-----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, T27gffT9/TiSJA69YZYN0H1+nRXkFZD7IJyN5pdD3ljF1cFEsWgH10xN3KueDE+s GW/jAK4GKCKF6IcfrXo6Zg== 0000950131-99-003103.txt : 19990517 0000950131-99-003103.hdr.sgml : 19990517 ACCESSION NUMBER: 0000950131-99-003103 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990514 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: 99621678 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 MEDCARE TECHNOLOGIES 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, 1999 ----- 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 (IRS Employer jurisdiction of Identification No.) incorporation or organization) Suite 1210 - 1515 West 22nd Street, Oak Brook, Illinois 60523 - --------------------------------------------------------- ----- (Address of principal executive offices) (Zip Code) 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 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 13th, 1999: 7,831,105 --------- 1 MEDCARE TECHNOLOGIES, INC. FORM 10-QSB, QUARTER ENDED MARCH 31, 1999 INDEX PART I FINANCIAL INFORMATION Item 1 Financial Statements Consolidated Balance Sheet as of March 31, 1999........................... 3 Consolidated Statement of Operations for the Quarter Ended March 31, 1999..................................................... 4 Consolidated Statement of Cash Flows For The Quarter Ended March 31, 1999..................................................... 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 INTERIM CONSOLIDATED BALANCE SHEET MARCH 31, 1999 AND DECEMBER 31, 1998
(Unaudited) March 31, December 31, ASSETS 1999 1998 ------------- -------------- Current Assets - -------------- Cash $ 1,549,597 $ 2,826,086 Accounts Receivable, net of Allowance for Doubtful Accounts of $45,061 and $45,165 339,748 271,240 ------------ ------------ Total Current Assets 1,889,345 3,097,326 Property and Equipment, Net 364,469 283,630 Intangible Assets-the MedCare Program, net of Accumulated Amortization of $85 and $68 915 932 ------------ ------------ Total Assets $ 2,254,729 $ 3,381,888 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities - ------------------- Accounts Payable $ 213,007 $ 260,142 Accrued Liabilities 85,898 209,601 ------------ ------------ Total Current Liabilities 298,905 469,743 Stockholders' Equity - -------------------- Preferred Stock $.25 Par Value, Authorized 1,000,000; Issued and outstanding, 50 Convertible Series A at March 31, 1999 and December 31, 1998 12 12 Common Stock - $0.001 Par Value Authorized 100,000,000; Issued and Outstanding, 7,831,105 and 7,825,105 Shares at March 31, 1999 and December 31, 1998, respectively 7,831 7,825 Additional Paid in Capital 9,414,173 9,396,179 Retained Earnings (7,466,192) (6,491,871) ------------ ------------ Total Stockholders' Equity 1,955,824 2,912,145 ------------ ------------ Total Liabilities and Equity $ 2,254,729 $ 3,381,888 ============ ============
3 MEDCARE TECHNOLOGIES, INC AND SUBSIDIARIES INTERIM CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(Unaudited) Three Months Three Months Ended Ended 3/31/99 3/31/98 -------------- -------------- Revenues $ 394,063 $ 227,008 General and Administrative Expenses 1,392,416 765,710 -------------- -------------- Operating Loss (998,353) (538,702) Interest Income 24,032 42,669 -------------- -------------- Net Loss Available to Common Stockholders (974,321) ($496,033) Loss Per Common Share & Common Share Equivalants (Basic & Diluted) ($0.12) ($0.06) Weighted Number of Common Shares Outstanding 7,829,949 7,734,915
4 MEDCARE TECHNOLOGIES, INC. AND SUBSIDIARIES INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(Unaudited) For the Three For the Three Months Ended Months Ended 3/31/99 3/31/98 ------------- ------------- Cash Flows from Operating Activities - Net Loss (974,321) ($496,033) Adjustments to Reconcile Net Loss to Net Cash Providing by Operating Activities: - -------------------------------------------------------------------------------- Depreciation and Amortization 20,541 3,385 Decrease in Accounts Receivable (68,508) (102,153) Increase in Prepaid Expenses 0 61,663 Increase (Decrease) in Accounts Payables and Accrued Liabilities (170,838) 46,952 ------------- ------------- Total Adjustments (218,805) 9,847 Net Cash Used by Operating Activities (1,193,126) (486,186) Cash Flow from Invesing Activities: - ----------------------------------- Purchase of Property & Equipment (101,363) (8,725) ------------- ------------- Net Cash Flows from Investing Activities (101,363) (8,725) Cash Flow from Financing Activity - --------------------------------- Proceeds from sale of common stock 18,000 1,281,000 Repayments to Officers 0 (1,000) ------------- ------------- Net Cash Provided by Financing Activities 18,000 1,280,000 Increase (Decrease) in Cash and Cash Equivalants ($1,276,489) $ 785,089 Cash and Cash Equivalants at Beginning of Period $ 2,826,086 $3,440,791 Cash and Cash Equivalants at End of Period $ 1,549,597 $4,225,880 Supplemental Information Cash Paid for: Interest 0 0 Income taxes 0 0
