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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
[ ] 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 0-27135
MEDSEARCH TECHNOLOGIES, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 13-4070962
------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
40 WALL STREET
NEW YORK, NEW YORK 10005
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(Address of principal executive offices and zip code)
(212) 943-6000
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(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 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
filing requirements for the past 90 days: Yes [X] No [ ].
Indicate the number of shares outstanding of each of the registrant's classes of
common stock as of the latest practicable date: 6,534,582 shares of common
stock, no par value, as of May 1, 2000.
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<PAGE>
MEDSEARCH TECHNOLOGIES, INC.
FORM 10-QSB/A
FOR THE QUARTER ENDED MARCH 31, 2000
TABLE OF CONTENTS
PART I. CONDENSED CONSOLIDATED FINANCIAL INFORMATION
PAGE
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets
March 31, 2000 and December 31, 1999 3
Condensed Consolidated Statements of Operations
Three months ended March 31, 2000 and 1999 4
Condensed Consolidated Statements of Cash Flows
Three months ended March 31, 2000 and 1999 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 11
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds 12
Signatures 13
Schedule 27 14
2
<PAGE>
<TABLE>
<CAPTION>
MEDSEARCH TECHNOLOGIES, INC.
(FORMERLY MEDSEARCH, INC.)
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2000 1999
----------- -----------
ASSETS (Unaudited)
<S> <C> <C>
Current Assets
Cash and equivalents $ 148,877 $ 367,840
Accounts receivable-net 210,561 156,271
Note receivable 22,039 22,039
Inventory 6,900 8,575
Other receivable 19,916 6,133
Prepaid expenses 1,090 1,090
----------- -----------
Total Current Assets 409,383 561,948
Fixed assets-net 110,833 110,955
Note receivable 144,078 144,078
Other assets
Patents-net 323,208 331,958
Goodwill-net 856,876 864,459
----------- -----------
Total Other Assets 1,180,084 1,196,417
----------- -----------
TOTAL ASSETS $ 1,844,378 $ 2,013,398
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accrued expenses $ 144,371 $ 102,803
Demand note payable -- 150,000
Current portion of note payable 37,404 4,366
----------- -----------
Total Current Liabilities 181,775 257,169
Note's payable 350,000 284,095
Commitments and contingencies -- --
Minority interest -- --
Stockholders' Equity
Common stock, 50,000,000 shares authorized at $.001
par value; issued and outstanding 6,534,582 at
March 31, 2000 and December 31, 1999 6,534 6,534
Preferred stock 2,000,000 shares authorized at $.001
par value; issued and outstanding none
Capital in excess of par value 4,969,731 4,960,731
Deficit (3,108,675) (2,880,467)
Accumulated comprehensive (loss) (3,261) (953)
Unearned compensation (551,726) (613,711)
----------- -----------
Total Stockholders' Equity 1,312,603 1,472,134
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,844,378 $ 2,013,398
=========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
3
<PAGE>
MEDSEARCH TECHNOLOGIES, INC.
(FORMERLY MEDSEARCH, INC.)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three Months
Ended March 31,
-----------------------------
2000 1999
----------- -----------
Sales revenues $ 163,278 $ 655,514
Cost of sales 45,390 609,873
----------- -----------
Gross profit 117,888 45,641
Stock compensation 70,985 --
Research and development 51,856 21,317
General and administrative expenses 222,845 140,617
----------- -----------
345,686 161,934
Loss from operations (227,798) (116,293)
Other income and expenses
Interest income 77 --
Other income 323 --
Interest expense (810) --
----------- -----------
Income (loss) before taxes (228,208) (116,293)
Provision for income taxes -- --
----------- -----------
Net (loss) (228,208) (116,293)
Other comprehensive (loss) (2,308) 1,429
----------- -----------
Comprehensive (loss) (230,516) (114,864)
Basic (loss) per share (0.04) (0.05)
=========== ===========
Comprehensive (loss) per share (0.04) (0.05)
=========== ===========
Basic average shares outstanding 6,051,431 2,236,294
=========== ===========
SEE NOTES TO FINANCIAL STATEMENTS.
