<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 3 TO FORM 10-QSB
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended
December 31, 1999
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 1097181
-------------
MOBILE P.E.T. SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 11-2787966
(State or other jurisdiction (I.R.S. Employer
of organization) Identification No.)
2240 SHELTER ISLAND DRIVE #205
SAN DIEGO, CA 92106
(Address of principal executive offices)
(619) 226-6738
(Issuer's telephone number, including area code)
NOT APPLICABLE
(Former name, address and fiscal year, if changed since last report)
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 / /
As of December 31, 1999, 13,359,658 shares of the registrant's common
stock were outstanding.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
The following financial statements are furnished:
Consolidated Balance sheet as of December 31, 1999
Consolidated Statements of Operations for the three months and six
months ended December 31, 1999
Consolidated Statement of Cash Flows for the three months and six
months ended December 31, 1999
Consolidated Statement of Shareholders' Equity (Deficit) as of December
31, 1999
Notes to Unaudited Consolidated Financial Statements
<PAGE>
MOBILE P.E.T. SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
DECEMBER 31, 1999
<TABLE>
ASSETS
<S> <C>
CURRENT ASSETS
Cash $ 338,094
Due from London Radiosurgical Center, Ltd 256,024
Accounts receivable, net of allowance for doubtful accounts of $0 246,225
Prepaid expenses 40,916
Deposits and other assets 436,431
-------------------
Total current assets 1,317,690
PROPERTY AND EQUIPMENT, NET 623,416
OTHER ASSETS
Subordinated equity participation 200,000
Restricted cash 105,226
-------------------
Total assets $ 2,246,332
===================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 225,331
Income taxes payable 800
Accrued liabilities 83,651
Notes payable 50,000
Obligations under capital lease - current 32,761
-------------------
Total current liabilities 392,543
NONCURRENT LIABILITIES
Obligations under capital lease 246,629
Deferred revenue - gain 14,127
-------------------
Total liabilities 653,299
SHAREHOLDERS' EQUITY
Common stock; $0.0001 par value; 20,000,000 shares authorized,
13,359,658 shares issued and outstanding December 31, 1999 1,336
Additional paid in capital 4,830,947
Accumulated deficit (3,235,800)
Foreign currency translation adjustment (3,450)
-------------------
Total shareholders' equity 1,593,033
-------------------
Total liabilities and shareholders' equity $ 2,246,332
===================
</TABLE>
See notes to unaudited consolidated financial statements.
<PAGE>
MOBILE P.E.T. SYSTEMS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, 1999 DECEMBER 31, 1999
------------------- --------------------
<S> <C> <C>
Service revenues $ 216,925 $ 296,920
Cost of service revenues 157,044 232,573
-------------------- --------------------
Gross profit 59,881 64,347
Expenses
General and administrative 777,059 1,442,712
-------------------- --------------------
Total expenses 777,059 1,442,712
-------------------- --------------------
Loss from operations (717,178) (1,378,365)
Other income (expense)
Interest income 2,662 9,329
Interest expense (26,760) (41,299)
-------------------- --------------------
Total other income (expense) (24,098) (31,970)
-------------------- --------------------
Loss before provision for income taxes (741,275) (1,410,335)
Provision for income taxes 800 1,600
-------------------- --------------------
Net loss $ (742,076) $ (1,411,935)
==================== ====================
Basic loss per share $ (0.06) $ (0.11)
Diluted loss per share $ (0.06) $ (0.11)
</TABLE>
See notes to unaudited consolidated financial statements.
