<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[xx] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 2000
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or
[ ] 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: 33-2205-D
---------
NeuroCorp., Ltd.
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(Exact name of registrant as specified in its charter)
Nevada 22-2813990
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
45 Knollwood Road, Elmsford, New York 10523
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(914) 345-2057
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (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 [xx] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: 12,731,672 shares as of October 31,
2000.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [xx]
<PAGE>
NEUROCORP, LTD. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PART 1 - FINANCIAL INFORMATION:
ITEM I - CONSOLIDATED FINANCIAL STATEMENTS Page
number
------
Consolidated Balance Sheets at September 30, 2000 (unaudited)
and December 31, 1999 1
Consolidated Statements of Operations (unaudited)
for the three months ended September 30, 2000 and 1999 2
Consolidated Statements of Operations (unaudited)
for the nine months ended September 30, 2000 and 1999 3
Consolidated Statement of Stockholders' Equity (unaudited)
for the nine months ended September 30, 2000 4
Consolidated Statements of Cash Flows (unaudited)
for the nine months ended September 30, 2000 and 1999 5
Notes to consolidated financial statements 6
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 10
PART II - OTHER INFORMATION 13
Cautionary Statement Regarding Forward Looking Information
The Private Securities Litigation Reform Act of 1995 provides a
safe harbor for forward-looking information made on behalf of the
Company. Certain statements in this quarterly report on Form 10-QSB
are "forward-looking statements". These forward-looking statements
include, but are not limited to, statements about our plans,
objectives, expectations and intentions and other statements
contained in the annual report on Form 10-KSB for the year ended
December 31, 1999 and this current report that are not historical
facts. When used in this annual report, the words "expect,"
"anticipate," "intend," "plan," "believe," "seek," "estimate," and
similar expressions are generally intended to identify
forward-looking statements. Because these forward-looking
statements involve risks and uncertainties, there are important
factors that could cause actual results to differ materially from
those expressed or implied by these forward-looking statements,
including our plans, objectives, expectations, and intentions and
other factors discussed in this report. We assume no obligation to
update such forward-looking statements
<PAGE>
PART I
Item 1. Consolidated Financial Statements
NEUROCORP, LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2000 AND DECEMBER 31, 1999
ASSETS
<TABLE>
<CAPTION>
2000 1999
------------- -------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 87,951 $ 1,003,180
Accounts receivable, net of allowance for doubtful
accounts of $40,000 in 2000 and $37,600 in 1999 105,010 38,352
Prepaid expenses and other current assets 36,763 52,742
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Total current assets 229,724 1,094,274
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PROPERTY AND EQUIPMENT, net 567,068 625,462
OTHER ASSETS 22,320 24,750
------------- -------------
$ 819,112 $ 1,744,486
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of obligation under capital lease $ 3,273 $ 3,309
Accounts payable 204,105 307,201
Accrued expenses 175,423 199,401
Deferred revenue 950 38,980
Stockholder demand notes payable 300,000 300,000
------------- -------------
Total current liabilities 683,751 848,891
------------- -------------
OBLIGATION UNDER CAPITAL LEASE, less current portion 3,694 5,773
STOCKHOLDERS' EQUITY
Cumulative, convertible preferred stock, Class B, Series C
$.001 par value, 20,000 shares authorized 17,368 17,071
Cumulative, non-convertible preferred stock, Class B, Series 1,
no par value, 5,000,000 shares authorized 150,000 150,000
Common stock, $.001 par value, 100,000,000 shares authorized 11,731 11,731
Additional paid-in capital 11,138,872 11,150,419
Deficit (11,186,304) (10,439,399)
------------- -------------
131,667 889,822
------------- -------------
$ 819,112 $ 1,744,486
============= =============
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
-1-
<PAGE>
NEUROCORP, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(Unaudited)
2000 1999
------------- -------------
NET SALES $ 203,143 $ 115,341
COST OF SALES 30,802 36,845
------------ ------------
Gross profit 172,341 78,496
GENERAL AND ADMINISTRATIVE EXPENSES 408,332 524,349
------------ ------------
Loss from operations (235,991) (445,853)
OTHER INCOME (EXPENSE)
Interest income 3,689 1,700
Other Income - 81,726
Interest expense (3,004) (4,082)
------------ ------------
685 79,344
============ ============
Net loss $ (235,306) $ (366,509)
============ ============
LOSS PER COMMON SHARE $ (0.02) $ (0.03)
============ ============
WEIGHTED AVERAGE SHARES OUTSTANDING 11,731,672 11,731,672
============ ============
The accompanying notes are an integral part
of these consolidated financial statements.
