of Nevada
on July 11, 2003 as Crystal Labs Corporation. On February 2, 2004, Crystal Labs
Corporation changed its name to Bio-Life Laboratories Corporation. When the
reverse acquisition took place, a new reporting entity was created. Bio-Life
Laboratories Corporation is considered the reporting entity for financial
reporting purposes. On May 18, 2004, the Company changed its name to Bio-Life
Labs, Inc.
7
BIO-LIFE LABS, INC.
(Formerly TecScan International, Inc.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(continued)
NOTE 1 - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES (continued)
Nature of Business
Bio-Life Laboratories Corporation acquired exclusive worldwide rights to
Carcinoderm, a topical ointment that in the estimation of the Company's
management destroys skin cancer cells in patients who have been diagnosed with
basal cell carcinoma, squamous cell carcinoma, and malignant melanoma in a
one-time application that does not harm surrounding healthy tissue. Dr. David
Karam, who has been appointed as one of the Registrant's directors, developed
the product and is conducting what the Company believes are FDA-conforming
clinical trials in the El Paso laboratory facility, where he is currently
investigating other possible uses of and delivery systems for Carcinoderm in the
treatment of other types of cancer, including tumors of the pancreas and brain.
Cash Equivalents
For the purpose of reporting cash flows, the Company considers all highly
liquid debt instruments purchased with maturity of three months or less to be
cash equivalents to the extent the funds are not being held for investment
purposes.
Income Taxes
The Company accounts for income taxes under the provisions of SFAS No. 109,
"Accounting for Income Taxes." SFAS No.109 requires recognition of deferred
income tax assets and liabilities for the expected future income tax
consequences, based on enacted tax laws, of temporary differences between the
financial reporting and tax bases of assets and liabilities.
Earnings (Loss) Per Share
Basic net loss per common share is computed by dividing net loss by the
weighted average number of common shares outstanding during the year. Diluted
net loss per common share ("Diluted EPS") reflects the potential dilution that
could occur if stock options or other common stock equivalents were exercised or
converted into common stock. The computation of Diluted EPS does not assume
exercise or conversion of securities that would have an antidilutive effect on
net loss per common share.
There are no outstanding common stock equivalents at March 31, 2005 and
2004.
8
BIO-LIFE LABS, INC.
(Formerly TecScan International, Inc.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(continued)
NOTE 1 - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES (Continued)
Concentration of Credit Risk
The Company has no significant off-balance-sheet concentrations of credit
risk such as foreign exchange contracts, options contracts or other foreign
hedging arrangements. The Company maintains the majority of its cash balances
with one financial institution, in the form of demand deposits.
Pervasiveness of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles require management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Depreciation and Amortization
Fixed assets are recorded at cost and depreciated using the straight-line
method over the estimated useful lives of the assets which range from three to
seven years. Fixed assets consisted of the following at March 31, 2005 and June
30, 2004, respectively:
(Unaudited)
March 31, June 30,
2005 2004
------------------ ------------------
Furniture and Fixtures $ 10,663 $ 10,417
Computer Equipment 3,015 3,015
Lab Equipment 75,000 -
Less accumulated depreciation (5,026) (239)
------------------ ------------------
Total $ 83,652 $ 13,193
================== ==================
Maintenance and repairs are charged to operations; betterments are
capitalized. The cost of property sold or otherwise disposed of and the
accumulated depreciation thereon are eliminated from the property and related
accumulated depreciation accounts, and any resulting gain or loss is credited or
charged to income.
Total depreciation expense for the nine months ended March 31, 2005 was
$4,787.
9
BIO-LIFE LABS, INC.
(Formerly TecScan International, Inc.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(continued)
NOTE 1 - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES (Continued)
The Company has adopted the Financial Accounting Standards Board SFAS No.,
142, "Goodwill and Other Intangible Assets." SFAS 142 requires, among other
things, that companies no longer amortize goodwill, but instead test goodwill
for impairment at least annually. In addition, SFAS 142 requires that the
Company identify reporting units for the purposes of assessing potential future
impairments of goodwill, reassess the useful lives of other existing recognized
intangible assets, and cease amortization of intangible assets with an
indefinite useful life. An intangible asset with an indefinite useful life
should be tested for impairment in accordance with the guidance in SFAS 142.