5 MEDCARE TECHNOLOGIES, INC. NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1999 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, 1999, the results of operations for the three months period ended March 31, 1999, and the statement of cash flows for the three months period ended March 31, 1999. 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 1998 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 1998 Annual Report on Form 10-KSB. 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. On January 21, 1999, the Company formed a new, wholly owned subsidiary of the Company, Medcareonline.com, Inc. In January 1999, the Company, through Medcareonline.com, Inc., announced its intention to offer a comprehensive healthcare portal offering adult gender specific health information. As of March 31, 1999, the Company has not generated any revenues from Medcareonline.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 ("UI") 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 through the practices of physicians, 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 contracting with additional physicians for utilization of the MedCare Program 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 74% increase in revenues over last year's first quarter results with revenues of $394,063 and $227,008 for the three months ended March 31, 1999 and 1998, respectively. As of March 31, 1999, the Company had 47 MedCare Program sites established versus 12 sites as of March 31, 1998. The Company has also introduced a new version of the MedCare Program to physicians which requires each new physician to share the up front costs, pay the clinician's salary and pay MedCare a set monthly management fee. Under the new version, the physician enjoys a potentially higher revenue stream, while at the same time allows MedCare to reach a greater number of doctors that were previously excluded from the MedCare Program. To date, the Company has not relied on any revenues for funding. During the next several years, 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, and possibly select foreign markets. In addition, during 1999, the Company expects to begin generating revenue from the sale of advertising from its new wholly-owned subsidiary, Medcareonline.com. General and Administrative Expenses. During the three months ended March 31, 1999, the Company incurred $1,392,416 in general and administrative expenses, an increase of 82% over first quarter 1998 expenses of $765,710. The Company experienced a $.12 per share loss for the quarter ended March 31, 1999, versus a $.06 per share loss for the quarter ended March 31, 1998. This increase is primarily attributable to costs associated with the development of advertising and marketing programs, public relations, hiring and training expenses of clinical and managerial personnel, development of Medcareonline.com, and ongoing general operating expenses. Interest Income. Interest income was $24,032 and $42,669 for the quarters ended March 31, 1999 and 1997, 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, 1999, the Company's accumulated deficit was $7,521,192. Accordingly, the Company has recorded a full valuation allowance against any income tax benefit to date. Liquidity and Capital Resources - ------------------------------- As of March 31, 1999, the Company's cash balance was $1,549,597 compared to $2,826,086 as of March 31, 1998. The Company has financed its operations primarily through private placement 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, recruiting and training qualified management and clinical personnel, competing against any potential technological advances in the treatment of urinary incontinence and other afflictions of the pelvic floor area, and the Company's ability to compete against 8 other better capitalized corporations who offer alternative or similar treatment options for urinary incontinence and other afflictions of the pelvic floor area. Due to the "start up" nature of the Company's business, the Company expects to incur losses as it expands its business. The Company may raise additional funds through private or public equity investment in order to expand the range and scope of its business operations. The Company may seek access to the private or public equity but there is no assurance that such additional funds will be available for the Company to finance its operations on acceptable terms, if at all. 9 PART II -- OTHER INFORMATION Item 1 Legal Proceedings - --------------------------- None Item 2 Changes in Securities - ------------------------------- As detailed in the financial statements, the Company issued 6,000 shares of its common stock due to the exercise of employee stock options during the first quarter of 1999. 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 - ------------------------------------------ On February 7, 1999, the Company filed a Form 8-K to disclose that it had formed a new wholly owned subsidiary of the Company, Medcareonline.com, Inc. 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 13, 1999 10 EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 1,549,597 0 339,748 45,061 0 1,889,345 364,469 20,541 2,254,729 298,905 0 0 12 7,831 1,947,981 2,254,729 394,063 394,063 0 0 1,392,416 0 0 (974,321) 0 (974,321) 0 0 0 (974,321) (.12) (.12)
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