<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, 1997
-----------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-19567
CARDIAC SCIENCE, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 33-0465681
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1176 MAIN STREET, SUITE C, IRVINE, CALIFORNIA 92614
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (714) 587-0357
8 HAMMOND DRIVE, SUITE 111, IRVINE, CALIFORNIA 92618
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(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark 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
----- -----
The number of shares of the Common Stock of the registrant outstanding as of
July 31, 1997 was 37,471,177.
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CARDIAC SCIENCE, INC.
INDEX TO FORM 10-Q
PART I. FINANCIAL INFORMATION
PAGE NO.
--------
Item 1. Financial Statements:
Consolidated Condensed Balance Sheets
June 30, 1997 (Unaudited) and
December 31, 1996 3
Consolidated Condensed Statements of Operations (Unaudited)
Three and six months ended June 30, 1997
and 1996 4
Consolidated Condensed Statements of Cash Flows (Unaudited)
Six months ended June 30, 1997 and 1996 5
Consolidated Condensed Notes to Financial Statements
(Unaudited) 6
Item 2. Management's Discussion and analysis of 9
financial condition and results of operation
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
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CARDIAC SCIENCE, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
ASSETS
JUNE 30, DECEMBER 31,
1997 1996
---------- ------------
(Unaudited)
Current assets:
Cash and cash equivalents . . . . . . . . . . . $ 15,783 $ 413,311
Trade accounts receivable . . . . . . . . . . . 195,362 --
Inventories . . . . . . . . . . . . . . . . . . 119,634 --
Other current assets . . . . . . . . . . . . . 53,982 10,893
- ---------- -----------
Total current assets . . . . . . . . . . . . 384,761 424,204
Equipment, at cost . . . . . . . . . . . . . . . 98,332 70,286
Less accumulated depreciation . . . . . . . . (51,658) (45,639)
---------- ------------
Equipment, net . . . . . . . . . . . . . . . . 46,674 24,647
Goodwill, net of amortization of $ 10,952 . . . . 646,186 --
Other assets . . . . . . . . . . . . . . . . . . 5,784 4,012
---------- ------------
$1,083,405 $ 452,863
---------- ------------
---------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank line of credit . . . . . . . . . . . . . . $ 34,998 $ --
Accounts payable and accrued expenses . . . . . 516,257 133,402
Accrued payroll . . . . . . . . . . . . . . . . 17,202 50,269
Note payable . . . . . . . . . . . . . . . . . 85,309 --
---------- ------------
Total current liabilities . . . . . . . . . 653,766 183,671
---------- ------------
---------- ------------
Stockholders' equity:
Preferred stock - $.001 par value;
1,000,000 shares authorized, 5,714
issued and outstanding at June 30,
1997 and 0 at December 31, 1996 . . . . . . 600,000 --
Common stock - $.001 par value:
Authorized shares - 40,000,000
Issued and outstanding shares
37,471,177 at June 30, 1997
and 37,321,177 at December 31,
1996 . . . . . . . . . . . . . . . . . . . 37,471 37,273
Common stock subscribed - 1,666,667 at
June 30, 1997 and 1,816,667 at
December 31, 1996 . . . . . . . . . . . . . 250,000 268,000
Additional paid-in capital . . . . . . . . . . . 4,936,776 4,918,974
Accumulated deficit . . . . . . . . . . . . . (5,394,608) (4,955,055)
---------- ------------
Total stockholders' equity . . . . . . . . 429,639 269,192
---------- ------------
$ 1,083,405 $ 452,863
---------- ------------
---------- ------------
See accompanying notes.