Intangible Assets consisted of the following at March 31, 2005:
Intangible Asset Amortization Amortization Period
--------------------------------------------- ------------------ ---------------------------
Product Rights $ 279,610 20 Years
Less accumulated amortization (16,310)
------------------
Total $ 263,300
==================
Total amortization expense for the nine months ended March 31, 2005 was
$10,485.
The estimated amortization for the next five years is as follows:
2005 $ 13,980
2006 13,980
2007 13,980
2008 13,980
2009 13,980
--------------------
Total $ 69,900
====================
NOTE 2 - CAPITAL TRANSACTIONS
Preferred Stock
The Board of Directors of the Company has the authority to fix by
resolution for each particular series of preferred stock the number of shares to
be issued; the rate and terms on which cumulative or non-cumulative dividends
shall be paid; conversion features of the preferred stock; redemption rights and
prices, if any; terms of the sinking fund, if any to be provided for the shares;
voting powers of preferred shareholders; and any other special rights,
qualifications, limitations, or restrictions.
10
BIO-LIFE LABS, INC.
(Formerly TecScan International, Inc.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(continued)
NOTE 2 - CAPITAL TRANSACTIONS (Continued)
Common Stock
In February 2004, the Company issued 29,609,660 shares of common stock to
acquire product rights. The shares were valued at $29,610.
In February and March 2004, the Company issued 2,720,121 shares of common
stock for cash of $477,875.
In February and March 2004, the Company issued 2,670,219 shares of common
stock for services valued at $333,777.
On April 5, 2004, the Company acquired Bio-Life Laboratories Corporation
("Bio-Life") in a reverse acquisition. In the acquisition, the Company issued
35,000,000 shares of common stock, par value $.001, in exchange for all of the
outstanding shares of Bio-Life (35,000,000 shares, par value $.0001).
Also on April 5, 2004, an additional 12,091,786 shares of common stock were
issued to the previous owners of TecScan International, Inc. This entry was
recorded by a credit to common stock of $12,092 and a debit to paid-in capital
of $32,025.
During November and December 2004, the Company received $50,000 in proceeds
for the purchase of 1,554,030 shares of common stock. The Company borrowed the
common stock from a director. The shares were issued in December 2004.
During January and February 2005, the Company received $250,000 in proceeds
for the purchase of 7,770,148 shares of common stock. The Company borrowed the
common stock from a director. These shares were issued during the quarter ended
March 31, 2005.
During the quarter ended March 31, 2005, the Company increased the total
number of authorized common shares from 50,000,000 shares to 100,000,000 shares.
11
BIO-LIFE LABS, INC.
(Formerly TecScan International, Inc.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(continued)
NOTE 3 - DEVELOPMENT STAGE COMPANY AND GOING CONCERN
The Company has not begun principal operations and as is common with a
development stage company, the Company has had recurring losses during its
development stage.
Since inception, the Company has incurred recurring losses from operations
and has an accumulated deficit of $822,299 since the inception of the
development stage on July 11, 2003. For the nine months ended March 31, 2005,
the Company incurred losses of $377,724. This condition raises substantial doubt
about the Company's ability to continue as a going concern.
Continuation of the Company as a going concern is dependent upon obtaining
additional working capital and management has developed a strategy, which it
believes will accomplish this objective through additional equity funding which
will enable the Company to operate in the future. However, there can be no
assurance that the Company will be successful with its efforts to raise
additional capital. The inability of the Company to secure additional financing
in the near term could adversely impact the Company's business, financial
position and prospects.
