-----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, KjvSABIo7iJz4qtNqxvx5UkmWdWQ5ixtpaNrVCd+hdsECRBJRTBZjiAToeAFJgRP jpqZ3OjnTKGdwZikAI6XEw== 0000914190-97-000230.txt : 19970520 0000914190-97-000230.hdr.sgml : 19970520 ACCESSION NUMBER: 0000914190-97-000230 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: QUANTECH LTD /MN/ CENTRAL INDEX KEY: 0000880354 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER STORAGE DEVICES [3572] IRS NUMBER: 411709417 STATE OF INCORPORATION: MN FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-19957 FILM NUMBER: 97608615 BUSINESS ADDRESS: STREET 1: 1419 ENERGY PARK DRIVE CITY: ST PAUL STATE: MN ZIP: 55108 MAIL ADDRESS: STREET 1: 1419 ENERGY PARK DRIVE CITY: ST PAUL STATE: MN ZIP: 55108 FORMER COMPANY: FORMER CONFORMED NAME: SPECTRUM DIAGNOSTICS SPA DATE OF NAME CHANGE: 19930328 10QSB 1 FORM 10-QSB SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended: Commission File Number: March 31, 1997 0 - 19957 Quantech Ltd. (Exact name of registrant as specified in its charter) Minnesota 41-1709417 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) identification No.) 1419 Energy Park Drive St. Paul, MN 55108 (Address of principal executive offices) (Zip code) (612)-647-6370 (Registrant's telephone number, including area code) N/A (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO ____ Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date: 47,675,759 shares of Common Stock, par value $.01 per share, outstanding as of May 10 , 1997. Transitional Small Business Disclosure Format: YES ___ NO X Index PART I. FINANCIAL INFORMATION Page No. Item 1: Financial Statements: 3 Balance Sheets as of March 31, 1997 and June 30, 1996 Statement of Operations for the Three Months and Nine Months Ended March 31, 1997 and 1996 and from inception to March 31, 1997 4 Statement of Stockholders' Equity from inception to March 31, 1997 6 Statement of Cash Flows for the Nine Months ended March 31, 1997 and 1996 and from inception to March 31, 1997 7 Notes to Financial Statements 8 Item 2: Management's Discussion and Analysis or Plan of Operation 9 PART II. OTHER INFORMATION 13 PART I QUANTECH LTD. (A Development Stage Company) BALANCE SHEET
(Unaudited) March 31, June 30, 1997 1996 ------------------ ------------------ ASSETS CURRENT ASSETS Cash and cash equivalents $ 457,670 $ 2,942,871 Other current assets 53,633 41,269 ------------------ ------------------ 511,303 2,984,140 ------------------ ------------------ EQUIPMENT Equipment 360,007 268,058 Leasehold Improvements 15,000 15,000 ------------------ ------------------ 375,007 283,058 Less:accumulated depreciation (123,680) (78,657) ------------------ ------------------ 251,327 204,401 ------------------ ------------------ OTHER ASSETS License agreement, at cost, less amortization 2,152,502 2,320,334 Organization expenses, at cost, less amortization 150 4,675 ------------------ ------------------ 2,152,652 2,325,009 ------------------ ------------------ TOTAL ASSETS $ 2,915,282 $ 5,513,550 ================== ================== LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT) CURRENT LIABILITIES Short term debt $ 0 $ 24,455 Accounts Payable 264,641 114,934 Accrued Expenses: Spectrum Diagnostics Inc. obligations 40,868 53,637 Minimum Royalty Commitment 93,750 0 Other 7,402 0 ------------------ ------------------ Total Current Liabilites 406,661 193,026 ------------------ ------------------ LONG-TERM OBLIGATIONS Minimum Royalty Commitment 0 37,500 ------------------ ------------------ STOCKHOLDERS EQUITY (DEFICIT) Common stock, $.01 par value; authorized 90,000,000 shares; issued and outstanding 47,675,759 shares at March 31, 1997; and 46,900,759 at June 30, 1996 $ 476,758 $ 469,008 Additional paid-in capital 15,475,796 15,296,856 Deficit accumulated during the development stage (13,443,933) (10,482,840) ------------------ ------------------ Total Stockholders Equity 2,508,621 5,283,024 ------------------ ------------------ TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 2,915,282 $ 5,513,550 ================== ==================
QUANTECH LTD. (A Development Stage Company) STATEMENT OF OPERATIONS-UNAUDITED
Three months Three months Ended Ended March 31, March 31, 1997 1996 -------------------- -------------------- Interest Income $ 14,655 $ 10,983 -------------------- -------------------- Expenses: General & Administrative 423,016 270,769 Research and development 584,946 238,294 Sales and Marketing 108,354 - Minimum royalty expense 18,750 18,750 Loses resulting from transactions with Spectrum Diagnostics Inc. - - Net exchange (gain) - - Financing 1,471 3,501 -------------------- -------------------- 1,136,537 531,314 -------------------- -------------------- Loss before income taxes (1,121,882) (520,331) Income taxes - - ==================== ==================== Net loss $ (1,121,882) $ (520,331) ==================== ==================== Loss per common share $ (0.02) $ (0.01) Weighted average common shares outstanding 47,488,759 40,659,893
