UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO 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 ______
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LIFESTREAM TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
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NEVADA 82-0487965
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
515 PINE STREET, SUITE 200, SANDPOINT, IDAHO 83864
(Address of principal executive offices)
(208) 263-5433
(Registrant's telephone number, including area code)
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 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 as of May 4,
1998 was 8,502,829.
Transitional Small Business Disclosure Format. Yes [ _ ] No [ X ]
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LIFESTREAM TECHNOLOGIES, INC.
FORM 10-QSB
FOR THE QUARTER ENDED MARCH 31, 1997
INDEX
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PART I. FINANCIAL INFORMATION
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Item 1. Consolidated Financial Statements
Balance Sheets for the three months ended March 31, 1997
and the year ended December 31, 1996 2
Statements of Loss for the three months ended March 31,
1997 and 1996, and from the period from date of inception
(August 7, 1992) through March 31, 1997 3
Statements of Cash Flows for the three months ended March
31, 1997 and 1996, and from the period from date of
inception (August 7, 1992) through March 31, 1997 4
Notes to consolidated financial statements 5
Item 2. Management's Discussion and Analysis or Plan of Operation 7
PART II. OTHER INFORMATION 12
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES 13
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<TABLE>
<CAPTION>
Part I. FINANCIAL INFORMATION Lifestream Technologies, Inc.
Item 1. Financial Statements (A Development Stage Company)
Consolidated Balance Sheets
March 31, December 31,
1997 1996
- -----------------------------------------------------------------------------------------------------------
Unaudited
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Assets
Current assets:
Cash $ 18,034 $ 5,229
Interest receivable, officer 5,123 4,019
Inventory and supplies 35,731 35,731
Prepaid expenses 3,000 27,000
- -----------------------------------------------------------------------------------------------------------
Total current assets 61,888 71,979
- -----------------------------------------------------------------------------------------------------------
Equipment and leasehold improvements, net 16,837 16,135
- -----------------------------------------------------------------------------------------------------------
Other assets:
Patent, net 1,713,593 1,748,457
Note receivable, officer 58,689 54,189
Other 7,707 10,706
- -----------------------------------------------------------------------------------------------------------
Total other assets 1,779,989 1,813,352
- -----------------------------------------------------------------------------------------------------------
Total assets $ 1,858,714 $ 1,901,466
- -----------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 227,509 $ 221,777
Interest payable 10,196 6,242
Notes payable 46,144 46,144
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Total current liabilities 283,849 274,163
Convertible debt 100,000 50,000
- -----------------------------------------------------------------------------------------------------------
Total liabilities 383,849 324,163
- -----------------------------------------------------------------------------------------------------------
Commitments and Contingencies
Stockholders' equity:
Preferred stock - -
Common stock 7,657 7,387
Additional paid-in capital 3,455,098 3,415,368
Deficit accumulated during the development stage (1,987,890 ) (1,845,452 )
- -----------------------------------------------------------------------------------------------------------
Total stockholders' equity 1,474,865 1,577,303
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Total liabilities and stockholders' equity $ 1,858,714 $ 1,901,466
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</TABLE>
See accompanying notes to consolidated financial statements.
2
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<TABLE>
<CAPTION>
Lifestream Technologies, Inc.
(A Development Stage Company)
Consolidated Statements of Loss
Cumulative
Amounts from
Date of Inception
(August 7, 1992) Three Months Ended
through March 31,
March 31, --------------------------------
1997 1997 1996
- -----------------------------------------------------------------------------------------------------------
Unaudited Unaudited Unaudited
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Revenues $ - $ - $ -
Operating Expenses:
Depreciation and amortization 457,695 36,385 36,081
Professional services 815,342 52,232 2,926
Travel 170,374 4,644 2,027
Research and product development 122,138 12,576 300
Salaries and wages 132,750 25,000 8,000
Other, general office 297,093 9,999 4,462
- -----------------------------------------------------------------------------------------------------------
Total operating expenses 1,995,392 140,836 53,796
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Loss from operations (1,995,392) (140,836) (53,796)
Other (expense) income, net 7,502 (1,602) 15,138
- -----------------------------------------------------------------------------------------------------------
Net loss $ (1,987,890) $ (142,438) $ (38,658)
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Net loss per share $ (0.02) $ (0.01)
- -----------------------------------------------------------------------------------------------------------
Weighted average number of shares
outstanding
7,522,031 6,469,541
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</TABLE>
See accompanying notes to consolidated financial statements.