NOTE 4 - LEASE COMMITMENT
The Company currently leases approximately 824 square feet of office space
at 9911 West Pico Boulevard, Suite 1410, Los Angeles, California, from Arden
Realty Limited Partnership. The lease commenced on May 15, 2004 and has a lease
term of four years. The lease payments for the first year are $1,648 per month,
with the exception of the second and third months of the lease, in which the
payments will be one-half of the monthly lease rate. The lease payments for the
second year are $1,697 per month. The lease payments for the third year are
$1,747 per month. The lease payments for the fourth year are $1,796 per month.
As of March 2005, the Company began subleasing this office space and is no
longer occupying the space.
In August 2004, the Company began leasing approximately 32,000 square feet
of a building at 16 Concord Road, El Paso, Texas that will be used for research
and development. The lease is for ten years and the monthly payment is
approximately $10,000.
12
BIO-LIFE LABS, INC.
(Formerly TecScan International, Inc.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(continued)
NOTE 4 - LEASE COMMITMENT (Continued)
The minimum future lease payments under these leases for the next five
years are:
Year Ended June 30,
-------------------
2005 $ 128,614
2006 140,440
2007 141,038
2008 138,858
2009 120,000
---------------
Total minimum future lease payments $668,950
===============
NOTE 5 - PRODUCT RIGHTS
On February 27, 2004, the Company entered into an agreement David Wade
Karam, M.D./Ph.D., an individual, and Jules Verne, Inc., a Nevada corporation
("the licensor"), whereby the licensor has granted to the Company the exclusive
right to manufacture, market, sell, distribute and use a skin cancer treatment
that has been used to successfully treat skin cancer patients with basal cell
carcinoma, squamous cell carcinoma, and melanoma in clinical trials. The
agreement is for a period of twenty years. The Company paid the licensor
$250,000 in cash, and issued the licensor 29,609,660 shares of the Company's
common stock, valued at $29,610. The Company has booked an intangible asset of
$279,610, and is amortizing the intangible asset over a period of twenty years.
NOTE 6 - INCOME TAXES
As of June 30, 2004, the Company had a net operating loss carry-forward for
income tax reporting purposes of approximately $445,000 that may be offset
against future taxable income through 2024. Current tax laws limit the amount of
loss available to be offset against future taxable income when a substantial
change in ownership occurs. Therefore, the amount available to offset future
taxable income may be limited. No tax benefit has been reported in the financial
statements, because the Company believes there is a 50% or greater chance the
carry-forwards will expire unused. Accordingly, the potential tax benefits of
the loss carry-forwards are offset by a valuation allowance of the same amount.
13
BIO-LIFE LABS, INC.
(Formerly TecScan International, Inc.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(continued)
NOTE 7 - PAYABLES
The Company (formerly known as Phoenix Media Group, Ltd.) was delinquent in
payment of condominium association dues on a property previously owned by the
Company. The property was distributed to the former President of the Phoenix
Media Group, Ltd. in June of 2003. The condominium association filed a lawsuit
to collect the past due fees. The former President paid approximately $11,000 to
settle the lawsuit during the year ended June 30, 2004. Legal fees associated
with this lawsuit was approximately $15,000. These amounts have been included in
accounts payable at March 31, 2005. These amounts are in dispute.
NOTE 8 - ACQUISITION
On April 5, 2004, the Company acquired 100% of the outstanding common stock
of Bio-Life Laboratories Corporation in a reverse acquisition. The Company
issued 35,000,000 shares of common stock to acquire all of the outstanding
common stock of Bio-Life Laboratories Corporation. When the reverse acquisition
took place, a new reporting entity was created. Bio-Life Laboratories
Corporation is considered the reporting entity for financial reporting purposes.
NOTE 9 - RELATED PARTY PAYABLES
During November and December 2004, the Company received $50,000 in proceeds
for the purchase of 1,554,030 shares of common stock. The Company borrowed the
common stock from a director and will repay the loan on a share for share basis
at a future date. The shares were issued during December 2004. The $50,000 has
been recorded as a related party loan.
