<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
[X] SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 27, 1997
-------------------
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 0-16453
-------
HEARx LTD
- --------------------------------------------------------------------------------
Exact Name of Registrant as Specified in Its Charter
Delaware 22-2748248
- --------------------------------------------------------------------------------
(State of Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1250 Northpoint Parkway, West Palm Beach, Florida 33407
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (561) 478-8770
--------------
- --------------------------------------------------------------------------------
Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report
Indicate by check X whether the registrant (1) has 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 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
---------- ----------
On June 27,1997, 86,293,940 shares of the Registrant's Common Stock were
outstanding.
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets 3
June 27, 1997 and December 27, 1996
Consolidated Statements of Operations 4
Six months ended June 27, 1997 and June 28, 1996
Consolidated Statements of Operations 5
Three months ended June 27, 1997 and June 28, 1996
Consolidated Statements of Cash Flows 6
Six months ended June 27, 1997 and June 28,1996
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition 8 - 10
and Results of Operations
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 6. Exhibits and reports on Form 8-K 12
Signatures 13
</TABLE>
2
<PAGE> 3
HEARX LTD AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 27, December 27,
1997 1996
-------------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ................................ $ 4,545,995 $ 1,811,437
Marketable securities .................................... 13,905,794 11,936,025
Accounts and notes receivable ............................ 3,887,122 3,811,314
Allowance for doubtful accounts .......................... (522,355) (789,322)
Inventories .............................................. 360,723 363,978
Prepaid expenses ........................................ 209,280 245,000
-------------- -------------
Total current assets ................................. 22,386,559 17,378,432
-------------- -------------
PROPERTY AND EQUIPMENT
Equipment, furniture and fixtures ........................ 8,036,815 6,914,732
Leasehold improvements ................................... 4,484,126 3,823,205
Construction-in-progress ................................. 19,440 114,382
-------------- -------------
12,540,381 10,852,319
Less accumulated depreciation and amortization ............. 3,680,439 2,783,619
-------------- -------------
Net property and equipment ................................. 8,859,942 8,068,700
-------------- -------------
OTHER ASSETS ............................................... 1,147,828 1,180,352
-------------- -------------
$ 32,394,329 $ 26,627,484
============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion - long-term debt ......................... 749,707 751,673
Accounts payable and accrued expenses .................... 2,088,726 3,357,422
Accrued salaries and other compensation................... 615,058 812,946
-------------- -------------
Total current liabilities ............................. 3,453,491 4,922,041
-------------- -------------
LONG-TERM DEBT-NET OF CURRENT PORTION ...................... 185,999 230,258
-------------- -------------
COMMITMENT AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Non-redeemable preferred stock:
(Aggregate liquidation preference $11,238,685)
$1 par; 2,000,000 shares,authorized, issued
and outstanding:
1996 Convertible B-1 ................................... 750 3,500
1996 Convertible B-2 ................................... 250 1,450
1997 Convertible ...................................... 10,000 -
-------------- -------------
Total preferred stock ................................ 11,000 4,950
Common stock, $.10 par; 130,000,000 shares authorized,
86,293,940 and 81,969,233 shares issued .................. 8,629,394 8,196,923
Additional paid-in capital ............................... 71,853,080 59,996,480
Accumulated deficit ..................................... (51,572,221) (46,130,289)
Unrealized gain on marketable securities ................. 16,670 32,121
Unamortized deferred compensation ........................ (132,344) -
Treasury stock, at cost - 28,995 and 250,000 common shares (50,740) (625,000)
-------------- -------------
Total stockholders' equity ........................... 28,754,839 21,475,185
-------------- -------------
$ 32,394,329 $ 26,627,484
============== =============
</TABLE>
See notes to Consolidated Financial Statements
3
<PAGE> 4