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<TABLE>
<CAPTION>
Lifestream Technologies, Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flows
Increase (Decrease) in Cash
Date of
Inception
(August 7, 1992) Three Months Ended
through March 31,
March 31, ------------------------------
1997 1997 1996
- -----------------------------------------------------------------------------------------------------------
Unaudited Unaudited Unaudited
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Net cash used in operating activities $ (640,677) $ (34,972) $ 8,914
- ---------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Capital expenditures (30,574) (2,223) (710)
Advances to officer (58,208) - -
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Net cash used in investing activities (88,782) (2,223) (710)
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Cash flows from financing activities:
Proceeds from issuance of convertible debt 100,000 50,000 -
Proceeds from stock options exercised 38,179 - -
Proceeds from sale of common stock 383,170 - -
Net proceeds from notes payable 226,144 - -
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Net cash provided by financing activities 747,493 50,000 -
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Net increase in cash 18,034 12,805 8,204
Cash at beginning of period - 5,229 305
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Cash at end of period $ 18,034 $ 18,034 $ 8,509
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Supplemental schedule of non-cash investing and
financing activities:
Issuance of common stock in exchange for:
Patent and distribution rights $ 2,116,865 $ - $ -
Reduction of note payable $ 185,000 $ - $ 135,000
Reduction of accrued interest $ 2,033 $ - $ 2,033
Reduction of accounts payable $ 90,381 $ - $ -
- ----------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
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Lifestream Technologies, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
A. Basis of In the opinion of management, the accompanying
Presentation unaudited consolidated balance sheets and related
interim consolidated statements of loss and cash
flows include all adjustments (consisting only of
normal recurring items) necessary for their fair
presentation in conformity with generally accepted
accounting principles. Preparing financial statements
requires management to make estimates and assumptions
that affect the reported amount of assets,
liabilities, revenue and expenses. Examples include
provisions for returns and bad debt and the length of
product life cycles and buildings' lives. Actual
results may differ from these estimates. Interim
results are not necessarily indicative of results for
a full year. The information included in this Form
10-QSB should be read in conjunction with
Management's Discussion and Analysis and the
financial statements and notes thereto included in
the Lifestream Technologies, Inc. Form 10-KSB for the
year ended December 31, 1997.
B. Development Stage The Company has been in the development stage since
Operations and its inception. The Company has had no recurring
Going Concern source of revenue, has incurred operating losses
since inception and, at March 31, 1997, has a working
capital deficiency. These factors raise substantial
doubt about the Company's ability to continue as a
going concern. The financial statements do not
include any adjustments that may be necessary if the
Company is unable to continue as a going concern.
Management of the Company has undertaken certain
actions to address these conditions. These actions
include seeking new sources of capital or funding to
allow the Company to commence production of its
products. The Company anticipates commencing
operations in 1998.
C. Research and Research and development costs are charged to
Development expense as incurred.
D. Intangible Assets In 1992, the Company acquired all of the assets and
liabilities of a related party development
partnership for 3,327,000 shares of the Company's
common stock. The net assets acquired by the Company
primarily included license and distribution rights
which
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had been previously acquired by the development
partnership for cash of approximately $700,000 from
an unrelated company. In 1993, the Company acquired
the patents and technology from this same unrelated
company to complete the asset acquisition. The
patents and technology were acquired through the
issuance of 470,000 shares of common stock, valued at
$1,400,000.
In accordance with the provisions of SFAS No. 121,
"Accounting for the Impairment of Long-lived Assets
and for Long-lived Assets to be Disposed of",
management of the Company reviews the carrying value
of its intangible assets on a regular basis.
Estimated undiscounted future cash flows from the
intangible assets are compared with the current
carrying value. Reductions to the carrying value are
recorded to the extent the net book value of the
property exceeds the estimate of future discounted
cash flows.
E. Commitments and The Company entered into an employment agreement in
Contingencies March 1996 with its president. This agreement is
automatically extended on an annual basis, unless
terminated by either party. The agreement calls for
an annual salary of $100,000. Further, this agreement
also provides for six months of severance pay in the
event this individual is terminated by the Company.
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Item 2. Management's Discussion and Analysis or Plan of Operation
The following Management's Discussion and Analysis of Financial
Condition and Results of Operations contains forward-looking
statements which involve risks and uncertainties. The Company's actual
results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including
those set forth in the Company's 1997 Form 10-KSB and elsewhere in
this document.
The Company
- -----------
Lifestream Technologies, Inc. (the "Company" or "Lifestream") (formerly Utah
Coal and Chemicals Corporation) is a Nevada corporation, reorganized on February
11, with its current address in Sandpoint, Idaho 83864.
The Company was formed to develop, manufacture and market a line of health
diagnostic instruments to domestic and international markets. Lifestream's
initial product offering is the CholestronTM, a hand held instrument that
measures cholesterol levels in the blood with medical laboratory accuracy in
under five minutes. It is used in conjunction with a disposable dry-chemistry
test strip. The Company signed a manufacturing agreement with Boehringer
Mannheim, located in Germany, whereby Boehringer will supply the dry-chemistry
test strips and invitro diagnostic optic hardware used by the CholestronTM. This
combination of Boehringer's proven production capabilities and Lifestream's
marketing strategies will set the foundations for the Company's first product
entry.
