SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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:
SEPTEMBER 30, 1996
[ ] 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:0-26028
IMAGING DIAGNOSTIC SYSTEMS, INC.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
FLORIDA 22-2671269
------- ----------
(STATE OF INCORPORATION) (IRS EMPLOYER IDENT. NO.)
6531 N.W. 18TH COURT, PLANTATION, FL 33313
- ------------------------------------ -----
(ADDRESS OF PRINCIPAL OFFICE) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER: (954)581-9800
Indicate by check mark whether the Registrant:(1) has 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 [ ]
The number of shares outstanding of each of the issuer's classes of equity
as of September 30, 1996: 24,275,422 shares of Common Stock, no par value; and,
800 shares of Series A Preferred Convertible Stock, no par value.
<PAGE>
IMAGING DIAGNOSTIC SYSTEMS, INC.
(a Developmental Stage Company)
(formerly Alkan Corp.)
PART I - FINANCIAL INFORMATION PAGE
- ------------------------------ ----
Condensed Balance Sheet -
September 30, 1996 and June 30, 1996 3
Condensed Statement of Operations -
Three months ended September 30, 1996 and 1995,
and December 10, 1993(date of inception)
to September 30, 1996 4
Condensed Statement of Cash Flows -
Three months ended September 30, 1996 and 1995,
and December 10, 1993(date of inception)
to September 30, 1996 5
Notes to Condensed Financial Statements 6
Management's Discussion and Analysis of Financial
Condition and Results 7
PART II - OTHER INFORMATION
- ---------------------------
Item 1, Legal Proceedings................................................... 8
Item 2, Changes in Securities............................................... 8
Item 3, Defaults upon Senior Securities..................................... 8
Item 4, Submission of Matters to a Vote of Security Holders................. 8
Item 5, Other Information................................................... 8
Item 6, Exhibits and Reports on Form 8-K.................................... 9
Signatures ................................................................. 9
<PAGE>
IMAGING DIAGNOSTIC SYSTEMS, INC.
(a Developmental Stage Company)
(formerly Alkan Corp.)
CONDENSED BALANCE SHEET
ASSETS
30-SEP-96 30-JUN-96
----------- -----------
(UNAUDITED) *
Current Assets
Cash $ 1,523,416 $ 3,975,354
Loan Recievable 0 0
Prepaid Rent 5,300 15,900
----------- -----------
Total Current Assets 1,528,716 3,991,254
----------- -----------
Property and Equipment,net 2,581,616 1,050,194
Prototype Equipment 941,564 575,338
Other Assets 12,874 53,010
----------- -----------
Total Assets $ 5,064,770 $ 5,669,796
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable
and Accrued Expenses $ 293,484 $ 205,750
Shareholders Loans 0 77,833
----------- -----------
Total Current Liabilites 293,484 283,583
Stockholders' Equity
Common Stock 9,450,522 8,001,721
Series A Preferred 720,000 2,160,000
Deficit Accumulated during
development stage (5,380,552) (4,756,824)
----------- -----------
4,789,970 5,404,897
Subscription receivable (18,684) (18,684)
----------- -----------
Total Stockholders' Equity 4,771,286 5,386,213
----------- -----------
Total Liabilties and
Stockholders' Equity $ 5,064,770 $ 5,669,796
=========== ===========
* Condensed from audited financial statements
The accompanying notes are an integral part of these
condensed financial statments.
<PAGE>
<TABLE>
<CAPTION>
IMAGING DIAGNOSTIC SYSTEMS, INC.
(a Developmental Stage Company)
(formerly Alkan Corp.)