-2-
<PAGE>
NEUROCORP, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(Unaudited)
2000 1999
------------ -------------
NET SALES $ 636,446 $ 314,123
COST OF SALES 111,721 131,646
------------ ------------
Gross profit 524,725 182,477
GENERAL AND ADMINISTRATIVE EXPENSES 1,275,631 1,618,517
------------ ------------
Loss from operations (750,906) (1,436,040)
OTHER INCOME (EXPENSE)
Interest income 13,759 7,528
Other Income - 84,242
Interest expense (9,758) (14,938)
------------ ------------
4,001 76,832
------------ ------------
Net loss $ (746,905) $ (1,359,208)
============ ============
LOSS PER COMMON SHARE $ (0.06) $ (0.12)
============ ============
WEIGHTED AVERAGE SHARES OUTSTANDING 11,731,672 11,397,628
============ ============
The accompanying notes are an integral part
of these consolidated financial statements.
-3-
<PAGE>
NEUROCORP, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Preferred Stock Preferred Stock
Class B, Series C Class B, Series 1 Common Stock
------------------------- ----------------------- -------------------------
Shares Amount Shares Amount Shares Amount
---------- --------- -------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1999 17,071,593 $ 17,071 150,000 $ 150,000 11,731,672 $ 11,731
Preferred stock dividends 296,930 297 - - - -
Net loss - - - - - -
---------- --------- ------- ---------- ---------- ---------
Balance, September 30, 2000 17,368,523 $ 17,368 150,000 $ 150,000 11,731,672 $ 11,731
========== ========= ======= ========== ========== =========
Additional Total
Paid-in- Stockholders'
Capital Deficit Equity
-------------- --------------- -------------
<S> <C> <C> <C>
Balance, December 31, 1999 $ 11,150,419 $ (10,439,399) $ 889,822
Preferred stock dividends (11,547) (11,250)
Net loss - (746,905) (746,905)
------------- -------------- ----------
Balance, September 30, 2000 $ 11,138,872 $ (11,186,304) $ 131,667
============= ============== ==========
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
-4-
<PAGE>
NEUROCORP, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER, 2000 AND 1999
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
------------ --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (746,905) $ (1,359,208)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 62,453 62,191
Bad debt (recoveries) expense (21,017) 8,014
Changes in operating assets and liabilities:
Increase in accounts receivable (45,641) (52,592)
Decrease (increase) in prepaid expenses and
other current assets 15,979 (35,990)
Decrease (increase) in other current assets 2,430 (9,122)
Increase (decrease) in accrued expenses (35,228) 45,480
Increase (decrease) in deferred revenue (38,030) 31,000
Decrease in accounts payable (103,096) (101,116)
----------- -------------
Net cash used in operating activities (909,055) (1,411,343)
----------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (4,059) (6,017)
----------- -------------
Net cash used in investing activities (4,059) (6,017)
----------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of stock - 1,131,400
Payments on obligations under capital lease (2,115) -
----------- -------------
Net cash (used in) provided by financing activities (2,115) 1,131,400
----------- -------------
NET DECREASE IN CASH (915,229) (285,960)
CASH AND CASH EQUIVALENTS, beginning of period 1,003,180 795,739
----------- -------------
CASH AND CASH EQUIVALENTS, end of period $ 87,951 $ 509,779
=========== =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 3,008 $ 8,188
Income taxes 5,032 5,347
NON CASH INVESTING AND FINANCING ACTIVITIES
Preferred stock dividends 11,250 11,250
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
-5-
<PAGE>
NEUROCORP, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The interim consolidated financial statements for the nine months ended
September 30, 2000 have been prepared by NeuroCorp, Ltd. and
subsidiaries (the "Company") pursuant to the rules and regulations of
the Securities and Exchange Commission (the "SEC") for interim
financial reporting. These consolidated statements are unaudited and,
in the opinion of management, include all adjustments (consisting only
of normal recurring accruals) and disclosures necessary to present
fairly the consolidated balance sheets, consolidated statements of
operations, changes in stockholders' equity and cash flows for the
periods presented in accordance with generally accepted accounting
principles. Certain information and footnote disclosures normally
included in the financial statements prepared in accordance with
generally accepted accounting principles have been omitted in
accordance with the rules and regulations of the SEC. These
consolidated financial statements should be read in conjunction with
the audited consolidated financial statements, and accompanying notes,
included in the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1999.
