UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934, FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
[ ] 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.
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(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.)
125 Moen Avenue, Cranford, New Jersey 07016
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(Address of principal executive offices)
(908) 709-3434
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(Issuer's telephone number, including area code)
Not Applicable
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(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 X No ____.
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of May 12, 1997, 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 .
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
HumaScan Inc.
(A Development Stage Enterprise)
Condensed Balance Sheet
December 31, 1996 and March 31, 1997
<TABLE>
<CAPTION>
12/31/96 3/31/97
------------ ----------------
(Unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 6,413,062 $ 5,424,135
Investments 6,096,449 6,180,427
Prepaid Expenses 115,557 120,400
------------ ------------
Total current assets 12,625,068 11,724,962
Property, plant and equipment, net 480,756 586,909
Other assets 1,363,206 1,395,885
------------ ------------
Total assets $ 14,469,030 $ 13,707,756
============ ============
Liabilities and Stockholder's Equity
Current Liabilities:
Accounts payable 215,603 105,223
Accrued expenses 1,200,904 1,155,616
Obligations under capital lease 8,283 8,586
Total current liabilities 1,424,790 1,269,425
------------ ------------
Obligations under capital lease, noncurrent portion 35,657 33,393
Stockholders' equity:
Common Stock, $0.01 par value, 25,000,000 shares authorized;
in 1996 and 1997, 7,720,313 shares issued and outstanding 77,204 77,204
Additional paid-in capital 14,774,732 14,774,732
Deficit accumulated during the development stage (1,843,353) (2,446,998)
Total stockholders' equity 13,008,583 12,404,938
------------ ------------
Total liabilities and stockholders' equity $ 14,469,030 $ 13,707,756
============ ============
</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 Ended March 31, 1997 and 1996
and for the period from December 27, 1994 (date of inception) to March 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
For the Period
Three Months Ended from 12/27/94
------------------------------- (date of inception)
3/31/97 3/31/96 to 3/31/97
----------- ----------- -----------
<S> <C> <C> <C>
Interest income $ 160,224 $ 1,246 $ 418,007
----------- ----------- -----------
Operating Expenses:
Facility costs 178,324 1,936 280,099
Marketing expenses 155,851 18,782 481,116
General and administrative expenses 295,060 130,021 1,386,500
Clinical development expenses 132,971 1,264 337,958
Interest expense 1,663 87,605 379,332
----------- ----------- -----------
763,869 239,608 2,865,005
----------- ----------- -----------
Net loss ($ 603,645) ($ 238,362) ($2,446,998)
=========== =========== ===========
Net loss per common share ($ 0.08) ($ 0.06)
=========== ===========
Shares used in computing
net loss per share 7,720,313 4,326,719
=========== ===========
</TABLE>
See accompanying notes to unaudited condensed financial statements.
- 3 -
<PAGE>
HumaScan Inc.
(A Development Stage Enterprise)
Condensed Statements of Cash Flows
For the three months ended March 31, 1997 and 1996 and for the period from
December 27, 1994 (date of inception) to March 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Three months Period from
ended March 31, December 27, 1994
---------------------------- (date of inception)
1997 1996 to March 31, 1997
------------ ----------- ----------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss ($ 603,645) ($ 238,362) ($ 2,446,998)
Adjustments to reconcile net loss to net cash used in
operating activities:
Noncash miscellaneous expenses -- 10,000 17,000
Noncash interest expense -- 87,605 343,485
Depreciation expense 24,062 1,886 48,809
Changes in operating assets and liabilities:
Increase in other assets (26,227) -- (125,521)
Decrease (increase) in prepaid expenses (4,843) 5,000 (120,400)
Increase (decrease) in accounts payable (110,380) -- 105,223
Increase (decrease) in accrued expenses (45,288) 35,218 95,616
------------ ------------ ------------
Net cash used in operating activities (766,321) (98,653) (2,082,786)
============ ============ ============
Cash flows from investing activities:
Increase in other assets -- (350,000) --
Purchase of property, plant and equipment (130,215) -- (585,729)
Payments for production line (6,452) -- (1,270,364)
Payments in connection with license agreement -- -- (550,000)
Purchase of investments (83,978) -- (6,180,427)
------------ ------------ ------------
Net cash used in investing activities (220,645) (350,000) (8,586,520)
============ ============ ============
Cash flows from financing activities:
Proceeds from issuance of common stock -- -- 208,600
Proceeds from officer loan -- -- 125,000
Payments on officer loan -- -- (91,000)
Proceeds from borrowings of notes payable -- 460,000 810,000
Principal payments on obligation under capital lease (1,961) (573) (8,010)
Proceeds from initial public offering -- -- 14,001,418
Proceeds from private placement -- -- 1,047,433
------------ ------------ ------------
Net cash provided by financing activities (1,961) 459,427 16,093,441
============ ============ ============
Net increase in cash (988,927) 10,774 5,424,135
Cash and cash equivalents, beginning of period 6,413,062 218,520 --
------------ ------------ ------------
Cash and cash equivalents, end of period $ 5,424,135 $ 229,294 $ 5,424,135
============ ============ ============
Supplemental disclosure of noncash transactions:
Amounts due in connection with license agreement $ 1,050,000 -- $ 1,050,000
============ ============ ============
Dollar value of common stock issued in connection with license agreement $ 3,291 -- $ 12,291
============ ============ ============
Dollar value of equipment acquired under capital lease $ 49,989 $ 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
March 31, 1997 and 1996
(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 1996 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 March 31, 1997 and its results of operations and cash
flows for the three and nine months ended March 31, 1997 and 1996 and for the
period December 27, 1994 (date of inception) to March 31, 1997. 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.