<PAGE>
MOBILE P.E.T. SYSTEMS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, 1999 DECEMBER 31, 1999
---------------------- ----------------------
<S> <C> <C>
Cash flows from operating activities
Net loss $ (742,076) $ (1,411,935)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities
Depreciation 9,375 19,773
(Increase) decrease in operating assets
Due from London Radiosurgical Center, Ltd. (44,006) (226,053)
Accounts receivable (110,610) (246,225)
Prepaid expenses (19,363) (22,926)
Deposits and other assets 787,271 114,861
Restricted cash (1,186) 147,146
Increase (decrease) in operating liabilities
Accounts payable 170,516 143,462
Accrued liabilities 61,948 (5,099)
---------------------- ----------------------
Net cash provided by (used in) operating activities 111,869 (1,486,996)
---------------------- ----------------------
Cash flows from investing activities
Capital expenditures (273,257) (573,694)
Proceeds from sale of equipment 279,390 279,390
---------------------- ----------------------
Net cash provided by (used in) investing activities 6,133 (294,304)
---------------------- ----------------------
Cash flows from financing activities
Proceeds from loan 50,000 50,000
Common stock issued - 285,000
---------------------- ----------------------
Net cash provided by financing activities 50,000 335,000
---------------------- ----------------------
Effect of exchange rate changes on cash 4 4
Net increase (decrease) in cash 168,006 (1,446,296)
Cash - beginning of period 170,088 1,784,390
---------------------- ----------------------
Cash - end of period $ 338,094 $ 338,094
====================== ======================
Supplemental disclosures
Interest paid $ 26,760 $ 41,299
Income taxes paid $ 800 $ 1,600
Noncash investing and financing activities
Gain on sale of equipment in
connection with capital lease $ 14,127 $ 14,127
</TABLE>
See notes to unaudited consolidated financial statements.
<PAGE>
MOBILE P.E.T. SYSTEMS, INC. AND SUBSIDIARIES
Consolidated Statement of Shareholders' Equity (Deficit)
(Unaudited)
<TABLE>
<CAPTION>
ADDITIONAL
PAID IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT
----------------- ------------- ---------------- ---------------------
<S> <C> <C> <C> <C>
Balance - June 30, 1999 12,844,658 $ 1,285 $ 4,545,998 $ (1,823,864)
Common stock issued in private placement,
net of offering costs 515,000 51 284,949
Net loss - July 1, 1999 to September 30, 1999 (669,860)
----------------- ------------- ---------------- ---------------------
Balance - September 30, 1999 13,359,658 1,336 4,830,947 (2,493,724)
----------------- ------------- ---------------- ---------------------
Net loss - October 1, 1999 to December 31, 1999 (743,076)
Foreign currency translation adjustment
----------------- ------------- ---------------- ---------------------
Balance - December 31, 1999 13,359,658 $ 1,336 $ 4,830,947 $ (3,235,800)
================= ============= ================ =====================
</TABLE>
<TABLE>
<CAPTION>
ACCUMULATED
OTHER TOTAL
COMPREHENSIVE SHAREHOLDERS'
INCOME EQUITY
------------------------ ---------------------
<S> <C> <C>
Balance - June 30, 1999 $ - $ 2,723,419
Common stock issued in private placement,
net of offering costs 285,000
Net loss - July 1, 1999 to September 30, 1999 - (669,860)
------------------------ ---------------------
Balance - September 30, 1999 - 2,338,559
------------------------ ---------------------
Net loss - October 1, 1999 to December 31, 1999 - (743,076)
Foreign currency translation adjustment (3,450) (3,450)
------------------------ ---------------------
Balance - December 31, 1999 $ (3,450) $ 1,593,033
======================== =====================
</TABLE>
See notes to unaudited consolidated financial statements.
<PAGE>
MOBILE P.E.T. SYSTEMS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. THE COMPANY
Mobile P.E.T. Systems, Inc. was incorporated in the State of Nevada
on December 1, 1998. On December 22, 1998, the Company's shareholders
exchanged all of their shares of common stock for shares of common stock in
Colony International Incorporated, prior to that named American Coin & Stamp
Ventures, Inc., incorporated in the State of Delaware on August 21, 1995 and
its wholly owned subsidiary Colony International Incorporated, incorporated
in the State of Nevada on April 25, 1995. Mobile P.E.T. Systems, Inc. was
merged into Colony International Incorporated on December 22, 1998 and Colony
International Incorporated changed its name to Mobile P.E.T. Systems, Inc.
(the "Company"), the surviving corporation. On December 10, 1999, the Company
incorporated a wholly owned subsidiary, The London P.E.T. Centre Limited, a
United Kingdom private limited company. On December 17, 1999 the Company
incorporated two wholly owned subsidiaries, Mobile P.E.T. Leasing Limited, a
United Kingdom private limited company and Mobile P.E.T. Systems (UK)
Limited, a United Kingdom private limited company.