QUANTECH LTD. (A Development Stage Company) STATEMENT OF OPERATIONS-UNAUDITED (CONTINUED)
Period From September 30, 1991 Nine Months Nine Months (Date 0f Ended Ended Inception), to March 31, March 31, March 31, 1997 1996 1997 -------------------- --------------------- -------------------- Interest Income $ 75,887 $ 23,310 $ 165,814 -------------------- --------------------- -------------------- Expenses: General & Administrative 1,147,680 919,506 7,289,151 Research and development 1,648,359 691,585 4,179,478 Sales and Marketing 178,778 - 178,778 Minimum royalty expense 56,250 106,250 943,750 Loses resulting from transactions with Spectrum Diagnostics Inc. - - 556,150 Net exchange (gain) - - (67,172) Financing 5,913 106,329 487,017 -------------------- --------------------- -------------------- 3,036,980 1,823,670 13,567,152 -------------------- --------------------- -------------------- Loss before income taxes (2,961,093) (1,800,360) (13,401,338) Income taxes - - 42,595 ==================== ===================== ==================== Net loss $ (2,961,093) $ (1,800,360) $ (13,443,933) ==================== ===================== ==================== Loss per common share $ (0.06) $ (0.07) Weighted average common shares outstanding 47,167,584 25,793,027
QUANTECH LTD (A Development Stage Company) STATEMENT OF STOCKHOLDERS'EQUITY-UNAUDITED Period From September 30, 1991 (date of Inception), to March 31, 1997
Deficit Accumulated During Par Additional the Paid for Due Cumulative Shares Value Paid-In Development Subscriptions Not From Translation Issued Amount Capital Stage Receivable Issued Officers Adjustment ------------------------------------------------------------------------------------------ Balance at Inception Net Loss for 15 months ($3,475,608) Common stock transactions: Common stock issued, October 1991 3,200,000 $3,154,574 Common stock issued, November 1991 600,000 $611,746 $1,788,254 Common stock issuance costs ($889,849) Cumulative translation adjustment $387,754 Common stock issued, September 1992 700,000 $699,033 $875,967 ($53,689) Common stock issuance costs ($312,755) Common stock to be issued $120,000 Cumulative translation adjustment ($209,099) Elimination of cumulative translation adjustment ($178,655) Officers advances, net ($27,433) --------------------------------------------------------------------------------------------- Balance, December 31, 1992 4,500,000 $4,465,353 $1,461,617 ($3,475,608)($53,689) $120,000 ($27,433) $0 Net loss ($996,089) Common stock transactions: Common stock issued, January 1993 160,000 $1,600 $118,400 ($120,000) Common stock issued, April 1993 30,000 $300 $11,700 Change in common stock par value resulting from merger Change in common stock par value resulting from merger ($4,420,353) $4,420,353 Repayments $5,137 ---------------------------------------------------------------------------------------------- Balance,June 30, 1993 4,690,000 $46,900 $6,012,070 ($4,471,697)($53,689) $0 ($22,296) $0 Net loss ($1,543,888) 240,000 shares of common stock to be issued $30,000 Repayments $53,689 $22,296 ---------------------------------------------------------------------------------------------- Balance, June 30, 1994 4,690,000 $46,900 $6,012,070 ($6,015,585) $0 $30,000 $0 $0 Net loss ($2,070,292) Common stock issued, June 1995 2,150,000 $21,500 $276,068 ($20,000) ($30,000) Warrants issued for services $40,200 ---------------------------------------------------------------------------------------------- Balance June 30, 1995 6,840,000 $68,400 $6,328,338 ($8,085,877)($20,000) $0 $0 $0 Common stock issued, net of issuance costs of $848,877: July, 1995 6,160,000 $61,600 $1,304,450 August, 1995 717,600 $7,176 $161,460 September, 1995 13,807,296 $138,073 $2,370,389 November, 1995 1,897,840 $18,978 $425,482 December, 1995 11,217,157 $112,172 $1,292,473 May, 1996 6,275,000 $62,750 $3,300,422 June, 1996 5,058 $51 $3,650 Payments received on subscription receivable (19,192) ($192) ($14,808) $20,000 Compensation expense recorded on stock options $125,000 Net loss ($2,396,963) ----------------------------------------------------------------------------------------------- Balance, June 30, 1996 46,900,759 $469,008 $15,296,85 ($10,482,840) $0 $0 $0 $0 Stock offering costs ($12,310) Common stock issued upon exercise of options and warrants September 1996 10,000 $100 $2,400 October 1996 170,000 $1,700 $40,800 November 1996 15,000 $150 $3,600 December 1996 270,000 $2,700 $64,800 ($57,500) January 1997 20,000 $200 $4,800 February 1997 150,000 $1,500 $17,250 March 1997 140,000 $1,400 $33,600 Payments received on $57,500 subscription receivable Compensation expense recorded on stock options $24,000 Net loss ($2,961,093) ---------------------------------------------------------------------------------------------- Balance, March 31, 1997 (Unaudited) 47,675,759 $476,758 $15,475,796 ($13,443,933) $0 $0 $0 $0 ===============================================================================================