CONSOLIDATION
The consolidated financial statements include the accounts of
NeuroCorp, Ltd. (NeuroCorp), and its wholly-owned subsidiaries, HZI
Research Center, Inc. (HZI) and Memory Centers of America, Inc. (MCAI).
All material intercompany balances and transactions have been
eliminated in consolidation.
NATURE OF OPERATIONS
The Company has developed software programs that are used to treat
individuals suffering from memory disorders. The Company is marketing
these programs with other products and services, which are packaged and
licensed to customers. The Company performs clinical research data
analysis for health agencies, research organizations, and
pharmaceutical companies. In addition, as an outgrowth of its research
activities, the Company also designs diagnostic testing software and
equipment for neuropsychiatric applications and performs neurological
testing services for hospitals and physicians. The Company also manages
a facility that diagnoses and treats memory disorders and provides
education and consultation to individuals who suffer from memory
impairment.
USE OF ESTIMATES
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts and
disclosures in the consolidated financial statements. Actual results
could differ from those estimates.
6
<PAGE>
NEUROCORP, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
EARNINGS PER COMMON SHARE
The Company accounts for earnings per share in accordance with
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings
Per Share". Net loss per common share was computed based upon weighted
average shares outstanding during the periods ended September 30, 2000
and 1999. Diluted net loss per share was not presented as the
potentially dilutive convertible preferred stock and stock purchase
options are antidilutive.
SEGMENT INFORMATION
Statement of Financial Accounting Standards (SFAS) No. 131,
"Disclosures About Segments of an Enterprise and Related Information,"
was issued effective for fiscal years ending after December 15, 1998.
The Company measures its operations on a consolidated basis and,
therefore, has not adopted the reporting requirements of this
Statement.
NOTE 2 - CONCENTRATIONS OF CREDIT RISK
For the nine months ended September 30, 2000 and 1999, approximately
72% and 65% of net sales were derived from four and three unrelated
customers, respectively. As of September 30, 2000 and December 31,
1999, approximately 75% and 74% of accounts receivable are due from
four unrelated customers for each of these periods.
NOTE 3 - PROPERTY AND EQUIPMENT
A summary of property and equipment is as follows:
<TABLE>
<CAPTION>
September December
30, 2000 31, 1999
--------- ---------
<S> <C> <C>
Equipment $ 327,573 $ 323,511
Furniture and fixtures 212,466 212,466
Leasehold improvements 171,365 171,365
Land 102,000 102,000
--------- ---------
813,404 809,342
Less: accumulated depreciation and amortization 246,336 183,880
--------- ---------
$ 567,068 $ 625,462
========= =========
</TABLE>
Depreciation and amortization expense totaled $62,453 and $62,191 for
the nine months ended September 30, 2000 and 1999, respectively.
NOTE 4 - COMMITMENTS AND CONTINGENCIES
OPERATING LEASES
The Company and its subsidiaries have entered into lease agreements for
administrative offices and certain equipment under noncancellable
operating leases expiring in various dates through December 2002. The
administrative office leases contain a provision for additional rent,
which is equal to the Company's pro rated share of future real estate
taxes.
7
<PAGE>
NEUROCORP, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
A schedule of future minimum rental payments is as follows:
Year ended December 31,
-----------------------
2000 $ 130,647
2001 137,438
2002 130,274
2003 80,000
---------
$ 478,359
=========
Rent expense under all operating leases for the nine months ended
September 30, 2000 and 1999 was $71,279 and $101,326, respectively.
OBLIGATIONS UNDER CAPITAL LEASE
The Company has entered into a lease agreement for computer equipment
under a noncancellable lease. The lease is for three years and contains
a purchase option equal to the fair market value at the end of the
lease. The equipment cost is $9,867 and the amount financed totals
$9,867 with interest payable at 12%. At September 30, 2000 accumulated
amortization totals $1,969.
Future minimum lease payments on the capital lease for each of the
years succeeding December 31, 1999 are as follows:
Year ending December 31,
------------------------
2000 $ 3,309
2001 3,595
2002 2,178
-------
$ 9,082
=======
NOTE 5 - STOCKHOLDER DEMAND NOTES PAYABLE
The Company has a demand note payable to a shareholder for $200,000.