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<PAGE>
CARDIAC SCIENCE, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
------------------ ----------------
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
---------------------------------------------------
<S> <C> <C> <C> <C>
SALES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 408,998 --- 408,998 ---
Cost of Sales . . . . . . . . . . . . . . . . . . . . . . . . . 209,447 --- 209,447 ---
---------- ---------- ---------- ----------
Gross Profit. . . . . . . . . . . . . . . . . . . . . . . . . . 199,551 --- 199,551 ---
OPERATING EXPENSES:
Research and development. . . . . . . . . . . . . . . . . . . . 51,392 98,446 129,928 222,068
Selling expenses. . . . . . . . . . . . . . . . . . . . . . . . 115,193 --- 115,193 ---
General and administrative. . . . . . . . . . . . . . . . . . . 299,283 111,736 392,759 219,464
---------- ---------- ---------- ----------
LOSS FROM OPERATIONS. . . . . . . . . . . . . . . . . . . . . . (266,317) (210,182) (438,329) (441,532)
Interest income, expense net. . . . . . . . . . . . . . . . . . (4,656) 10,236 (1,119) 23,849
---------- ---------- ---------- ----------
Loss before provision for income taxes. . . . . . . . . . . . . . (270,973) (199,946) (439,448) (417,683)
Provision for income taxes . . . . . . . . . . . . . . . . . . . . 105 183 105 383
---------- ---------- ---------- ----------
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (271,078) (200,129) (439,553) (418,066)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net loss per share.. . . . . . . . . . . . . . . . . . . . . . . . (.01) (.01) (.01) (.01)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Number of shares used in the computation of loss per
share. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,137,844 38,987,844 39,137,844 38,597,844
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
See accompanying notes.
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<PAGE>
CARDIAC SCIENCE, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six months ended
----------------
June 30, June 30,
1997 1996
--------------- ----------------
<S> <C> <C>
Cash flows from operating activities:
Net loss. . . . . . . . . . . . . . . . . . . . . . $ (439,553) $ (418,066)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation. . . . . . . . . . . . . . . . . 6,019 6,380
Amortization . . . . . . . . . . . . . . . . 10,952 --
Changes in operating assets and liabilities
(net of Diagnostic Monitoring assets and
liabilities acquired):
Trade receivables . . . . . . . . . . . (65,787) --
Inventories . . . . . . . . . . . . . . 2,372 --
Other assets . . . . . . . . . . . . . (31,629) 3,919
Accounts payable and accrued expenses . 104,552 (52,234)
Accrued payroll . . . . . . . . . . . . (33,067) 7,782
--------------- ----------------
Net cash used in operating activities . . . . . . . (446,141) (452,219)
--------------- ----------------
Cash flows from investing activities:
Purchase of equipment. . . . . . . . . . . . . . (10,705) --
Cash acquired in Diagnostic Monitoring
acquisition. . . . . . . . . . . . . . . . . . 43,223 --
--------------- ----------------
Net cash provided by investing activities. . . . 32,518 --
Cash flows from financing activities:
Proceeds from line of credit. . . . . . . . . 16,095 --
Proceeds from issuance of and subscription
for Common Stock. . . . . . . . . . . . . . -- 16,050
--------------- ----------------
Net cash provided by financing activities . . 16,095 16,050
--------------- ----------------
Net decrease in cash and cash equivalents . . (397,528) (436,169)
--------------- ----------------
Cash and cash equivalents at beginning
of period . . . . . . . . . . . . . . . . 413,311 1,177,806
--------------- ----------------
Cash and cash equivalents at end of
period. . . . . . . . . . . . . . . . . . $ 15,783 $ 741,637
--------------- ----------------
--------------- ----------------
Supplemental cash flow disclosures:
Cash paid during the period for:
Income taxes. . . . . . . . . . . . . . . $ -- $ 383
Interest. . . . . . . . . . . . . . . . . $ -- $ --
Non cash investing and financing activities:
On April 11, 1997, the Company acquired
Diagnostic Monitoring (see note 2). . . . $ 600,000 --
Accounts payable and accrued interest
paid by issuance of common stock. . . . . $ -- 13,402
</TABLE>
See accompanying notes.
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<PAGE>
CARDIAC SCIENCE, INC.
CONSOLIDATED CONDENSED NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 1997
1. ORGANIZATION AND OPERATIONS OF THE COMPANY
Until the acquisition of Innovative Physician Services, Inc. d/b/a
Diagnostic Monitoring ("Diagnostic Monitoring") on April 11, 1997 (see note
2) Cardiac Science, Inc. ("Cardiac Science" or the "Company") was a
development stage company engaged in the development of a line of
non-surgical, non-invasive automatic external cardioverter defibrillator
("AECD-Registered Trademark-") devices (the "Products") for the treatment of
cardiac arrest. Cardiac Science has one wholly owned subsidiary, Diagnostic
Monitoring, which develops, manufactures and distributes cardiac devices and
supplies, primarily PC-based Ambulatory ECG ("Holter") systems and Holter
recorders on a worldwide basis.
BASIS OF PRESENTATION AND CONTINUED EXISTENCE
The consolidated condensed financial statements include the accounts
of the Company and of its wholly owned subsidiary, Diagnostic Monitoring. All
inter-company accounts and transactions have been eliminated in
consolidation.
