SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996.
Commission file number 0-12405
IMATRON INC.
New Jersey
I.D. No. 94-2880078
389 Oyster Point Blvd, South San Francisco, CA 94080
(415) 583-9964
Indicate by check mark whether the Registrant (1) had 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 periods 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
---- ----
At October 30, 1996, 77,355,833 shares of the Registrant's common stock
(no par value) were issued and outstanding.
Total Number of Pages: 15
<PAGE>
IMATRON INC.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION PAGE
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets - 3
September 30, 1996 (unaudited) and December 31, 1995.
Condensed Consolidated Statements of 4
Operations - Three and Nine Months Ended
September 30, 1996 and 1995 (unaudited).
Condensed Consolidated Statements of 5
Cash Flows - Nine Months Ended
September 30, 1996 and 1995 (unaudited).
Notes to Condensed Consolidated Financial 6
Statements (unaudited).
Item 2. Management's Discussion and Analysis of Financial 11
Condition and Results of Operations.
PART II. OTHER INFORMATION 13
SIGNATURES 15
<PAGE>
<TABLE>
IMATRON INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
<CAPTION>
September 30, December 31,
1996 1995
----------------- -----------------
ASSETS (Unaudited)
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 5,318 $ 7,269
Short-term investments 10,961 1,266
Accounts receivable, net 5,988 3,083
Accounts receivable from affiliate 3,192 2,957
Notes receivable - 250
Inventories 9,718 8,937
Prepaid expenses 609 563
----------------- -----------------
Total current assets 35,786 24,325
Property and equipment, net 7,243 6,260
Other assets 333 291
Investments in HSI 1,437 -
----------------- -----------------
Total assets $ 44,799 $ 30,876
================= =================
LIABILITIES & SHAREHOLDERS' EQUITY:
Current liabilities
Borrowings under line of credit $ - $ 992
Accounts payable 1,587 2,785
Other accrued liabilities 7,919 5,607
Capital lease obligations - due within one year 64 689
----------------- -----------------
Total current liabilities 9,570 10,073
Deferred income on sale-leaseback transactions 1,551 1,267
Capital lease obligations 6,035 3,311
----------------- -----------------
Total liabilities 17,156 14,651
SHAREHOLDERS' EQUITY
Common stock, no par value; authorized - 100,000
shares; issued and outstanding 77,248 shares at 1996
and 68,835 at 1995; 87,954 72,282
Additional paid-in capital 1,500 1,500
Accumulated deficit (61,811) (57,557)
----------------- -----------------
Total shareholders' equity 27,643 16,225
----------------- -----------------
Total liabilities and shareholders' equity $ 44,799 $ 30,876
================= =================
<FN>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
IMATRON INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30
------------------------------------- ------------------------------------
1996 1995 1996 1995
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Revenues:
Product sales $ 6,545 $ 244 $ 12,562 $ 9,532
Product sale-leaseback
arrangements - - 1,774 953
Service 1,134 1,079 2,722 4,581
Development contracts 1,250 1,250 3,750 4,387
Clinic - 132 574 271
--------------- --------------- --------------- ---------------
Total revenues 8,929 2,705 21,382 19,724
--------------- --------------- --------------- ---------------
Cost of revenues:
Product 4,649 999 10,020 8,325
Product sale-leaseback
arrangements - - 1,774 953
Service 980 997 2,452 3,271
Development contracts 1,250 1,250 3,750 3,728
Clinic - 425 966 989
--------------- --------------- --------------- ---------------
Total cost of revenues 6,879 3,671 18,962 17,266
--------------- --------------- --------------- ---------------
Gross profit / (loss) 2,050 (966) 2,420 2,458
Operating expenses:
Research and development 879 779 2,380 2,539
Marketing and sales 688 648 2,669 2,208
Gen. and admin 823 709 2,661 1,913
--------------- --------------- --------------- ---------------
Total operating expenses 2,390 2,136 7,710 6,660
--------------- --------------- --------------- ---------------
Total operating loss (340) (3,102) (5,290) (4,202)
Other income, net 1,922 16 2,083 4,014
Interest expense (259) (46) (493) (109)
--------------- --------------- --------------- ---------------
Net income(loss) before
loss from equity investment 1,323 (3,132) (3,700) (297)
--------------- --------------- --------------- ---------------
Loss from equity investment
in HeartScan Imaging, Inc. (554) - (554) -
--------------- --------------- --------------- ---------------
Net income (loss) $ 769 $ (3,132) $ (4,254) $ (297)
=============== =============== =============== ===============
Net income per share $ 0.01 $ (0.06) $ (0.06) $ (0.01)
=============== =============== =============== ===============
Number of shares used
in per share calculation 80,428 55,488 73,359 54,764
=============== =============== =============== ===============
<FN>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
