U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
[x] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934. For the quarterly period ended SEPTEMBER 30, 1997.
[ ] 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: 0-5367
D-LANZ DEVELOPMENT GROUP, INC.
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(Exact name of small business issuer as specified in its charter)
DELAWARE 11-1717709
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(State or other jurisdiction (I.R.S.Employer
incorporation or organization Identification No.)
400 GROVE STREET GLEN ROCK, NEW JERSEY
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(Address of principal executive offices)
201-457-1221
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(Issuer's telephone number)
(Not Applicable)
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(Former name, former address and former fiscal year,
if changed since last report)
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 equity as of the latest practicable date:
10,000,000 common shares as of SEPTEMBER 30, 1997
Transitional Small Business Disclosure Format Yes [ ] No [X]
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
The condensed financial statements for the periods ended September 30, 1997
included herein have been prepared by American Bio Medica Corporation,
(the "Company") without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission (the "Commission"). In the opinion of
management, the statements include all adjustments necessary to present fairly
the financial position of the Company as of July 31, 1997, and the results of
operations and cash flows for the three month periods ended July 31, 1996 and
1997.
2
<PAGE>
<TABLE>
<CAPTION>
D-LANZ DEVELOPMENT GROUP, INC.
(A Development Stage Company)
BALANCE SHEET
September 30,
December 31, 1997
1996 Unaudited
--------- ---------
<S> <C> <C>
Current assets
Cash $ 0 $2,000
-------- ------
Current assets 0 2,000
Other assets
License rights 252,500
-------
Total other asset 252,500
-------- -------
Total assets $ 0 $254,500
======== =======
Liabilities and Stockholders' Equity
Current liabilities
Commitments and contingencies $ 0 $ 0
Capital stock
<CAPTION>
Preferred stock- authorized 50,000,000 shares $.001 par value each. At December
31, 1996 and September 30, 1997, the number of shares outstandings was -0-
Common stock-authorized 100,000,000 common shares, par value $.001 each, at
December 31, 1996 and September 30, 1997, the shares outstanding were
1,551,394 and 10,000,000 <C> <C>
respectively. 1,551 10,000
Additional paid in capital 0 246,051
Retained earnings ( 1,551) ( 1,551)
----------- ---------
Total stockholders' equity 0 254,500
----------- ---------
Total liabilities
and stockholders' equity $ 0 $254,500
========== ========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
D-LANZ DEVELOPMENT GROUP, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
<S> <C> <C>
For the nine For the nine
months ended months
ended
September 30, September 30,
1996 1997
Unaudited Unaudited
------------- ------------
Revenue $ 0 $ 0
Less cost of
goods sold 0 0
-------- ---------
Gross profit 0 0
Operations:
General
administrative 0 0
Depreciation and
amortization 0 0
------ --------
Total expenses 0 0
Income (loss) from
operations 0 0
Net Profit (Loss)
from operations $ 0 $ 0
========== ========
Net income (loss)
per share $ 0 $ 0
====== ======
Total number of
shares outstanding 10,000,000 10,000,000
========== ==========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
D-LANZ DEVELOPMENT GROUP, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
<S> <C> <C>
For the nine For the nine
months ended months ended
September 30, September 30,
1996 1997
Unaudited Unaudited
--------- ---------
CASH FLOWS FROM
OPERATING ACTIVITIES
Net profit (loss) $ 0 $ 0
Amortization and
depreciation 0 0
--------- --------
Adjustments to
reconcile net
income to net cash
TOTAL CASH FLOWS
FROM OPERATIONS 0 0
CASH FLOW FROM
FINANCING ACTIVITIES
Sale of common shares 2,000
-------
TOTAL CASH FLOWS FROM
FINANCING ACTIVITIES 2,000
NET INCREASE (DECREASE) IN CASH 0 2,000
CASH BALANCE BEGINNING OF PERIOD 0 0
-------- ---------
CASH BALANCE END OF PERIOD $ 0 $ 2,000
======== ==========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
D-LANZ DEVELOPMENT GROUP, INC.