4
<PAGE>
MEDSEARCH TECHNOLOGIES, INC.
(FORMERLY MEDSEARCH, INC.)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Three Months
Ended March 31,
-----------------------
2000 1999
---------- ----------
OPERATING ACTIVITIES
Net income or (loss) $ (228,208) $ (116,293)
Adjustments to reconcile net income or (loss)
to net cash used by operating activities:
Warrant compensation 9,000 --
Depreciation and amortization 23,158 47,782
Amortization of unearned compensation 61,985 --
Changes in operating assets and liabilities net
of effects of the purchase of TNJ Products:
(Increase) decrease in accounts receivable (54,290) (10,431)
(Increase) decrease in inventory 1,675 --
(Increase) decrease in current assets (13,783) (2,367)
Increase (decrease) in payables 41,568 (45,874)
---------- ----------
Net cash (used) by operating activities (158,895) (127,183)
INVESTING ACTIVITIES
Repayment of officer loan -- 15,000
Purchase of fixed assets (6,303) --
---------- ----------
Net cash provided(used) by investing activities (6,303) 15,000
FINANCING ACTIVITIES
Foreign currency adjustment (2,708) --
Increase in demand note payable 100,000 --
Payment of bank loan and note payable (151,057) --
---------- ----------
Net cash used by financing activities (53,765) 0
---------- ----------
Increase (decrease) in cash (218,963) (112,183)
Cash at beginning of period 367,840 498,176
---------- ----------
Cash at end of period $ 148,877 $ 385,993
========== ==========
Supplemental Disclosures of Cash Flow Information:
Cash paid during period for:
Interest $ 810 $ 25
========== ==========
Income taxes $ -- $ --
========== ==========
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE>
MEDSEARCH TECHNOLOGIES, INC.
(FORMERLY MEDSEARCH, INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1- ORGANIZATION & OPERATIONS
Medsearch, Inc., a Nevada corporation, was organized on June 13,
1986 and changed its name to Medsearch, Inc. on June 16, 1998.
The Company and its subsidiaries are engaged in the development,
manufacturing and marketing of medical products.
On April 12, 1999 Medsearch Technologies, Inc. ("Medsearch") was
incorporated in Delaware to effectuate a reincorporation of
Medsearch, Inc.-Nevada with and into the Company. All shares of
outstanding common stock were exchanged on a one for one basis for
shares of the $0.001 par value common stock of the new Delaware
corporation. There was no change in the number of shares
authorized. The financial statements for the period prior to the
reincorporation reflect the historical results of operations for
Medsearch, Inc.
The accompanying unaudited financial statements have been prepared
by Medsearch in accordance with the rules and regulations of the
Securities and Exchange Commission for interim financial
statements. Accordingly, 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.
In the opinion of management of the Company, the unaudited
financial statements reflect all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation of
the Company's financial position at March 31, 2000, its operating
results for the three months ended March 31, 2000 and 1999 and
cash flows for the three months ended March 31, 2000 and 1999. The
balance sheet at December 31, 1999 has been derived from the
Company's audited consolidated financial statements as of that
date. These financial statements and the notes should be read in
conjunction with the Company's audited consolidated financial
statements and notes thereto contained in the Company's Form
SB-KSB filed with the Securities and Exchange Commission.
The results of operations for the three months ended March 31,
2000 are not necessarily indicative of the results that may be
expected for future quarters or the year ending December 31, 2000.
6
<PAGE>
MEDSEARCH TECHNOLOGIES, INC.
(FORMERLY MEDSEARCH, INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of
Meduck Technologies, LTD. ("Meduck") as of December 31, 1999 and
1998, Optimart Imports, Inc. ("Optimart"), a 100% owned subsidiary
for the period of ownership October, 1998 through its sale in
June, 1999, TNJ Products, Inc. acquired in June, 1999 and M&W
Medical Supply, LLC acquired in August, 1999. All significant
intercompany accounts and transactions have been eliminated.
Subsidiary losses losses in excess of the unrelated investors'
interest are charged against the Company's interest.
