UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------
FORM 10-QSB/A
/X/ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
/ / ACT OF 1934, FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
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
0-21015
HUMASCAN INC.
(Exact name of small business issuer as specified in its charter)
Delaware 22-3345046
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
514 Centennial Avenue, Cranford, New Jersey 07016
(Address of principal executive offices)
(908) 709-3434
(Issuer's telephone number, including area code)
Not Applicable
(Former name, former address, and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 / / No /X/ * .
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date; As of September 1, 1996, Issuer had
outstanding 7,720,313 shares of common stock, par value $.01 per share.
Transitional small business disclosure format (check one): Yes / / No /X/ .
* Registrant became subject to the filing requirements of the Securities
Exchange Act of 1934 on August 19, 1996, when its Registration Statements on
Form SB-2 and Form 8-A were declared effective by the Commission.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
HumaScan Inc,
(A Development Stage Enterprise)
Condensed Balance Sheet
December 31, 1995 and June 30, 1996
<TABLE>
<CAPTION>
12/31/95 6/30/96
----------- ------------
(Unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash $ 218,520 $ 232,525
Prepaid Expenses 5,000 0
------------ -----------
Total current assets 223,520 232,525
Property, plant and equipment, net 4,400 49,783
Other assets 145,000 922,358
------------ -----------
Total assets $ 372,920 $1,204,666
============ ===========
Liabilities and Stockholder's Deficit
Current Liabilities:
Notes payable 350,000 0
Accrued expenses 1,493,571 1,149,561
Due to officer 125,000 0
Obligations under capital lease 0 7,708
------------ -----------
Total current liabilities 1,968,571 1,157,269
Obligations under capital lease, noncurrent portion -- 39,948
Series A Convertible Preferred Stock (redeemable), $0.01 par value, 6,000,000
shares authorized; in 1995, no shares issued and outstanding; in 1996,
2,943,750 shares issued and outstanding shown net of stock
subscriptions receivable of $4,479,300 -- 1,916,633
Stockholders' deficit:
Common Stock, $0.01 par value, 25,000,000 shares authorized; in 1995, 1,747,500
shares issued and outstanding; in 1996,
2,076,563 shares issued and outstanding 17,475 20,766
Additional paid-in capital (1,401,875) (1,061,681)
Deficit accumulated during the development stage (211,251) (868,269)
------------ -----------
Total stockholders' deficit (1,595,651) (1,909,184)
------------ -----------
Total liabilities and stockholders' deficit $ 372,920 $ 1,204,666
============ ===========
</TABLE>
See accompanying notes to unaudited condensed financial statements.
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<PAGE>
HumaScan Inc.
(A Development Stage Enterprise)
Condensed Statements of Operations
For the Three Months and Six Months Ended June 30, 1996 and 1995
and for the period from December 27, 1994 (date of inception) to June 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
For the Period
from 12/27/94
Three Months Ended Six Months Ended (date of inception)
6/30/96 6/30/95 6/30/96 6/30/95 to 6/30/96
----------- ----------- ----------- ----------- -----------
Interest income $ 1,888 $ -- $ 3,134 $ -- $ 4,033
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Operating Expenses:
Salaries 73,265 -- 128,854 -- $ 128,854
Consulting fees 30,361 12,250 52,253 38,750 145,095
Legal/Professional fees 3,345 -- 42,668 20,683 142,640
Interest expense 275,864 -- 363,469 -- 370,510
Other 37,709 1,214 72,908 3,405 85,203
----------- ----------- ----------- ----------- -----------
420,544 13,464 660,152 62,838 872,302
=========== =========== =========== =========== ===========
Net loss ($ 418,656) ($ 13,464) ($ 657,018) ($ 62,838) ($ 868,269)
=========== =========== =========== =========== ===========
Net loss per common share ($ 0.08) $ 0.00 ($ 0.14) ($ 0.02)
=========== =========== =========== ===========
Shares used in computing
net loss per share 5,124,926 4,326,718 4,725,822 3,895,406
=========== =========== =========== ===========
</TABLE>
See accompanying notes to unaudited condensed financial statements.
-3-
<PAGE>
HumaScan Inc.