IMATRON INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<CAPTION>
Nine Months Ended September 30,
----------------------------------------------------
1996 1995
----------------- -----------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (4,254) $ (297)
Adjustments to reconcile net loss
to net cash used in
operating activities:
Depreciation and amortization 437 1,207
Other Income - (4,000)
Changes in:
Accounts and notes receivable (2,522) 3,835
Inventories (781) (613)
Prepaid expenses and deposits (46) (104)
Other assets 212 (20)
Accounts payable (1,198) (1,503)
Other accrued liabilities 2,312 536
Deferred income 284 -
----------------- -----------------
Net cash used in
operating activities (5,556) (959)
Cash flows from investing activities:
Capital expenditures (280) (1,055)
Purchases of marketable securities (17,511) -
Maturities of marketable securities 5,536 -
Sales of marketable securities 2,014 -
Investment in HeartScan (780) -
----------------- -----------------
Net cash used in investing activities (11,021) (1,055)
Cash flows from financing activities:
Payment of obligation under capitalized leases (54) -
Payment of notes payable (992) -
Proceeds from issuance of notes payable - 800
Issuance of common stock 15,672 1,033
----------------- -----------------
Net cash provided by
financing activities 14,626 1,833
----------------- -----------------
Net decrease in cash and
cash equivalents (1,951) (181)
Cash and cash equivalents, at beginning
of the period 7,269 1,694
----------------- -----------------
Cash and cash equivalents, at end of the
period $ 5,318 $ 1,513
================= =================
<FN>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
</FN>
</TABLE>
<PAGE>
IMATRON INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
- ---------------------------------------------------------------- ---------------
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for annual
consolidated financial statements. In the opinion of management, adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three and nine month
periods ended September 30, 1996 are not necessarily indicative of the results
that may be expected for the year ended December 31, 1996. For further
information, refer to the consolidated financial statements and notes thereto
included in the Company's Annual Report to Shareholders for the year ended
December 31, 1995.
2. PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Imatron Inc. and
its subsidiary HeartScan Imaging, Inc. (HeartScan). All inter-company accounts
and transactions have been eliminated in consolidation through June 30, 1996.
Effective July 1, 1996, the consolidated financial statements include the
accounts of Imatron Inc. and its 48.3% equity investment in HeartScan.
3. SHORT-TERM INVESTMENTS
Short-term investments consist of certificates of deposit and debt securities.
The certificates of deposit have been classified as held to maturity and the
debt securities have been classified as available for sale. The maturity of all
debt securities is less than one year and the unrealized gain/loss of the
securities is immaterial at September 30, 1996.
4. INVENTORIES
Inventories consist of (in thousands of dollars):
September 30, December 31,
1996 1995
---------------- --------------
Purchased parts and sub-assemblies $ 3,690 $ 2,594
Service parts 995 1,079
Work-in-process 4,969 2,403
Finished goods 64 2,861
=============== =================
Total $ 9,718 8,937
=============== ==================
5. INCOME (LOSS) PER SHARE
Net income per common and common equivalent share is computed using the weighted
average number of common shares outstanding after considering the dilutive
effect of stock options and warrants.
Net loss per common share is computed using the weighted average number of
common shares outstanding. Stock options and warrants have not been included in
the computation as their effect would have been antidilutive.
<PAGE>
6. TRANSACTIONS WITH SIEMENS CORPORATION
The following table represents the percent of revenues attributable to the
development and distribution agreements between the Company and Siemens
Corporation:
Three months ended Nine months ended
September 30, September 30,
-------------------- -----------------
1996 1995 1996 1995
---- ---- ---- ----
Net product sales - 100% 2% 17%
Service 22% 49% 18% 39%
Development contracts 100% 100% 100% 100%
Total revenues 17% 76% 21% 40%
Siemens has asserted a claim against the Company regarding the lapse of certain
foreign registrations of one of the patents assigned to Siemens by the Company
in connection with the March 31, 1995 agreement between the companies. The
technology involved in the patent is not used presently in any of the Company's
products. The Company believes that it can provide patent to Siemens to replace
the lapsed patent. While the resolution of the claim is not expected to have a
material effect on the Company's financial position, it could however, have a
material effect on the results of operations of a particular future period if
resolved unfavorably.
