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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10Q-SB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999
SECURITIES AND EXCHANGE COMMISSION FILE NUMBER
000-26369
DICOM IMAGING SYSTEMS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA 88-0422026
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
1350 E. FLAMINGO ROAD
SUITE 847
LAS VEGAS, NV 89119
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
(877) 624-6243
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
(520) 441-8755
(REGISTRANT'S FACSIMILE 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 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
requirements for the past 90 days.
YES [ ] NO [X]
The number of issued and outstanding shares of the Registrant's Common
Stock, $0.001 par value, as of June 30, 1999, was 2,400,000.
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DICOM IMAGING SYSTEMS, INC.
<TABLE>
<CAPTION>
PART I-FINANCIAL INFORMATION
PAGE
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<S> <C> <C>
Item 1. Financial Statements:
Condensed Statements of Operations for the three month period
ended June 30, 1999........................................................................3
Balance Sheet at June 30, 1999.............................................................4
Condensed Statements of Cash Flows for the three month period
ended June 30, 1999........................................................................5
Notes to Unaudited Condensed Financial Statements..........................................6-7
Item 2. Management's Plan of Operation for the twelve month period
beginning June 30, 1999....................................................................8-9
PART II-OTHER INFORMATION
Item 1. Legal Proceedings..........................................................................9
Item 2. Changes in Securities......................................................................9
Item 3. Defaults Upon Senior Securities............................................................9
Item 4. Submission of Matters to a Vote of Security Holders........................................9
Item 5. Other Information..........................................................................9
Item 6. Exhibits and Reports on Form 8-K...........................................................9
Signatures..........................................................................................9
Exhibit 27.1 Financial Data Schedule................................................................10
</TABLE>
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INFORMATION REQUIRED IN QUARTERLY REPORT
CERTAIN FORWARD-LOOKING INFORMATION
The information contained in this Quarterly Report includes
forward-looking statements. Since this information is based on current
expectations which involve risks and uncertainties, actual results could differ
materially from those expressed in the forward-looking statements.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
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DICOM IMAGING SYSTEMS, INC.
PROFIT & LOSS STATEMENT
For Months April - June 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INCOME
COST OF SALES
GROSS PROFIT $ --
---------
EXPENSES
GENERAL & ADMINISTRATIVE EXP
Development $ 10,769
TOTAL GENERAL & ADMINISTRATIVE EXP $ 10,769
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START-UP EXPENSES
NASD Filing 139,071
Video 1,801
Master CD 4,919
Initial Mailing 33,735
Equipment 1,175
TS Booth 1,189
TS Costs 10,668
Web Design 1,534
Ads 19,453
Travel 21,012
Legal 36,326
Start-up Overhead 325,312
Contingency 42,159
TOTAL START-UP EXPENSES 638,352
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OVERHEAD
Telephone 3,164
Office Supplies 69
Miscellaneous 1,392
Courier 525
Wages 3,793
Employer Payroll Tax Expense $ 256
TOTAL OVERHEAD $ 9,200
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TOTAL EXPENSES 658,320
---------
OPERATING PROFIT (658,320)
---------
NET INCOME (LOSS) BEFORE INCOME TAXES $(658,320)
---------
BENEFIT FROM INCOME TAXES 223,829
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NET INCOME (LOSS) $(424,491)
=========
NET INCOME (LOSS) PER SHARE $ (0.1810)
=========
</TABLE>
* Average number of common shares outstanding 2,400,000.
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DICOM IMAGING SYSTEMS, INC
BALANCE SHEET
As At June 30, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Assets
CURRENT ASSETS
CASH ON HAND
Wells Fargo Checking USD $ 5,045
Check Register 16,323
Savings Register 134,015
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TOTAL CASH ON HAND $ 155,383
Merchant Receivables --
Accounts Receivable --
Dicom Software Loan Receivable 44,202
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TOTAL CURRENT ASSETS $ 199,585
LONG TERM ASSETS
Deferred Tax Asset 258,827
Computer Equipment
Comp Equip - Orig Cost 47,539
--------
TOTAL COMPUTER EQUIPMENT 47,539
Demonstration Equipment
Demo Equip - Orig Cost $ 12,916
--------
TOTAL DEMONSTRATION EQUIPMENT 12,916
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TOTAL FIXED ASSETS 319,282
---------
TOTAL ASSETS $518,867
========
LIABILITIES
CURRENT LIABILITIES
Accounts Payable 21,224
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TOTAL CURRENT LIABILITIES 21,224
Tax Liabilities
GST Collected 71
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TOTAL TAX LIABILITIES 71
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TOTAL LIABILITIES 21,294
EQUITY
OWNER'S/SHAREHOLDER'S EQUITY
Owner/Sharehldr Investment $1,000,000
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TOTAL OWNER'S/SHAREHOLDER'S EQUITY 1,000,000
RETAINED EARNINGS (67,936)
CURRENT YEAR EARNINGS $ (434,491)
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TOTAL EQUITY 497,573
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TOTAL LIABILITY & EQUITY $518,867
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</TABLE>
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DICOM IMAGING SYSTEMS, INC.