CONDENSED STATEMENT OF OPERATIONS
(unaudited)
PERIOD SINCE
THREE MONTHS THREE MONTHS INCEPTION
ENDED ENDED (10-DEC-93) TO
30-SEP-96 30-SEP-95 SEP-30-96
------------ ------------ --------------
<S> <C> <C> <C>
Research and develop. expenses $ 49,714 $ 1,091 $ 935,219
Payroll and employee benefits 312,870 55,476 1,984,173
Advertising expenses 27,924 26,734 369,953
Selling, general and
administrative expenses 84,001 52,032 498,148
Clinical expenses 1,828 0 172,582
Consulting expenses 8,300 47,288 409,749
Professional fees 22,415 16,915 257,548
Trade show expenses 39,209 12,286 173,703
Travel and subsistence costs 35,602 18,518 185,617
Rent expense 13,498 15,900 146,124
Interest expense 0 47 24,309
Depreciation and amortization 55,995 24,661 261,518
Interest Income (36,430) 0 (94,738)
----------- ----------- -----------
Net Loss: ($ 614,926) ($ 270,948) ($5,323,905)
=========== =========== ===========
Dividends on cumulative
preferred stock (8,802) 0 (56,647)
Net loss applicable to common shareholders ($ 623,728) ($ 270,948) ($5,380,552)
Net loss per share:
Weighted avg. per shares 24,192,124 18,480,450 20,253,002
Net Loss ($0.03) ($0.014) ($0.26)
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements
<PAGE>
<TABLE>
<CAPTION>
IMAGING DIAGNOSTIC SYSTEMS, INC.
(a Developmental Stage Company)
(formerly Alkan Corp.)
CONDENSED STATEMENTS OF CASH FLOWS
(undaudited)
PERIOD
THREE THREE SINCE INCEPTION
MONTHS ENDED MONTHS ENDED (10-DEC-93) TO
30-SEP-96 30-SEP-95 30-SEP-96
------------ ------------ ---------------
<S> <C> <C> <C>
Cash provided by (used for)
Operations:
Net income ($ 614,926) ($ 270,948) ($5,323,905)
Changes in assets and liabilities (249,595) (9,971) 1,146,617
----------- ----------- -----------
Net cash provided by operations (864,521) (280,919) (4,177,288)
----------- ----------- -----------
Investments
Capital expenditures (1,587,417) (165,698) (2,753,486)
----------- ----------- -----------
Cash used for investments (1,587,417) (165,698) (2,753,486)
----------- ----------- -----------
Financing
Proceeds from stockholder loans, net 77,833
Proceeds from common stock 1,358,802 442,896 6,135,159
Proceeds from preferred stock (1,350,000) 2,250,000
----------- ----------- -----------
Cash provided by financing 8,802 442,896 8,462,992
----------- ----------- -----------
Net increase in cash (2,451,938) (3,721) 5,498,770
Cash, beginning of period 3,975,354 16,059 0
----------- ----------- -----------
Cash, end of period $ 1,523,416 $ 12,338 $ 5,498,770
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements
<PAGE>
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIGICANT ACCOUNTING PRINCIPLES
Basis of Presentation: The accompanying financial statements have been prepared
by the Company without audit. In the opinion of management, all adjustments
(which included only normal recurring adjustments) necessary to present fairly
the financial position, results of operations and cash flows for all periods
presented, have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principals
have been condensed or omitted in the accompanying interim financial statements.
It is suggested that these condensed consolidated financial statements be read
in conjunction with the financial statements and notes thereto included in the
Company's June 30, 1996 audited financial statements. The results of operations
for the three month period ended September 30, 1996 is not necessarily
indicative of the results to be expected for the full year.
NOTE - 2 CONVETIBLE PREFERRED
In connection with a funding agreement entered into on March 21, 1996, the
Company issued 4,000 shares of Series A Convertible Preferred Stock in
consideration for funds received in the amount of $4,000,000. Of the 4,000
shares of Series A originally issued there remains 800 shares.
NOTE - 3 Building Improvements
As of the date of filing the Company has spent approximately $340,440 in
improvements to the building that was purchased on August 29, 1996. The Company
expects to relocates its entire operations to the facility during the first two
weeks of November, 1996.