(A Development Stage Enterprise)
Condensed Statements of Cash Flows
For the six months ended June 30, 1996 and 1995
and for the period from December 27, 1994 (date of inception)
to June 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Six months Period from
ended June 30, December 27, 1994
----------------------------- (date of inception)
1996 1995 to June 30, 1996
---------- ---------- ----------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss ($ 657,018) ($ 62,838) ($ 868,269)
Adjustments to reconcile net loss to net cash used in
operating activities:
Noncash miscellaneous expenses 10,000 -- 10,000
Noncash interest expense 343,485 -- 343,485
Depreciation expense 4,606 -- 4,606
Changes in operating assets and liabilities:
Increase in other assets (162,358) -- (202,358)
Decrease in prepaid expenses 5,000 -- --
Increase in accrued expenses 45,990 -- 89,561
---------- ---------- ----------
Net cash used in operating activities (410,295) (62,838) (622,975)
---------- ---------- ----------
Cash flows from investing activities:
Increase in other assets -- -- --
Purchase of property, plant and equipment -- -- (4,400)
Payments for production line (615,000) -- (720,000)
Payments in connection with license agreement (400,000) (100,000) (550,000)
---------- ---------- ----------
Net cash used in investing activities (1,015,000) (100,000) (1,274,400)
---------- ---------- ----------
Cash flows from financing activities:
Proceeds from issuance of common stock -- 203,600 215,600
Proceeds from officer loan -- -- 125,000
Payments on officer loan (91,000) -- (91,000)
Proceeds from borrowings of notes payable 460,000 -- 810,000
Principal payments on obligation under capital lease (2,333) -- (2,333)
Proceeds from Private Placement 1,072,633 -- 1.072,633
---------- ---------- ----------
Net cash provided by financing activities 1,439,300 203,600 2,129,900
---------- ---------- ----------
Net increase in cash 14,005 40,762 232,525
Cash, beginning of period 218,520 -- --
---------- ---------- ----------
Cash, end of period $ 232,525 $ 40,762 $ 232,525
========== ========== ==========
Supplemental disclosure of noncash transactions:
Amounts due in connection with license agreement $1,050,000 $1,500,000 $1,050,000
========== ========== ==========
Dollar value of common stock issued in connection with license agreement $ 3,291 $ 9,000 $ 12,291
========== ========== ==========
Dollar value of equipment acquired under capital lease $ 49,989 -- $ 49,989
========== ========== ==========
Conversion of notes payable to preferred stock $ 810,000 -- $ 810,000
========== ========== ==========
Conversion of officer loan to preferred stock $ 34,000 -- $ 34,000
========== ========== ==========
</TABLE>
See accompanying notes to unaudited condensed financial statements.
-4-
<PAGE>
HUMASCAN INC.
(A Development Stage Enterprise)
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 1996 and 1995
(UNAUDITED)
(1) Basis of Presentation
The unaudited condensed financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission and in accordance with generally accepted
accounting principles. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. These unaudited financial statements should be read in conjunction
with the 1995 financial statements and notes thereto.
In the opinion of the Company's management, the accompanying unaudited
condensed financial statements have been prepared on a basis substantially
consistent with the audited financial statements and contain adjustments, all of
which are of a normal recurring nature, necessary to present fairly its
financial position as of June 30, 1996 and its results of operations and cash
flows for the three and six months ended June 30, 1996 and 1995 and for the
period December 27, 1994 (date of inception) to June 30, 1996. Interim results
are not necessarily indicative of results for the full fiscal year.
On July 23, 1996, the Company amended the certificate of incorporation
to increase its authorized shares of common stock to 25,000,000 and to effect a
four-to-three reverse split of its common stock. All common share and per share
amounts in the accompanying financial statements have been retroactively
adjusted to reflect this reverse split.
(2) Financing Transactions
The unaudited June 30, 1996 balance sheet reflects the following
transactions:
o The conversion/partial repayment of amounts due to the chief
executive officer.
o The conversion of the $350,000 November Bridge
Notes into 262,500 shares of Series A Convertible
Preferred Stock.
- 5 -
<PAGE>
o The issuance of an additional 329,063 shares of common stock to
Scantek Medical, Inc. ("Scantek") in connection with the terms
of the License Agreement dated as of October 20, 1995, as
amended, between Scantek and the Company.
o The exchange of $434,800 aggregate principal amount (net of
$25,200 in over-subscriptions) of March Bridge Notes for units
of Series A Convertible Preferred Stock and warrants to
purchase common stock in connection with the sale of 71.5 units
in a private placement, resulting in the issuance of 2,681,250
shares of Series A Convertible Preferred Stock. Proceeds of
such sales represented 37% of the total $7,150,000
consideration for all the units, less the $434,800 March
Bridge Notes, in accordance with the terms of the private
placement.
