<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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FORM 10-Q
[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from:
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Commission file number 0-27094
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FIRST AMERICAN SCIENTIFIC CORP.
(Exact name of Registrant as specified in its charter.)
NEVADA 88-0338315
(State of other jurisdiction of (IRS Employer
incorporation or organization) Identification
No.)
470 Granville Street, Suite 1122
Vancouver, British Columbia V6C 1V5
(Address of principal executive offices, including zip code.)
(604) 681-8656
Registrant's telephone number, including area code.
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 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 outstanding of the Registrant's Common
Stock, no par value per share, at March 31, 1996 was 8,505,117
shares.
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<PAGE> 2
PART I
ITEM 1. FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
FIRST AMERICAN SCIENTIFIC CORP.
(A Development Stage Company)
BALANCE SHEET
Unaudited - See Notes to Financials
March 31, 1996
<S> <C>
ASSETS
Bank $ 36,850
Other Assets
Technology license 675,000
Ultrasound equipment 789,388
Leasehold Improvements 5,476
Security deposit 8,510
____________
$ 1,515,224
============
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities
Accounts payable $ 23,857
Loan payable 274,141
Equipment agreement payable 127,000
Stockholder's Equity
Common stock - $.001 par value
50,000,000 shares authorized
8,505,117 shares issued 8,505
Additional paid in capital 1,400,818
Deficit accumulated during
the development stage (319,097)
___________
Total Stockholder's Equity 1,090,226
$ 1,515,224
============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 3
<TABLE>
<CAPTION>
FIRST AMERICAN SCIENTIFIC CORP.
(A Development Stage Company)
STATEMENT OF LOSS AND ACCUMULATED DEFICIT
For the period from inception (April 12, 1995)
through March 31, 1996
Unaudited - See Notes to Financials
Cumulative during
development
stage from inception
April 5, 1995 through
March 31, 1996
<S> <C>
INCOME $ 0
OPERATING EXPENSES 319,097
___________
NET INCOME (LOSS) $ (319,097)
===========
NET INCOME (LOSS) PER SHARE $ (0.04)
===========
</TABLE>
The Company is in the development stage and has not commenced
operations.
See accompanying notes to financial statements.
<PAGE> 4
FIRST AMERICAN SCIENTIFIC CORP.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
April 12, 1995 (Inception) through March 31, 1996
Unaudited - See Notes to Financials
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Retained
Shares Amount Capital Earnings
<S> <C> <C> <C> <C>
Balance
Inception 5/12/95 0 $ 0 $ 0 $ 0
Add:
Sale of 6,000,000 6,000,000 6,000 94,000 0
shares on 5/2/95,
for $100,000 cash.
Sale of 250,000 250,000 250 174,750 0
shares on 6/22/95
for $175,000 payment
on license agreement.
Sale of 600,000 600,000 600 269,400 0
shares on 9/18/95
for $270,000 cash.
Sale of 200,000 200,000 200 99,800 0
shares on 10/20/95,
in lieu of $100,000
management contract
payment.
Sale of 380,717 380,717 381 170,942 0
shares on 3/25/96,
in settlement of
debt conversion
for Canadian and
U.S. dollar loans.
Private placement 74,400 74 92,926 0
Sale of 74,400
shares at $1.25U.S.
Sale of 1,000,000 1,000,000 1,000 499,000 0
shares on 2/29/96
regarding purchase
of Gypsum SDM and
related technology,
per agreement.