HEARX LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 27, 1997 AND JUNE 28, 1996
<TABLE>
<CAPTION>
1997 1996
--------------- ----------------
(Unaudited) (Unaudited)
<S> <C> <C>
NET SALES ........................................ $ 11,602,849 $ 8,962,983
--------------- ---------------
COSTS AND EXPENSES:
Cost of products sold .......................... 3,279,883 2,861,513
Center operating expenses ...................... 8,060,129 5,476,022
General and administrative expenses ............ 3,015,935 2,443,357
Depreciation and amortization .................. 952,777 500,180
Interest expense ............................... - 125,330
--------------- ---------------
Total expenses .............................. 15,308,724 11,406,402
--------------- ---------------
LOSS BEFORE DIVIDENDS ON PREFERRED STOCK ......... (3,705,875) (2,443,419)
DIVIDENDS ON PREFERRED STOCK:
Deemed dividends................................ (1,500,000) (9,000,000)
Dividends....................................... (236,057) (200,705)
--------------- ---------------
Total dividends ............................. (1,736,057) (9,200,705)
--------------- ---------------
NET LOSS APPLICABLE TO COMMON STOCKHOLDERS ....... $ (5,441,932) $ (11,644,124)
=============== ===============
NET LOSS PER COMMON SHARE ....................... $ (0.06) $ (0.20)
=============== ===============
WEIGHTED AVERAGE NUMBER OF SHARES OF
COMMON STOCK OUTSTANDING ....................... 84,425,871 56,890,174
=============== ===============
</TABLE>
See notes to Consolidated Financial Statements
4
<PAGE> 5
HEARX LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 27, 1997 AND JUNE 28, 1996
<TABLE>
<CAPTION>
1997 1996
------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C>
NET SALES .................................................. $ 5,854,592 $ 4,244,791
------------- -------------
COSTS AND EXPENSES:
Cost of products sold .................................... 1,468,120 1,469,867
Center operating expenses ................................ 4,057,941 3,239,066
General and administrative expenses ...................... 1,594,856 1,655,800
Depreciation and amortization ............................ 548,067 354,833
Interest expense ......................................... - 67,821
------------- -------------
Total expenses ........................................ 7,668,984 6,787,387
------------- -------------
LOSS BEFORE DIVIDENDS ON PREFERRED STOCK ................... (1,814,392) (2,542,596)
DIVIDENDS ON PREFERRED STOCK:
Deemed dividends.......................................... (1,500,000) (9,000,000)
Dividends................................................. (180,871) (200,705)
------------- -------------
Total dividends ....................................... (1,680,871) (9,200,705)
------------- -------------
NET LOSS APPLICABLE TO COMMON STOCKHOLDERS ................. $ (3,495,263) $(11,743,301)
============= =============
NET LOSS PER COMMON SHARE ................................. $ (0.04) $ (0.18)
============= =============
WEIGHTED AVERAGE NUMBER OF SHARES OF
COMMON STOCK OUTSTANDING ................................. 84,764,248 66,570,196
============= =============
</TABLE>
See notes to Consolidated Financial Statements
5
<PAGE> 6
HEARX LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASHFLOWS
SIX MONTHS ENDED JUNE 27, 1997 AND JUNE 28, 1996
<TABLE>
<CAPTION>
1997 1996
(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) .............................................................. $ (5,441,932) $(11,644,124)
Adjustments to reconcile net income (loss) to net cash
used by operating activities:
Depreciation and amortization .......................................... 952,777 500,180
Allowance for doubtful accounts ........................................ (266,967) (364,385)
Deferred compensation .................................................. (151,250) -
Unrealized gain on investmetns ......................................... (15,451) -
Non-cash expense for dividends on Convertible Preferred Stk ............ 1,736,057 9,200,705
Non-cash expense for advisors/consultants/public relations ............. - 101,500
Non-cash expense for customer list ..................................... - 239,070
Non-cash expense for executive stock bonuses ........................... 6,750
Changes in operating assets and liabilities:
Accounts and notes receivable .......................................... (75,808) (274,915)
Receivables from Private Placements .................................... (12,450,000)
Inventories ............................................................ 3,256 171,525
Prepaid expenses and other current assets .............................. 35,720 (757,677)
Deferred charges and other ............................................. (4,528) (916,184)
Accounts payable and accrued expenses................................... (1,466,584) 1,773,551