(3) Completion of Initial Public Offering
On August 19, 1996, the Company completed an initial public offering of
2,700,000 shares of its common stock at a price of $6.00 per share. The
Company's net proceeds from the offering were approximately $14.0 million after
underwriting fees and offering expenses. Simultaneously with the closing of the
Company's initial public offering, all of the outstanding shares of Series A
Preferred Stock converted automatically on a share-for-share basis into
2,943,750 shares of common stock and the stock subscription was forgiven in
accordance with the terms of the Series A Preferred Stock.
(4) Lease Commitment
In June 1996, the Company leased a facility under a six year lease,
commencing October 1996, with aggregate rental payments of $875,400.
- 6 -
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND PLAN OF OPERATION
Plan of Operation
The Company is devoting substantially all of its present efforts to
establishing a new business by commercializing the BreastAssure(TM) device. The
Company has generated no revenues to date and, from inception (December 27,
1994) until June 30, 1996, the Company accumulated a deficit of $868,269.
Operating expenses consist of personnel salaries and benefits,
consulting and professional fees, interest expenses and general and
administrative expenses. Operating expenses increased $407,080 and $597,314,
respectively, during the three and six month periods ended June 30, 1996 over
the comparable year earlier periods due to the hiring of personnel, increased
consulting, legal and professional fees in anticipation of the Company's initial
public offering and increased interest expenses (which includes a noncash charge
of approximately $343,000 related to warrants issued by the Company to bridge
financing investors). The Company anticipates that selling, general and
administrative expenses will increase during the next several years due to the
expansion of its corporate infrastructure, primarily in manufacturing, sales,
marketing and finance.
Liquidity and Capital Resources
The Company has financed its operations since inception primarily
through the issuance of promissory notes and proceeds from the private placement
of its equity securities. In May 1996, the Company sold 71.5 units in a private
placement, each unit consisting of 37,500 shares of Series A Preferred Stock and
7,500 Private Warrants, for an aggregate payment of $2,645,500.
At June 30, 1996, the Company had cash and cash equivalents of
$232,525. On August 19, 1996, the Company completed an initial public offering
of 2,700,000 shares of common stock at a price of $6.00 per share, which
generated net proceeds to the Company of approximately $14.0 million after
underwriting fees and offering expenses.
As of June 30, 1996, the Company had $47,656 outstanding on an
obligation under a capital lease. No lines of credit were outstanding at June
30, 1996.
The Company anticipates, based on its currently proposed plans and
assumptions relating to its operations, that its existing cash resources will be
sufficient to satisfy its contemplated cash requirements through at least 1997.
The Company's future liquidity and capital funding requirements will depend on
numerous factors, including results of clinical trials, the extent to which the
BreastAssure device gains market acceptance, the costs and timing of expansion
of sales, marketing and manufacturing activities and competition.
- 7 -
<PAGE>
HUMASCAN INC.
(A Development Stage Enterprise)
Part II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
By written consents dated as of July 17, 1996, the holders of a
majority of the shares of common stock and Series A Preferred Stock, and the
holders of a majority of the shares of Common Stock acting as a class, adopted
resolutions authorizing an amendment of the Company's Certificate of
Incorporation to effect a four-to-three reverse stock split and an increase in
the authorized number of shares of common stock to 25,000,000 shares and
approving the Company's 1996 Stock Incentive Plan.
Item 5. Other Information.
On August 19, 1996, the Company consummated an initial public offering
of 2,700,000 shares of its Common Stock for $6.00 per share, generating net
proceeds of approximately $14.0 million after deducting underwriting discounts
and commissions and offering expenses.
Item 6. Exhibits and reports on Form 8-K.
(a) Exhibits.
27. Financial Data Schedule (6/30/96)
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter for which
this report on Form 10-QSB is filed.
- 8 -
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
HUMASCAN INC.
(Registrant)
/s/ KENNETH S. HOLLANDER
--------------------------------------
Kenneth S. Hollander
Chief Financial Officer (Principal
Financial and Accounting Officer)
Date: October 4, 1996
- 9 -
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 232,525
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 233,525
<PP&E> 49,783
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,204,666
<CURRENT-LIABILITIES> 1,157,269
<BONDS> 0
1,916,633
0
<COMMON> 20,766
<OTHER-SE> (1,929,950)
<TOTAL-LIABILITY-AND-EQUITY> 1,204,666
<SALES> 0
<TOTAL-REVENUES> 3,134
<CGS> 0
<TOTAL-COSTS> 296,683
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 363,469
<INCOME-PRETAX> (657,018)
<INCOME-TAX> 0
<INCOME-CONTINUING> (657,018)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (657,018)
<EPS-PRIMARY> (0.14)
<EPS-DILUTED> (0.14)
</TABLE>