QUANTECH LTD (A Development Stage Company) STATEMENTS OF CASH FLOWS - UNAUDITED
Period From September 30, Nine Nine 1991 Months Months (Date of ended ended Inception), to March 31, March 31, March 31, 1997 1996 1997 -------------------- ------------------ ----------------- Cash Flows From Operating Activities Net Loss $ (2,961,093) $ (1,800,360) $ (13,443,933) Adjustments to reconcile net loss to net cash used in operating activities: Elimination of cumulative translation adjustment - - (178,655) Depreciation 45,023 27,884 170,034 Amortization 172,357 179,195 1,300,636 Noncash compensation and interest 24,000 125,000 513,250 Losses resulting from transactions with Spectrum Diagnostics Inc. - - 556,150 Write down of investment - - 67,500 Change in assets and liabilities, net of effects from purchase of Spectrum Diagnostics Inc.: (Increase) decrease in current assets (12,364) (1,039) 22,804 Increase (decrease)in accounts payable 149,707 (640,184) 263,086 Increase (decrease) in accrued expenses 50,883 (536,784) 416,144 -------------------- ------------------ ----------------- Net cash used in operating activities (2,531,487) (2,646,288) (10,312,984) -------------------- ------------------ ----------------- Cash Flows From Investing Activities Purchase of property and equipment (91,949) (156,789) (414,390) Organization expenses - - (97,547) Officer advances, net - - (109,462) Purchase of investment - - (225,000) Purchase of license agreement - - (1,950,000) Advances to Spectrum Diagnostics, Inc. - - (320,297) Prepaid securities issuance costs - - (22,943) Purchase of Spectrum Diagnostics, Inc., net of cash and cash equivalents acquired - - (1,204,500) -------------------- ------------------ ----------------- Net cash used in investing activities (91,949) (156,789) (4,344,139) -------------------- ------------------ ----------------- Cash Flows From Financing Activities Net proceeds from the sale of common stock $ 112,500 $ 3,312,952 $ 12,720,736 Proceeds on debt obligations - - 2,658,435 Payments received on stock subscription receivables 62,500 - 67,500 Stock offering costs (12,310) - (12,310) Payments on debt obligations (24,455) (347,034) (522,810) -------------------- ------------------ ----------------- Net cash provided by financing activities 138,235 2,965,918 14,911,551 -------------------- ------------------ ----------------- Effect of Exchange Rate Changes on Cash - - 203,242 -------------------- ------------------ ----------------- Net increase (decrease) in cash (2,485,201) 162,841 457,670 Cash Beginning 2,942,871 4,276 - -------------------- ------------------ ----------------- Ending $ 457,670 $ 167,117 $ 457,670 ==================== ================== =================
QUANTECH LTD. ( A Development Stage Company ) NOTES TO UNAUDITED FINANCIAL STATEMENTS Note 1. BASIS OF PRESENTATION In the opinion of the management of the Company, the accompanying unaudited financial statements contain all adjustments (consisting of only normal, recurring adjustments) necessary to present fairly the financial position of the Company as of March 31, 1997 and the results of operations and its cash flows for the three month and nine month periods ended March 31, 1997 and 1996. The results of operations for any interim period are not necessarily indicative of the results for the year. These interim financial statements should be read in conjunction with the Company's annual financial statements and related notes in the Company's Annual Report on Form 10-KSB for the year ended June 30, 1996. Note 2. LICENSE AGREEMENT The Company has a license agreement for certain patents, proprietary information and associated hardware related to SPR technology. The license calls for an ongoing royalty of 6 percent on all products utilizing the SPR technology which are sold by the Company. In addition, if the Company sublicenses the technology, the Company will pay a royalty of 15 percent of all revenues received by the Company under any sublicense. If the cumulative payments of these two royalties fail to reach at least $1,000,000 by December 31, 1997, the licensor has the right to deprive the Company of its exclusive rights under the license agreement. As of December 31, 1996, the Company has paid $850,000 of the cumulative royalty payments. The Company has also ratably accrued additional minimum royalty payments of $93,750 as of March 31, 1997, because sales or sublicense revenues through December 31, 1997 may not be adequate to meet the cumulative minimum royalty payments. The Company intends to accrue the entire $150,000 by December 31, 1997. ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION History Quantech Ltd. ("Quantech" or the "Company") was formed under the laws of Minnesota for the purpose of effecting the change of domicile of Spectrum Diagnostics S.p.A. ("SDS") from Italy to the state of Minnesota through the merger with SDS on April 14, 1993. Quantech had no operations prior to the merger and is continuing the business of SDS to commercialize Surface Plasmon Resonance ("SPR") technology licensed from Ares-Serono. SPR, the core technology of Quantech's proposed medical diagnostic system, enables the Company to integrate the existing diagnostic methodologies of immunoassays, DNA probes and chemical binding into a single, simple economical system in order to provide rapid, quantitative, diagnostic results. The Quantech system configuration consists of a small bench top instrument and a series of disposables each offering a particular test or series of tests. It is anticipated that the Quantech system will have the ability to analyze body fluids (e.g. whole blood, urine, saliva) without preparation or addition of reagents. The Company's initial focus is to develop its SPR instrument for Critical Care Units of hospitals, the first such unit being the emergency department. Its first test will aid physicians in assessing whether a patient has suffered a heart attack, with additional disposable tests being introduced after the initial introduction of the Quantech system. Quantech is a development stage company which has suffered losses from operations and will require additional financing to commercialize its product. The Company's product development must be completed, FDA approval obtained, the product introduced to the market, and ultimately, Quantech will need to successfully attain profitable operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. Results of Operations The Company has incurred a net loss of $13,443,933 from September 30, 1991 (date of inception) through March 31, 1997 due to expenses related to formation and operation of SDS in Italy, continuing costs of raising capital, normal expenses of operating over an extended period of time, funds applied to research and development, royalty payments related to the SPR technology, losses due to expenses of Quantech's predecessor, Spectrum Diagnostics Inc., and interest on borrowed funds. In addition, an investment of $3,356,629 was made when Quantech purchased the exclusive rights to the SPR technology. For the three and nine months ended March 31, 1997, the Company had interest income of $14,655 and $75,887, respectively, compared to $10,983 and $23,310, respectively, for the same periods in 1996 as a result of a greater amount of cash on hand obtained from Quantech's 1996 private placement of securities. General and administration expenses increased to $423,016 and $1,147,680 for such three and nine months ended March 31, 1997, respectively, from $270,769 and $919,506 for the three and nine months ended March 31, 1996, respectively. These increases were in part a result of adding general and administration personnel and other costs associated with Quantech continuing to build its infrastructure in anticipation of commercial production of its system. A significant portion of the increase was also attributable to increased public relations expenditures and costs associated with pursuing additional short and long term funding. General and administration expenses are anticipated to increase in the future as the Company nears market introduction of, and begins to sell, its system. Research and development costs increased from $238,294 and $691,585 in the three and nine months ended March 31, 1996, respectively, to $584,946 and $1,648,359 in the same respective periods of 1997. These increases are a result of accelerated research and development activity, including hiring of employees and consultants, purchasing of chemistry supplies and engaging firms to perform contract development work, including design engineering on Quantech's disposable and instrument. It is expected that research and development expenditures will continue to increase as Quantech completes development of its system, begins work on additional disposable tests for its system and maintains a level of activity to continually improve and advance the Company's technology and testing system. The Company for the three months ended March 31, 1997 incurred sales and marketing expenses of $108,354. There are no comparative periods for such sales and marketing expenditures as the Company established its sales and marketing activity in the quarter ended December 31, 1996. Sales and Marketing activity in the three month period ended March 31, 1997 consisted of market research, including attending the winter symposiums of Emergency Physicians, integrating user requirements into the disposable and instrument designs and initiating work on Quantech's marketing plan. The Company anticipates sales and marketing expenses to increase substantially as it nears product introduction and begins system sales. Minimum royalty expense decreased in the nine months ended March 31, 1997 as compared to the same 1996 period as a result of the declining minimum royalties owed under Quantech's license with Ares-Serono. Such expense was equal in the comparable three month periods. For the three and nine months ended March 31, 1997 Quantech had a loss of $1,121,882 and $2,961,093, respectively, as compared to $520,331 and $1,800,360, respectively, for