------------- -------------
Net cash used by operating activities (4,694,710) (14,414,004)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment .................................... (1,688,062) (3,487,518)
Proceeds from sale of property and equipment .......................... - 4,856
Purchase of investments ............................................... (1,969,769) -
------------- -------------
Net cash used by investing activities .......................................... (3,657,831) (3,482,662)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of:
Long-term debt-principal shareholder ................................ - 277,666
Long-term debt-other ................................................ 114,219 695,843
Principal payments on borrowings:
Short-term debt ..................................................... - (58,828)
Long-term debt ...................................................... (62,561) (2,203,298)
Forgiveness of long-term debt ....................................... (97,883) (181,709)
Proceeds from issuance of capital stock, net of offering costs....... 11,133,324 29,081,489
------------- -------------
Net cash provided by financing activities ...................................... 11,087,099 27,611,163
------------- -------------
Net increase in cash and cash equivalents ...................................... 2,734,558 9,714,497
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ............................... 1,811,437 933,539
============= =============
CASH AND CASH EQUIVALENTS AT END OF PERIOD ..................................... $ 4,545,995 $ 10,648,036
============= =============
</TABLE>
See notes to Consolidated Financial Statements
6
<PAGE> 7
HEARX LTD AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The accompanying unaudited consolidated financial statements should be read in
conjunction with the Company's Annual Report on Form 10-K for the fiscal year
ended December 27, 1996. All adjustments, consisting of normal recurring
accruals, which are, in the opinion of management, necessary for a fair
statement of results for interim periods have been made.
1. PRIVATE PLACEMENT
On March 17, 1997, the Company completed a private placement of 10,000 shares
of 1997 Convertible Preferred Stock, a newly designated preferred stock, par
value $1.00 per share pursuant to Regulation D, under the Securities Act of
1933, as amended. Net proceeds to the Company after payment of placement fees,
legal and accounting expense was $9,270,000. The additional capital was raised
to enable HEARx to expand its network of hearing centers, if required by
current or potential managed-care contracts. The 1997 Convertible Preferred
Stock is convertible into Common Stock at various rates depending upon the date
of conversion and the market price at the date of conversion. During the six
months ended June 27, 1997 the Company recorded a deemed preferred stock
dividend of $1,500,000, for the discounted conversion price.
2. STOCKHOLDERS' EQUITY
Conversion of Series B-1 and B-2 Preferred Stock into shares of Common Stock
During May and August 1996, the Company completed an offering pursuant to
Regulation D, under the Securities Act of 1933, as amended. In the Regulation
D offering, the Company sold 15,000 shares of a convertible preferred stock
(the "Series B-1 Preferred Stock") and 9,900 shares of another convertible
preferred stock (the "Series B-2 Preferred Stock"), for net proceeds of
$23,048,590. During the six months ended June 27, 1997, 2,750 shares of the
Series B-1 Preferred Stock were converted into 1,550,399 shares of Common
Stock and 1200 shares of the Series B-2 Preferred Stock were converted into
870,928 shares of Common Stock.
Common Stock
During the six months ended June 27, 1997, warrants were exercised resulting
in the issuance of 1,967,729 shares of Common Stock and employee stock
options were exercised resulting in the issuance of 110,650 shares of Common
Stock.
During the six months ended June 27, 1997, 50,000 shares of Common Stock were
issued to one of the Company's officers pursuant to a deferred compensation
stock plan.
3. RECENT ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board recently issued Standard Number 128,
Earnings Per Share. As required the Company will adopt this standard at the
end of its current fiscal year. The adoption of this standard is not expected
to have a material impact on the Company's reported earnings per share.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Management believes the shift of patients from the Medicare population to
managed care, which has occurred in recent years, will continue and increase in
the future. To the extent the Company is successful in contracting with the
providers of Medicare managed care for the provision of hearing care goods and
services, the Company can enjoy the benefits of this shift.
