<PAGE>
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 JUNE 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 33-43537
FUTURE MEDICAL TECHNOLOGIES INTERNATIONAL, INC.
(Name of small business issuer as specified in its charter)
Nevada 56-1668867
(State of other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One Glenhardie Corporate Center, 1275 Drummers Lane, Suite 201, Wayne,
Pennsylvania 19087
(address of principal executive offices)
Issuer's telephone number: 610-975-9533
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes X No
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: July 16, 1996
Common Stock, Par Value $.001 11,542,401
(Class) Outstanding
Transitional Small Business Disclosure Format (check one): Yes No X
<PAGE>
FORM 10-QSB
FUTURE MEDICAL TECHNOLOGIES INTERNATIONAL, INC.
INDEX
Page
<TABLE>
<S> <C>
PART I. Financial Information
Item 1. Consolidated Financial Statements
Balance Sheet - June 30, 1996 (Unaudited) 2 & 3
Statements of Operations (Unaudited) - Six
Months Ended June 30, 1996 and 1995 4
Statements of Cash Flows (Unaudited) - Six
Months Ended June 30, 1996 and 1995 5
Notes to Consolidated Financial Statements
(Unaudited) 6 - 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 9
PART II. Other Information 10
Signature Page 11
</TABLE>
<PAGE>
FORM 10-QSB PART I - FINANCIAL INFORMATION
FUTURE MEDICAL TECHNOLOGIES INTERNATIONAL, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
June 30, 1996
<S> <S> <C>
Assets
Current Assets
Cash and cash equivalents $ 2,581,269
Accounts receivable, net of allowance
for doubtful accounts of $62,573 966,025
Other receivables 61,800
Inventories:
Raw materials 115,062
Work in process 21,282
Finished goods 102,784
Prepaid expenses 23,379
Costs and estimated earnings in excess
of related billings on uncompleted
contracts (Note 1) 3,501,310
Total Current Assets 7,372,911
Property and Equipment
Equipment 891,353
Molds 154,699
Furniture and fixtures 102,160
Demonstration model 158,326
1,306,538
Less accumulated depreciation ( 357,978)
Net Property and Equipment 948,560
Other assets (Notes 3&4) 503,681
Total Assets $ 8,825,152
</TABLE>
<PAGE>
FORM 10-QSB
FUTURE MEDICAL TECHNOLOGIES INTERNATIONAL, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
June 30, 1996
<S> <S> <C>
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable and accrued expenses $ 466,388
Current portion of long term debt (Notes 1&3) 19,014
Billings in excess of related costs and
estimated earnings on uncompleted
contracts (Note 1) 4,252,530
Total Current Liabilities 4,737,932
Long Term Debt (Less Current Portion) (Notes 1&3) 577,658
Total Liabilities 5,315,590
Shareholders' Equity
Common stock, $.001 par value per
share, authorized 25,000,000 shares,
issued and outstanding 11,542,215
shares 11,542
Additional paid-in capital 9,046,106
Unearned compensation ( 57,575)
Deficit (5,490,511)
Total Shareholders' Equity 3,509,562
Total Liabilities and
Shareholders' Equity $ 8,825,152
</TABLE>
<PAGE>
FORM 10-QSB
FUTURE MEDICAL TECHNOLOGIES INTERNATIONAL, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenues $ 2,407,229 $ 899,285 $ 4,178,862 $ 1,146,031
Cost and Expenses
Cost of revenue 1,284,506 377,531 2,302,875 485,065
Selling, general and
administrative 678,515 645,343 1,255,372 885,513
Research and development 177,172 298,957
Total Cost and Expenses 2,140,193 1,022,874 3,857,204 1,370,578
Income (Loss) From
Operations 267,036 ( 123,589) 321,658 ( 224,547)
Other Income (Expense)
Interest and
miscellaneous income 59,404 184,584 132,333 192,326
Interest and
miscellaneous expense ( 22,625) ( 35,116)
Total Other Income
(Expense) 36,779 184,584 97,217 192,326
Net Income (Loss) $ 303,815 $ 60,995 $ 418,875 $( 32,221)
Net Income (Loss)
Per Share $ .03 $ .01 $ .04 $( .01)
Weighted Average Number