During January and February 2005, the Company received $250,000 in proceeds
for the purchase of 7,770,148 shares of common stock. The Company borrowed the
common stock from a director and will repay the loan on a share for share basis
at a future date. The shares were issued during the quarter ended March 31,
2005. The $250,000 has been recorded as a related party loan.
NOTE 10 - AGREEMENTS
On February 14, 2005, Vertical Capital Partners, Inc. ("Vertical") filed a
Form 13D with the Securities and Exchange Commission claiming that the Company
had entered into an agreement whereby Vertical was to purchase 14,000,000 shares
of the Company's common stock at less than par value. This agreement has not yet
been approved by the Company's Board of Directors.
14
Item 2. Management's Discussion and Analysis of Financial Condition and Plan of
Operations.
The following discussion contains forward-looking statements, which involve
risks and uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of various factors,
including those set forth under the caption "Business - Risk Factors". This
Management's Discussion and Analysis of Financial Condition and Results of
Operations should be read in conjunction with our consolidated financial
statements and related notes included elsewhere in this Form 10-KSB.
Overview
We are a research-driven biotechnology company focused on discovery,
development, and commercialization of treatments for cancer, diabetes mellitus,
hepatitis C, and other diseases for which current treatments have limited
efficacy, severe toxicity, and other negative results. Our signature product
candidate Carcinoderm(TM) is a topical ointment that destroys skin cancer cells
in patients who have been diagnosed with basal cell carcinoma, squamous cell
carcinoma, and malignant melanoma, using a single application that does not harm
surrounding healthy tissue. Carcinoderm is currently being studied in what we
believe are FDA-conforming clinical trials in our laboratory facilities in El
Paso, Texas. We are also investigating additional possible uses of and delivery
systems for Carcinoderm that target various solid tumor cancers.
In addition to Carcinoderm we have other product candidates in research and
pre-clinical development, including a treatment for diabetes mellitus that in
our estimation slows the destruction of pancreatic cells, and a product
candidate for hepatitis C that we believe has implication in blocking the
enzymes responsible for the destruction of tissue. We are not funding this
research, however, we have the first right of refusal on any results that we
choose to acquire.
The information discussed herein is for Bio-Life-Labs' operations for the
three and nine months ended March 31, 2005. As of March 31, 2005, our
accumulated deficit was approximately $822,299. We may incur losses for the next
several years as we continue development and prepare for the commercialization
of our skin cancer product candidate Carcinoderm; expand the applications and
delivery systems for Carcinoderm; expand in-house manufacturing capability to
support the commercialization of Carcinoderm, as well as other product
candidates; and expand our research and development programs.
We have a limited history of operations as a biotechnology company. To
date, we have funded our operations primarily through sales of equity securities
in an exempt private placement.
We have worldwide manufacturing and commercialization rights to Carcinoderm
and any derivative products, and plan to market these products through our own
sales force or through strategic alliances both in the United States and abroad.
Agreements with potential collaborators may include joint marketing or promotion
arrangements. Alternatively, we may grant exclusive marketing rights to
potential collaborators in exchange for up-front fees, milestones and royalties
on future sales, if any. We intend to manufacture Carcinoderm at our
manufacturing facility in El Paso, Texas. We believe that our manufacturing
facility will have the capacity to satisfy commercial demand for Carcinoderm for
several years after the initial product launch.
15
Our business is subject to significant risks, including the risks inherent
in our ongoing clinical trial and the regulatory approval process; the results
of our research and development efforts; and competition from other products and
uncertainties associated with obtaining and enforcing patent rights.
Clinical development timelines, achievement of success, and development
costs vary widely. If we are successful in securing additional funding, we
intend to apply for FDA (U. S. Food and Drug Administration) approval for
Carcinoderm(TM) in 2005, and will focus our efforts on developing a clinical
program that is fully responsive to the U.S. Food and Drug Administration's
(FDA) guidance on moving a product through the regulatory process. Although
Carcinoderm is not by definition a pharmaceutical, and thus does not require FDA
approval, we believe that we have followed FDA guidelines, rules, and
regulations applicable to a clinical research project in order to prepare for
application for FDA approval for the product (a product need not be classified
as a pharmaceutical to receive FDA approval), as well as to document its
efficacy.