7. JOINT VENTURE
As of September 30, 1996 Imatron's interest in the Joint Venture is carried in
the accompanying financial statements at no value. The Company has no financial
commitments to the Joint Venture and is prepared to abandon its interest. The
Company intends to carry this investment at no value until such time as the
Joint Venture can demonstrate that it will be able to sustain profitable
operations. Once profitable operations are sustained, the Company will account
for the Joint Venture investment on the equity method. Summarized financial
information for the Joint Venture is not included in the notes to the
consolidated financial statements for the period ended or as of September 30,
1996, as such information is not considered material to the operations of
Imatron Inc.
The following table represents the percent of revenues attributable to the Joint
Venture between the Company and Imatron Japan K.K.:
Three months ended Nine months ended
September 30, September 30,
----------------------- ------------------
1996 1995 1996 1995
------- -------- ------- -----
Net product sales 22% - 44% 59%
Service 24% 11% 23% 22%
Percentage to total
revenues 19% 5% 33% 37%
<PAGE>
8. EQUITY INVESTMENT IN HEARTSCAN
On June 28, 1996, Imatron completed a private offering whereby Imatron sold
100,000 shares of Heartscan Imaging, Inc. Series A Preferred stock to
unaffiliated third parties at $160 per share. As a result, the total
capitalization of Heartscan is as follows:
<TABLE>
<CAPTION>
<S> <C>
Common shares outstanding 70,312
Common shares issuable upon the conversion of 100,000 Series A Preferred 1,000,000
Common shares issuable upon the conversion of 100,000 Series B Preferred 1,000,000
Stock options issued but not outstanding 117,188
Warrants issued in connection with the sale of Series A Preferred 30,000
Common stock reserved for issuance under the stock option plans 282,500
----------------
Total Common Shares Authorized 2,500,000
================
</TABLE>
Imatron Inc remains the owner of 100,000 shares of Heartscan Series B Preferred
stock which represents a 48.3% ownership in Heartscan at September 30, 1996.
The Heartscan Series A Preferred stock may be exchanged at the sole option of
the holders into Imatron common stock at an exchange price of $5.00 per share of
Imatron Common stock until the earlier of a) the conclusion of the two year
period following the closing date of the Preferred Stock offering; or b) a
Heartscan initial public offering at a market capitalization of no less than
$15,000,000. If there is no initial public offering of Heartscan Common stock
within 24 months of the Preferred Stock closing, the holders may convert the
Heartscan Series A Preferred stock into Imatron common stock at a conversion
price equal to 73% of the weighted average closing price of Imatron Common Stock
for the 90 day period immediately preceding the pricing date, but in no event
shall the conversion price be less than $1.50.
Heartscan Series A & B Preferred stock issued and outstanding shall have the
right to vote with the holders of Common stock on all matters, each share of
Preferred stock having that number of votes equal to the number of common stock
shares into which the Preferred stock is convertible.
Effective July 1, 1996, Imatron did not have a majority voting interest in
Heartscan and, therefore, has changed its method of accounting for HeartScan
from consolidation basis to accounting for its investment using equity method.
For the three months ended September 30, 1996, HeartScan's losses were
$1,148,000 of which $554,000 (or 48.3%) was recognized by Imatron Inc. as a loss
on its equity investment.
If at some future point in time sufficient shares of Heartscan Series A
Preferred stock are exchanged into shares of Imatron Common stock such that
Imatron controls the equivalent of 50% or greater of the shares of Heartscan
Common stock, Imatron will fully consolidate Heartscan's financial statements.
Had Imatron controlled more than 50% of the shares of Common stock of Heartscan,
as of September 30, 1996, Imatron's third quarter results on a fully
consolidated basis would be $8,991,000 in revenues and $155,000 in net income.
Following, are Imatron's proforma financial statements as if HeartScan had been
fully consolidated and the Heartscan Series A Preferred stock was accounted for
as minority interest as of September 30, 1996.
<PAGE>
The following is Imatron's condensed consolidated balance sheets as if HeartScan
had been fully consolidated.
<TABLE>
IMATRON INC.