To support the requirements of the Company's current and future participation
in such contracts, the Company made a strategic decision to enter the northeast
United Sates market in 1996. To fulfill its contractual requirements during
1996 in this region, sixteen centers were opened in New York, fourteen in New
Jersey, and four in Connecticut for a total of thirty-four centers in the
northeast market. Additionally, five centers were opened in Florida, and two
centers closed, for a net increase of three centers in the Company's Florida
region. In the first six months of 1997, the Company continued its expansion
into the northeast U.S. market with the opening of five new centers in the
Philadelphia region, and increased its presence in the Florida region with the
addition of three new centers to serve the Orlando market. The eight new
centers brought the total Company owned centers to seventy-three (73).
The Company signed new or expanded contracts with nine managed care companies
in the first six months of 1997 adding to the fourteen new contracts signed in
1996 in the northeast U.S. market in support of the new and existing centers.
There can be no certainty that the executed contracts will either start up on a
timely basis or produce the revenues anticipated. These contracts call for the
managed care or insurance companies to reimburse the Company for all, or a
portion, of the costs incurred by their members for hearing care services
provided by the Company. The balance of the cost is borne by the member. The
Company is reimbursed by the insurer on either a "fee for service" basis, or
through a "capitated" plan. Capitation contracts are those contracts which
provide for payments to the Company on a per member per month basis. Under
those contracts, a member is entitled to testing services and a product credit
with respect to a hearing aid purchase. These credits (discounted from
published retail prices) are then applied to the member's purchase of hearing
aids. As generally provided in those contracts, the member can receive this
credit once every three years. The price of the services and products provided
on the first visit, above the group discount, as well as any additional
services or products purchased, are the obligation of the member.
The Company believes that the loss of any single managed care contract would
not have a material adverse effect on its financial condition or results of
operation. Each of the existing insurance contracts are achieving expected
gross profit margins and contributing positively to the Company's results of
operations.
In 1996, the Company substantially completed its planned corporate expansion to
support the center network expansion and new contract signings. This included
the development, installation and implementation of new computer information
systems; the establishment and staffing of three new departments (Professional
Services, Information Technology and Contract Management); the upgrade and
expansion of existing departments and the relocation to a new corporate
facility.
8
<PAGE> 9
RESULTS OF OPERATIONS
For the six months ended June 1997 compared to 1996
Net sales increased $2,639,866, or 29.4%, to $11,602,849, in 1997 from $
8,962,983 in 1996. The increase primarily resulted from those centers open in
the northeast U.S. markets.
Cost of products sold increased $418,370, or 14.6%, to $3,279,883 in 1997 from
$ 2,861,513 in 1996. The increase in cost of products sold was primarily the
result of increased sales volume in 1997 over 1996. Cost of products sold, as a
percentage of net sales, decreased in 1997 due to improved pricing from the
Company's hearing aid suppliers and a change in the Company's product mix.
Center operating expenses increased $2,584,107, or 47.2%, to $8,060,129 in
1997 from $5,476,022 in 1996. This increase is partially due to an increase in
advertising expense of $661,738, an 89% increase over 1996. Advertising
expenditures are expected to remain at these levels throughout 1997. The
remaining increase of $1,922,369 or 35% is attributable to the 33% increase in
the number of centers operating in the first six months of 1997 (73) compared
to the first six months of 1996 (55).
General and administrative expenses increased $572,578, or 23.4%, to $3,015,935
in 1997 from $2,443,357 in 1996. Substantially all of the increase was
attributable to the increase in wages and fringe benefits associated with the
expansion of the corporate administrative functions. This increase occurred
primarily in the first quarter of 1997.
Depreciation and amortization expense increased $452,597, or 90.5%, to
$952,777 in 1997 from $500,180 in 1996. The increase was attributable to the
depreciation and amortization of the leasehold improvements, medical and
computer equipment, and furniture associated with the new centers opened in
1996 and 1997, the installation of computer systems in existing centers in
South Florida and the corporate office computer systems installed in 1996.
For the three months ended June 1997 compared to 1996
Net sales increased $1,609,801, or 37.9%, to $5,854,592, in 1997 from
$4,244,791 in 1996. The increase primarily resulted from those centers open in
the northeast U.S. market.