Until April 11, 1997, the Company was in the development stage.
Subsequent to that date, the Company, through its subsidiary, engaged in the
manufacture and sale of diagnostic medical equipment. For the quarter
ending June 30,1997, the Company generated its first revenue of $408,998.
From May 20, 1991 (inception) through June 30, 1997, the Company
incurred losses of approximately $5.4 million. Recovery of the Company's
assets is dependent upon future events, the outcome of which is
indeterminable. Additionally, successful completion of the Company's
development program and its transition, ultimately, to attaining profitable
operations is dependent upon achieving a level of revenues adequate to
support the Company's cost structure.
While the acquisition of Diagnostic Monitoring provides Cardiac
Science with a revenue base, additional capital will be needed to fulfill the
Company's research and product development goals. The Company is currently
seeking equity capital through a private placement of its common stock (see
note 3).
In the opinion of the Company's management, the accompanying
consolidated condensed unaudited financial statements include all adjustments
(which consist only of normal recurring adjustments) necessary for a fair
presentation of its financial position at June 30, 1997 and results of
operations and cash flows for the periods presented. Although the Company
believes that the disclosures in these financial statements are adequate to
make the information presented not misleading, certain information and
disclosures normally included in financial statements prepared
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<PAGE>
in accordance with generally accepted accounting principles have been
condensed or omitted and should be read in conjunction with the Company's
audited financial statements included in the Company's 1996 Annual Report on
Form 10-K/A No.1. Results of operations for the three and six months ended
June 30, 1997 are not necessarily indicative of results for the full year.
2. ACQUISITION OF DIAGNOSTIC MONITORING
On April 11, 1997, the Company acquired from Raymond W. Cohen, the
President and Chief Executive Officer of the Company, Diagnostic Monitoring,
a Nevada corporation engaged in the sale of medical diagnostic equipment,
particularly Holter technology, through a network of domestic and
international distributors, for 5,714 shares of the Company's Series A
Convertible Preferred Stock (the "Preferred Stock") plus a non-interest
bearing promissory note (the "Note") in the principal amount of $100,000,
payable in eighteen (18) equal consecutive monthly installments commencing
upon the earlier of April 9, 1999 or the completion of an equity financing by
the Company of not less than $2,000,000 of gross proceeds. Each share of
Series A Preferred Stock is entitled to 1,000 votes per share; is
convertible into 1,000 shares of the Company's common stock, par value $0.001
per share (the "Common Stock"), at any time, and from time to time, at the
holder's option, without the payment of any additional consideration, and
automatically shall convert into 1,000 shares of Common Stock (subject to
adjustment for any reverse stock split, etc.) upon there being a sufficient
number of authorized but unissued shares of Common Stock to allow such
conversion.
The total purchase price was estimated at $600,000, the fair market value of
preferred stock issued. The fair market value of the preferred stock issued
was estimated based on the trading value of the Company's common stock less a
30% discount to take into consideration the lack of the ability to trade and
other features of the preferred stock. The fair market value of the note
payable represents the discounted value (at 11.25%) of the note over 20
months.
The transaction was accounted for under the purchase method and the
purchase price was allocated to the fair market value of the assets and
liabilities acquired as follows:
Cash. . . . . . . . . . . . . . . . . . $ 43,223
Accounts receivable . . . . . . . . . . 129,575
Inventory . . . . . . . . . . . . . . . 122,006
Other assets. . . . . . . . . . . . . . 13,232
Property and equipment. . . . . . . . . 17,341
Goodwill. . . . . . . . . . . . . . . . 657,138
Bank line of credit . . . . . . . . . . (18,903)
Accounts payable and accrued expenses . (280,637)
Note Payable. . . . . . . . . . . . . . (82,975)
--------
Preferred Stock Consideration . . . . . . . $ 600,000
--------
--------
The $657,138 goodwill resulting from the purchase price allocation is
being amortized over 15 years using the straight line method.
