-----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, U27P5M9Z20T+u5DcaL32vKzBDiUgj3MD8uIjXGCvhrZ3DkLsfkVPE1WmmKiu6tsS RBKpnbEOZbwEtd8SpA0L7w== 0000950131-00-003387.txt : 20000516 0000950131-00-003387.hdr.sgml : 20000516 ACCESSION NUMBER: 0000950131-00-003387 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDCARE TECHNOLOGIES INC CENTRAL INDEX KEY: 0001002422 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SPECIALTY OUTPATIENT FACILITIES, NEC [8093] IRS NUMBER: 870429962 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-28790 FILM NUMBER: 630607 BUSINESS ADDRESS: STREET 1: 1515 WEST 22ND STREET STREET 2: STE 101 CITY: OAK BROOK STATE: IL ZIP: 60523 BUSINESS PHONE: 8006113388 MAIL ADDRESS: STREET 1: 400 BURRARD STREET STREET 2: SUITE 1408 CITY: VANCOUVER STATE: A1 ZIP: 00000 10QSB 1 FORM 10-QSB 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 quarterly period ended March 31, 2000 ____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _______ Commission file number: 0-28790 MEDCARE TECHNOLOGIES, INC. -------------------------- (exact name of registrant as specified in its charter) DELAWARE 87-0429962 B - -------- ---------------- (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) Suite 1210 - 1515 West 22nd Street, Oak Brook, Illinois 60523 - --------------------------------------------------------------- (Address of principal executive offices) Registrant's telephone number, including area code: (630) 472-5300 -------------- Indicate by check mark whether the registrant: (1) has filed all reports required 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 --- The number of shares of the Registrant's Common Stock, $0.001 par value, as of May 11, 2000: 10,117,997 MEDCARE TECHNOLOGIES, INC. FORM 10-QSB, QUARTER ENDED MARCH 31, 2000 INDEX
PART I FINANCIAL INFORMATION Item 1 Financial Statements Consolidated Balance Sheet as of March 31, 2000.................................................... 3 Consolidated Statement of Operations for the Quarter Ended March 31, 2000.......................... 4 Consolidated Statement of Cash Flows for the Quarter Ended March 31, 2000.......................... 5 Notes to Interim Consolidated Financial Statements................................................. 6 All schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. Item 2 Management's Discussion and Analysis..................................................... 7 PART II OTHER INFORMATION Item 1 Legal Proceedings........................................................................ 10 Item 2 Changes in Securities.................................................................... 10 Item 3 Defaults Upon Senior Securities.......................................................... 10 Item 4 Submission of Matters to a Vote of Security Holders...................................... 10 Item 5 Other Information........................................................................ 10 Item 6 Exhibits and Reports on Form 8-K......................................................... 10 Signatures............................................................................... 10
2 Item 1 Financial Statements - ------------------------------ MEDCARE TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS MARCH 31, 2000 AND DECEMBER 31, 1999
(Unaudited) March 31, December 31, ASSETS 2000 1999 ------------ ----------- Current Assets - -------------- Cash $ 2,456,514 $ 3,218,228 Accounts Receivable, net of Allowance for Doubtful Accounts of $92,600 and $82,000 165,228 201,700 Prepaid Expenses 228,086 162,140 ------------ ----------- Total Current Assets 2,849,828 3,582,068 Property and Equipment, Net 274,757 312,198 Intangible Assets-the MedCare Program, net of Accumulated Amortization of $153 and $136 847 864 ------------ ----------- Total Assets $ 3,125,432 $ 3,895,130 ============ =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities - ------------------- Accounts Payable $ 266,391 $ 88,522 Accrued Liabilities 71,616 98,715 Deferred Revenue 0 18,646 ------------ ----------- Total Current Liabilities 338,007 205,883 Stockholders' Equity - -------------------- Preferred Stock (Authorized 1,000,000 shares): Convertible Series B, $.25 Par Value, Issued and outstanding, 147 and 178 shares at March 31, 2000 and December 31, 1999, respectively, at redemption value 1,778,105 2,122,620 Common Stock - $0.001 Par Value, Authorized 100,000,000 shares; Issued and Outstanding, 10,066,866 and 9,911,313 shares at March 31, 2000 and December 31, 1999, respectively 10,067 9,911 Warrants 114,924 94,000 Additional Paid in Capital 11,402,799 11,079,364 Retained Earnings (10,518,470) (9,616,648) ------------ ----------- Total Stockholders' Equity 2,787,425 3,689,247 ------------ ----------- Total Liabilities and Equity $ 3,125,432 $ 3,895,130 ============ ===========