The note is non-interest bearing and was payable as of December 15,
1999. The Company also has a demand note payable to a shareholder for
$100,000. This note bears interest at 9% per annum and was due on
December 15, 1999
As of September 30, 2000, the above loans remain outstanding without
extension.
NOTE 6 - GOING CONCERN
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. The
Company's ability to continue as a going concern is currently dependent
on its ability to successfully attain profitability and positive cash
flows from operations as well as obtain capital or other financing to
fund future losses and intended expansion. These conditions indicate
that the Company may be unable to continue as a going concern. The
consolidated financial statements do not include adjustments that might
result from the outcome of this uncertainty. Management's plans to
mitigate the Company's financial problems are outlined below.
8
<PAGE>
NEUROCORP, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
On October 12, 2000 the Company completed a financing with its two
largest shareholders. The Company issued Senior Convertible Secured
Debentures totaling $600,000 and 1,000,000 shares of common stock in
exchange for $600,000. The Company issued a $300,000 debenture and
500,000 shares of common stock to Pioneer Ventures Associates Limited
Partnership in exchange for $300,000. The Company issued $150,000
debentures and 250,000 shares of common stock to both Lancer Partners
L.P. and The Viator Fund Ltd in exchange for $150,000 from both Lancer
Partners L.P. and the Viator Fund Ltd. The Lancer Management Group,
LLC, manages Lancer Partners L.P. and the Viator Fund Ltd. The
debentures are due six months from issuance with interest accrued at
15% per annum. If the Company defaults on the payment of either the
principal or interest such overdue amount shall accrue interest from 30
days after default at the rate of 18% per annum. In addition, in the
event such overdue principal or interest is not paid for a period of
ten days after the date due, the Company is liable to the bondholders
for a late payment fee of 5% of such overdue amount and the Company
must issue 1,000,000 shares of common stock per month to the
bondholders until the default is cured. The Senior Convertible Secured
Debentures have a security interest in all of the assets, technology,
contracts, and intellectual property rights of the Company. The Company
paid a financing fee of $18,000 and issued warrants to purchase 100,000
shares of common stock at a purchase price of $0.25 per share to
Capital Research Ltd. The warrants expire on August 31, 2000.
The Company is continuing its ongoing marketing efforts to generate
Memory Center clients and obtain contracts for its contract research
division and has implemented several measures to reduce current
expenses. Further reductions in monthly expenses beyond current levels
could have adverse effects on the Company's ability to function as
further reductions would most likely occur in payroll costs which could
hamper the ability of the Company to develop and market products and
service customers. The Company expects that with current cash and
projected cash from operations there will be sufficient cash available
to fund its working capital requirements for the next four to six
months.
The Company's plans center on the following objectives: grow the Memory
Centers(TM) of America business which includes sales of medical
systems, software, and licensing revenues; turn its Signature Memory
Center into a profitable operation; secure new contract research
business and additional consulting business.
The Company is pursuing a marketing strategy intended to create
awareness of Memory Centers and its services to potential patients and
large existing healthcare providers such as, multi-specialty physician
groups, hospital consortiums, and large assisted living center
organizations.
The Company believes the Tele-Map(TM) business can be marketed and
provide a consistent growing revenue stream. The Company is pursuing
several options for the purpose of expanding its Tele-Map business
including joint venture opportunities.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
The Company reported a net loss of $235,306 the three months ended
September 30, 2000 as compared to a net loss of $366,509 for the three
months ended September 30, 1999.
Revenues for the three months ended September 30, 2000 and 1999
amounted to $203,143 and $115,341 respectively. Revenues increased by
$87,802 or 76% for the three months ended September 30, 2000 as
compared to the three months ended September 30, 1999. Gross profit for
the three months ended September 30, 2000 and 1999 amounted to $172,341
and $78,496, respectively or a net increase of $93,845.
The increase in sales and gross profit is attributable to the Company
focusing its efforts on developing the Memory Center business. For the
three months ended September 30, 2000 MCAI contributed $105,000 in
revenues as compared to $22,000 for the three months ended September
30, 1999.
General and administrative expenses for the three months ended
September 30, 2000 were $408,332 as compared to the three months ended
September 30, 1999 of $524,349 or a decrease of $116,017 or 22%. The
decrease in general and administrative expenses for the three months
ended September 30, 2000 is due to a Company restructuring which
included a reduction in facility leases, employee staffing and other
cost reduction strategies. General and administration expenses include
overhead, administration salaries, selling and consulting costs.