(A Development Stage Company
STATEMENT OF STOCKHOLDERS' EQUITY
Additional
Common Common Preferred paid-in Retained
Stock Stock Stock capital Earnings Total
---------- ------- --------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
12-31-1991 1,551,394 $1,551 $(1,551) $ 0
========= ===== ====== =====
12-31-1992 1,551,394 $1,551 $(1,551) $ 0
========= ===== ====== =====
12-31-1993 1,551,394 $1,551 $(1,551) $ 0
========= ===== ====== =====
12-31-1994 1,551,394 $1,551 $(1,551) $ 0
========= ===== ====== =====
12-31-1995 1,551,394 $1,551 $(1,551) $ 0
========= ===== ====== =====
12-31-1996 1,551,394 $1,551 $(1,551) $ 0
Unaudited
09-30-1997 2,000,000 2,000 2,000
09-30-1997 6,448,606 6,449 246,051 252,500
--------- -------- -- ---------- ---------- ---------
09-30-1997 10,000,000 10,000 $0 $ 246,051 $( 1,551) $254,500
========== ======== == ========== ========== =========
<FN>
(1) Sale of shares pursuant to Regulation D at $.001 per share (2) Issuance of
shares for acquisition of License Rights valued at $.01 per share
</FN>
</TABLE>
6
<PAGE>
D-LANZ DEVELOPMENT GROUP, INC.
(A Development Stage Company
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements of D-Lanz Development
Group, Inc., (the "Company"), reflect all adjustments which are, in the opinion
of management, necessary to a fair statement of the results of the interim
periods presented. All such adjustments are of a normal recurring nature. The
financial statements should be read in conjunction with the notes to financial
statements contained in the Company's Annual Report on Form 10KSB for the year
ended December 31, 1996.
2. NET INCOME PER SHARE
Primary earnings per share are based on the total average number of common
and dilutive common equivalent shares outstanding during each quarter.The total
number of shares for computing primary earnings per share were 10,000,000 and
10,000,000 for the quarters ended September 30, 1996 and 1997,respectively
4. ACCOUNTING FOR INCOME TAXES
The Company follows Statement of Financial Accounting Standards (SFAS) No.
109, "Accounting for Income Taxes," which requires an asset and liability
approach of accounting for income taxes.Deferred tax assets and liabilities are
computed annually for differences between financial statement basis and tax
basis of assets, liabilities and available general business tax credit
carry-forwards. A valuation allowance is established when necessary to reduce
deferred tax assets to the amount expected to be realized.
5. MARKETABLE SECURITIES
The Company adopted Financial Accounting Standards Board ("FASB") Statement
No. 115, "Accounting for Certain Investments in Debt and Equity Securities",
which requires that investments in equity securities that have readily
determinable fair values and investments in debt securities be classified in
three categories: held-to-maturity, trading and available-for-sale. Based on the
nature of the assets held by the Company and Management's investment strategy,
the Company's investments have been classified as available-for-sale. Management
determines the appropriate classification of debt securities at the time of
purchase and reevaluates such designation as of each balance sheet date.
Securities classified as available-for-sale are carried at estimated fair
value, as determined by quoted market prices, with unrealized gains and losses,
net of tax, reported in a separate component of stockholders' equity. At July
31, 1997, the Company had no investments that were classified as trading or
held-to-maturity as defined by the Statement.
8
<PAGE>
The following is a summary of cash, cash equivalents and available-for-sale
securities by balance sheet classification at September 30, 1997:
<TABLE>
<CAPTION>
Estimated
Gross Gross Fair
Unrealized Unrealized Market
Cost Gains Losses Value
---- ----- ------ ------
<S> <C> <C> <C> <C>
Cash $ 2,000 $-0- $-0- $ 2,000
---------- ---- ---- ---------
Total cash and cash
equivalents $ 2,000 $-0- $-0- $ 2,000
========== === === =========
</TABLE>
6. ACQUISITION OF LICENSE RIGHTS
On September 30, 1997, the Company issued 6,448,606 shares of common stock to
purchase from Health Technologies International, Inc. ("Health Tech") the rights
to manufacture and market certain patented technologies. The License has been
valued at the historic cash purchase price of $252,500 paid by Health Tech for
the manufacturing and marketing rights.