Condensed Consolidated Balance Sheets
September 30, 1996
PROFORMA
<CAPTION>
Elimination
ASSETS Imatron HeartScan Entries Total
------------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 5,318 $3,060 $ - $ 8,378
Short term investments 10,961 7,992 - 18,953
Receivables 8,812 136 - 8,948
Inventories 9,718 - - 9,718
Prepaid Expenses 609 63 - 672
............. ............. ............... .............
Current Assets 35,418 11,251 - 46,669
Fixed Assets, net 1,341 8,229 - 9,570
Other Assets 333 2,505 (2,500) 338
Investments in HSI 1,192 - (1,192) -
............. ............. ............... .............
Total Assets $38,284 $21,985 $(3,692) $56,577
============= ============= =============== =============
LIABILITIES
Accounts Payable $1,587 $ - $ - $ 1,587
Other accrued liabilities 7,919 76 (2,500) 5,495
Capital lease obligations-due within one year 64 1,135 - 1,199
............. ............. ............... .............
Current Liabilities 9,570 1,211 (2,500) 8,281
Deferred income on sale leaseback transactions 1,551 - - 1,551
Capital lease obligations 134 4,766 - 4,900
............. ............. ............ ..............
Total Liabilities 11,255 5,977 (2,500) 14,732
Minority Interest - 14,798 - 14,798
STOCKHOLDER'S EQUITY
Preferred Stock - 1,992 (1,992) -
Common Stock 87,954 143 - 88,097
Additional Paid in Capital 1,500 348 (348) 1,500
Deferred Compensation - (125) - (125)
Retained Earnings (62,425) (1,148) 1,148 (62,425)
............. ............. ............... .............
Stockholders' Equity 27,029 1,210 (1,192) 27,047
............. ............. ............... .............
Total Liability & Stockholders' Equity $38,284 $21,985 ($3,692) $56,577
============= ============= =============== =============
</TABLE>
<PAGE>
The following is Imatron's condensed consolidated statement of operations as if
HeartScan had been fully consolidated.
<TABLE>
IMATRON INC.
Condensed Consolidated Statement of Operations
(Amounts in thousands, except in per share data)
PROFORMA
<CAPTION>
Three Months Ended Nine Months Ended
September 30, 1996 September 30, 1996
------------ ----------- -------------- ------------ ------------- ------------- -------------- ----------------
Eliminating Eliminating
Imatron HeartScan entries Total Imatron HeartScan entries Total
------------ ----------- -------------- ------------ ------------- ------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUE
Product $6,545 $ - $ (169) $ 6,376 $14,336 $ - $ (169) $14,167
Field Service 1,134 - (64) 1,070 2,793 - (135) 2,659
R&D 1,250 - - 1,250 3,750 - - 3,750
Clinic - 295 - 295 - 869 - 869
............ ........... .............. ............ ............. ............ ............. ...............
Total Revenue 8,929 295 (233) 8,991 20,879 869 (304) 21,444
COST OF SALES
Product 4,649 - - 4,649 11,794 - - 11,794
Field Service 980 - (153) 827 2,452 - (153) 2,299
R&D 1,250 - - 1,250 3,750 - - 3,750
Clinic - 605 (60) 545 - 1,642 (131) 1,511
............ ........... .............. ............ ............. ............. .............. ................
Total Cost of
Sales 6,879 605 (213) 7,271 17,996 1,642 (284) 19,354
............ ........... .............. ............ ............. ............. .............. ................
Gross profit 2,050 (310) (20) 1,720 2,883 (773) (20) 2,090
Operating
Expenses 2,390 831 - 3,221 6,444 2,097 - 8,541
Other income 1,922 150 - 2,072 2,077 156 - 2,233
Interest expense 259 157 - 416 303 347 - 650
............ ........... .............. ............ ............. ............. .............. ................
Net income/
(loss) $ 1,323 $ (1,148) $ (20) $ 155 $ (1,787) $ (3,061) $ (20) $ (4,868)
============ =========== ============== ============ ============= ============= ============== ================
Net income per share $ 0.00 $ (0.07)
============ ================
Number of shares used
in per share calculation 80,428 73,359
============ ================
</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations:
Three months ended September 30, 1996 versus 1995
Overall revenues for the third quarter ended September 30, 1996 of $8,929,000
increased $6,224,000 or 230% compared to 1995 revenues of $2,705,000. Net
product revenues increased to $6,545,000 from $244,000 in 1995 primarily because
of increases in scanner shipments from zero in 1995 to four in 1996. Service
revenues remained flat in 1996 due to an increase in service contracts which was
offset by a decrease in spares shipments. Development contract revenue is
consistent with the three year Memorandum of Understanding entered into with
Siemens in March 1995. Clinic revenues related to the Heartscan Imaging
subsidiary is no longer being reported as a result of the recent Heartscan
private placement decreasing the ownership in Heartscan by Imatron to a minority
ownership (See footnote #8).