Interest income for the three months ended September 30, 2000 and 1999
amounted to $3,689 and $1,700, respectively, an increase of $1,989.
Interest expense for the three months ended September 30, 2000 and 1999
amounted to $3,004 and $4,082, respectively, a decrease of $1,078
NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
The Company reported a net loss of $746,905 for the nine months ended
September 30, 2000 as compared to a net loss of $1,359, 208 for the
nine months ended September 30, 1999.
Revenues for the nine months ended September 30, 2000 and 1999 amounted
to $636,446 and $314,123, respectively. Revenues increased by $322,323
or 102% for the nine months ended September 30, 2000 as compared to the
nine months ended September 30, 1999. Gross profit for the nine months
ended September 30, 2000 and 1999 amounted to $524,725 and $182,477,
respectively or a net increase of $342,248.
The increase in sales and gross profit is attributable to the Company
focusing its efforts on developing the Memory Center business and
increased contract research work by HZI. For the nine months ended
September 30, 2000 MCAI sold and installed three Memory Center systems
and contributed $260, 000 in revenues as compared to $58,000 for the
nine months ended September 30, 1999. The Company also realized
$222,000 from consulting contracts for the nine months ended September
30, 2000 as compared to $183,000 for the nine months ended September
30, 1999. For the nine months ended September 30, 2000 HZI contributed
$153,000 in revenues as compared to $37,000 for the nine months ended
September 30, 1999.
10
<PAGE>
General and administrative expenses for the nine months ended September
30, 2000 were $1,275,631 as compared to the nine months ended September
30, 1999 of $1,618,517 a decrease of $342,886 or 21%. The decrease in
general and administrative expenses for the nine months ended September
30, 2000 is primarily due to a Company restructuring which included a
reduction in employee staffing and other cost reduction strategies.
Interest income for the nine months ended September 30, 2000 and 1999
amounted to $13,759 and $7,528, respectively, an increase of $6,231.
Interest expense for the nine months ended September 30, 2000 and 1999
amounted to $9,758 and $14,938, respectively, a decrease of $5,180.
The Company has not generated any taxable income the last four years
and therefore has not paid any federal income taxes for this period.
Utilization of the Company's net operating loss carryforwards may be
subject to certain limitations under section 382 of the Internal
Revenue Code. Due to uncertainties regarding realizability of the
deferred tax assets, the Company has provided a valuation allowance on
the deferred tax asset in an amount necessary to reduce the net
deferred tax asset to zero.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 2000 the Company had negative working capital of
$454,027 and at December 31, 1999 working capital of $245,383,
respectively. The negative working capital is attributable to the net
loss of $746,905 for the nine months ended September 30, 2000. The
Company's cash balance at September 30, 2000 and December 31, 1999
amounted to $87,951 and $1,003,180, respectively. The Company's net
accounts receivable amounted to $105,010 at September 30, 2000 and
$38,352 at December 31, 1999, an increase of $66,658. Prepaid expenses
and other current assets at September 30, 2000 and December 31, 1999
amounted to $36,763 and $52,742, respectively, a decrease of $15,979.
As of September 30, 2000 and December 31, 1999 current liabilities
amounted to $683,751 and $848,891, respectively, a decrease of
$165,140. Included in these amounts is $300,000 in stockholder demand
notes payable. These demand notes payable were due December 15, 1998.
The Company has not made any payments against the loans.
For the nine months ended September 30, 2000 and 1999, the Company used
cash for operations of $909,055 and $1,411,343 respectively, resulting
in decreased use of cash for operations by $502,288.
For the nine months ended September 30, 2000 and 1999 cash used by
investing activities amounted to $4,059 and $6,017, respectively, or a
net decrease in use of cash of $1,958.