Health Tech entered into an agreement on August 15, 1996 with Scantek, a
Delaware corporation located in Mountain Lakes, New Jersey for the licensing of
certain patented technology to manufacture and market for the countries of Chile
and Singapore. The patented technology consists of a temperature sensing device
and diagnostic direct reading, digital device to screen the breast for
abnormalities, including cancer.
As a result of the acquisition, the Company has been granted a nonassignable,
indivisible, nontransferable exclusive right and license within the territories
of Chile and Singapore to assemble, use and sell the devices for a period of
ending with the expiration of the applicable patents in these countries. If the
Company fails to achieve for a period of 12 consecutive months the minimum net
sales of the devices with respect to each country, Scantek may upon 30 days
written notice and at its option either terminate this agreement or delete the
country from the Company's territories. Minimum net sales as defined is based
upon market penetration. The size of the market in each of the three countries
will be computed using official government census information from each country.
The market is defined as the lesser of two pairs of the device for each women
between the ages of 25 and 70 or such usage as may be recommended by the
relevant medical association or government agency in each country in the
Territory. The percentage of market penetration by year is as follows:
<TABLE>
<CAPTION>
Year Percentage of Market Penetration
<S> <C> <C>
1997 0%
1998 1%
1999 3%
2000 4%
2001 and after 5%
</TABLE>
This schedule is based upon the scheduled delivery of an operational assembly
line, part of which will be installed in Scantek's facility, part of which will
be install in the Company's facility. In the event that completion of
installation of the turnkey manufacturing line is delayed beyond June 30, 1997,
then the above referenced years will be adjusted to appropriate calendar years
so as not to prejudice the Company's 365 day time period in which to achieve the
graduated market penetration.
As of September 30, 1997, Health Tech has paid to Scantek a nonrefundable
License Fees aggregating $252,500.
The Company is required to pay a royalty equal to 15% of Net Sales of Licensed
Devices in the Territories during each contract year during the term of the
agreement. The royalty paid, will in no instance be less than $1.00 per unit or
a guaranteed minimum royalty payable as follows: $80,000 for the year 1997;
$200,000 for the year 1998; $300,000 for the year 1999 and $400,000 for each
year thereafter.
Royalties are due and payable each quarter either for the actual amount due or
25% of the minimum royalty payable for the year. The Company is required to sell
to Scantek 2,000,000 shares of common stock, representing 20% of the total
issued and outstanding common shares of the Company as of the date of the
agreement for the aggregate sum of $2,000. or $.001 per share. Under no
circumstances will Scantek's common stock position be diluted to less than 15%
of the issued and outstanding common stock of the Company. In the event the
Company will receive at nominal cost warrants to purchase sufficient shares of
common stock to maintain its 20% ownership, such warrants will allow the
purchase of shares at $2.25 per share for five years from the date of the
agreement. The Company is required to arrange to purchase a turnkey
manufacturing line. Upon completion of the line, that portion of the line that
manufactures Sensors for the licensed devices will be installed at the same
location as Scantek's own manufacturing facility. Scantek will operate that
portion of the line and to the extent of the lines manufacturing capacity,
deliver the Company's requirements for Sensors to the Company's plant location
F.O.B. for cost plus 25%. Scantek will maintain a purchase money security
interest in the sensors delivered pursuant to this agreement.
During each contract year, the Company is required to spend 5% of net sales
during the immediately preceding year on advertising and promotion.
Upon termination of this agreement, the Company agrees that neither the
Company's officers, directors, principals nor its shareholders will during a
period of 5 years from the date of termination manufacture Sensors or purchase
Sensors manufactured by any entity other than Scantek for use in the licensed
devices or any competing device or directly or indirectly manage, operation or
control of or be connected as an officer, director, shareholder, partner,
consultant, owner, employee, agent, lender, donor, vendor, or otherwise, or have
any financial interest in or aid assist anyone else in the conduct of any
competing entity which offers similar devices for sale. The Company is required
to maintain product liability insurance with a limit of not less than
$1,000,000.