During June, 1999 the Company converted $237,000 of loans to
Meduck for an additional 27% interest, bringing its total
ownership percentage to 97%.
REVENUE
The Company records revenue when products or services are provided
to customers.
EARNINGS (LOSS) PER COMMON SHARE
Basic earnings (loss) per common share is based on the weighted
average number of common shares outstanding during the period
presented. Fully diluted loss per share has not been disclosed as
it is anti-dilutive.
USE OF ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires the Company's
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.
COMPREHENSIVE INCOME
Comprehensive income is the total of (1) net income plus (2) all
other changes in net assets arising from non-owner sources. The
Company has presented a statement of operations that includes
other comprehensive income.
7
<PAGE>
MEDSEARCH TECHNOLOGIES, INC.
(FORMERLY MEDSEARCH, INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 3- SHORT TERM BORROWINGS
During the fourth quarter of 1999 the Company borrowed $150,000
from the President of the Company. The loan is due on demand and
bears interest at the rate of one percent (1%) per month. The
short term loan payable to the president was repaid during
February, 2000.
Short-term borrowings consisted of the following:
March 31, December 31,
2000 1999
--------- -----------
12% Demand note payable to the
president of the Company $ -- $ 150,000
========= ===========
At December 31, 1999 the carrying value of short-term borrowings
approximated fair values.
Note 4- NOTES PAYABLE LONG TERM
Notes payable consisted of the following:
March 31, December 31,
2000 1999
--------- -----------
12% note payable to Argos Associates $ 350,000 $ 250,000
Installment loan 37,404 38,431
--------- -----------
387,404 288,431
Less current portion (37,404) (4,336)
--------- -----------
$ 350,000 $ 284,095
========= ===========
The note payable to Argos Associates ("Argos") is payable twelve
months from the date of the last advance or April 28, 2001.
Subsequent to March 31, 2000 Argos advanced the company an
additional $150,000, with the final advance on April 28, 2000. The
total note payable is $500,000 with 12% interest payable at
maturity. The Company has the option to extend the note for two
additional twelve month periods. Additionally, Argos has agreed to
lend the Company an additional $500,000 when needed on terms to be
determined at closing.
The installment loan payable to a finance company is secured by an
automobile and is payable in monthly installments of $622, which
include principal and interest through March, 2001, at which time
a final balloon payment of $32,943 is due. The interest rate on
the loan is 8.5%.
8
<PAGE>
MEDSEARCH TECHNOLOGIES, INC.
(FORMERLY MEDSEARCH, INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 5- STOCKHOLDERS' EQUITY
TNJ ACQUISITION
In June, 1999 the Company issued 600,000 shares of $0.001 par
value common stock valued at $1.75 per share or $1,050,000 for
100% of the outstanding shares of TNJ Products, Inc. common stock,
a medical product distributor and a rehabilitative medical service
provider. The acquisition was accounted for as a purchase.
The operations and financial position of TNJ Products, Inc. were
accounted for in the consolidated financial statements of the
Company beginning July, 1999. The excess purchase price over the
estimated fair value of the assets was approximately $910,000 and
is being amortized over 10 years using the straight-line method.
OPTIMART DIVESTITURE
In June 1999, the Company sold Optimart back to its original
investors for $418,597. This amount was paid by returning 150,000
shares of the Company's common stock valued at $1.75 per share or
$262,500, and a $216,117 non-interest bearing note, payable in
three installments between June 1, 2000 and December 1, 2000.
$60,020 of the note was for the accounts receivable outstanding at
the date of sale. The note is secured by 100,000 shares of the
Company's stock owned by the buyer.