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<PAGE>
3. PRIVATE PLACEMENT
In January 1997, the Company entered into an advisory and consulting
agreement (the "Sorbus Agreement") with Sorbus Asset Strategies, S.A., a
Swiss company ("Sorbus"), a partner of which is a member of the Company's
Board of Directors. Sorbus agreed, among other things, to locate, on a best
efforts basis, potential investors to purchase shares of Common Stock. The
Sorbus Agreement contemplates a financing of $2,000,000 (the "Financing")
with a minimum of $1,500,000. As a condition precedent to the Financing, the
Sorbus Agreement provides, among other things, that the Company shall have
obtained the approval of its Board of Directors and stockholders to amend the
Charter (i) to effectuate effect a one-for-11.42857143 reverse stock split of
the issued and outstanding shares of the common stock and (ii) to reduce the
number of authorized shares of Common Stock from 40,000,000 to 20,000,000
shares. On April 9, 1997, the Board of Directors of the Company unanimously
approved the Reverse Stock Split and the Stock Reduction.
On May 15, 1997, the Company held a special meeting of its
stockholders to approve a proposed amendment to the Company's Certificate of
Incorporation to (a) effect a one-for-11.42857143 reverse stock split of the
issued and outstanding shares of Common Stock and (b) reduce the number of
authorized shares of Common Stock from 40,000,000 to 20,000,000 shares. These
resolutions were approved by a majority vote of the stockholders on May 15,
1997.
On that date there were 37,471,177 shares of Common Stock issued and
outstanding, each of which was given one vote on each matter presented at the
meeting, and 5,714 shares of Preferred Stock issued and outstanding, each of
which was given 1,000 votes on each Proposal. The holders of each class of
stock voted as if they held one class of stock. In addition, the holders of
Common Stock voted as a separate class on the Proposal to amend the Company's
Certificate of Incorporation to reduce the number of authorized shares of
Common Stock from 40,000,000 to 20,000,000 shares.
As of August 14, 1997, Sorbus raised $1,200,000 on behalf of the
Company, and the Company anticipates, but there can be no assurance, that the
minimum required of $1,500,000 will be attained by August 31, 1997. Such
$1,200,000 is being held in escrow pending (and release to the Company is
subject to) the meeting of the $1,500,000 minimum requirement, the
satisfaction of certain conditions precedent to the Financing, and the
consent of the investors to an extension of the offering termination date.
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<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
GENERAL
The Company is engaged in the development of non-invasive
automatic defibrillator devices to treat persons suffering from or at high
risk of, life threatening arrhythmias. The Company commenced operations in
May, 1991. Until its acquisition of Diagnostic Monitoring in April, 1997,
its operations have consisted primarily of research and development,
organizational activities, FDA testing, and financing related activities.
Cardiac Science's AECD devices are designed to treat persons suffering
from, or at high risk of, life-threatening arrhythmias (abnormal rhythms of
the heart), such as ventricular tachycardia (dangerously rapid heart rate)
and ventricular fibrillation (quivering of the heart), that lead to cardiac
arrest. The Products will continuously monitor a patient's cardiac activity,
detect abnormalities within seconds, and automatically, without human
interaction, via disposable defibrillator pads attached to the patient's
chest, transmit electrical shock (defibrillation) to convert the patient's
heart to a normal rhythm. Reducing time to defibrillation is widely
recognized as the most effective way to increase survival from cardiac arrest.
There are four AECD devices under development by the Company: (i) the
Powerheart-Registered Trademark- bedside model for in-hospital use; (ii) a
Powerheart portable model, which can be transported within the hospital;
(iii) a light-weight, ambulatory vest model which can be worn continuously by
at-risk patients; and (iv) a public access defibrillator which can be used by
non-technical individuals outside of the hospital environment. The Company's
primary objective is to pioneer the commercialization of AECD devices that
obviate the need for human intervention to successfully treat arrhythmias and
cardiac arrest. The Company believes that the Products will be ideally
suited for hospitalized and non-hospitalized patients temporarily at risk
(periods ranging from days to months) of suffering cardiac arrest. Through
its investment in clinical research, the Company believes it has established
competitive functional and technological advantages in the development of
AECD devices. The Company has been issued one patent, and has one additional
patent under exclusive license relating to its AECD technology.
On February 26, 1997, the Company filed for 510(k) clearance from the
United States Food and Drug Administration ("FDA") to allow it to begin
marketing its Powerheart Automatic External Cardioverter Defibrillator in the
United States. The filing is currently under review by the FDA.
Diagnostic Monitoring develops, manufactures and distributes cardiac
devices and supplies, primarily PC-based Ambulatory ECG ("Holter") systems
and Holter recorders on a worldwide basis. Sales are made through qualified
domestic and international distributors, pursuant to strategic distribution
agreements, and managed by DM employees on a country-by-country basis.