of Shares Outstanding 11,021,568 9,894,125 10,942,490 7,220,696
/TABLE
<PAGE>
FORM 10-QSB
FUTURE MEDICAL TECHNOLOGIES INTERNATIONAL, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION> Six Months Ended
June 30,
1996 1995
<S> <C> <C>
Cash Flows From Operating Activities
Net income (loss) $ 418,875 $( 32,221)
Adjustments to Reconcile Net Income
(Loss) to Net Cash Provided By
Operating Activities
Amortization and depreciation 103,189 61,202
Changes In Operating Assets
and Liabilities
Increase in receivables ( 856,593) ( 725,796)
Increase in inventories ( 79,858) ( 109,587)
Decrease (increase) in prepaid expenses 17,544 ( 7,505)
Increase in costs and estimated earnings
in excess of related billings on
uncompleted contracts (3,501,310)
Increase in other assets ( 16,667)
Increase in accounts payable and
accrued expenses 227,272 63,132
Increase in billings in excess of related
costs and estimated earnings on
uncompleted contracts 4,252,530 315,032
Net Cash Provided By (Used In)
Operating Activities 581,649 ( 452,410)
Cash Flows Used In Investing Activities
Purchase of property and equipment ( 200,375) ( 430,263)
Cash Flows From Financing Activities
Decrease in loans from officer ( 19,906)
Reduction of debt ( 3,828) (296,163)
Proceeds from issuances of
common stock 1,897,488 1,375,000
Net Cash Provided By Financing Activities 1,894,160 1,058,931
Net Increase In Cash and
Cash Equivalents 2,275,434 176,258
Beginning Cash and Cash Equivalents 305,835 18,373
Ending Cash and Cash Equivalents $ 2,581,269 $ 194,631
</TABLE>
Supplemental Disclosure (Note 5)<PAGE>
FORM 10-QSB
FUTURE MEDICAL TECHNOLOGIES INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Nature of Organization
Future Medical Technologies, Inc. ("FMT") was incorporated under
the laws of the State of New Jersey on September 28, 1989.
On January 26, 1990, West End Ventures, Inc. ("West End"),
acquired 100% of the stock of FMT. West End is a company that was
organized under the laws of the State of Nevada on August 1, 1989.
West End completed a blind pool public offering of common stock on
January 15, 1990. The Company's intent upon completion of the
offering was to seek potential businesses with which to merge or
acquire. Pursuant to the acquisition agreement, West End amended
its Certificate of Incorporation to change its name to Future
Medical Technologies International, Inc. ("FMTI" or the
"Company"), the subsidiary (FMT) retained its name. West End's
officers and directors resigned in favor of the current officers
and directors of FMT.
On February 22, 1995, the Company effected a five for seven
reverse stock split and completed the acquisition of 100% of the
stock of Covalent Research Alliance Corporation, ("CRA") a
Pennsylvania corporation, in exchange for 7,200,000 shares of post
split common stock of FMTI. CRA is a total research management
organization whose strength is in the design and management of
clinical trials in the drug and device development process and
with associated cost containment and quality of care components.
On April 1, 1996, FMT acquired substantially all of the assets of
Cultech Diagnostics ("Cultech"), a Missouri corporation, for
$600,000, payable in monthly installments through April, 2011.
Cultech was incorporated on April 1, 1991 and is engaged in the
manufacturing and sale of culture media products for the detection
of select bacterial organisms.
Principles of Consolidation
The accompanying consolidated financial statements include the
accounts of the Company and all of its wholly owned subsidiaries.
Intercompany transactions and balances have been eliminated in
consolidation.
FUTURE MEDICAL TECHNOLOGIES INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Cash Equivalents
For the purposes of the statement of cash flows, cash equivalents
include investments with maturities of three months or less.
