U. S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JULY 31, 1998
( ) 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 0-9064
Applied Medical Devices, Inc.
(Exact name of small business issuer as specified in its charter)
Colorado 84-0789885
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
1722 Buffehr Creek Road, Vail, CO 81657
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code
-------------------
(970) 479-2800
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
State the number of shares outstanding of each of the Issuer's classes of common
stock, as of the latest practicable date.
Class Outstanding at August 28, 1998
Common Stock, $.01 par value 65,977,800
<PAGE>
Applied Medical Devices, Inc.
Form 10-QSB
Table of Contents
Part I. Financial Information.............................................. 3
Consolidated Balance Sheets as of July 31, 1998 and
April 30, 1998.............................................................. 4
Consolidated Statements of Operations for the three month periods ended
July 31, 1998, July 31, 1997 and Since Being a
Development Stage Company................................................... 5
Consolidated Statements of Cash Flows for the year-to-date periods
ended July 31, 1998, July 31, 1997, and Since Being a Development
Stage Company............................................................... 6
Management's Discussion and Analysis of Financial Condition
and Results of Operations........................................... 7, 8, & 9
Part II. Other Information................................................. 9
Signature Page............................................................. 10
Form 10-QSB
Page 2 of 10
<PAGE>
Applied Medical Devices, Inc.
Form 10-QSB
July 31, 1998
Part I. Financial Information
Item I. Financial Statements
- ----------------------------
The unaudited financial statements reflect all adjustments and contain all
information necessary, in the opinion of management, for a fair presentation of
the financial position and results of operation for the interim periods reported
when these statements are read in conjunction with the notes to financial
statements included in the Registrant's Form 10-KSB for the year ended April 30,
1998.
Form 10-QSB
Page 3 of 10
<PAGE>
Applied Medical Devices, Inc.
(A Development Stage Company)
Consolidated Balance Sheets
July 31, April 30,
1998 1998
(Unaudited)
----------- -----------
Assets
Current -
Cash and cash equivalents $ 156,470 $ 160,103
----------- -----------
$ 156,470 $ 160,103
=========== ===========
Liabilities and Shareholders' Equity
Current liabilities -
Accrued expenses $ 4,214 $ 530
----------- -----------
Commitments
Shareholders' equity
Common Stock - $.01 par value,
75,000,000 shares authorized,
issued and outstanding 65,977,800
as of July 31, 1998 and April 30, 1998 659,778 659,778
Additional paid-in capital 4,172,128 4,172,128
Accumulated deficit (4,451,999) (4,451,999)
Deficit accumulated during the
development stage (227,651) (220,334)
----------- -----------
Total shareholders' equity 152,256 159,573
----------- -----------
$ 156,470 $ 160,103
=========== ===========
See accompanying notes to consolidated financial statements.
Form 10-QSB
Page 4 of 10
<PAGE>
Applied Medical Devices, Inc.
(A Development Stage Company)
Consolidated Statements of Operations
(Unaudited)
Three Months Three Months Since Being
Ended Ended A
July 31, 1998 July 31, 1997 Development
Stage Company
------------ ------------ -------------
Expenses -
General and administrative $ 9,321 $ 10,884 $ 411,742
------------ ------------ ------------
Other income:
Interest income 2,004 2,266 120,502
Other -- -- 32,536
Gain from sale of
marketable securities -- -- 31,053
------------ ------------ ------------
Total other income 2,004 2,266 184,091
------------ ------------ ------------
Net Loss $ (7,317) $ (8,618) $ (227,651)
============ ============ ============
Basic income (loss)
per share nil nil
============ ============
Weighted average number
of common shares
outstanding 65,977,800 65,977,800
============ ============
See accompanying notes to consolidated financial statements.