2. BASIS OF PRESENTATION
The consolidated financial statements included herein have been
prepared without audit pursuant to the rules and regulations of the
Securities and Exchange Commission ("SEC" or "Commission"). The consolidated
financial statements include the accounts of the Company and its subsidiaries
as mentioned in note 1. 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. The accompanying financial statements reflect all
adjustments that are, in the opinion of management, necessary to a fair
statement of the results for the interim periods presented. Such adjustments
are of a normal recurring nature.
Assets and liabilities of foreign subsidiaries are translated at
current exchange rates with the related translation adjustments reported as a
separate component of stockholders' equity. Income statement accounts are
translated at the average exchange rate during the period. Non-monetary
assets and liabilities are translated at historical exchange rates.
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, the
disclosure of contingent assets and liabilities, and the reported amounts of
revenues and expenses during the period. Actual results could differ from
those estimates.
The consolidated financial statements should be read in conjunction
with the audited financial statements and the notes thereto included in the
registrant's amended Form-10SB for the year ended June 30, 1999. The results
for the three months ended December 31, 1999 and the six months ended
December 31, 1999 are not necessarily indicative of the results that may be
expected for the year ended June 30, 2000.
3. CERTAIN TRANSACTIONS
On December 10, 1999, the Company converted working capital advances
into 100% of the capital stock of a newly formed limited company named The
London PET Centre Ltd. Also on December 17, 1999, the Company formed Mobile
PET Leasing Limited, and Mobile P.E.T. Systems (UK) Limited 100% owned
subsidiaries of the Company. Foreign currency translation adjustments of
$(3,450) attributable to these activities have been reported as a separate
component of shareholders' equity.
<PAGE>
4. LEASE COMMITMENTS
In July 1999, the Company purchased a mobile coach for cash in the
amount of $279,390. In December 1999, the Company sold the mobile coach to a
leasing company for cash in the amount of $279,390 and entered into a five-year
capital lease. Equipment under capital lease is included in property and
equipment as follows:
<TABLE>
<S> <C>
Equipment $ 279,390
Less accumulated amortization --
---------------
Net capital lease assets $ 279,390
===============
</TABLE>
The Company leases office space under a non-cancelable operating lease.
The office lease expires in December 2000. The Company leases certain other PET
equipment under operating leases. The equipment leases expire through December
2004.
Rent expense for the six-month period ended December 31, 1999 was
$118,594.
The following is a schedule by year of the future minimum lease
payments at December 31, 1999:
<TABLE>
<CAPTION>
Capital Operating
Year Lease Leases
---- ------------------ ---------------
<S> <C> <C>
2000 $ 60,813 $ 306,272
2001 74,054 337,945
2002 74,054 337,945
2003 74,054 337,945
2004 100,647 309,783
------------------ ---------------
383,620 $ 1,629,891
===============
Less amount representing
interest at 12.01% 54,230
------------------
Present value of minimum lease
payments (including current
portion of $32,761) $ 279,390
==================
</TABLE>
In July 1999, the Company made a cash deposit in the amount of $637,500
for a PET imaging system. The Company also entered into a five year operating
lease for a PET imaging system with a leasing company and the deposit was
returned, receiving cash in the amount of $637,500.
5. NOTES PAYABLE
The Company issued a six-month promissory note for bridge financing in
the amount of $50,000 to Northwest Capital Partners, LLC. related through a
common shareholder and board membership. The note is non-interest bearing and is
due not later than May 20, 2000.
6. SHAREHOLDERS' EQUITY
In July 1999, the Company issued 515,000 shares of common stock,
completing a private placement. The Company received cash in the amount of
$1,572,000, net of offering costs prior to July 1, 1999, and an additional
$300,000 in July 1999 for a total of $1,872,000. In connection with the
placement, the Company issued to the investors 51,500 warrants to purchase
shares of common stock at an exercise price of $4.00 per share. The warrants
expire on June 30, 2002.
<PAGE>
During the period July 1, 1999 to October 8, 1999, the Company issued
options to purchase 609,000 shares of common stock at an exercise price of the
average price per share of the Company's common stock during the calendar year
1999 which was between $1.00 to $4.00 per share. These stock options expire
between June 30, 2002 and 2005 and vest over periods ranging from zero to four
years.
7. RELATED PARTIES
DUE FROM LONDON RADIOSURGICAL CENTRE LTD ("LRC")
During the period July 1, 1999 to December 31, 1999, the Company
advanced without interest, $226,053 to LRC. At December 31, 1999, the balance
due from LRC was $256,024.