<PAGE>
THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANINGS OF SECTION
27A OF THE SECURITIES ACT OF 1933 AND SECTION 21E OF THE SECURITIES EXCHANGE
ACT OF 1934. ACTUAL RESULTS AND EVENTS COULD DIFFER MATERIALLY FROM THOSE
PROJECTED AS A RESULT OF THE "KNOWN UNCERTAINTIES" AS SET FORTH IN THE
COMPANY'S FORM 10 - KSB FOR FISCAL YEAR ENDED 1996.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
Imaging Diagnostic Systems, Inc. (the "Company") is a developmental stage
business which has been engaged since inception in research and development
associated with its cancer detection technology. Because the Company is still in
the development stage of its business, the Company has not yet distributed any
device based on its cancer detection technology. Therefore, the Company has had
no revenue from its operations.
The Company has incurred net losses since inception through September 30,
1996 of approximately $5,380,552. The Company expects operating losses will
continue for at least the next few years as total costs and expenses increase
due principally to increased marketing and manufacturing expenses associated
with the anticipated commercialization of the Computed Tomography Laser
Mammography (CTLM(TM)) device, development of, and clinical trials for, the
proposed CTLM device and other research and development activities. There can be
no assurance that the Company will complete a device incorporating its
technologies, or that sufficient revenues will be generated from sales of such
product to allow the Company to operate profitably.
Property and Equipment was valued for the three month period ended
September 30, 1996 at $2,581,616 representing an increase of $1,531,422 from
$1,050,194 for the three months ended September 30, 1995. This increase is due
primarily to the purchase of a building for $1,250,000 and an increase in
software development. The Company expects to relocate its entire operations to
the facility during the first two weeks of November, 1996.
Prototype Equipment was valued for the three month period ended September
30, 1996, at $941,564 representing an increase of $366,226 from $575,338 for the
three months ended September 30, 1995. This increase is due primarily to an
increase in developmental activities leading to the commercialization of the
CTLM device.
General and administrative expenses during the three months ended
September 30, 1996, were $84,001 representing an increase of $31,969 from
$52,032 during the three months
<PAGE>
ended September 30, 1995. This increase was primarily due to an expansion of the
general operations of the Company associated with hiring additional personnel
and an increase in the size of the facilities.
Compensation and related benefits during the three months ended September
30, 1996, were $312,870 representing an increase of $257,394 from $55,476 during
the three months ended September 30, 1995. This increase was primarily due to an
increase in compensation expense as a result of the hiring of an additional
sixteen employees.
The Company's combined cash and cash equivalents totaled $1,523,416 at
September 30, 1996, representing an increase of $1,511,078 from $12,338 at
September 30, 1995. This increase was primarily due to receipt of approximately
$5,200,000 from the private placement of equity securities, Series A Convertible
Preferred Shares and Common Shares pursuant to Regulation S. The Company does
not expect to generate a positive internal cash flow for at least the next
twelve (12) months due to the expected increase in spending for research and
development and the expected costs of commercializing it initial product, the
CTLM device.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
NONE.
ITEM 2. CHANGES IN SECURITIES.
NONE.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
NONE.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-
HOLDERS.
NONE
ITEM 5. OTHER INFORMATION.
On September 9, 1996, the Company finalized the purchase of a 24,000
square foot building situated on 5 acres of land in Plantation, Florida, for
$1,250,000. The Company expects to relocate its entire operations to the
building during the first two weeks of November, 1996.
Effective July 1, 1996, the Company terminated its Non-Qualified Stock
Option Plan.
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
NONE.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned who is duly
authorized to sign as an officer and as the principal financial officer of the
registrant.
IMAGING DIAGNOSTIC SYSTEMS, INC.
By: /s/ ALLAN L. SCHWARTZ
--------------------------
Allan L. Schwartz
Executive Vice-President
Chief Financial Officer
Dated: November 19, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,528,716
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,528,716
<PP&E> 2,855,616
<DEPRECIATION> 274,000
<TOTAL-ASSETS> 5,064,770
<CURRENT-LIABILITIES> 293,484
<BONDS> 0
0
720,000
<COMMON> 9,441,720
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 5,064,770
<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> (5,371,750)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