The CholestronTM will initially monitor only total cholesterol levels, but the
Company plans subsequent introductions of systems and disposable test strips
which can also make readings of high-density lipoprotein ("HDL") cholesterol,
triglycerides, low-density lipoprotein ("LDL") cholesterol levels, and possibly
glucose in one instrument.
Lifestream plans to introduce the CholestronTM to the market through health
professionals, including physicians, HMO's and wellness/lifestyle educators
(work site health promotion programs). Also, the Company will distribute its
products to pharmacists and physicians to support the introduction and
compliance for pharmaceutical companies who sell cholesterol lowering therapy,
and to pharmacists offering on-site testing to their customers. The consumer
product, introduced after successful launch to the professional market, will be
geared toward patients with high cholesterol levels who need to monitor their
progress on a cholesterol-reducing program on a retail basis.
The CholestronTM professional instrument offers important education features
absent in competing technologies. Using the Cholestron'sTM keypad, the user can
enter risk factors associated with heart health. The devise uses these factors
to calculate the patients "biological" age (i.e. a measure of how the patient's
heart health compares to others). By changing parameters, a patient can learn
how his or her biological age will improve by
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changing behavior lifestyles, such as quitting smoking or exercising. A key part
of this system is the CholestronTM "smart card", holding up to 75 "bytes" of
information, including the patient's cholesterol readings and other risk factors
downloaded from the CholestronTM meter. This information is then transferred to
the physician's office computer via the "smart card" to provide the patient's
risk profile.
By accessing Lifestream's secured intranet program created jointly with Secured
Interactive Technologies, Inc. (formerly Interactive Health Evaluation Systems,
Inc.), a health information software company, the physician can merge the "smart
card" patient information with the latest health research to create a "Personal
Health Evaluation Program" for each patient. This personalized program can then
be printed out and reviewed with the patient and the physician. It can be
continually updated, providing physicians with a state-of-the-art tool to evoke
behavioral change.
The Company believes this approach to fighting and monitoring high cholesterol
is what sets the CholestronTM apart from its competitors. The Company expects
competition from several firms, those using "singe use" cholesterol (screening)
test strips and those developing an instrument/strip for monitoring and
diagnostics. However, no competitor to date has introduced a monitoring product
into the U.S. over-the-counter market on a retail basis, or met the Company's
targeted price range for the professional market.
As of March 31, 1997, Lifestream had an accumulated deficit of approximately
$1,987,890. The ability of the Company to continue as a going concern and
achieve profitability is highly dependent upon numerous factors including, but
not limited to: the Company's ability to directly market and distribute its
product, CholestronTM, through-out North America; successful completion of the
Company's regulatory approval process; and the ability to provide the product at
a cost efficient price and quantity. Due to the uncertainty of these factors, it
is difficult to reliably predict when such profitability may occur, if at all.
The development and marketing of consumer medical devices is capital intensive.
The Company has funded operations to date through private equity and debt
financing arrangements. In order to complete the product development and
initiate the marketing and production process it is expected that substantial
additional funding will be necessary. To this end the Company completed a
private placement offering of shares of the Company's Common Stock as of May 6,
1998, in which the Company was successful in raising approximately $1.3 million.
The Company believes the funds raised in this offering will be sufficient to
fund the development of the product through the initial stages of production and
marketing for the CholestronTM device.
Plan of Operation
In April 1998, the Company completed the required clinical studies for the
Cholestron(TM) unit. Upon completion the Company immediately filed a 510(k)
notification with the Federal Drug Administration ("FDA"). This 510(k)
notification process was permitted
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over the more lengthy Pre-Market Application Process ("PMA") as it is the
Company's position that the Cholestron(TM) unit meets the definition of
"substantially equivalent" to other products (specifically blood glucose
monitoring devices) currently being marketed within the United States. It is the
Company's belief that the FDA's approval will be successfully obtained by July
1998.
As the Company expects regulatory approval, a pre-qualification product run of
the Cholestron(TM) unit is currently in-process. This process is performed both
in-house and through key external vendors to determine the exact assembly line
production process and to determine necessary production quality assurance
standards. Additionally, in May 1998, the Company executed a lease agreement for
a production facility located in Post Falls, Idaho. The Company expects to take
possession of this 6,500 square foot facility by June 1, 1998, and immediately
begin preparation for a preproduction run of 250 units, which is expected to
occur during June 1998. These 250 units would be used for beta site testing,
marketing and as a final quality assurance and control test before beginning
actual production. Currently, the Company has five full time employees, who are
performing the required financial and technological functions necessary to
complete the development of the Cholestron(TM) unit. The Company expects to
increase this to approximately 15 - 20 full time equivalent employees by August
1, 1998, which is the current anticipated date when full production will begin.