Product candidate completion dates and completion costs vary significantly
and are difficult to estimate. The expenditure of substantial resources will be
required for the lengthy process of clinical development and obtaining
regulatory approval as well as to comply with applicable regulations. Any
failure by us to obtain, or any delay in obtaining, regulatory approval could
cause our research and development expenditures to increase and, in turn, have a
material adverse effect on our results of operations. We cannot be certain when
any net cash inflows from Carcinoderm or any of our other development projects
will commence.
Results of Operations - We are in the development stage. For the three and nine
months ended March 31, 2005, we had net losses of $171,562 and $377,724,
respectively. The losses are primarily due to start-up expenses of a new
company, and costs associated with the reverse merger. For the three and nine
months ended March 31, 2005, general and administrative expenses included
$11,728 and $123,506 paid for attorneys, accountants, and regulatory expenses.
Liquidity and Capital Resources - Our future capital uses and requirements
depend on numerous forward-looking factors. These factors include, but are not
limited to the following:
o the progress of our research activities;
o the number and scope of our research programs;
o the progress of our pre-clinical development activities;
o our ability to establish and maintain strategic collaborations;
o the costs involved in enforcing or defending patent claims and other
intellectual property rights;
o the costs and timing of regulatory approvals;
o the costs of establishing or expanding manufacturing, sales and
distribution capabilities;
o the success of the commercialization of Carcinoderm; and
o the extent to which we acquire or invest in other products, technologies
and business.
16
To date, we have funded our operations primarily through the sale of equity
securities in an exempt private placements. Through March 31, 2005, we received
aggregate net proceeds of approximately $777,875 from the sale of exempt private
placement equity securities.
Until we can generate significant cash from our operations, we expect to
continue to fund our operations with existing cash resources that are primarily
generated from the proceeds of exempt private offerings of our equity
securities. We may finance future cash needs through the sale of additional
equity securities, strategic collaboration agreements, and debt financing.
However, we may not be successful in obtaining collaboration agreements, or in
receiving milestone or royalty payments under those agreements. In addition, we
cannot be sure that our existing cash resources will be adequate or that
additional financing will be available when needed or that, if available,
financing will be obtained on terms favorable to us or our stockholders. Having
insufficient funds may require us to delay, scale back or eliminate some or all
of our research or development programs or to relinquish greater or all rights
to product candidates at an earlier stage of development or on less favorable
terms than we would otherwise choose. Failure to obtain adequate financing also
may adversely affect our ability to operate as a going concern. If we raise
additional funds by issuing equity securities, substantial dilution to existing
stockholders would likely result. If we raise additional funds by incurring debt
financing, the terms of the debt may involve significant cash payment
obligations as well as covenants and specific financial ratios that may restrict
our ability to operate our business.
Off-Balance Sheet Arrangements
Through March 31, 2005, we did not have any relationships with
unconsolidated entities or financial partnerships, such as entities often
referred to as structured finance or special purpose entities, which would have
been established for the purpose of facilitating off-balance sheet arrangements
or other contractually narrow or limited purposes. In addition, we do not engage
in trading activities involving non-exchange traded contracts. As such, we are
not materially exposed to any financing, liquidity, market, or credit risk that
could arise if we had engaged in these relationships. We do not have
relationships or transactions with persons or entities that derive benefits from
their non-independent relationship with us, or our related parties.
Factors That May Affect Future Results - Management's Discussion and Analysis
contains information based on management's beliefs and forward-looking
statements that involved a number of risks, uncertainties, and assumptions.
There can be no assurance that actual results will not differ materially from
the forward-looking statements. The foregoing statements are based upon
management's current assumptions.
