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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
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(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 (Fee Required)
For the quarterly period ended March 31, 1997
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (No Fee Required)
For the transition period from ___________ to __________
Commission file number 0-15179
NEUROTECH CORPORATION
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(Name of small business issuer in its charter)
DELAWARE 06-1100063
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(State of incorporation (I.R.S. Employer
or organization) Identification No.)
45 ORCHARD STREET, MANHASSET, NEW YORK 11030
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (516) 869-9663
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 of 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 ( )
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24,155,748 shares of issuer's common stock, $.01 par value, were
outstanding at June 30, 1996.
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<PAGE>
NEUROTECH CORPORATION AND SUBSIDIARIES
INDEX
MARCH 31, 1997
Page
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PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Consolidated balance sheet ............................. 3 & 4
March 31, 1997
Consolidated statements of income ...................... 5
Three months ended
March 31, 1997 and 1996
Consolidate statements of income ....................... 6
Nine months ended
March 31, 1997 and 1996
Consolidated statements of cash flows .................. 7
Three months ended
March 31, 1997 and 1996
Consolidated statements of cash flows .................. 8
Nine months ended
March 31, 1997 and 1996
Notes to consolidated financial statements ............. 9
March 31, 1997
Item 2. MANAGEMENT'S DISCUSSION & ANALYSIS OF .................. 10 & 11
FINANCIAL CONDITION & RESULTS OF OPERATION
PART II - OTHER INFORMATION ..................................... 12
SIGNATURES ...................................................... 13
<PAGE>
NEUROTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
March 31 June 30
1997 1996
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ASSETS
CURRENT ASSETS
Cash and cash equivalents .................. $ 98,647 $ 277,339
Patient accounts receivable, net ......... 1,332,072 1,124,059
Estimated third-party settlements ........ 19,477
Inventory and supplies ................... 342,886 357,848
Other current assets ..................... 69,488 21,125
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Total current assets ................ 1,843,093 1,799,848
PROPERTY AND EQUIPMENT ..................... 2,022,372 2,150,004
OTHER ASSETS ............................... 47,252 17,430
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TOTAL ASSETS ............................... $3,912,717 $3,967,282
========== ==========
The accompanying notes to the consolidated financial statements are an integral
part of these statements and should also be read in conjunction with those notes
which accompanied the Company's annual report.
<PAGE>
March 31 June 30
1997 1996
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LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)
CURRENT LIABILITIES
Notes payable ........................... $ 683,124 $ 514,692
Current maturities of long-term debt .... 1,778,412 1,843,606
Current maturities of capital lease
obligations ........................... 33,606 32,219
Accounts payable ........................ 455,055 489,712
Accounts payable - related party ........ 122,511 80,711
Accrued expenses ........................ 681,355 584,599
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Total current liabilities ............ 3,754,063 3,545,539
LONG-TERM DEBT ............................. 490,391 553,435
CAPITAL LEASE OBLIGATION ................... 35,837 45,307
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, par value $0.01 per share;
40,000,000 shares authorized;
24,155,748 shares outstanding .......... 241,558 241,558
Additional paid-in capital ............... 4,136,256 4,136,256
Retained (deficit) ....................... (4,595,388) (4,404,813)
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( 217,574) ( 26,999)
Less 100,000 shares of treasury stock
at cost ................................ ( 150,000) ( 150,000)
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Total stockholders' equity (deficit) . ( 367,574) ( 176,999)
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TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) ...................... $3,912,717 $3,967,282
========== ==========
The accompanying notes to the consolidated financial statements are an integral
part of these statements and should also be read in conjunction with those notes
which accompanied the company's annual report.
<PAGE>
NEUROTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31
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1997 1996
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NET PATIENT SERVICE REVENUES ................ $1,883,977 $ -0-
EXPENSES
Salaries and benefits .................... 1,003,483
Medical supplies and drugs ............... 306,493
Administrative ........................... 207,903 17,016
Equipment rental ......................... 32,506
Contract services ........................ 44,545
Provision for bad debts .................. 216,451
Depreciation and amortization ............ 50,760
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Total expenses ....................... 1,862,141 17,016
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Operating income (loss) .............. 21,836 ( 17,016)
OTHER INCOME (EXPENSE)
Miscellaneous income ..................... 33,013
Interest expense ......................... 109,081
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Loss from continuing operations .......... ( 54,232) (17,016)
Loss from discontinued operations ........ ( 2,775) ( 79,605)
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Net Loss ............................. ($ 57,007) ($ 96,621)
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Income (loss) per share from
continuing operation ....................... -- --
Income (loss) per share from
discontinued operations .................... -- --
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Net loss per share ................... -- --
========== ==========
Weighted average number of common
shares outstanding ........................ 24,155,748 20,908,748
The accompanying notes to the consolidated financial statements are an integral
part of these statements and should also be read in conjunction with those notes
which accompanied the Company's annual report.
