The BIEL financials (or lack there of) will trump any distribution agreement, FDA reclassification, or any misleading PR'S this company and it's 24-7 sales staff spews out. This "gizmo product" the company has been trying to push and penetrate into markets around the world has been met with ZERO consumer interest.
How's Canada sales doing?
How's HealFast doing?
How's Mexico and China doing?
How's UK doing?
How's the eastern block doing?
How's India and the middle east doing?
How's South America doing?
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NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
3,000,000,000 in 2012, to 4,000,000 in 2013, and to 7,000,000 in 2014. These increases are a result of the
continued requirement to cover the potential issuance of common stock resulting from the conversion of debt to
equity, and the vesting of nonvested share awards. The holders of the remaining shares to be issued upon
conversion or exercise of equity instruments are likely to promptly sell those shares into the public market. The
resale of these shares could have a negative impact on the stock price, and these conversions would have a
dilutive impact on our shareholders. As a result, our net income per share could decrease for future periods, and
the market price of our common stock could decline.
NOTE 3 – GOING CONCERN
The Company’s financial statements have been prepared on a going concern basis which contemplates the
realization of assets and the liquidation of liabilities in the ordinary course of business. The Company has incurred
substantial losses from operations. The Company sustained a net loss of $2,102,947 for the nine months ended
September 30, 2014, and a total net loss since inception of $24,503,145. The Company is currently seeking financing
to provide the needed funds for operations. However, the Company can provide no assurance that it will be able to
obtain the financing it needs to continue its efforts for market acceptance, U.S. FDA approval and to maintain operations and alleviate doubt about its ability to continue as a going concern.
NOTE 6 – LINE OF CREDIT
In May 2013, the Company finalized a line of credit agreement with the Export-Import Bank of the United States.
The line of credit is for $500,000, and was renewed for an additional one-year term effective in June 2014, at a fixed
interest rate of 5.07%, with the amount borrowed owed in full in June 2015. As of September 30, 2014, the full line of credit of $500,000 was utilized with the full amount payable. Total interest expense on the line of credit amounted to $15,528 in the nine months ended September 2014.
NOTE 7 – RELATED PARTY NOTES PAYABLE
IBEX Revolver Agreement
IBEX, LLC is a limited liability company, whose President is the daughter of the President of the Company. On
January 1, 2005, the Company entered into an unsecured revolving convertible promissory note agreement (“the
Revolver”) with IBEX, LLC (“IBEX”) a related party, for a maximum limit of $2,000,000, with interest at the Prime
Rate plus 2%, and all accrued interest and principal due on or before January 1, 2015, whether by the payment of
cash or by conversion into shares of the Company’s common stock.
The IBEX revolving convertible promissory note states the initial conversion price is $0.05 per share subject to
adjustments for a) stock dividends or other distributions and subdividing or combining its common stock or common
stock equivalents, b) sales or issuances of common stock or common stock equivalents at less than market value,
defined as the average of the daily closing price for the 10 trading days before the market value date. The closing
price is the last sale price, regular way, or the average of last bid and ask price, regular way, if there are no reported
sales during that period on exchanges where shares are admitted to trading or listed, and if not available, the fair
market price as reasonably determined by the Board of Directors, or c) if the Company issues shares of common
stock to the holder which are not freely transferable at the time of issuance, in lieu of payment of indebtedness, the
conversion price shall be discounted to reflect such restriction.
Any discount will be negotiated on a case by case basis between the holder and the Company to reflect current
market conditions and both parties must expressly accept the discounted conversion price.
The conversion price on the related party convertible notes payable discussed below and the individual advances
under the IBEX revolving convertible promissory note has generally been 50% or less of the pink sheet closing
price of the common stock on the date the notes or advances are issued to reflect the restricted nature of the stock
into which the notes could be converted and the Board of Directors’ belief that the closing stock price is not
reflective of the fair market value of the common stock due to the price volatility, lack of an active market for
trading shares resulting in limited trading volume of share transactions. The Board of Directors is active in
negotiating conversion prices for each issuance and takes into consideration all information in establishing the
issuance date fair market value.
During the nine months ended September 30, 2014, IBEX sold $760,325 of the Revolver’s remaining outstanding
balance to external parties, who subsequently converted these notes into 1,396,694,318 shares at conversion prices
ranging from $.00018 to $.003 per share. During the six months ended June 30, 2013, IBEX sold $408,930 of the
Revolver’s outstanding balance for conversions into 420,728,290 shares at conversion prices ranging from $.00075
to $.0015 per share.