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Item 3. Controls and Procedures
a) Evaluation of Disclosure Controls and Procedures. As of March 31, 2005, the
Company's management carried out an evaluation, under the supervision of
the Company's Principal Executive Officer and the Principal Financial
Officer of the effectiveness of the design and operation of the Company's
system of disclosure controls and procedures pursuant to the Securities and
Exchange Act, Rule 13a-15(e) and 15d-15(e) under the Exchange Act). Based
upon that evaluation, the Principal Executive Officer and Principal
Financial Officer concluded that the Company's disclosure controls and
procedures were effective, as of the date of their evaluation, for the
purposes of recording, processing, summarizing and timely reporting
material information required to be disclosed in reports filed by the
Company under the Securities Exchange Act of 1934.
b) Changes in internal controls. There were no changes in internal controls
over financial reporting, known to the Principal Executive Officer or
Principal Financial Officer that occurred during the period covered by this
report that has materially affected, or is likely to materially effect, the
Company's internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may become involved in various lawsuits and legal
proceedings which arise in the ordinary course of business. However, litigation
is subject to inherent uncertainties, and an adverse result in these or other
matters may arise from time to time that may harm our business. Except as
described below, we are currently not aware of any such legal proceedings or
claims that we believe will have, individually or in the aggregate, a material
adverse affect on our business, financial condition or operating results.
A lawsuit was filed in the District Court of El Paso County, 34th Judicial
District. Zack Thomas is seeking to enforce an alleged oral agreement in which
Dr. David Karam allegedly agreed to issue Plaintiff Thomas 25% of the equity
received by the principal shareholder (Dr. Karam) for developing his invention
in a predecessor company, ZDS Labs, Inc., for which the Plaintiff Thomas worked.
Counsel to the Company has advised that the Company is only a nominal party
necessary to resolve all issues between the Plaintiff Thomas and other
Defendants in the case. The Company is not responsible for any sum of money or
stock. However, should the Plaintiff Thomas prevail in his claims and receive
the relief that he is requesting, the principle shareholder's percentage
interest would be reduced from approximately 63% to 48%; no change of control
would occur. By an Amendment filed in this proceeding on November 14, 2004,
Plaintiff's joined Nancy LeMay, President, Secretary and a Director, as a
defendant alleging her to have entered into a conspiracy with Dr. David Karam to
deprive the Plaintiff Thomas of his corporate opportunity. Both Dr. Karam and
Nancy LeMay deny the claims entirely.
On March 23, 2005, the Company entered into a Settlement Agreement that
settles and releases all claims against the Company; Nancy LeMay; and David
Karam, M.D., Ph.D. by Plaintiff Zach Thomas who was seeking to enforce an
alleged oral agreement with Dr. Karam. Plaintiff Thomas alleged that Dr. Karam
agreed to issue Plaintiff Thomas 25% of his personal equity in Bio-Life Labs,
Inc. Under the terms of the Settlement, Dr. Karam agreed to issue 20%
(5,921,932) of his personally-owned shares of common stock to the Plaintiffs.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
During the quarter ended March 31, 2005, the Company sold 7,770,148 shares
of common stock in exchange for $250,000. The Company borrowed the common stock
from a director.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None
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Item 5. Other Information
In April 2005, Joseph McGhie resigned as the Company's Treasurer and
Director.
In April 2005, Nancy LeMay resigned as the Company's President, Secretary,
Director and Chief Executive Officer.
In April 2005, David Karam was appointed to the offices of President,
Secretary, and Treasurer, and to the positions of Chief Executive Officer and
Chief Financial Officer. Mr. Karam is also the Company's sole director.
Item 6. Exhibits
31.1 Certification of Chief Executive Officer pursuant to Rule 13a-14 and Rule
15d-14(a), promulgated under the Securities and Exchange Act of 1934, as
amended
31.2 Certification of Chief Financial Officer pursuant to Rule 13a-14 and Rule
15d 14(a), promulgated under the Securities and Exchange Act of 1934, as
amended
32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer)
32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer)
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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, thereunto duly authorized.
BIO-LIFE LABS, INC.
Date: June 3, 2005 By: /s/ DAVID KARAM
----------------
David Karam
President (Principal Executive Officer), Principal
Financial Officer and Principal Accounting Officer
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