For the nine months ended September 30, 2000 net cash used in financing
activities amounted to $2,115 as compared to the nine months ended
September 30, 1999 net cash provided by financing activities of
$1,131,400, respectively. For the nine months ended September 30, 1999,
6,400 shares were issued in connection with exercise of 6,400 warrants
and 16,200,000 shares of the Class B, Series C preferred stock and
500,000 shares of common stock were issued
On October 12, 2000 the Company completed a financing with its two
largest shareholders. The Company issued Senior Convertible Secured
Debentures totaling $600,000 and 1,000,000 shares of common stock in
exchange for $600,000. The Company issued a $300,000 debenture and
500,000 shares of common stock to Pioneer Ventures Associates Limited
Partnership in exchange for $300,000. The Company issued $150,000
debentures and 250,000 shares of common stock to both Lancer Partners
11
<PAGE>
L.P. and the Viator Fund Ltd in exchange for $150,000 from Lancer
Partners L.P. and The Viator Fund Ltd. The Lancer Management Group,
LLC, manages Lancer Partners L.P. and The Viator Fund Ltd. The
debentures are due six months from issuance with interest accrued at
15% per annum. If the Company defaults on the payment of either the
principal or interest such overdue amount shall accrue interest from 30
days after default at the rate of 18% per annum. In addition, in the
event such overdue principal or interest is not paid for a period of
ten days after the date due, the Company is liable to the bondholders
for a late payment fee of 5% of such overdue amount and the Company
must issue 1,000,000 shares of common stock per month to the
bondholders until the default is cured. The Senior Convertible Secured
Debentures have a security interest in all of the assets, technology,
contracts, and intellectual property rights of the Company. The Company
paid a $18,000 financing fee and issued warrants to purchase 100,000
shares of common stock at a purchase price of $0.25 per share to
Capital Research Ltd. The warrants expire August 31, 2000.
MANAGEMENT'S PLAN
The Company is continuing its ongoing marketing efforts to generate
Memory Center clients and obtain contracts for its contract research
division and has implemented several measures to reduce current
expenses. Further reductions in monthly expenses beyond current levels
could have adverse effects on the Company's ability to function as
further reductions would most likely occur in payroll costs which could
hamper the ability of the Company to develop and market products and
service customers. The Company expects that with current cash and
projected cash from operations there will be sufficient cash available
to fund its working capital requirements for the next four to six
months.
The Company's plans center on the following objectives: grow the Memory
Centers(TM) of America business which includes sales of medical
systems, software, and licensing revenues; turn its Signature Memory
Center into a profitable operation; secure new contract research
business and additional consulting business.
The Company is pursuing a marketing strategy intended to create
awareness of Memory Centers and its services to potential patients and
large existing healthcare providers such as, multi-specialty physician
groups, hospital consortiums, and large assisted living center
organizations.
The Company believes the Tele-Map(TM) business can be marketed and
provide a consistent growing revenue stream. The Company is pursuing
several options for the purpose of expanding its Tele-Map business
including joint venture opportunities.
12
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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 October 12, 2000 the Company completed a financing with its two
largest shareholders. The Company issued Senior Convertible Secured
Debentures totaling $600,000 and 1,000,000 shares of common stock in
exchange for $600,000. The Company issued a $300,000 debenture and
500,000 shares of common stock to Pioneer Ventures Associates Limited
Partnership in exchange for $300,000. The Company issued $150,000
debentures and 250,000 shares of common stock to Lancer Partners L.P.
and The Viator Fund Ltd. in exchange for $150,000 from Lancer Partners
L.P. and The Viator Fund Ltd. The Lancer Management Group, LLC, manages
Lancer Partners L.P. and The Viator Fund Ltd. The debentures are due
six months from issuance with interest accrued at 15% per annum. If the
Company defaults on the payment of either the principal or interest
such overdue amount shall accrue interest from 30 days after default at
the rate of 18% per annum. In addition, in the event such overdue
principal or interest is not paid for a period of ten days after the
date due, the Company is liable to the bondholders for a late payment
fee of 5% of such overdue amount and the Company must issue 1,000,000
shares of common stock per month to the bondholders until the default
is cured. The Senior Convertible Secured debentures have a security
interest in all of the assets, technology, contracts, and intellectual
property rights of the Company. The Company paid a financing fee of
$18,000 and issued warrants to purchase 100,000 shares of common stock
at a purchase price of $0.25 per share to Capital Research Ltd. The
warrants expire August 31, 2000.
ITEM 6 - Exhibits and Reports on Form 8-K:
a) Exhibits
None
b) Reports on Form 8-K
None
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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.
NEUROCORP, LTD. (Registrant)
Dated: November 14, 2000
By: /S/ VERNON L. WELLS
------------------
Vernon L. Wells, President,
Chief Executive Officer, Acting Chief Financial
Officer (Principal Financial Officer) and
Director
/S/ DONALD J. ALBERTIE
----------------------
Donald J. Albertie, Controller
(Principal Accounting Officer)