The balance of the Revolver as of September 30, 2014 and December 31, 2013 was $0 and $745,417, respectively.
IBEX Promissory Convertible Notes Payable
In addition to the Revolver as described above, beginning on August 1, 2009, the Company started entering into
convertible promissory note agreements with IBEX with simple interest at 8% per annum. All accrued interest
and principal on the various notes payable are due on or before the end of the month two years from the date of
issuance, whether by the payment of cash or by conversion into shares of the Company’s common stock, unless
otherwise extended with new terms. According to the original Security Agreement dated August 1, 2009, the
Company grants IBEX a security interest in, all of the right, title, and interest of the Company, in and to all of the
Company’s personal property and intellectual property, and all proceeds or replacements as collateral for the convertible promissory note agreements.
On August 31, 2011, the date of maturity for notes payable of $519,920, the Company did not have sufficient cash
on hand to pay the amount due, so the Company and issuer entered into an agreement to change the conversion
price of the note to the market price of the restricted shares. The Conversion Price was thus changed from the
original amount of $.019 per share to $.015 per share, the share market price on that date. The maturity date on the
note agreement was extended to September 30, 2015, with a new conversion price of $.0008 per share.
Starting in 2012 and continuing through June 2014, the Company extended the maturity dates by one year and two
years on several separate notes through multiple agreements with IBEX, as a result of insufficient cash to make
payments on amounts owed. In exchange for the extensions, the conversion prices were changed to the existing
market price of the Common Stock on the date of the maturity. Due to the drop in stock prices since the
original note issuances, the corresponding shares to be issued on the conversion of these IBEX notes has increased
from 9,863,573,500 at December 31, 2013 to 10,893,804,786 at September 30, 2014.
During the nine months ended September 30, 2014 and 2013, the Company borrowed $1,703,305 and $591,000,
respectively, through additional promissory notes with IBEX.
Total interest expense, including amortization of the discount, incurred on the IBEX Revolver and IBEX convertible
promissory notes payable for the nine months ended September 30, 2014 and 2013 was $297,648 and $158,629,
respectively.
The balance of the IBEX Promissory Notes Payable as of September 30, 2014 and December 31, 2013 was
$5,105,594 and $4,263,082, respectively.
Other Related Party Loans
The Company has entered into convertible promissory note agreements with various other related parties of the
Company. Other related parties consist of family members of the President of the Company. Additionally, St.
Johns, LLC is a limited liability company, which is owned by a family member of the President of the Company.
Other related parties consist of Robert Whelan and Janel Zaluski, the son and daughter of the President, Mary
Whelan, the sister of the President, St. John’s LLC, which is owned by family members of the President, and Richard
Staelin, who is Chairman of the Board of Directors.
Each of the promissory notes bears simple interest at 8% per annum, and all accrued interest and principal is due
on the maturity date. At the option of the holder, the promissory notes are convertible into common shares of the
Company’s stock at a conversion rate equal to the quotient of (i) a sum equal to the entire outstanding principal and
interest, divided by (ii) the conversion price.
Similar to the IBEX promissory convertible notes, the conversion prices per the terms of the note agreements are
based upon the fair market value of the OTC closing price of the Company’s stock as of the date of issuance
discounted based on the factors previously discussed in the disclosures related to the IBEX Revolver and promissory
convertible notes. There were no related party loan conversions during the six months ended June 30, 2014 and
2013, respectively.
During the nine months ended September 30, 2014 and 2013, the Company borrowed $92,675 and $80,782,
NOTE 13 – RELATED PARTY TRANSACTIONS (Continued)
eMarkets and provides for the company to provide training and customer support at its own cost to support the
distributor’s sales function.
Revenue from eMarkets for the nine months ended September 30, 2014 and 2013 amounted to $10,337 and $2,872,
respectively. The balance due from eMarkets as of September 30, 2014 and December 31, 2013 was $1,003 and
$0, respectively.
NOTE 14 – CONCENTRATIONS
As of September 30, 2014, approximately 90 percent of trade receivables was from two customers. For the nine
months ended September 30, 2014 approximately 60 percent of sales revenue was from six customers. As of September 30, 2014, approximately 73 percent of accounts payable was for five vendors.
AI