STATEMENT OF CASH FLOWS
For Months April - June 1999
CASH FLOWS FROM OPERATING ACTIVITIES
(Net loss) $(434,491)
Increase in deferred taxes (223,829)
Deduct loan receivable (44,202)
Add back accounts payable increase 21,224
Add back tax liabilities 71
Net Cash (Used) In Operating Activities (681,227)
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment 25,541
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CASH FLOW FROM FINANCING ACTIVITIES
Issuance of common stock for cash 639,250
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Net increase (decrease) in cash (67,518)
=========
Cash, April 1, 1999 222,902
Cash, June 30, 1999 155,384
Reconciliation of cash decrease $ (67,518)
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DICOM IMAGING SYSTEMS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
April 1 - June 30, 1999
NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY
The Company was incorporated March 17, 1999 under the laws of the State of
Nevada. The Company was organized to engage in any lawful activity. The Company
currently has no operations and, in accordance with SFAS #7, is considered a
development stage company.
In March of 1999 the Company entered into a license and distribution agreement
with Torchmark Holdings to secure rights to image archiving and retrieval
software for use in dental diagnostic procedures and for other applications.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ACCOUNTING METHOD
The Company records income and expenses on the accrual method.
ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost. Depreciation is recorded using the
straight-line method over the estimated useful life. Computer hardware and
equipment is depreciated over a period of three years.
INCOME TAXES
Income Taxes are provided for using the liability method of accounting in
accordance with Statement of Financial Accounting Standards No. 109 (SFAS #109)
"Accounting for Income Taxes." A deferred tax asset or liability is recorded
for all temporary differences between financial and tax reporting. Deferred tax
expense (benefit) results from the net change during the year of deferred tax
assets and liabilities.
RESEARCH AND DEVELOPMENT
Research and development costs are expensed as incurred. There were no such
costs expensed as of March 31, 1999.
LOSS PER SHARE
Net loss per share is provided in accordance with Statement of Financial
accounting Standards No. 128 (SFAS #128) "Earnings Per Share." Basic loss per
share is computed by dividing losses available to common stockholders by the
weighted average number of common shares outstanding during the period. Diluted
loss per share reflects per share amounts that would have resulted if dilutive
common stock equivalents had been converted to common stock. The common stock
equivalents outstanding at March 31, 1999 are anti dilutive.
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NOTE 3 - INCOME TAXES
There is no provision for income taxes for the period from April 1 - June 30,
1999 due to the net loss and no Nevada state income tax in the state of the
Company's domicile.
The tax effects of temporary differences that give rise to deferred tax assets
by applying the U.S. federal income tax rate of 34% to pretax loss of 658,320
results in a deferred tax asset of $223,829 at June 30, 1999 for the first
quarter.
Net Operating Losses $223,829
Less: valuation allowance $ --
--------
Net deferred tax assets $223,829
========
The deferred taxes are presented in the balance sheet as a long term asset.
At June 30, 1999 the Company has net operating loss carryfowards for federal
income tax purposes of $761,642, which are available to offset future taxable
income through 2019.
In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
asset will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which the related temporary differences become deductible.
NOTE 4 - STOCKHOLDERS' EQUITY
COMMON STOCK
The authorized common stock of the Company consists of 50,000,000 shares with a
par value of $0.001 per share. Issued and outstanding common stock shares equal
to 2,400,000 were issued on March 31, 1999.
PREFERRED STOCK
The authorized preferred stock of the Company consists of 10,000,000 shares
with a par value of $0.001 per share. No preferred stock shares were issued and
outstanding at June 30, 1999.
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Item 2. Management's Plan of Operation over the twelve month period beginning
June 30, 1999
Dicom Imaging Systems, Inc., a Nevada Corporation ("Dicom" or "DIS" or
the "Company") is a development stage software provider to the dental industry
and associated groups. It is the plan of Dicom to capture market share of
imaging software in dentistry by producing and distributing, free of charge, an
imaging software application known as IMAGE EXPLORER AND IMAGE EDITOR ("Image
Explorer") to dentists, dental specialists, dental laboratories, dental
insurance companies, and educational facilities throughout North America. Dicom
requires registration of its Image Explorer product by its customers through a
telephone registration system. At the point of registration of IMAGE EXPLORER,
it is anticipated that Dicom representatives will market a series of value
added software modules, support services and select imaging hardware devices to
its software registrants.