Distribution is currently in place with market coverage in 47 countries
worldwide. In the United States, products are sold by distributors, as well
as directly by the company to hospitals, physicians, and medical centers at
prices that reflect market conditions. The
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<PAGE>
company's products are primarily made in the United States. Certain products
and components are subcontracted and manufactured to the company's
specifications.
RESULTS OF OPERATIONS
For the three and six months ended June 30, 1997, the Company had
revenues of $408,998, and a net loss of $271,078 and $439,553, respectively,
compared to no revenues and a net loss of $200,129 for the three month period
ended June 30, 1996 and a net loss of $418,066 for the six month period
ending June 30, 1996.
In the quarter ending June 30,1997, the Company generated revenue of
$408,998 attributed to the sale of products by its subsidiary, Diagnostic
Monitoring. This is the first time in the Company's history that it has
generated revenue. Gross profit on sales was 49% for the period. Sales of
Diagnostic Monitoring's Windows 95-Registered Trademark- compatible Holter
software and systems, Holter Recorder products, and related Holter supplies
represented 81% of the company's total revenue. Sales of Spirometers
accounted for 6.7% and PC-based Electrocardiographs accounted for 7.6%.
Export sales of the products to international countries represented 72% of
the company's revenue, with the balance of sales coming from within the
United States.
The increased loss for the period ended June 30, 1997 is primarily
attributed to the Company's increase of personnel expenses and period costs
relating to the acquisition of Diagnostic Monitoring.
Research and development expenses decreased to $51,392, and $129,928,
respectively, for the three and six months ended June 30, 1997, from $98,446
and $222,068, respectively, for the three and six months ended June 30, 1996.
Decreased research and development expenses is related to decreased overall
expenses for research and a focus on engineering and manufacturing for its
initial AECD product, the Powerheart.
General and administrative expenses increased to $299,283 and $392,759,
respectively, for the three and six months ended June 30, 1997, from
$111,736, and $219,464 for the three and six months ended June 30, 1996, due
to higher payroll expenses relating, in part, to the addition of its chief
executive officer during the quarter, moving expenses and period costs
relating to the acquisition of Diagnostic Monitoring.
Sales and marketing expenses for the period ending June 30, 1997 were
$115,193 compared to no expenses in the three and six months ending June 30,
1996 reflecting the marketing efforts for Diagnostic Monitoring's products.
Interest income net, decreased to ($4,656) for the three and six months
ended June 30, 1997, from $10,236 in the same period in the prior year, due
to the decrease in investable cash as a result of expenditures for operations
and the interest expense inputed on the note payable resulting from the
Diagnostic Monitoring acquisition.
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<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1997, the Company had cash and cash equivalents and negative
working capital of $15,783, and $269,005 as compared to cash and cash
equivalents and negative working capital of $413,311 and $240,533 at December
31, 1996, respectively. Cash of $446,141 was used for operations, and cash of
$32,518 and $16,095 was provided by investing and financing activities
respectively.
In April 1997, the Company acquired Diagnostic Monitoring, a corporation
involved in the worldwide distribution of cardiac devices and supplies. The
acquisition of Diagnostic Monitoring provides Cardiac Science with a revenue
base, however, additional capital will be required to finance the Company's
research and product development plans.
Cardiac Science is currently seeking equity capital through a private
placement of its Common Stock (See Note 3 Private Placement herein). On July
1, 1997, the Company received a cash contribution of $100,000 from Sorbus
Asset Strategies, S.A. ("Sorbus") as an advance against the proceeds of the
private placement. As of August 14, 1997, Sorbus raised $1,200,000 on behalf
of the Company, and the Company anticipates, but there can be no assurance,
that the minimum required of $1,500,000 will be attained by August 31, 1997.
Such $1,200,000 is being held in escrow pending (and release to the Company
is subject to) the meeting of the $1,500,000 minimum requirement, the
satisfaction of certain conditions precedent to the Financing, and the
consent of the investors to an extension of the offering termination date. In
the event the Company is unable to finalize the financing, the Company will
be unable to complete development of its products, will have to curtail
operations and may be unable to continue as a going concern.
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<PAGE>
CARDIAC SCIENCE, INC.
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None.