</TABLE>
<PAGE> 5
FIRST AMERICAN SCIENTIFIC CORP.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
April 12, 1995 (Inception) through March 31, 1996
Unaudited - See Notes to Financials
con't
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Retained
Shares Amount Capital Earnings
<S> <C> <C> <C> <C>
Net Loss for the 319,097
period _________ ______ _________ ________
Balance, 3/31/96 8,505,117 $8,505 $1,400,818 $(319,097)
========= ===== ========= ========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 6
FIRST AMERICAN SCIENTIFIC CORP.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
April 12, 1995 (Inception) through March 31, 1996
Unaudited - See Notes to Financials
<TABLE>
<CAPTION>
Cumulative during
development state from
Inception (04-12-95)
through 03-31-96
<S> <C>
CASH FLOWS PROVIDED (USED) IN OPERATIONS
Net Income (loss) $ (319,097)
Adjustment to reconcile net loss
to net cash used by operating: 23,857
___________
Increase in accounts payable (295,240)
CASH FLOWS PROVIDED (USED) IN INVESTING ACTIVITIES
Payments for technology license (525,597)
Payments on license agreement (150,777)
___________
(971,614)
___________
CASH FLOWS PROVIDED (USED) IN FINANCING ACTIVITIES
Proceeds from sale of stock 785,235
Proceeds from loan agreement 223,229
___________
1,008,464
___________
NET INCREASE IN CASH $ 36,850
===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 0
Income tax $ 0
SUPPLEMENTAL SCHEDULE OF NONCASH ACTIVITIES
A payment on the technology license of
$175,000 was made by issuing 250,000
shares of common stock.
A payment on the management contract of
$100,000 was made by issuing 200,000
shares of common stock.
</TABLE>
See accompanying notes to financial statements.
<PAGE> 7
FIRST AMERICAN SCIENTIFIC CORP.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 1996
Unaudited - See Notes to Financials
NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES.
Organization
The First American Scientific Corp. was incorporated on April 12,
1995, under the laws of the State of Nevada. The Company has
adopted a year ending on June 30. The Company was organized to
become the manufacturer of rubber powder for industrial fillers.
Because of the speculative nature of the Company, there are
significant risks which are summarized as follows:
Newly formed company with no operation history and minimal
assets.
Limited funds available for expansion or operations.
The Company is considered to be in the development stage as
defined in Statement of Accounting Standards No. 7. There have
been no operations since incorporation.
Summary of Significant Accounting Principles
The ultrasound equipment will be depreciated over a fifteen year
life. The technology license will continue for ninety-nine years
but will be amortized over the estimated economic life of fifteen
years. Depreciation and amortization will begin when the
equipment is placed in service. Organization costs were expenses
when paid.
NOTE 2. TECHNOLOGY LICENSE
On June 22, 1995, the Company entered into a license agreement
with Spectrasonic Corp. for the worldwide license to its Sonic
Disintegration Equipment as it relates to rubber and glass
recycling and disposal and is for a period of ninety-nine years.
The purchase of this license and one SDM Machine was $550,000 and
values the license rights at $250,000. Since this initial
agreement, modifications were made to the first SDM bringing its
cots to $439,388, at March 31, 1996. This equipment is now ready
to be put into service. All loans in regard to the license right
and the first machine have been fully retired. A second machine
to be used in processing of gypsum materials has been delivered
and is ready for production.
<PAGE> 8
FIRST AMERICAN SCIENTIFIC CORP.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 1996
Unaudited - See Notes to Financials
NOTE 2. TECHNOLOGY LICENSE con't
On February 22, 1996, the Company entered into an additional
license agreement with Spectrasonic Corp. for the worldwide
license to its Ultrasound Equipment as it relates exclusively to
gypsum disintegration, disposal, recycling remanufacturing or
manufacturing ("disintegrate") using used or new raw materials.
The purchase price of this license and one SDM Machine for gypsum
was $775,000 with the parties agreeing that the technology
license is valued at $425,000 and the gypsum SDM machine is
valued at $350,000. There is a balance of $127,000 still owning
at March 31, 1996, and the machine is ready for production.
NOTE 3. OFFICES AND EMPLOYEES
The Company owns no real property. It leases 1,000 square feet
of office space at Suite 1122, 470 Granville Street, Vancouver,
British Columbia V6C 1V5 from L.C.M. Equities Inc. The current
lease is unwritten and is month to month. As well, the Company
leases 3,000 square feet of plant space at 450 Vanguard Road,
Richmond, British Columbia, V6X 2P4 from Spectrasonic Corp.,
pursuant to a written lease agreement dated December 1, 1995.
The lease is for a three year period commencing December 1, 1995
and ending November 30, 1998. Monthly rental is $2,775 per month
for the first two years, and increases 10% in the third year.