Form 10-QSB
Page 5 of 10
<PAGE>
<TABLE>
<CAPTION>
Applied Medical Devices, Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Three Months Since Being
ended ended A Development
July 31, 1998 July 31, 1997 Stage Company
------------- ------------- -------------
Operating Activities
<S> <C> <C> <C>
Net loss $ (7,317) $ (8,618) $(227,651)
Adjustments to reconcile net loss to
cash used in operating activities:
Gain from sale of marketable securities -- -- (31,053)
Issuance of common stock for services -- -- 7,565
Changes in operating assets and liabilities:
Accounts receivable -- -- 4,903
Accrued expenses 3,684 2,453 (38,896)
Other -- -- 10
Prepaid expenses -- -- --
--------- --------- ---------
Net cash used in operating activities (3,633) (6,165) (285,122)
--------- --------- ---------
Investing activities -
Proceeds from sale of marketable securities -- -- 47,040
--------- --------- ---------
Financing activities:
Proceeds from issuance of common stock -- -- 139,368
Proceeds from exercise of stock warrants -- -- 98,000
--------- --------- ---------
Net cash provided by financing activities -- -- 237,368
--------- --------- ---------
Increase (decrease) in cash and
cash equivalents (3,633) (6,165) (714)
Cash and cash equivalents,
beginning of period 160,103 186,065 157,184
--------- --------- ---------
Cash and cash equivalents,
end of period $ 156,470 $ 179,900 $ 156,470
========= ========= =========
See accompanying notes to consolidated financial statements.
Form 10-QSB
Page 6 of 10
</TABLE>
<PAGE>
Note 1 - The unaudited consolidated financial statements and related notes
have been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. Accordingly, certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been omitted pursuant to such rules and
regulations. The accompanying financial statements and related notes should be
read in conjunction with the audited financial statements of the Company, and
notes thereto, for the year ended April 30, 1998.
Note 2 - The Company has implemented Statement of Financial Accounting
Standards (SFAS) No. 128, "Earnings per Share". SFAS No. 128 provides for the
calculation of "Basic" and "Diluted" earnings per share. Basic earnings per
share includes no dilution and is computed by dividing income or loss available
to common stockholders by the weighted average number of common shares
outstanding for the period. Diluted earnings per share reflects the potential
dilution of securities that could share in the earnings of an entity, similar to
fully diluted earnings per share. In loss periods, dilutive common equivalent
shares are excluded as the effect would be anti-dilutive. Basic and diluted
earnings per share are the same for all periods presented.
Note 3 - The Company has implimented Statement of Financial Accounting
Standards (SFAS) No. 130 "Reporting Comprehensive Income" which establishes
standards for reporting and display of comprehensive income, as components and
accumulated balances. Comprehensive income is defined to include all changes in
equity except those resulting from investments by owners and distributions to
owners. Among other disclosures, SFAS No. 130 required that all items that are
required to be recognized under current accounting standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements. Management believes that the
adoption of this statement will have no material impact on the Company's
financial statements.
The financial statements reflect all adjustments which are, in the opinion
of management, necessary for a fair statement of the results for the periods
presented. All significant intercompany accounts and transactions have been
eliminated in consolidation.
Item 2. Management's Discussion and Analysis or Plan of Operation.
- ------------------------------------------------------------------
The following review concerns the three month periods ended July 31, 1998,
and July 31, 1997, which should be read in conjunction with the financial
statements and notes thereto presented in this Form 10- QSB.
The information set forth in "Management's Discussion and Analysis of
Financial Condition and Results of Operations" below includes "forward looking
statements" within the meaning of Section 27A of the Securities Act, and is
subject to the safe harbor created by that section. Factors that could cause
actual results to differ materially from these contained in the forward looking
statements are set forth in "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
Form 10-QSB
Page 7 of 10
<PAGE>
Plan of Operation.
- ------------------
The Company has continued its efforts to acquire, merge with or enter into
another form of business combination with another entity, and the Company plans
to continue these efforts in the current fiscal year. It is presently unknown
whether any transaction will be concluded. The Company considers its current
cash and cash equivalent balances adequate to satisfy its cash requirements for
the next twelve months. However, legal and accounting and other expenses could
increase significantly in connection with any contemplated business combination.
Due to the nature of the Company's present activities, however, the Company is
unable to predict its likely expenditures for professional fees and other
expenses. The Company has no major capital commitments.