Cost of products sold decreased $1,747, to $1,468,120 in 1997 from $1,469,867
in 1996. Cost of products sold, as a percentage of net sales, decreased in
1997 due to improved pricing from the Company's hearing aid suppliers and a
change in the Company's product mix.
Center operating expenses increased $818,875, to $4,057,941 in 1997 from
$3,239,066 in 1996.This increase is partially due to an increase in advertising
expense of $272,902, a 63% increase over 1996. The remaining increase of
$545,973 or 16.9% is attributable to the 33% increase in the number of centers
operating in the second quarter of 1997 (73) compared to the second quarter of
1996 (55).
General and administrative expenses decreased $60,944, or 3.7%, to $1,594,856
in 1997 from $1,655,800 in 1996. The level of general and administrative
expenses has not changed substantially since the second quarter of 1996. The
planned corporate expansion to support the center network expansion was
substantially complete at the beginning of the third quarter in 1996.
9
<PAGE> 10
LIQUIDITY AND CAPITAL RESOURCES
Working capital increased $6,476,677 to $18,933,068 as of June 27, 1997 from
$12,456,391 as of December 27, 1996. During the first quarter of 1997, the
Company completed a private placement (see Note 1. Private Placement) providing
the Company net proceeds of $9,270,000. The Company also received net proceeds
of $3,599,381 from the exercise of warrants and stock options during the six
months. The Company purchased $1,688,062 in property and equipment in the six
months. The sale of the Company's securities in 1997 did not individually, or
in the aggregate, cause a "change in control" which would result in an annual
limitation of the Company's net operating loss carry-forward under Section 382
of the Internal Revenue Code of 1986, as amended.
The Company believes that its current working capital and revenues from
operations are sufficient to support the Company's foreseeable capital
requirements and operating needs through 1997 in accordance with its strategic
plan, although there can be no assurance that other cash needs will not arise.
Net cash used by operating activities decreased from $14,414,004, in the first
six months of 1996, to $4,694,710 in 1997. The cash used by operating
activities in 1997 and 1996 was primarily the result of operating losses
resulting from the Company's decision to expand its operations to accommodate
the new contract signings and the accompanying expansion into the northeast
U.S. market as discussed above, in advance of patient usage.
Net cash used in investing activities increased from $3,482,662, in the first
six months of 1996, to $3,657,831 in 1997. This modest net increase includes a
$1,799,456 decrease in cash used to fund the construction of leasehold
improvements and the related purchase of property and equipment offset by a
$1,969,769 increase for the purchase of investments.
The capital costs associated with the start up of a new center vary depending
on the size of the center and its location. Typically, new centers are leased
under operating leases and range from 1,500 to 2,000 square feet in size. New
center property and equipment costs include leasehold build out costs,
furniture and costs of equipment, including diagnostic and computer equipment.
Pre-opening costs, such as training wages, recruiting, advertising, travel,
etc. are expensed as incurred. The Company believes it has the funds to
support the planned expansion of the Company's network of centers through 1997.
Cash from financing activities decreased from $27,611,163, in the first six
months of 1996, to $11,087,099 in 1997. This decrease was the result of a
reduction in the proceeds from equity offerings in 1997 versus 1996.
10
<PAGE> 11
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its annual meeting of stockholders on May 22,1997. At that
meeting, the stockholders were asked to consider and act on the following
matters:
1. The election of five directors; and
2. The ratification of the selection of BDO Seidman as the
Company's independent public accountants for its fiscal year
ending December 26, 1997.
The voting of the shareholders on the above issues was as follows:
1. Paul A. Brown, M.D. : 68,866,762 "For";
434,759 "Against"/"Withheld"; 0 broker non-votes; and
15,070,262 abstentions.
Stephen J. Hansbrough: 68,878,199 "For";
423,322 "Against"/"Withheld"; 0 broker non-votes; and
15,070,262 abstentions.
Thomas W. Archibald: 68,878,799 "For";
422,722 "Against"/"Withheld"; 0 broker non-votes; and
15,070,262 abstentions.
Fred N. Gerard, Esq.: 68,872,499 "For";
429,022 "Against"/"Withheld"; 0 broker non-votes; and
15,070,262 abstentions.