<PAGE>
NEUROTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Nine Months Ended
March 31
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1997 1996
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NET PATIENT SERVICE REVENUES ............. $5,661,904 $ -0-
EXPENSES
Salaries and benefits ................. 3,206,635
Medical supplies and drugs ............ 873,336
Administrative ........................ 681,654 123,711
Equipment rental ...................... 91,284
Contract services ..................... 185,247
Provision for bad debts ............... 448,615
Depreciation and amortization ......... 152,499
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Total expenses .................... 5,639,270 123,711
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Operating income (loss) ........... 22 634 (123,711)
OTHER INCOME (EXPENSE)
Miscellaneous income .................. 123,031
Interest expense ...................... 302,305
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Loss from continuing operations ....... ( 156,640) ( 123,711)
Loss from discontinued operations ..... ( 33,935) ( 141,585)
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Net Loss .......................... ($ 190,575) ($ 265,296)
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Income(loss)persharefrom
continuing operation ..................... ($ .01)
Income (loss) per share from
discontinued operations ................. ($ .01)
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Net Income (loss) per share ....... ($ .01) ($ .01)
=========== ==========
Weighted average number of common
shares outstanding ....................... 24,155,748 20,008,748
The accompanying notes to the consolidated financial statements are an integral
part of these statements and should also be read in conjunction with those notes
which accompanied the Company's annual report.
<PAGE>
NEUROTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31
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1997 1996
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CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) .......................... $( 57,007) ($ 96,621)
Adjustments to reconcile net income
(loss) to net cash used in operating
activities:
Depreciation and amortization .............. 50,760
Provision for bad debts .................... 216,451
Increase in accounts receivable ............ (148,704)
Increase in inventory and other
current assets ........................... ( 38,259)
Decrease in accounts payable and
accrued expenses ......................... ( 12,987) ( 80,572)
Increase in other assets ................... ( 1,275)
Discontinued operations .................... 13,243
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Net cash provided (used) in operating
activities ................................. 8,979 (163,950)
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CASH FLOWS FROM INVESTING ACTIVITIES
Book value of equipment sold ...............
Purchase of property and equipment .........
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Net cash used in investing activities .........
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CASH FLOWS FROM FINANCING ACTIVITIES
Common stock issued for services
and debt repayment ....................... 163,950
Proceeds notes payable and capital
lease obligations ........................ 36,611
Payments on note payable and capital
lease obligations ........................ ( 21,714)
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Net cash provided by financing activities ..... 14,897 163,950
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Net increase in cash and cash equivalents ..... 23,876 --
Cash and cash equivalents, beginning
of period ................................... 74,771 --
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Cash and cash equivalents, end of period ...... $ 98,647 $ -0-
========= =========
The accompanying notes to the consolidated financial statements are an integral
part of these statements and should also be read in conjunction with those notes
which accompanied the Company's annual report.
<PAGE>
NEUROTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
March 31
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1997 1996
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CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) ............................. ($190,575) ($265,296)
Adjustments to reconcile net income
(loss) to net cash used in operating
activities:
Depreciation and amortization ................. 152,499
Provision for bad debts ....................... 448,615
Increase in accounts receivable ............... (656,628)
Increase in inventory and other
current assets .............................. ( 13,924)
Increase (decrease) in accounts payable
and accrued expenses ........................ 103,899 (11,969)
Increase in other assets ...................... ( 29,822)
Discontinued operations ....................... 113,315
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Net cash used in operating activities ........... (185,936) (163,950)
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CASH FLOWS FROM INVESTING ACTIVITIES
Book value of equipment sold .................. 3,684
Purchase of property and equipment ............ ( 28,551)
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Net cash used in investing activities ........... ( 24,867)
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CASH FLOWS FROM FINANCING ACTIVITIES
Common stock issued for services
and debt repayment 163,950
Proceeds notes payable and capital ............ 168,432
lease obligations
Payments on note payable and capital
lease obligations ........................... (136,321)
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Net cash provided by financing activities ....... 32,111 163,950
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Net decrease in cash and cash equivalents ....... ( 178,692) --
Cash and cash equivalents, beginning
of period ..................................... 277,339 --
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Cash and cash equivalents, end of period ........ $ 98,647 $ -0-
======== ========
The accompanying notes to the consolidated financial statements are an integral
part of these statements and should also be read in conjunction with those notes
which accompanied the Company's annual report.