M & W ACQUISITION
On August 18, 1999 the Company acquired 100% of the outstanding
membership interests of M & W Medical Supplies, L.L.C. ("M & W"),
a medical products company, for 50,000 shares of the Company's
common stock valued at $2.50 per share or $125,000, warrants to
purchase 100,000 shares of the Company's common stock at $2.00 per
share expiring August 18, 2002 valued at $.50 per warrant or
$50,000 and warrants to purchase 100,000 shares of the Company's
common stock at $3.00 per share expiring August 18, 2002 valued at
$.10 per warrant or $10,000 for a total acquisition price of
$185,000. The acquisition was accounted for as a purchase
STOCK ISSUED FOR COMPENSATION
During June, 1999 the Company issued 20,000 restricted common
shares to an officer and 10,000 restricted common shares to a
director for services rendered valued at $52,500. Additionally,
the Company issued 125,000 restricted common shares valued at
$218,750, to an officer for services to be rendered over the next
three years. The unearned compensation of $218,750 is being
amortized over 36 months. For the year ended December 31, 1999,
$42,539 of unearned compensation was charged to expense.
9
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MEDSEARCH TECHNOLOGIES, INC.
(FORMERLY MEDSEARCH, INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 6- COMPREHENSIVE INCOME
Accumulated other comprehensive income consists of the following:
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
---------- ----------
<S> <C> <C>
Foreign currency translation adjustment $ (3,261) $ (953)
========== ==========
</TABLE>
A summary of the components of other comprehensive income for the
quarters ended March 31, 2000 and 1999 is as follows:
<TABLE>
<CAPTION>
Before-Tax Income After-Tax
Amount Tax Amount
---------- ---------- ----------
2000
<S> <C> <C> <C>
Net foreign currency translation $ (2,308) $ -- $ (2,308)
---------- ---------- ----------
Other comprehensive income $ -- $ -- $ 0
========== ========== ==========
1999
Net foreign currency translation $ 1,429 $ -- $ 1,429
---------- ---------- ----------
Other comprehensive income $ -- $ -- $ 0
========== ========== ==========
</TABLE>
10
<PAGE>
PART I - FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS-THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO
THREE MONTHS ENDED MARCH 31, 1999
Net sales for the three month period ended March 31, 2000 were $163,278 while
sales for the three months ended March 31, 1999 were $655,514. Sales for 2000
represent sales of TNJ Products, Inc. which was acquired on June 30, 1999. TNJ's
sales of $163,278 for 2000 increased from sales of $50,908 for the same quarter
last year.
Sales for the three months ended March 31, 1999 were $655,514 which reflected
the sale of optical products from Optimart Products, Inc. which was sold in June
1999.
Gross profit for the three months ended March 31, 2000 amounted to $117,888 (72%
of sales), compared to $45,641 (7% of sales) for the corresponding three months
of 1999. This increase in gross margin is principally attributable to higher
gross profits on the items sold by TNJ Products.
Research and development costs increased by approximately $31,000 from the first
quarter of 2000 from the corresponding three month period of 1999. This trend
will continue as the Company continues to develop products to bring to market.
Stock compensation charges of $70,985 was recorded in 2000 related to stock and
warrants issued to officers and directors.
As a result of the foregoing, The Company incurred net losses of ($228,208) or
($.04) per share for the three months ended March 31, 2000 compared to net
losses of ($116,293) or ($.05) per share for the same period in 1999.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2000, the Company had cash and cash equivalents of $148,877
principally due to loans in February 2000 and December, 1999. The Company issued
its common stock in lieu of cash payments for compensation and consulting fees
where possible during 1999. This trend is expected to continue in the second,
third and fourth quarters of 2000.
The Company believes that the net proceeds of the Company's loans will meet its
working capital obligations and fund further development of its business for the
next twelve months. There can be no assurance that any additional financing will
be available to the Company on acceptable terms, or at all.
For the long term the Company plans to extend the maturity of its loans and seek
additional equity capital to fund operations.
11
<PAGE>
PART II - OTHER INFORMATION
Item 2. Change in Securities
During the first quarter ended March 31, 2000, the Company issued warrants to
purchase 30,000 shares of Common Stock, at $3.00 per share expiring 2003 to Dr.
David Filer to become a director of the Company. The warrants were valued at
$.30 per share for a total value of $9,000.
12
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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.
Medsearch Technologies, Inc.
Dated: July 24, 2000 By: /s/ JACOB MELLER
----------------------------
Name: Jacob Meller
Title: President
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