David J. McLachlan: 68,874,299 "For";
427,222 "Against"/"Withheld"; 0 broker non-votes; and
15,070,262 abstentions.
2. The ratification of the selection of BDO Seidman as the
Company's independent public accountants for fiscal year
ending December 26,1997: 68,748,069 "For"; 328,780 "Against";
0 broker non-votes; and 15,294,934 abstentions.
11
<PAGE> 12
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
3.1 Restated Certificate of Incorporation of HEARx Ltd., including
certain certificates of designations, preferences and rights
of certain preferred stock of the Company. Filed as an exhibit
to the Company's Current Report on Form 8-K, filed on May 17,
1996, as the exhibit number indicated in brackets and
incorporated herein by reference. [3]
3.1A-1 Amendments to Restated Certificate of Incorporation. Filed as
an exhibit to the Company's Quarterly Report on Form 10-Q,
for the period ended June 28, 1996, as the exhibit number
indicated in brackets and incorporated herein by reference.
[3.1A]
3.2A-2 Certificate of designation, preferences and rights of the 1997
Convertible Preferred Stock of the Company. Filed as an
exhibit to the Company's Current Report on Form 8-K, filed on
March 26, 1997, as the exhibit number indicated in brackets
and incorporated herein by reference. [3]
3.2 By-Laws of HEARx Ltd. Filed as an exhibit to the Company's
Registration Statement on Form S-18 (Registration N0.
33-17041-NY) as the exhibit number indicated in brackets and
incorporated herein by reference. [3.2]
4.1 Securities Purchase Agreement, dated March 17, 1997, between
HEARx Ltd. and each of the purchasers set forth on the
signature pages thereto. Filed as an exhibit to the Company's
Current Report on Form 8-K, filed on March 26, 1997, as the
exhibit number indicated in brackets and incorporated herein
by reference. [4.1]
4.2 Registration Rights Agreement, dated March 17, 1997, between
HEARx Ltd. and each of the purchasers set forth on the
signature pages thereto. Filed as an exhibit to the Company's
Current Report on Form 8-K, filed on March 26, 1997, as the
exhibit number indicated in brackets and incorporated herein
by reference. [4.2]
4.3 Form of Placement Agent Warrant (to purchase up to 850,000
shares of Common Stock at an exercise price equal to $5.00 per
share). Filed as an exhibit to the Company's Current Report on
Form 8-K, filed on March 26, 1997, as the exhibit number
indicated in brackets and incorporated herein by reference.
[4.3]
27 Financial Data Schedule (provided for the information of the
Securities and Exchange Commission only).
(b) Reports on Form 8-K:
None.
12
<PAGE> 13
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.
HEARx Ltd.
(Registrant)
Date: August 11, 1997 By: /s/ Stephen J. Hansbrough
-------------------------
Stephen J. Hansbrough
President
Chief Operating Officer
Date: August 11, 1997 By: /s/ James W. Peklenk
--------------------
James W. Peklenk
Vice President and
Chief Financial Officer
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains financial information extracted from the financial
statements of HEARx Ltd and is qualified in its entirety by references to such
financial statements.
</LEGEND>
<CIK> 0000821536
<NAME> HEARX LTD.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-26-1997
<PERIOD-START> DEC-28-1996
<PERIOD-END> JUN-27-1997
<CASH> 4,545,995
<SECURITIES> 13,905,794
<RECEIVABLES> 3,887,122
<ALLOWANCES> (522,355)
<INVENTORY> 360,723
<CURRENT-ASSETS> 22,386,559
<PP&E> 12,540,381
<DEPRECIATION> (3,380,439)
<TOTAL-ASSETS> 32,394,329
<CURRENT-LIABILITIES> 3,453,491
<BONDS> 185,999
0
11,000
<COMMON> 8,629,394
<OTHER-SE> 20,114,445
<TOTAL-LIABILITY-AND-EQUITY> 32,394,329
<SALES> 11,602,849
<TOTAL-REVENUES> 11,602,849
<CGS> 3,279,883
<TOTAL-COSTS> 12,028,841
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
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