Total cost of revenues as a percent of revenues for the third quarter of 1996 is
lower at 77% as compared with 136% in 1995. Product cost of revenues as a
percent of product revenues decreased to 77% in 1996 from 409% in 1995 due to
shipment of four scanners with higher margins compared to zero shipments in
1995. Service cost of revenues as a percent of service revenue slightly
decreased to 86% in 1996 from 92% in 1995. Development contract revenue and cost
of revenue is equal due to the terms of the three year Memorandum of
Understanding with Siemens.
Operating expenses of $2,050,000 increased $271,000 or 13% compared to 1995
expenses of $2,119,000. R&D expenses of $879,000 in 1996 reflect the portion of
R&D spending not covered by the Siemens research and development contract.
Selling expenses remained flat as compared to 1995 due to commissions paid on
the sale of C-150 scanner to Japan offset by the exclusion of Heartscan expenses
during the third quarter as a result of the recent Heartscan private placement
decreasing the ownership in Heartscan by Imatron to a minority interest (See
footnote #8). Administrative expenses increased $131,000 to $823,000 due to
increases in bank fees related to the Exim Bank credit line and investor
relations expenses. These were also partially offset by the non-consolidation of
Heartscan administrative expenses during third quarter.
<PAGE>
Nine months ended September 30, 1996 versus 1995
Overall revenues for the nine months ended 1996 of $21,382,000 increased
$1,658,000 or 8% compared to revenues of $19,724,000 for the same period in
1995. Net product revenues, including $1,774,000 under the sale-leaseback
arrangements, increased 37% to $14,336,000 in 1996 from $10,485,000 in 1995 due
to nine scanners shipped in 1996 compared to seven in 1995. Service revenues
decreased 41% to $2,722,000 in 1996 due primarily to a lower volume of spares
shipments. The decrease in the development contract revenue of 15% to $3,750,000
in 1996 resulted from the lower revenue recognized under the Memorandum of
Understanding entered into with Siemens as compared to the previous development
agreement terminated in March 1995. Clinic revenues related to the Heartscan
reflect the amount prior to the sale of the majority ownership of Heartscan to
unaffiliated third party (See footnote #8).
Total cost of revenues as a percent of revenues for nine months ended 1996 at
89%, the same as 1995. Product cost of revenues as a percent of product
revenues decreased to 82% in 1996 from 88% in 1995 due higher margins on
scanners shipped. Service cost of revenues as a percent of service revenues
increased to 90% in 1996 from 71% 1995 due primarily to a decrease in spares
shipments. Development contract cost of revenues is equal to the revenue
recognized under the Memorandum of Understanding with Siemens. Clinic cost of
revenues as a percent of clinic revenues decreased to 168% in 1996 from 365% in
1995 due to the exclusion of clinic revenues and expenses for the third quarter
ended 1996 as a result of the recent HeartScan private placement decreasing the
ownership in HeartScan by Imatron to a minority ownership (See footnote #8).
Operating expenses of $7,710,000 in 1996 increased $1,102,000 or 17% in 1995
expenses of $6,608,000. R&D expenses of $2,380,000 in 1996 reflect the portion
of R&D spending not related to the Siemens research and development contract.
Selling expenses increased to $2,669,000 in 1996 from $2,208,000 in 1995 due to
higher marketing expenses incurred by Heartscan Imaging prior to the Heartscan
private placement. Administrative expenses increased $800,000 to $2,661,000 due
to increases in investor relations expenses and overhead expenses related to the
establishment of new Heartscan clinics prior to the Heartscan private placement.
Other income decreased to $2,083,000 in 1996 due to the $4,000,000 recorded in
1995 for the transfer of five Imatron EBT patents to Siemens and the
cancellation of Siemens' existing minimum purchase obligations under the
previous distribution agreement. This was partially offset by income derived
from the sale of 59,090 shares of Invision Technologies common stock at $30.00
per share or a total of $1,756,000.
<PAGE>
The increase in interest expense is related to the capital lease obligations for
certain equipment entered into by the Company.