9
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
for the nine months ended September 30, 1996 and 1997
-------------------------------------------------
Except for the description of historical facts contained herein, this Form
10Q-SB contains certain forward looking statements that involve risks and
uncertainties as detailed herein and from time to time in the Company's filings
with the Securities and Exchange Commission and elsewhere. Such statements are
based on management's current expectations and are subject to a number of
factors and uncertainties which could cause actual results to differ materially
from those described in the forward-looking statements. These factors include,
among others, the Company's fluctuations in sales and operating results, risks
associated with international operations and regulatory, competitive and
contractual risks and product development.
Results of operations for the nine months ended September 30, 1997 as
compared to the nine months ended September 30, 1996.
- -------------------------------------------------------------------------
Revenues were $0 for the nine months ended September 30, 1997 as compared
to $0 for the nine months ended September 30, 1996. Costs of goods sold for the
nine months ended September 30, 1997, were $0 as compared to $0 for the
nine months ended September 30, 1996 representing a cost of goods sold
percentage of 0% for the nine months ended September 30, 1997 as compared to 0%
for the nine months ended September 30, 1996. The cost of goods sold percentage
during the first quarter of fiscal 1998 remains approximately consistent with
the percentage during the first quarter of fiscal 1997.
General and administrative costs for the nine months ended September 30,
1997 were $0, an increase of 0% over expenses of $0 for the nine months
ended September 30, 1996.
Liquidity and capital resources as of the end of the nine months ended
September 30, 1997.
- ------------------------------------------------------------------------------
The Company's cash balance was $2,000 and working capital was $2,000 as at
September 30, 1997.
The Company's primary short-term needs for capital, which are subject to
change, are for development of its manufacturing to adequately deliver new
products and an increase in inventory levels to fill large anticipated orders.
10
<PAGE>
Income tax: As of September 30, 1997, the Company has a tax loss
carry-forward of $1,551. The Company's ability to utilize its tax credit
carry-forwards in future years will be subject to an annual limitation pursuant
to the "Change in Ownership Rules" under Section 382 of the Internal Revenue
Code of 1986, as amended. However, any annual limitation is not expected to have
a material adverse effect on the Company's ability to utilize its tax credit
carry-forwards.
The Company currently plans to expend approximately $2.0 million for the
expansion and development of its manufacturing, marketing and general
administrative capabilities in connection with the fulfillment of the Company's
marketing program and the anticipated launch of the Company's products currently
under development. Additionally, the Company utilizes cash generated from
operating activities to meet its capital requirements.
The Company expects its capital requirements to increase over the next
several years as it commences new research and development efforts, undertakes
new product development, increases sales and administration infrastructure and
embarks on developing in-house manufacturing capabilities and facilities. The
Company's future liquidity and capital funding requirements will depend on
numerous factors, including the extent to which the Company's products under
development are successfully developed and gain market acceptance, the timing of
regulatory actions regarding the Company's potential products, the costs and
timing of expansion of sales, marketing and manufacturing activities, facilities
expansion needs, procurement and enforcement of patents important to the
Company's business, results of clinical investigations and competition.
The Company believes that its available cash and cash from operations will
be sufficient to satisfy its funding needs for at least the next 36 months.
Thereafter, if cash generated from operations is insufficient to satisfy the
Company's working capital and capital expenditure requirements, the Company may
be required to sell additional equity or debt securities or obtain additional
credit facilities. There can be no assurance that such financing, if required,
will be available on satisfactory terms, if at all.
11
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities
As of September 30, 1997, the Company issued 6,448,606 shares of common stock
for the the acquisition of the certain patented technologies.
As of September 30, 1997, the Company sold 2,000,000 pursuant to Regulation D
for an aggregate consideration of $2,000 or $.001 per share.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security-Holders
None.
12
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
D-LANZ DEVELOPMENT GROUP, INC.
(Registrant)
By: s/Roger Fidler
------------------
Roger Fidler,
President and Principal
Executive Officer and
Principal Financial Officer
Dated: October 29, 1997
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
financial statements for the nine month period ended September 30, 1997 and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 2,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,000
<PP&E> 0
<DEPRECIATION> (41,934)
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
1
<COMMON> 10,000
<OTHER-SE> 246,051
<TOTAL-LIABILITY-AND-EQUITY> 254,500
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