The Company has no significant equipment and has not engaged in any
research or development activities during the past two fiscal years. At present,
the Company employs one person, on a part-time basis. The Company does not
expect any changes unless the Company determines to proceed with a business
combination.
Results of Operations Three Months Ended July 31, 1998 and July 31, 1997.
- -------------------------------------------------------------------------
During the three months ended July 31, 1998, the Company had a net loss of
approximately $7,300. The Company incurred general and administrative costs of
approximately $9,300. The Company's revenues consisted primarily of interest on
cash and other money market instruments of approximately $2,000. During the
three months ended July 31, 1997, the general and administrative costs were
approximately $10,900 and the Company's revenues consisted primarily of
approximately $2,300 from interest on cash and other money market instruments,
resulting in a loss of approximately $8,600 for the period. As detailed on the
accompanying consolidated statements of cash flows, there were no significant
adjustments between the net loss and net change in cash.
As stated above in the Plan of Operation, due to the nature of the
Company's activities, the Company's prospects for the future are dependent on a
number of variables which cannot be predicted. Generally, after identifying a
potential business opportunity, the Company could incur significant costs in
evaluating the desirability of an acquisition or other form of business
combination. Should the Company determine to proceed with the business
combination, the transaction costs could be substantial. Thereafter, results of
operations would likely be materially affected by the business acquired by the
Company.
Also, in June 1997, FASB issued SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information" which supersedes SFAS No. 14,
"Financial Reporting for Segments of a Business Enterprise". SFAS No. 131
establishes standards for the way that public companies report information about
operating segments in annual financial statements and required reporting of
Form 10-QSB
Page 8 of 10
<PAGE>
selected information about operating segments in interim financial statements
issued to the public. It also establishes standards for disclosures regarding
products and services, geographic areas and major customers. SFAS No. 131
defines operating segments as components of a company about which separate
financial information is available that is evaluated regularly by the chief
operating decision maker in deciding how to allocate resources in assessing
performance.
SFAS No. 131 is effective for financial statements for periods beginning
after December 15, 1997 and require comparative information for earlier years to
be restated. Because of the recent issuance of these standards, management has
been unable to fully evaluate the impact, if any, they may have on future
financial statement disclosures. Results of operations and financial position,
however, will be unaffected by implementation of these standards.
In February 1998, the FASB issued SFAS No. 132, "Employees' Disclosures
about Pensions and Other Postretirement Benefits" which standardizes the
disclosure requirements for pensions and other benefits and requires additional
information on changes in the benefit obligations and fair values of plan assets
that will facilitate financial analysis. SFAS No. 132 is effective for years
beginning after December 15, 1997 and requires comparative information for
earlier years to be restated unless such information is not readily available.
Management believes that adoption of this statement will have no material impact
on the Company's financial statements.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" which establishes accounting and reporting
standards for derivative instruments including certain derivative instruments
embedded in other contracts and for hedging activities. SFAS 133 is effective
for all fiscal quarters of fiscal years beginning after June 15, 1999.
Management believes the adoption of this statement will not have material impact
on the Company's financial statements.
Part II. Other Information
Not Applicable
Form 10-QSB
Page 9 of 10
<PAGE>
Applied Medical Devices, Inc.
Form 10-QSB
July 31, 1998
Signatures
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
APPLIED MEDICAL DEVICES, INC.
Date: September 8, 1998 By: /s/ Allan K. Lager
-----------------------------------
Allan K. Lager, President
and Chief Financial Officer
Form 10-QSB
Page 10 of 10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1999
<PERIOD-START> MAY-01-1998
<PERIOD-END> JUL-31-1998
<CASH> 156,470
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 156,470
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 156,470
<CURRENT-LIABILITIES> 4,214
<BONDS> 0
0
0
<COMMON> 4,831,906
<OTHER-SE> (4,679,650)
<TOTAL-LIABILITY-AND-EQUITY> 156,470
<SALES> 0
<TOTAL-REVENUES> 2,004
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 9,321
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (7,317)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,317)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