Liquidity and Capital Resources:
At September 30, 1996 the Company has a working capital of $26,216,000 which was
390% increase compared to the working capital of $14,252,000 at December 31,
1995. The current ratio increased to 3.7:1 from 2.4:1 at December 31, 1995.
The Company's assets increased in 1996 by 26% to $38,898,000 compared to
December 31, 1996 total assets of $30,876,000 primarily due to proceeds from the
sale of 4,000,000 shares of Imatron common stock and the receipt of a deposit of
$2,500,000 for scanner orders from Heartscan. This increase in cash and
investments was partially offset by the operating loss incurred during the year
and payment of the borrowings under the line of credit with San Paolo Bank.
Accounts receivable also increased due to the higher number of scanners sold
under the letters of credit that are outstanding as of September 30, 1996.
Inventories are higher at 10% due to the increase in work in process. Fixed
assets and lease obligations include capital leases on HeartScan clinic scanners
amounting to $5,901,000 that are guaranteed by Imatron Inc.
The Company's management believes that the cash, cash equivalents and short-term
investments existing at September 30, 1996 and the estimated proceeds from
ongoing sales of products and services in 1996 will provide the Company with
sufficient cash for operating activities and capital requirements through
December 31, 1996.
To satisfy the Company's capital and operating requirements beyond 1996,
profitable operations or additional public or private financing or the
incurrence of debt may be required. If future public or private financing is
required by the Company, holders of the Company's securities may experience
dilution. There can be no assurance that equity or debt sources, if required,
will be available or, if available, will be on terms favorable to the Company or
its shareholders.
The Company does not believe that inflation has had a material effect on its
revenues or results of operations.
This Form 10Q contains forward-looking statements which involve risk and
uncertainties. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements as a result of certain risk
factors set forth in the company's annual report on Form 10-K for the year ended
December 31, 1995.
<PAGE>
PART II. OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a vote of Security Holders
The Company's Annual Meeting of Shareholders was held on June
28, 1996. At the meeting the nominated slate of
directors was elected. In addition, a proposal to increase
the additional shares eligible for sale under the Company's
1994 Employee Stock Option plan from 1,000,000 to 1,800,000
shares was approved. The proposal received 50,150,046 votes
for, 1,403,348 against, and 288,719 abstentions.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
No. 11 - Computation of per share earnings.
(b) Form 8-K Reports:
Not applicable.
<PAGE>
<TABLE>
EXHIBIT NO. 11
IMATRON INC.
COMPUTATION OF PER SHARE EARNINGS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------------------------------------
1996 1995 1996 1995
------- -------- -------- -----
<S> <C> <C> <C> <C>
PRIMARY:
Average shares outstanding 76,601 55,488 73,359 54,764
Conversion of preferred stock
Net effect of dilutive stock options
based on the treasury stock method
using the average market price 2,234 - - -
Net effect of dilutive stock warrants
based on the treasury stock method using
the average market price 1,593 - - -
--------- --------- --------- ---------
TOTAL 80,428 55,488 73,359 54,764
======== ========= ======= =======
Net income / (loss) $ 769 $ (3,132) $(4,254) $ (297)
======= ========== ======= =========
Net income / (loss) per share $ 0.01 $ (0.06) $ (0.06) $ (0.01)
========= ========== ======= =========
</TABLE>
<PAGE>
SIGNATURES
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.
Date: November 14, 1996
IMATRON INC.
(Registrant)
/s/ Gary H. Brooks
------------------
Gary H. Brooks
Vice President, Finance/Administration
and Chief Financial Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from Imatron Inc.'s
CONSOLIDATED CONDENSED STATEMENTS OF INCOME AND CONSOLIDATED CONDENSED BALANCE
SHEETS and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0000720477
<NAME> Imatron Inc.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 5318
<SECURITIES> 10961
<RECEIVABLES> 9180
<ALLOWANCES> 0
<INVENTORY> 9718
<CURRENT-ASSETS> 35786
<PP&E> 12786
<DEPRECIATION> (5543)
<TOTAL-ASSETS> 44799
<CURRENT-LIABILITIES> 9570
<BONDS> 0
0
0
<COMMON> 87954
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 44799
<SALES> 8929
<TOTAL-REVENUES> 8929
<CGS> 6879
<TOTAL-COSTS> 6879
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 259
<INCOME-PRETAX> 769
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 769
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