Inventories
Inventories are recorded at the lower of cost, determined using
the first-in/first-out method, or market.
Property and Equipment
The Company records property and equipment at cost. Depreciation
is provided using a combination of straight line and accelerated
methods over the useful lives of the assets, which range from two
to seven years.
Revenue Recognition
The Company recognizes revenue using the accrual method of
accounting whereby it records revenue at the time a sale has been
made and the product shipped or services performed. In addition,
long term contract revenues are recognized under the
percentage-of-completion method based on the ratio of costs
incurred to date on the contract to total estimated contract costs
after providing for all known or anticipated losses. Costs
include direct and subcontract labor and applicable overhead
expenses. Cost estimates are reviewed periodically as the work
progresses and adjustments to revenue are reflected in the period
in which revisions to such estimates are deemed appropriate. All
anticipated losses are recognized immediately. Costs and
estimated earnings in excess of billings on uncompleted contracts,
as reflected in the balance sheet, comprise amounts of revenue
recognized on contracts for which billings have not been rendered.
Billings in excess of costs and estimated earnings on uncompleted
contracts comprise amounts of billings recognized on contracts
for which costs have not been incurred.
Basis of Presentation
The financial statements for the three months and six months ended
June 30, 1996 have been prepared without audit and, in the
opinion of management, reflect all adjustments necessary
<PAGE>
(consisting only of normal recurring adjustments) to present
fairly the Company's financial position at June 30, 1996 and the
results of its operations and its cash flows for the interim
and cumulative periods presented. Such financial statements do
not include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. For further information, refer to the financial
statements and footnotes thereto included in the Company's annual
report on Form 10-KSB for the year ended December 31, 1995.
Operating results for the three months and sixth months ended June
30, 1996 are not necessarily indicative of the results for the
year ending December 31, 1996.
2. Common Stock
Shares of common stock issued for consulting services have been
valued at various prices depending on the date of issuance.
Consultants have been issued shares approximately equivalent to
the fair value of the services received in exchange.
On February 22, 1995 in accordance with the acquisition agreement
with CRA, a 5 for 7 reverse split occurred.
3. Other Assets
Other assets consisted of the following at June 30, 1996:
<TABLE>
<S> <C>
Goodwill $ 210,000
Patents 147,688
Licensing agreement 64,552
Computer software 50,977
Customer list 30,000
Covenant not to compete 25,000
Security deposits 7,772
Logo design 8,123
Project start-up costs 3,831
547,943
Accumulated amortization ( 44,262)
$ 503,681
</TABLE>
Goodwill, customer list and covenant not to compute are amortized on
a straight-line basis over 15 years. Patents are being amortized on
a straight-line basis over 17 years. Logo design and project start
<PAGE>
-up costs are amortized on a straight line basis over two and three
years, respectively.
4. Business Segment Information
Information about the Company's operations in different businesses
for the three months and six months ended June 30, 1996 is as
follows:
<TABLE>
<CAPTION>
Media Clinical Consolidated
Products Research Total
<S> <C> <C> <C>
Revenues
Six months ended
June 30, 1996 $ 242,711 $ 3,936,151 $ 4,178,862
Three months ended
June 30, 1996 178,230 2,228,999 2,407,229
Net Income (Loss)
Six months ended
June 30, 1996 $(150,272) $ 569,147 $ 418,875
Three months ended
June 30, 1996 (109,925) 413,740 303,815
</TABLE>
The media products segment includes the operations of FMT and
Cultech. Clinical research includes CRA and FMTI.
5. Supplemental Disclosure of Noncash Investing Activity
On April 1, 1996, the Company acquired substantially all of the
assets of Cultech in a business combination accounted for as a
purchase. The total cost of the acquisition was $600,000, payable
in monthly installments of $5,908 through April, 2011. Assets
acquired, including goodwill and other intangible assets, amounted
to $600,000. Intangible assets are amortized over fifteen years
using the straight-line method.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Six and Three Month Periods Ended June 30, 1996 Compared To The Six and
Three Month Periods Ended June 30, 1995.