the same periods ended March 31, 1996. These increases were the result of the rise in general and administration, research and development and sales and marketing expenditures exceeding decreases in such periods in minimum royalty and financing expenses and the increase in interest income. The Company to date has contracted for the development and design of its prototype instrument and disposable and their manufacture, finalized specifications for the grating component of its disposable, completed operational prototypes of its instrument and continued to develop the chemistries necessary to do specific tests. Quantech is currently completing development of its chemistries to provide its system with the sensitivity required for market introduction. Management anticipates that the Company will be able to submit its system to the FDA for approval in the summer of 1997 and will introduce its product into the United States after receiving such FDA approval. This timetable will be influenced by the Company's ability to complete the final development of its system and necessary testing for submission of its FDA filing and delays it may encounter with the FDA in its review of the system. Liquidity and Capital Resources From inception to March 31, 1997, Quantech has raised approximately $15,500,000 through a combination of public stock sales, private stock sales and debt obligations. Quantech will not have sufficient funds to continue its current operations beyond May 31, 1997. To provide it with additional funding, the Company, through its investment banker, is currently raising a minimum of $1,000,000 and a maximum of $2,500,000 through the sale of notes (the "Notes") and warrants (the "Warrants"). The Notes will be due and payable on June 1, 1998, or earlier upon Quantech completing a transaction that provides it with a minimum of $5,000,000 (the "Additional Funding"). Interest will be the prime rate plus five percent and the Notes will be secured by all of the assets of the Company. For each dollar invested in the Note the investor will receive a Warrant to purchase two shares of Quantech Common Stock at an exercise price equal to 80% of the price of the Additional Funding or, if the Additional Funding has not occurred prior to June 1, 1998, the lower of 80% of the market price of the Company's Common Stock for the 20 consecutive trading days prior to the issuance of the Warrant or June 1, 1998. Terms are subject to negotiation and may change. The Company believes it will complete the sale of the minimum of $1,000,000 of the Notes by May 31, 1997 and the maximum of $2,500,000 by June 30, 1997, but there can be no assurance that the Company will be able to raise this or any other funding and continue its operations. See "Cautionary Statements - Future Capital Needs." The Company anticipates that the minimum of $1,000,000 will be sufficient to allow it to complete development of its system to start its FDA work and the maximum of $2,500,000 will allow it to submit its system to the FDA and continue its market introduction schedule. Funds of at least $15 million will be needed to significantly expand sales and marketing activity, including establishing a sales force once development of the Company's product is completed, and to establish manufacturing capabilities, to fund inventory and accounts receivable and repay the Notes. Quantech is currently reviewing multiple avenues of future funding including a secondary offering of securities, private sale of equity or debt with equity features or arrangements with strategic partners. The Company does not have any commitments for any such financing and there can be no assurance that the Company will obtain additional capital when needed or that additional capital will not have a dilutive effect on current shareholders. Although the Company has a limited lending arrangement with its bank, it does not anticipate receiving significant funding from commercial lenders. Quantech incurred capital expenditures of $91,949 in the nine month period ended March 31, 1997. The Company anticipates significant capital expenditures in fiscal 1997 for laboratory and production equipment and office expansion as the Company nears product introduction. The timing and amount of such expenditures will be governed by the Company's development and market introduction schedules which are subject to change due to a number of factors including development delays, FDA approval and availability of future financing. In addition to capital expenditures, the Company has a final minimum royalty payment of $150,000 due to Ares-Serono on December 31, 1997. The Company currently has outstanding 47,675,759 shares of Common Stock. It also has options and warrants outstanding to purchase an additional 15,873,603 shares. Issued But Not Yet Adopted Accounting Standard In October 1995, the Financial Accounting Standards Board (FASB) issued Statement No. 123, "Accounting for Stock-Based Compensation", which establishes financial accounting