3 MEDCARE TECHNOLOGIES, INC AND SUBSIDIARIES INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(Unaudited) (Unaudited) Three Months Three Months Ended Ended 3/31/00 3/31/99 ------------ ------------ Revenues $ 240,912 $ 394,063 General and Administrative Expenses 1,180,624 1,392,416 ------------ ------------ Operating Loss (939,712) (998,353) Interest Income 37,890 24,032 ------------ ------------ Net Loss (901,822) (974,321) Less: Preferred Stock Deemed Dividends (49,363) 0 ------------ ------------ Net Loss Available to Common Shareholders ($951,185) ($974,321) ============ ============ Loss Per Common Share & Common Share Equivalents ($0.10) ($0.12) Weighted Number of Common Shares Outstanding 9,975,152 7,829,949
4 MEDCARE TECHNOLOGIES, INC. AND SUBSIDIARIES INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(Unaudited) (Unaudited) For the Three For the Three Months Ended Months Ended 3/31/00 3/31/99 ------------- ------------- Cash Flows from Operating Activities - Net Loss ($901,822) ($974,321) Adjustments to Reconcile Net Loss to Net Cash Providing by Operating Activities: - -------------------------------------------------------------------------------- Depreciation and Amortization 21,413 20,541 Equipment write-off 33,351 0 (Increase) Decrease in Accounts Receivable 36,472 (68,508) (Increase) Decrease in Prepaid Expenses (65,946) 0 Increase (Decrease) in Current Liabilities 132,124 (170,838) ------------- ------------- Total Adjustments 157,414 (218,805) Net Cash Used by Operating Activities (744,408) (1,193,126) Cash Flow from Investing Activities: - ------------------------------------ Purchase of Property & Equipment (17,306) (101,363) ------------- ------------- Net Cash Flows from Investing Activities (17,306) (101,363) Cash Flow from Financing Activity - --------------------------------- Proceeds from sale of common stock 0 18,000 ------------- ------------- Net Cash Provided by Financing Activities 0 18,000 Increase (Decrease) in Cash and Cash Equivalents (761,714) (1,276,489) Cash and Cash Equivalents at Beginning of Period 3,218,228 2,826,086 ------------- ------------- Cash and Cash Equivalents at End of Period $2,456,514 $ 1,549,597 ============= ============= Supplemental Information: Preferred Stock Deemed Dividends 49,363 0 ============= ============= Cash Paid for: Interest 0 0 Income taxes 0 0
5 MEDCARE TECHNOLOGIES, INC. NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2000 NOTE 1. Statement of Information Furnished - ------------------------------------------- The accompanying unaudited interim consolidated financial statements have been prepared in accordance with Form 10QSB instructions and in the opinion of management contains all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the financial position as of March 31, 2000 and the results of operations and cash flows for the three month period ended March 31, 2000. These results have been determined on the basis of generally accepted accounting principles and practices and applied consistently with those used in the preparation of the Company's 1999 Annual Report on Form 10-KSB. Certain information and footnote disclosures normally included in the financial statements presented in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that the accompanying consolidated financial statements be read in conjunction with the financial statements and notes thereto incorporated by reference in the Company's 1999 Annual Report on Form 10-KSB. Note 2 - Segment Information - ---------------------------- During the first three quarters of 1999, the Company engaged in only one type of business, the offering of the MedCare Program, as described above. In October 1999, the Company launched its new web site, RxSheets.com (www.rxsheets.com), which is directed exclusively at the physician and pharmaceutical marketplace. During 2000, the Company is being managed as two operating segments, the MedCare Program and RxSheets.com. During the first quarter of 1999, the Company had only one operating segment, the MedCare Program. As of March 31, 2000, RxSheets.com had not generated any revenues and management did not allocate any corporate, selling, administrative or overhead expenses to RxSheets.com. All corporate, selling, administrative and overhead expenses are included in the MedCare Program in both 1999 and 2000.