Pro forma net loss per share was calculated by dividing the net loss by
the weighted average number of common shares outstanding for the period adjusted
for the dilutive effect of common stock equivalents which consist of stock
options and warrants using the treasury stock method. Pro forma net loss per
share gives effect to certain adjustments described below.
Pursuant to Securities and Exchange Commission (SEC) Staff Accounting
bulletins and SEC Staff policy, prior to the year in which the initial public
offering became effective, common equivalent shares issued during the
twelve-month period prior to the initial public offering at prices below the
initial public offering price are presumed to have been issued in contemplation
of the initial public offering and have been included in the calculation as if
they were outstanding for all periods presented (using the treasury stock method
and an initial public offering price of $6.00 per share).
-5-
<PAGE>
Pursuant to the policy of the SEC Staff, the calculation of shares used
in computing pro forma net loss per share for 1995 includes all of the preferred
stock that converted into shares of common stock upon completion of the initial
public offering (using the treasury stock method and an initial public offering
price of $6.00 per share) as if they were outstanding for all periods presented.
Pursuant to the policy of the SEC Staff, the calculation of shares used
in computing pro forma net loss per share in 1996, the fiscal year the initial
public offering became effective, also includes calculation of stock options and
warrants as if they were outstanding throughout the interim period (March 1996)
contained in the prospectus.
-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 BreastAlert(TM) device. The
Company has generated no revenues to date and, from inception (December 27,
1994) until March 31, 1997, the Company accumulated a deficit of $2,446,998.
Operating expenses consist of facility costs, marketing expenses,
general and administrative expenses, clinical development expenses, and interest
expense. Operating expenses increased $524,261 during the three month period
ended March 31, 1997 over the comparable year earlier period due to the hiring
of personnel and increased clinical and marketing expenses in anticipation of
commercializing the BreastAlert device. 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
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, which
generated net proceeds to the Company of approximately $14.0 million after
underwriting fees and offering expenses. At March 31, 1997, the Company had cash
and cash equivalents of $5,424,135 and investments of $6,180,427. Cash balances
in excess of those required to fund operations have been invested in
interest-bearing government securities or short-term investment grade
securities. The Company's working capital of $10.4 million at March 31, 1997
reflected a decrease of $0.7 million from December 31, 1996.
As of March 31, 1997, the Company had $41,979 outstanding on an
obligation under a capital lease. No lines of credit were outstanding at March
31, 1997.
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 the
first quarter of 1998. The Company's future liquidity and capital funding
requirements will depend on numerous factors, including results of clinical
trials, the extent to which the BreastAlert 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 6. Exhibits and reports on Form 8-K.
(a) Exhibits.
27. Financial Data Schedule (3/31/97)
(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: May 12, 1997
-9-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1.000
<CASH> 5,424,135
<SECURITIES> 6,180,427
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 11,724,962
<PP&E> 586,909
<DEPRECIATION> 0
<TOTAL-ASSETS> 13,707,756
<CURRENT-LIABILITIES> 1,269,425
<BONDS> 0
0
0
<COMMON> 77,204
<OTHER-SE> 12,327,734
<TOTAL-LIABILITY-AND-EQUITY> 13,707,756
<SALES> 0
<TOTAL-REVENUES> 160,224
<CGS> 0
<TOTAL-COSTS> 763,869
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (603,645)
<INCOME-TAX> 0
<INCOME-CONTINUING> (603,645)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (603,645)
<EPS-PRIMARY> (0.08)
<EPS-DILUTED> (0.08)
</TABLE>