SUBORDINATED EQUITY PARTICIPATION
The Company carries an 8% interest in a subordinated equity
participation in London Radiosurgical Centre Ltd (LRC), a foreign corporation
with a common shareholder, officer and director. The subordinated equity
participation is recorded at cost in the amount of $200,000. The agreement
provides first for a distribution of cash to investors, if any, up to the amount
of their investments, after which distribution of 60% of net income. According
to the terms of the participation agreement, net income for distribution is
equal to net income less equipment financing payments, operating expenses,
reserve capital and taxes.
8. COMMITMENTS
In December 1999, the Company guaranteed a 6 year lease of Mobile
P.E.T. Leasing Ltd. (a newly formed wholly-owned subsidiary of the Company) with
IGE Medical Systems for 1.1 Million Pounds ($1.7 million) for a GE Advance PET
System.
9. RECLASSIFICATIONS
Certain previously reported amounts principally prepaid insurance
and related liability for $56,834 have been reclassified to conform to the
December 31, 1999 presentation. These changes had no impact on previously
reported results of operations or shareholders' equity.
10. RESTATEMENT
The Company's amended financial statements as of December 31, 1999
have been restated to reflect assets and liabilities for equipment
capitalized under lease obligations, accrued interest on subordinated equity
position participation, common stock acquisition costs and certain
reclassification. The effect of the restatement is as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, 1999 December 31, 1999
---------------------------- ----------------------------
As Previously As Previously
Reported As Restated Reported As Restated
------------- ------------ -------------- -----------
<S> <C> <C> <C> <C>
Balance Sheet:
Current assets 1,426,024 1,317,690
Current liabilities 504,615 392,543
Shareholders' equity 1,446,656 1,593,033
Statement of Operations:
General and administrative 910,005 777,059 1,621,786 1,442,712
Interest expense (11,760) (41,299) (26,299) (41,299)
</TABLE>
<PAGE>
11. SUBSEQUENT EVENTS
CAPITALIZATION
Pursuant to an action by written consent of the majority of the
shareholders of the Company, effective January 28, 2000, the Company amended
and restated its Certificate of Incorporation to increase the number of
authorized shares from 20,000,000 shares to 100,000,000 shares, of which
90,000,000 shares are designated as common stock and 10,000,000 shares are
designated as preferred stock. The shares of preferred stock may be issued by
the Company's board of directors in such series and with such rights,
privileges and preferences as they may determine.
PREFERRED STOCK
On March 1, 2000, the Company entered into a Securities Purchase
Agreement. As part of the Agreement, the Company issued 60 shares of 8%
Cumulative Convertible Redeemable Preferred, Series A Stock for cash in the
amount of $2,700,000, net of acquisition fees and 120,000 warrants to
purchase shares of common stock at an exercise price of $5.00 per share,
which expire in March 2003. The buyer of the preferred stock unconditionally
and irrevocably agreed to purchase shares of common stock of the Company in
tranches, for an aggregate purchase price of up to $10,000,000, at a price
equal to eighty five percent (85%) of the average closing bid price five (5)
consecutive days immediately prior to the Company providing a tranche notice
to the buyer. The Company may begin the tranche notices three (3) business
days after the registration of both the 8% Cumulative Convertible Redeemable
Preferred, Series A Stock and warrants, and the common stock described in
this Agreement. The buyers obligations under this Agreement to purchase
shares of common stock of the Company terminates in the event the required
registration is not completed within four (4) months from the date of this
agreement or under certain other conditions, including the sale of common
stock or securities convertible into shares of common stock by the Company
within one hundred eighty (180) days of the date of registration.
These shares of 8% Cumulative Convertible Redeemable Preferred,
Series A Stock have no voting rights, have a liquidation value of $50,000 per
share, and accrue dividends at a rate of eight percent (8%) per annum per
share on the liquidation value payable upon conversion. The total liquidation
value of the shares outstanding at March 31, 2000 in the amount of $3,000,000
is classified on the Company's balance sheet as preferred stock. Cumulative
preferred dividends are payable upon conversion and at March 31, 2000 there
are cumulative preferred dividends in arrears in the amount of $20,000 or
$333 per share. In the event of any liquidation, dissolution or winding up of
the affairs of the Company, holders of the 8% Cumulative Convertible
Redeemable Preferred, Series A Stock shall be paid the liquidation value plus
all accrued dividends at the date of liquidation, dissolution or winding up
of the affairs before any payment to other shareholders. At the option of the
holders, the 8% Cumulative Convertible Redeemable Preferred, Series A Stock
are convertible into shares of common stock determined by dividing $50,000 by
the conversion price of the lesser of $5 or 75% of the average of the closing
bid price of common stock during the five
<PAGE>
(5) trading days immediately prior to the conversion date. The Preferred
Stock has an intrinsic value of beneficial conversion feature of
approximately $1,206,000.