MedCare Program RxSheets.com Total - ------------------------------------------------------------------------------ First Quarter 2000 - ------------------ Revenues $ 240,912 $ 0 $ 240,912 Segment Loss (444,367) (495,345) (939,712) Total assets 2,883,399 242,033 3,125,432 First Quarter 1999 - ------------------ Revenues $ 394,063 $ 0 $ 394,063 Segment Loss (998,353) 0 (998,353) Total assets 2,254,729 0 2,254,729
6 Item 2 Management's Discussion and Analysis of Financial Condition and - ------------------------------------------------------------------------- Results of Operations - --------------------- When used in this discussion, the words "believes", "anticipates", "expects" and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from those projected. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to republish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Readers are also urged to carefully review and consider the various disclosures made by the Company which attempt to advise interested parties of the factors which affect the Company's business, in this report, as well as the Company's periodic reports on Forms 10-KSB, 10QSB and 8-K filed with the Securities and Exchange Commission. Overview - -------- During 1998, the Company engaged in only one type of business, the offering of the MedCare Program, as described below. In October 1999, the Company announced the launch of its new web site, Rx Sheets.com (www.rxsheets.com), which is directed exclusively at the physician and pharmaceutical marketplace. The Company believes that RxSheets.com offers a wide array of compelling and focused information and services that will enable physicians to more efficiently and effectively manage the sampling of pharmaceutical drugs. In addition, the Company changed the name of its wholly-owned subsidiary from Medcareonline.com to RxSheets.com. As of March 31, 2000, the Company has not generated any revenues from RxSheets.com. The MedCare Program is a discrete package of equipment, software and services developed by MedCare to assist physicians in providing non- pharmaceutical, non-invasive treatment to patients suffering from urinary incontinence and other pelvic disorders, including pelvic pain, chronic constipation, fecal incontinence and disordered defecation. The MedCare Program is used by physicians to support a treatment plan based primarily on behavioral modification techniques such as electromyography ("EMG") biofeedback, pelvic floor muscle exercise, and bladder and bowel retraining. Utilizing the MedCare Program, physicians help patients activate and strengthen the various sensory response mechanisms that maintain bladder and bowel control. Therapy is provided through computerized instrumental EMG biofeedback and is based on operant conditioning strategies whereby specific physiological responses are progressively shaped, strengthened and coordinated. The MedCare Program is available either in a private office, clinic, or a hospital setting. To date, the Company has not received significant revenues due to the early stage nature of the Company's business and has incurred ongoing operating losses due to costs related to research, business development, website development, management and staff recruitment, establishing training systems and providing ongoing training, development of advertising and marketing programs, and other costs associated with establishing corporate infrastructure necessary for expanding on a national basis. Although planned principal operations have commenced, substantial revenues have yet to be realized. 7 RESULTS OF OPERATIONS Revenues. The Company experienced a 39% decrease in revenues from last year's first quarter results with revenues of $240,912 and $394,063 for the three months ended March 31, 2000 and 1999, respectively. During the second quarter of 1999, the Company introduced a new franchise version of the MedCare Program to hospitals and other large healthcare providers which requires each new site to pay an upfront subscription fee, the clinician's salary and a monthly management fee. Although the sales cycle is longer, the new franchise version allows MedCare to reach a greater number of healthcare providers. The decrease in revenues is due to the change to the new franchise version of the MedCare Program during 1999 and the closing of unprofitable offices. During the current year, the Company expects to derive the majority of its potential revenues from the commencement of operations of the MedCare Program at additional sites in the United States. In addition, the Company expects to begin generating revenue from the sale of marketing services from its new wholly-owned subsidiary, RxSheets.com. As of March 31, 2000, there have been no revenues related to RxSheets.com. General and Administrative Expenses. During the first quarter of 2000, the Company incurred $1,180,624 