The core Image Explorer product functions primarily as a means for
dental professionals to categorize, manage and manipulate patient images by
means of a visual interface. The value added software modules each provide
products to assist dental professionals with a specific area of image
management and manipulation, such as cosmetic whitening procedures on teeth.
The value added software modules can be added and integrated as dental
professionals become more familiar with the Dicom's Image Explorer technology.
Dicom had not yet commenced sales of its Image Explorer product at June 30,
1999. Sales of the Image Explorer product were comennced in July, 1999.
Dicom's plan of operation over the next twelve months is to continue
to develop and improve the Software throughout the year, responding to customer
comments and requests and producing an updated version of the core product,
Image Explorer. Dicom intends to aggressively capture market share over the
next twelve months through attendance at nearly every significant dental
tradeshow held in Canada and the United States. We plan to staff our booths at
these tradeshows with Dicom personnel who can explain and market our product to
the dentists in attendance. In addition, Dr. Gane plans an aggressive lecture,
seminar campaign, where he will speak to audiences of dental professionals
throughout Canada about dental imaging in general and Image Explorer in
particular. Because Dr. Gane receives a number of invitations to speak
throughout the year to dental professionals eager to improve and develop their
practices, we feel that these events provide him with an opportunity to promote
Image Explorer throughout the year to a large number of dental professionals.
Dicom intends over the next twelve months to negotiate supply
relationships with most of the major dental product distributors in North
America and to greatly expand the number of distributors who stock the Dicom
product. Dicom has planned an aggressive advertising campaign in Dental
Products Report and other dental trade magazines to continue to promote Image
Explorer throughout the year to dental professionals.
Dicom intends to purchase the license rights to the medical version of
the Image Explorer product from Torchmark. Originally, Dicom had anticipated
purchasing and commencing development on the medical version of the Image
Explorer software in October, 1999. Presently, management anticipates that his
will occur by December, 1999. Management intends to spend the balance of the
next twelve months developing and marketing the medical version of Image
Explorer to medical professionals.
Dicom intends to develop and enhance its web site over the next twelve
months and to drive traffic to the site by pursuing links with other dental
related sites and by purchasing banner advertisements on dental product sites.
Dicom is currently in discussions with various Internet consultants to add
multimedia and enhanced functionality to the web site, as well as improve
graphic design elements.
Dicom intends to streamline its customer support functions over the
next twelve months through extensive scripting of commonly experienced
technical and product usage problems as they are encountered by our customer
support staff. In addition, Dicom intends to begin its intensive telemarketing
campaign and to continue it throughout the next twelve months, with a goal of
contacting by telephone all leads generated by our presence at trade shows, Dr.
Gane's lectures, through our web site and through reader responses to our
advertisements in dental trade maganizes.
In addition to developing an upgraded version of the core Image
Explorer product during the next twelve months, Dicom intends to develop other
value-added software modules and other methods for enhancing its revenue
stream, including corporate partnering agreements and agreements to bundle the
Image Explorer core product with other manufacturer's hardware products.
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Under the terms of Dicom's stock subscription agreements with its
common shareholders, Dicom is prohibited from raising additional capital
through the sale of new equity in the company or through the undertaking of any
material indebtedness without the consent of the shareholders. Therefore, Dicom
has no immediate plans to raise additional capital. Dicom anticipates that this
prohibition on new equity issuances and indebtedness will be lifted by the end
of the first quarter of 2000. At that time, Dicom will re-evaluate its capital
needs and growth requirements.
PART II-OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
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
(a) Exhibits
Exhibit 27.1 Financial Data Schedule
(b) Reports on 8-K
None.
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
DICOM IMAGING SYSTEMS, INC.
(Registrant)
Date: October 26, 1999
By: /s/ David Gane
- --------------------------------------
David Gane
President and Chief Executive Officer
11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> APR-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 155,384
<SECURITIES> 0
<RECEIVABLES> 44,202
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 199,585
<PP&E> 319,282
<DEPRECIATION> 0
<TOTAL-ASSETS> 518,867
<CURRENT-LIABILITIES> 21,224
<BONDS> 0
0
0
<COMMON> 1,000,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 518,867
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 658,320
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (658,320)
<INCOME-TAX> (223,829)
<INCOME-CONTINUING> (434,491)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (434,491)
<EPS-BASIC> (0.181)
<EPS-DILUTED> (0.181)
</TABLE>