Management's Discussion and Analysis
- ------------------------------------
Operating Expenses:
Operating expenses include those costs incurred to bring the Company's product
to market relative to both research and development and general administration.
Operating expenses increased to $140,836 in the three months ended March 31,
1997, from $53,796 for the same period of the corresponding year. The increase
of $87,040, or 161% was due to primarily to the professional expenses paid in
connection with product testing and development performed by independent
contractors relating to dry strip chemistry and proprietary optical technology.
Other Expenses and Income:
Other expenses and income includes those costs incurred relative to both
interest earned and paid and for other miscellaneous non-operating matters. For
the three months ended March 31, 1997, other expenses and income was a net
$(1,602) as compared to $15,138 for the corresponding period of the prior year.
The fluctuation from an income to an additional loss component of $16,740 was
primarily attributable to a discontinuance at the end of the year ended December
31, 1996 of a cost sharing arrangement that the Company had between itself and
another research and development company. The result of the termination of this
cost sharing arrangement was a decrease in other income as the reimbursements
for shared expenses became the sole burden of the Company in 1997.
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Net Loss:
The Company's net loss was $142,438 for the three months ended March 31, 1997
and $38,658 for the three months ended March 31, 1996. This represents and
increase in the loss for the same period of $103,780, or 268%. This increase in
the loss was primarily due to the professional fees paid for product testing and
development to independent contractors relative to the continued work to develop
the CholestronTM devise.
Financial Condition:
From inception (August 7, 1992) to March 31, 1997, the Company has been financed
through private placements of equity securities and certain issuances of
corporate debt.
As part of the equity transactions, the Company acquired certain key intangible
assets in exchange for shares of the common stock. The first of these
transaction occurred in 1992, when the Company acquired all of the outstanding
assets and liabilities of a related party development partnership for 3,327,000
shares of common stock. The second such transaction occurred in 1993, when the
Company acquired certain patents and distribution rights from an unrelated
company in exchange for 470,000 shares of the Company's common stock.
Additionally, in both 1997 and 1996, the Company has received a total of
$100,000 pursuant to the terms of two convertible promissory notes. These notes
contain terms which specify a conversion to shares of common stock at a rate of
$0.75 or final maturity in November 1999, and March 2000.
During the three months ended March 31, 1997, the Company used cash in operating
activities of $2,223 as compared to $710 for the three months ended March 31,
1996. This increase of $1,513 was primarily due to the increase in contributed
services and the increase in accounts payable for the amounts owed for
professional services of independent research and development contractors. As of
March 31, 1997, the Company has a cash balance of $18,034.
The Company's success will be dependent on its ability to achieve profitable
operations, bring the CholestronTM product to market, and obtain additional
funds to support its operations. There can be no assurance that the Company will
achieve profitable operations or successfully complete development and obtain
regulatory approval to market the CholestronTM unit or that additional funds
will be available when and as required by the Company on acceptable terms or at
all.
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New Accounting Pronouncements:
SFAS 128 In February 1997, The Financial Accounting Standards
Board ("FASB") issued SFAS No. 128, Earnings Per
Share ("EPS"). SFAS No. 128 requires dual
presentation of basic EPS and diluted EPS on the face
of all income statements issued after December 15,
1997 for all entities with complex capital
structures. Adoption of SFAS No. 128 is not expected
to have significant effect on the Company's financial
statements. Basic EPS is computed as net income
divided by the weighted average number of common
shares outstanding for the period. Diluted EPS
reflects the potential dilution that could occur from
common shares issuable through stock options,
warrants and other convertible securities.
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Part II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
None
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
None
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
LIFESTREAM TECHNOLOGIES, INC.
- -----------------------------
(Registrant)
BY: /s/ Christopher Maus
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Christopher Maus, President, Chief Executive Officer, and Director
DATE: May 13, 1998
------------
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<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
unaudited financial statement of the Company for the three month period ended
March 31, 1997 and should be read in conjunction with, and is qualified in its
entirety by, the audited financial statements for the year ended December 31,
1997.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 18,034
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 35,731
<CURRENT-ASSETS> 61,888
<PP&E> 16,837
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,858,714
<CURRENT-LIABILITIES> 283,849
<BONDS> 0
0
0
<COMMON> 7,657
<OTHER-SE> 1,467,208
<TOTAL-LIABILITY-AND-EQUITY> 1,858,714
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 140,836
<OTHER-EXPENSES> 1,602
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (142,438)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> 0
</TABLE>