During the six months ended June 30, 1996, revenues were $4,178,862
compared to revenues of $1,146,031 for the six months ended June 30,
1995. During the three months ended June 30, 1996, revenues were
$2,407,229 compared to revenues of $899,285 for the three months ended
June 30, 1995. Revenues to date have been derived primarily from CRA
income derived from contracted clinical research. The increase in
revenues is a result of increased CRA activity. Management anticipates
several significant new contracts for clinical research in 1996.
The cost of revenue during the six months ended June 30, 1996 was
$2,302,875 compared to $485,065 for the six months ended June 30, 1995.
The cost of revenue during the three months ended June 30, 1996 was
$1,284,506 compared to $377,531 for the three months ended June 30,
1995. The increase in costs was due to the increase of producing such
revenue.
All other costs incurred during the six and three months ended June 30,
1996 including selling, general and administrative, and research and
development expenses, were $1,554,329 and $855,687. By comparison,
those same costs incurred during the six and three months ended June 30,
1995 were $885,513 and $645,343. The increase in operating expenses is
a result of increased activity at CRA.
The net income realized by the Company during the six months ended June
30, 1996 was $418,875, consisting of net income of CRA of $569,147 and
net loss of FMT and its subsidiary, Cultech, of $150,272. The net loss
realized in the six months ended June 30, 1995 was $32,221. The net
income realized by the Company during the three months ended June 30,
1996 was $303,815, consisting of net income of CRA of $413,740 and net
loss of FMT and its subsidiary, Cultech, of $109,925. The net income
realized in the three months ended June 30, 1995 was $60,995. The
increase was due to the factors described above. See financial
statement footnote 4.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1996, the Company had working capital of $2,634,979 compared
to a working capital deficiency at June 30, 1995 of $380,179. At June
30, 1996, the Company had total assets of $8,825,152 of which $7,372,911
were current assets. At June 30, 1996, the Company's total liabilities
were $5,315,590, of which $4,737,932 were current liabilities, versus
total liabilities of $806,384 at June 30, 1995, at which $761,362 were
current liabilities. At June 30, 1996, a long-term liability, related
to the acquisition of Cultech, in the amount of $577,658 existed
compared to $45,022 at June 30, 1995.
Total stockholders' equity was $3,509,562 on June 30, 1996 compared to
$1,159,074 on June 30, 1995. This increase of $2,343,488 was a result
of the income for the period and financing activities.
<PAGE>
FUTURE MEDICAL TECHNOLOGIES INTERNATIONAL, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 1. Legal Proceeding:
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:
None
ITEM 6. Exhibits and Reports on Form 8-K:
None
<PAGE>
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.
FUTURE MEDICAL TECHNOLOGIES
INTERNATIONAL, INC.
Dated: July 23, 1996 By:/s/Bruce LaMont
------------------------
Bruce LaMont, President
and Chief Executive Officer
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000856569
<NAME> FUTURE MEDICAL TECHNOLOGIES INTERNATIONAL, INC.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,581,269
<SECURITIES> 0
<RECEIVABLES> 1,028,598
<ALLOWANCES> (62,573)
<INVENTORY> 239,128
<CURRENT-ASSETS> 7,372,911
<PP&E> 1,306,538
<DEPRECIATION> (357,978)
<TOTAL-ASSETS> 8,825,152
<CURRENT-LIABILITIES> 4,737,932
<BONDS> 0
0
0
<COMMON> 11,542
<OTHER-SE> 3,555,595
<TOTAL-LIABILITY-AND-EQUITY> 8,825,152
<SALES> 4,178,862
<TOTAL-REVENUES> 4,178,862
<CGS> 2,302,875
<TOTAL-COSTS> 3,857,204
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 321,658
<INCOME-TAX> 0
<INCOME-CONTINUING> 418,875
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 418,875
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