<PAGE>
NEUROTECH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and the instruction to Form 10-QSB and
article 10 of Regulation S-X. Accordingly, they do not include all
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments considered necessary for a fair presentation have been
included. Operating results for the nine month period ended March 31, 1997
are not necessarily indicative of results that may be expected for the year
ending June 30, 1997. For further information, refer to the consolidated
financial statements and footnotes, thereto included in the Company's
annual report on Form 10-KSB for the year ended June 30, 1996.
In August 1996, the Company determined to discontinue its previous core
business, manufacturing intracranial pressure monitoring systems, custom
delay lines and visual systems. The operations of these previous core
businesses are reported as discontinued operations.
<PAGE>
NEUROTECH CORPORATION AND SUBSIDIARIES
Management's Discussion and Analysis of Financial
Condition and Results of Operations
In August 1996 the Company abandoned its previous core businesses,
manufacturing intracranial pressure monitoring systems, custom delay lines and
visual systems, as the Company believed they were no longer viable business
pursuits. The Company through its subsidiary, Global Health Enterprises, Inc,
operates an acute care hospital, Lakes Regional Medical Center, and it's
affiliated home health care agency in Jasper, Texas. The Company has chosen to
concentrate its future efforts to expanding its medical related businesses.
The Company reported a net loss of $57,007 for the three months ended March
31, 1997 as compared to a net loss of $96,621 for the three months ended March
31, 1996.
In comparing the results of operations for the two periods, losses from
discontinued operations for the three months ended March 31, 1997 and 1996 were
$2,775 and $79,605 respectively. The consolidated operating results of Global
for the three months ended March 31, 1997 was a net loss of $16,995. The
remaining loss from operations of $37,237 was made up of Company general and
administrative expenses.
The Company reported a net loss af $190,575 for the nine months ended March
31, 1997 as compared to a net loss of $265,296 for the nine months ended March
31, 1996.
In comparing the results of operations for the two periods, losses from
discontinued operations for the nine months ended March 31, 1997 and 1996 were
$33,935 and $141,585 respectively. The consolidated operating results of Global
for the nine months ended March 31, 1997 was a net loss of $53,987. The
remaining net loss from operations of $102,653 was made up of Company general
and administrative expenses.
As stated above Global's operating result for the quarter ended March 31,
1997 was a net loss of $16,995 as compared to a net income of $73,063 for the
quarter ended December 31, 1996 and a net loss of $110,055 for the quarter ended
September 30, 1996. The quarter ended March 31, 1997 reflects significantly
lower salary and benefit expense, but increased expense in the provision for bad
debts while revenues decreased marginally; all this had the effect of a
performance poorer than the quarter ended December 31, 1996 but still stronger
than the quarter ended September 30, 1996.
<PAGE>
Global, in connection with the acquisition of Lakes acquired over
$2,700,000 in debt service; $1,685,000 of this debt service is owed to the Bank
of America. The credit extension from the Bank of America has numerous negative
covenants, of which Global is currently in default of several of the covenants.
Bank of America has not called the loan, as the Company is attempting to
restructure this debt.
The Company does not have the capital resources and liquidity necessary to
meet all of the obligations, debt repayments, and commitments of the Company
during the next twelve months. The Company's viability is dependent on its
ability to enter new markets in the medical field and to restructure its debt.
<PAGE>
NEUROTECH CORPORATION AND SUBSIDIARIES
OTHER INFORMATION
ITEM 1 Legal Proceedings
No new legal proceedings or material development has occurred in this
quarter. For further information regarding pending legal proceedings,
refer to the Company's annual report on Form 10-KSB for the year ended
June 30, 1996
ITEM 2-5 Inapplicable
ITEM 6 Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
<PAGE>
NEUROTECH CORPORATION AND SUBSIDIARIES
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.
NEUROTECH CORPORATION
BY: /s/ BERNARD ARTZ
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CHAIRMAN OF THE BOARD
Date: June 5, 1997