in general and administrative expenses, a decrease of 15% from last year's first quarter expenses of $1,392,416. The decrease is primarily attributable to less salary and operating expenses as fewer MedCare sites existed during the first quarter of 2000 versus the same period in 1999. The decrease in these expenses were offset by operating and start-up expenses in the first quarter of 2000 related to RxSheets.com, which did not exist in first quarter of 1999. Interest Income. Interest income was $37,890 and $24,032 for the quarters ended March 31, 2000, and 1999, respectively. Interest earned in the future will be dependent on Company funding cycles and prevailing interest rates. Provision for Income Taxes. As of March 31, 2000, the Company's accumulated deficit was $10,518,470 and as a result, there has been no provision for income taxes to date. The Company has net operating loss carryforwards that will expire beginning with the year 2002 unless utilized by the Company. Preferred Stock Deemed Dividends. Preferred stock deemed dividends were $49,363 and zero for the quarters ended March 31, 2000 and 1999, respectively. The increase is due to the accretion to its redemption value of the Series B preferred stock issued in May 1999 and the vesting of warrants issued with the Series B preferred stock in March, 2000. LIQUIDITY AND CAPITAL RESOURCES At March 31, 2000, the Company had a cash balance of $2,456,514, compared to a cash balance of $3,218,228 at December 31, 1999. 8 During the first quarter of 2000, the Company used $744,408 of net cash from operating activities as compared to $1,193,126 of net cash used in the first quarter of 1999. The decrease in the net cash used in operating activities was due mainly to the decrease in the net loss between years and an increase in accounts payable and accrued liabilities offset by an increase in prepaid expenses. The increase in prepaid expenses was due to the purchase of a subscription for a database of physician information for RxSheets.com that will be utilized in 2000. The increase in accounts payable and accrued liabilities was due mainly to the additional expenditures required for the start-up and operating expenses of RxSheets.com. Net cash used in investing activities was $17,306 for the first quarter of 2000, compared to $101,363 for 1998. The decrease in the net cash used in investing activities was due mainly to purchasing fewer fixed assets for the MedCare Program offices in the first quarter of 2000 versus the first quarter of 1999. Net cash provided by financing activities was zero for 2000 compared to $18,000 for 1999. The Company has financed its operations primarily through private placements of Common Shares, Preferred Shares and the exercise of stock options. The Company's future funding requirements will depend on numerous factors. These factors include the Company's ability to establish and profitably operate current and future MedCare Program locations and RxSheets.com, recruit and train qualified management and clinical personnel, and the Company's ability to compete against other, better capitalized corporations who offer alternative or similar options for urinary incontinence and pharmaceutical sampling services. The Company expects to incur losses as it expands its businesses and will require additional funding during 2000. The Company is currently seeking additional equity and expects to raise funds through a private or public equity investment in order to support existing operations and expand the range and scope of its business. The Company will seek access to private or public equity but there is no assurance that such additional funds will be available for the Company on acceptable terms, if at all. 9 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 Security Holders - ------------------------------------------------------------- None Item 5 Other Information - --------------------------- None Item 6 Exhibits and Reports on Form 8-K - ------------------------------------------ None Signature Page - -------------- Pursuant to the requirements of section 13 or 15(d) 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. MEDCARE TECHNOLOGIES, INC. /s/ Jeffrey S. Aronin --------------------- Jeffrey S. Aronin CEO and President /s/ Alan Jagiello ----------------- By Alan Jagiello CFO Dated: May 12, 2000 10 EX-27 2 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the unaudited March 31, 2000 financial statements of Medcare Technologies, Inc. and is qualified in its entirety by reference to such financial statements. 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 2,456,514 0 257,828 92,600 0 2,849,828 274,757 21,413 3,125,432 338,007 0 0 1,778,105 10,067 999,253 3,125,432 240,912 240,912 0 1,180,624 49,363 0 (37,890) (901,822) 0 (901,822) 0 0 0 (901,822) (0.10) (0.10)
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