The Company currently has no full-time employees.
NOTE 4. TRANSLATION OF FOREIGN CURRENCY
The balance sheet as of March 31, 1996 is reported in U.S.
dollars. The conversion rate used is one Canadian dollar equal to
$0.74U.S. dollar. The cumulative translation adjustment is
calculated as follows:
Total Canadian funds received $ 772,633
Converted to U.S. dollars
($1.00 CAN is equal to $0.74 U.S.) 571,748
__________
Cumulative translation adjustment $ 200,885
Common stock issued for the payment on the license agreement was
recorded in U.S. dollars and no translation adjustment was
required.
<PAGE> 9
FIRST AMERICAN SCIENTIFIC CORP.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 1996
Unaudited - See Notes to Financials
NOTE 5. STOCKHOLDERS' EQUITY
Common Stock
All shares of stock issued have been paid for in cash or
property. All shares have been adjusted for the 6 for 10 reverse
stock split on August 14, 1995.
NOTE 6. MANAGEMENT CONTRACT
The Company has engaged Westmoreland Capital Corp. located at
Suite 1400, 1500 Georgia Street, Vancouver, British Columbia,
Canada V6G 2Z6, to supply management services to the Company.
The consideration for the services to be supplied by Westmoreland
is 650,000 "restricted" shares of common stock; 200,000 shares
valued at $100,000 were issued on October 20, 1995, 225,000
shares with an aggregate value of $112,500 are due within 30 days
of the fabrication of the first Sonic Disintegration Micronizer
and installation of the Sonic Disintegration Micronizer in an
operational plant capable of commercial production of at least
two tons per hour, for an eight hour shift for ten consecutive
days of operation, and, 225,000 shares with an aggregate value of
$112,500 are due upon the Company having been operating for three
months with positive cash flow, wherein revenue exceeds expenses
before taxes. Westmoreland shall also receive $0.005 U.S. per
pound for all rubber powder produced, sold and paid for pursuant
to the Spectrasonic Licensing Agreement.
NOTE 7. STOCK COMPENSATION PLANS
The Company has adopted a consultant and employee stock
compensation plan. The total number of shares included in the
Plan is 350,000. Any shares issued as a result of the exercise
of options thereunder will be "restricted securities." No
options have been issued. Options may only be granted to
employees and consultants of the Company. The Board of Directors
is vested with authority and discretion to prescribed, amend and
rescind rules and regulations relating to the plan. The Company
has also adopted a directors and officers' stock option plan.
Directors have approved a plan for 1,000,000. To date there has
been no allotment of this to eligible directors and officers.
<PAGE> 10
FIRST AMERICAN SCIENTIFIC CORP.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 1996
Unaudited - See Notes to Financials
NOTE 8. RELATED PARTY TRANSACTION
Spectrasonic Corp. (see note 2 above) and Westmoreland Capital
Corp. (see note 7 above) are owned and controlled by John Sand
and John Martin, each of whom own 50% of the outstanding common
stock of each entity.
NOTE 9. IMPAIRMENT OF LONG-LIVED ASSETS
Management of the Company intends to review annually events or
changes in circumstances that indicate the carrying amount of an
asset may not be recoverable. Statement of Financial Accounting
Standard No. 121 will be applied to long-lived assets for the
year beginning after December 31, 1995.
NOTE 10. EARNINGS (LOSS) PER SHARE
The shares issued as at March 31, 1996 amounted to 8,505,117
shares. The net loss for the period from inception (April 12,
1995) through March 31, 1996 amounted to $(319,097).
Accordingly, the net loss per share as of March 31, 1996 is
$(0.04) per share.
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULT OF OPERATIONS.
Liquidity and Capital Resources
The Company is considered to be in the development stage as
defined in Statement of Accounting Standards No 7. There have
been no operations since incorporation on April 12, 1995 and all
funds required to maintain liquidity have been raised through
sale of stock and loans. The Company will continue to raise funds
from sale of stock and a private loan agreement with LCM Equity
Inc. until it becomes operational. It is anticipated that
operations will commence in July, 1996.