COMMON STOCK
The Company has authorized the issuance of ninety million
(90,000,000) shares of common stock, having one hundredth of a cent ($0.0001)
par value per share. In January 2000, the Company competed a private
placement to accredited investors of 550,000 shares of common stock and
55,000 warrants, expiring in 2003, exercisable at $1.75 per share, the
proceeds from which was $962,458. In March 2000, the Company completed a
private placement of 1,000,000 shares of common stock and 200,000 warrants,
expiring in 2002, exercisable at $1.75 per share to purchase common stock to
accredited investors, raising proceeds of $1,750,000.
STOCK OPTIONS
The Company and subsidiaries' Board of Directors adopted the 1999
Stock Option Plan pursuant to which incentive stock options or nonstatutory
stock options to purchase up to 4,000,000 shares of common stock may be
granted to employees, directors and consultants. Stock options expire on June
30, 2002, with some options extending to 2004 and vesting over service
periods that range from zero to four years. During the nine month period
ended March 31, 2000 and the period December 1, 1998 (date of recommencement)
to March 31, 1999, the Company did not recognize any compensation expense.
As of March 31, 2000, the Company has granted options to purchase
3,668,500 shares of common stock.
WARRANTS
At March 31, 2000, warrants were outstanding for 606,500 shares of
common stock at exercise prices between $1.75 to $5.00 per share and the
average of the last reported sale price of the common stock for the five
trading days preceding the issue date. These warrants expire between January
2001 and March 2004.
COMMITMENTS
In February 2000, the Company purchased a mobile coach for cash in
the amount of $273,149. In March 2000, the Company sold the mobile coach to a
leasing company for cash in the amount of $273,149 and entered into a
five-year capital lease. In addition, the Company entered into a five-year
operating lease for an imaging system with the leasing company. Future lease
payments under these leases are $2,126,944.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
For the period from our inception through September 30, 1999, we had
minimal revenues and our operating activities related primarily to
establishing the management and operating infrastructure to provide PET
systems and services to hospitals and other health care providers on a
mobile, shared user basis. During the six-month period ended December 31,
1999, we commenced accruing revenues from the first PET unit placed in
operation in July of 1999. We placed a second unit into operation in December
1999.
Since forming the Company, operating activities have been focused on
establishing a national sales force, creating and executing a sales and
marketing strategy directed to key potential hospital and health care providers;
securing a $10 million lease financing package; establishing key equipment
vendor relationships; promoting our service brand strategy; and building a
management and operations infrastructure to effectively and efficiently manage
future operating growth opportunities.
Our PET services include the provision of high technology imaging
systems, technologists to operate the imaging systems, the management of
day-to-day operations and educational and marketing support. Our services
enable leading as well as small to mid-size hospitals to gain access to
advanced diagnostic imaging technology and related value-added services
without making a substantial investment in equipment and personal.
Our future revenues will principally be a function of the number of
mobile units in service, scan volumes and fees per scan. We generate
substantially all of our revenues from exclusive five-year contracts with
hospitals and health care providers. Our contracts offer tiered pricing which
may include lower fees per scan on incremental scans, allowing hospitals and
other health care customers to benefit from increased scan volumes and
provide us with the opportunity to benefit from operating leverage that may
be associated with increased scan volumes.
The principal component of our operating costs include salaries paid to
technologists and drivers, annual system maintenance costs, insurance and
transportation costs.
Since inception, we have incurred significant losses and, as of
December 31, 1999, had incurred cumulative net losses of $3,235,800. We
expect to experience operating losses and negative cash flow for the
foreseeable future. We anticipate our losses will increase significantly from
current levels as we expect to incur additional costs and expenses related to
staffing, infrastructure development, marketing and sales activities and
other capital expenditures. As a result, we will need to generate significant
revenues to achieve and maintain profitability.