and reporting standards for stock-based employee compensation plans. The Company will be required to adopt Statement No. 123 in fiscal 1997. The Company does not intend to adopt Statement No. 123 in measuring expense; however, it will present the pro forma disclosures and those pro forma amounts will likely be less than the amounts shown in future statements of income. Cautionary Statements As provided for under the Private Securities Litigation Act of 1995, the Company wishes to caution investors that the following important factors, among others, in some cases have affected, and in the future could affect, the Company's actual results of operations and cause such results to differ materially from those anticipated in forward-looking statements made in this document and elsewhere by or on behalf of the Company: No History of Operations; Development Stage Company; Going Concern Uncertainty To date, the Company does not have a product ready to be brought to market and its proposed operations are subject to all of the risks inherent in a new business enterprise, including completion of commercial development and FDA approval of its instrument within reasonable time frames and financial constraints, lack of marketing experience and lack of production history. The likelihood of the success of the Company must be considered in light of the expenses, difficulties and delays frequently encountered in connection with the start-up of new businesses, and specifically those historically encountered by Quantech, the development of a new product and the competitive environment in which the Company will operate. The report of the independent auditors on the Company's financial statements for the period ended June 30, 1996, includes an explanatory paragraph relating to the uncertainty of the Company's ability to continue as a going concern. The Company is a development stage company which has suffered losses from operations, requires additional financing, and ultimately needs to successfully attain profitable operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. There can be no assurance that the Company will be able to develop a commercially viable product or marketing system or attain profitable operations. Future Capital Needs The Company does not have sufficient funds to continue operations past May 31, 1997 or commence commercial production and sales of its system. The Company's ability to continue operations and begin commercial production and sales of its system will depend upon the continued availability of investment capital, funding made by strategic partner(s) or licensing revenues until revenues from sale of Quantech's instruments and associated test disposables are sufficient to maintain operations. Additional funds may have to be raised through equity or debt financing which could dilute current shareholders. If funding is not available when needed, the Company may be forced to cease operations and abandon its business. In such event, Company shareholders could lose their entire investment. Other Factors As described in the Company's Form 10-KSB for the year ended June 30, 1996 under Cautionary Statements and Prospectus dated September 12, 1996 under Risk Factors, there are additional factors concerning the Company that should be considered including: uncertainty of market acceptance of Quantech's product once introduced, inability or delay in , effects of government regulation on Quantech's product and its sale, ability to manufacture its product, exposure to the risk of product liability and market for the Company's shares. PART II OTHER INFORMATION Item 1. Legal Proceedings Not Applicable Item 2. Changes in Securities Not Applicable Item 3. Defaults upon Senior Securities Not Applicable Item 4. Submission of Matters to a Vote of Security Holders Not Applicable Item 5. Other Materially Important Events Not Applicable Item 6. Exhibits and Reports on 8-K a. Exhibits - 27. Financial Data Schedule (filed in electronic format only) b. Reports on 8-K - None 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. QUANTECH LTD /s/ R.H. Joseph Shaw R.H. Joseph Shaw President and Chief Executive Officer /s/ Gregory G. Freitag Gregory G. Freitag Chief Financial Officer Date: May 13, 1997 EXHIBIT INDEX QUANTECH LTD. FORM 10-QSB for Quarter Ended March 31, 1997 Exhibit Number Description - ------------------- --------------------------------------------- 27. Financial Data Schedule (filed in electronic format only) EX-27 2 FDS -- FOR 3RD QUARTER 10-QSB
5 This Schedule contains summary financial information extracted from the financial statements contained in the Registrant's Form 10-QSB for the quarter ended March 31, 1997 and is qualified in its entirety by reference to such financial statements. 1 U.S 9-MOS Jun-30-1997 Jul-01-1996 Mar-31-1997 1 457,670 0 0 0 0 511,303 375,007 (123,680) 2,915,282 406,661 0 0 0 476,758 15,475,796 2,915,282 0 0 0 0 0 0 0 (1,121,882) 0 0 0 0 0 (1,121,882) (0.02) (0.02)
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