Results of Operations
The initial technology acquired by the Company involved the
processing of crumb rubber and reducing it to a very fine powder.
The technology was detailed in the previous filing of quarterly
results. In February, 1996, the Company entered into another
technology agreement whereby it has acquired the right to
exploit, develop, use, manufacture, market, distribute and sell
ultrasound equipment developed by Spectrasonic Corp as it relates
to gypsum disintegration, disposal, recycling, remanufacturing or
manufacturing used or new materials. Payment in the amount of
$275,000 U.S. has been made, with $127,000 being paid in April,
1996. In addition, there has been 1,000,000 common shares of
First American issued at a price of $0.50 U.S. each for an
additional consideration of $500,000 U.S. All technology
acquired to date is fully paid for.
As at March 31, 1996, the Loan Agreement with LCM Equity Inc has
resulted in a total of $171,323U.S. in loans being converted to
common stock. All conversions are the result of a Loan Agreement
dated October 30, 1995 wherein LCM Equity has conversion rights.
The Company has sufficient liquidity to meet all obligations and
will have sufficient liquidity to commence operations in July,
1996. The delay from April to July, 1996, in commencement of
operations will allow the Company sufficient time to install a
machine for the processing of gypsum. It is planned that this
operation will open in Bakersfield, California, July 1, 1996. The
Company continues to refine the technology re processing of crumb
rubber and expects it to be operational in July, 1996 as well.
To March 31, 1996, the Company has issued a total of 8,505,117
common shares for a total capitalization of $1,409,323U.S. In
addition to common stock issued as described above, common stock
was also issued for a private placement of $93,000U.S. resulting
in the issuance of 74,400 common shares.
<PAGE> 12
The Company now owns 2 SDM Machines, one for processing rubber
and one for processing of gypsum. The Company intends to install
at least one SDM Machine and probably two machines in Bakersfield
for the processing of gypsum and related products.
The Statement of Expense for March 31, 1996 totals $319,097 for a
recorded loss per common share of $0.04 per share. Included in
expenses is the amount of $100,000 paid to Westmoreland Capital
for management services. This payment was effected by the
issuance of 200,000 common shares at $0.50 per share. There has
been no depreciation claimed to date, as the policy of the
Company is to commence depreciation on equipment once production
proceeds. Expenses incurred to date are primarily related to
start up expenses, being legal, accounting and other professional
services, and the Company expects that expenses will be minimal
leading up to the start of production.
Inflation
Inflation has not been a factor in the start up costs incurred by
the Company. The Company has no revenues to date, and the minor
rates of inflation have had no effect on the process of
assembling equipment and facilities for production.
Foreign Operations
The Company has a rented facility in Vancouver, B.C. Canada,
wherein it proposes to process crumb rubber into fine powder. It
also intends to use this facility as a research facility for
continuing development of the technology and its applications.
The Company has obtained registration to do business in British
Columbia but to date, has not formed a wholly owned subsidiary.
<PAGE> 13
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.
Dated this 17th day of May, 1996.
FIRST AMERICAN SCIENTIFIC CORP.
(the "Registrant")
BY: /s/ Jack Lovelock, Chief Executive Officer and a member of
the Board of Directors.
BY: /s/ Robert G. Dinning, Secretary/Treasurer, Chief Financial
Officer and a Member of the Board of Directors.
<PAGE>
<PAGE> 14
EXHIBIT INDEX
Exhibit
No. Description
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains financial information extracted from the Statement of
Financial Condition at March 31, 1996 (Unaudited) and the Statement of Income
from inception on April 5, 1995 through March 31, 1996 (Unaudited) and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> MAR-31-1996
<CASH> 36,850
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,478,374
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,515,224
<CURRENT-LIABILITIES> 424,998
<BONDS> 0
0
0
<COMMON> 8,505
<OTHER-SE> 1,081,721
<TOTAL-LIABILITY-AND-EQUITY> 1,515,224
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 319,097
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (319,097)
<EPS-PRIMARY> (0.04)
<EPS-DILUTED> (0.04)
</TABLE>