We have a limited operating history on which to base an evaluation
of our business and prospects. You must consider our prospects in light of
the risks, expenses and difficulties frequently encountered by companies in
their early stage of development. To address these risks, we must establish,
maintain and expand our customer base, implement and successfully execute our
business and marketing strategy, provide superior customer service,
anticipate and respond to competitive developments and attract, retain and
motivate qualified personnel. We cannot assure you that we will be successful
in addressing these risks, and our failure to do so could have a negative
impact on our business, operating results and financial condition.
<PAGE>
RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1999
The net loss totaled $742,076 or $ .06 per share for the three
months ended December 31, 1999.
The revenues totaled $216,925 for the three months ended December
31, 1999. The majority of our service revenues were generated from our first
unit placed into service in our first quarter of 1999. Our second unit was
placed in operation in late December and accrued minimum revenues.
The costs of service revenues represent salaries paid to
technologists and drivers, annual system maintenance costs, insurance,
transportation costs and the lease payment on our mobile PET system. In the
three months ended December 31, 1999, cost of service revenues totaled
$157,044 or 72.4% of revenues. In the three months ended December 31, 1999,
we hired additional technologists and drivers in anticipation of future
mobile PET route growth.
General and administrative expenses for the three months ended
December 31, 1999 totaled $777,059.
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999
The net loss totaled $1,411,935 or $ .11 per share for the six
months ended December 31, 1999.
Our service revenues totaled $296,920 for the six months ended
December 31, 1999. The majority of our service revenues were generated in the
six month period reflecting the initial operation of two mobile PET systems.
The costs of service revenues represent salaries paid to
technologists and drivers, annual system maintenance costs, insurance,
transportation costs and the lease payment on our mobile PET system. Cost of
service revenues for the six months ended December 31, 1999 was $232,573 or
78.3% of total service revenues.
General and administrative expenses for the six months ended
December 31, 1999 totaled $1,442,712. In the six month period ended
December 31, 1999, we incurred increased general and administrative expenses
due primarily to the growth in staff and related expenses incurred in
building our infrastructure, and increase advertising and marketing costs
related to the introduction of our mobile PET services.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1999, our total assets were $2,246,332, compared to
$2,894,837 at June 30, 1999. Current assets at December 31, 1999 totaled
$1,317,690 and current liabilities were $392,543. Stockholders' equity at
December 31, 1999 decreased to $1,593,033 from $2,723,419 at June 30, 1999, due
primarily to the net loss of $1,411,935 incurred in the six month period ended
December 31, 1999. We issued common stock in the six month period ended December
31, 1999 that totaled $285,000.
In July 1999, the Company purchased a mobile coach for cash in the
amount of $279,390. In December 1999, the Company sold the mobile coach to a
leasing company for cash in the amount of $279,390 and entered into a
five-year capital lease. In July 1999, the Company made a cash deposit in the
amount of $637,500 for a PET imaging system. The Company also entered into a
five year operating lease for a PET Imaging system with a leasing company and
the deposit was returned, receiving cash in the amount of $637,500.
<PAGE>
The Company issued a six-month promissory note for bridge financing in
the amount of $50,000 to Northwest Capital Partners, LLC. related through a
common shareholder and board membership. The note is non-interest bearing and is
due not later than May 20, 2000.
We have experienced a substantial increase in our capital expenditures
since our inception, consistent with our growth in operations and staffing, and
we anticipate that this will continue for the foreseeable future. Additionally,
we continue to evaluate possible expenditures and investments in businesses,
geographic service expansion and service offerings. We cannot be certain that
the underlying assumed levels of revenues and expenses will prove to be
accurate.
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 10
Sale/Leaseback Contracts*
Securities Purchase Agreement*
Exhibit 10.1, Finova Equipment Lease 4125
Exhibit 10.2, Master Hire Purchase Agreement dated 16,
December 1999
Exhibit 10.3, Lease between the Company and Finova Capital
Corporation dated December 22, 1999
Exhibit 27.
Financial Data Schedule
(b) Reports on Form 8-K
None
* Previously filed.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MOBILE P.E.T. SYSTEMS, INC.
Date: May 31, 2000 By: /s/ Thomas G. Brown
----------------------------------------
Thomas G. Brown, Chief Financial Officer