Item 2. CHANGES IN SECURITIES
On April 11, 1997, the Company acquired from Raymond Cohen, the
President and Chief Executive Officer of the Company, Innovative Physicians
Services, Inc. d/b/a/ Diagnostic Monitoring, a Nevada corporation engaged in
the sale of medical diagnostic equipment, particularly Holter technology,
through a network of domestic and international distributors, for 5,714.285
shares of the Company's Series A Convertible Preferred Stock (the "Preferred
Stock") plus a non-interest bearing promissory note (the "Note") in the
principal amount of $100,000, payable in eighteen (18) equal consecutive
monthly installments commencing upon the earlier of April 9, 1999 or the
completion of an equity financing by the Company of not less than $2,000,000
of gross proceeds. Each share of Series A Preferred Stock is entitled to
1,000 votes per share; is convertible into 1,000 shares of the Company's
common stock, par value $0.001 per share (the "Common Stock"), at any time,
and from time to time, at the holder's option, without the payment of any
additional consideration, and automatically shall convert into 1,000 shares
of Common Stock (subject to adjustment for any reverse stock split, etc.)
upon there being a sufficient number of authorized but unissued shares of
Common Stock to allow such conversion. A more complete description of the
transaction was filed on a Form 8-K, dated April 9, 1997 (as amended June 13,
1997).
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 15, 1997, the Company held a special meeting of its
stockholders to approve a proposed amendment to the Company's Certificate of
Incorporation to (a) effect a one-for-11.42857143 reverse stock split of the
issued and outstanding shares of the Common Stock of the Company, and (b)
reduce the number of authorized shares of Common Stock from 40,000,000 to
20,000,000 shares. These resolutions were approved by a majority vote of the
stockholders on May 15, 1997.
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<PAGE>
On that date there were 37,471,177 shares of the Common Stock issued
and outstanding, each of which was given one vote on each matter presented at
the meeting, and 5,714 shares of the Preferred Stock, issued and outstanding,
each of which was given 1,000 votes on each Proposal. The holders of each
class of stock voted as if they held one class of stock. In addition, the
holders of Common Stock voted as a separate class on the Proposal to amend
the Company's Certificate of Incorporation to reduce the number of authorized
shares of Common Stock from 40,000,000 to 20,000,000 shares.
All 5,714 shares of the Preferred Stock voted in favor of each
proposal. With respect to the proposal to effect the reverse stock split, the
shares of Common Stock were voted as follows: 28,836,384 for, and 2,612,370
against and 2,800 withheld. With respect to the proposal to reduced the
authorized shares, the shares of Common Stock were voted as follows:
23,411,119 for, and 1,989,917 against, and 336,233 votes withheld.
Item 5. OTHER INFORMATION
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibit 11 - Computation of Per Share Information.
b) The Company filed a report on Form 8-K, dated April 9, 1997,
(as amended on June 13, 1997) with the Commission relating to
the acquisition of Diagnostic Monitoring.
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<PAGE>
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 hereunto duly authorized.
CARDIAC SCIENCE, INC.
Date: August 14, 1997 By: Raymond W. Cohen
---------------------
Raymond W. Cohen
President,
Chief Executive Officer and Chief Financial Officer
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<PAGE>
EXHIBIT 11
CARDIAC SCIENCE, INC.
COMPUTATION OF PER SHARE INFORMATION
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1997 JUNE 30, 1996 JUNE 30, 1997 JUNE 30, 1996
------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Earnings:
Net income (loss) (271,078) (200,129) (439,553) (418,066)
-------- -------- -------- --------
-------- -------- -------- --------
Computation of primary per share information:
Shares: Weighted average number of
shares outstanding 39,137,844 39,987,844 39,137,844 38,597,844
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Primary earnings per share:
Net income (loss) (.01) (.01) (.01) (.01)
---- ---- ---- ----
---- ---- ---- ----
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 15,783
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 384,761
<PP&E> 98,332
<DEPRECIATION> 51,658
<TOTAL-ASSETS> 1,083,405
<CURRENT-LIABILITIES> 653,766
<BONDS> 0
0
600,000
<COMMON> 37,423
<OTHER-SE> 63,294
<TOTAL-LIABILITY-AND-EQUITY> 1,083,405
<SALES> 408,998
<TOTAL-REVENUES> 408,998
<CGS> 209,447
<TOTAL-COSTS> 675,315
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,656
<INCOME-PRETAX> (270,973)
<INCOME-TAX> 105
<INCOME-CONTINUING> (271,078)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (271,078)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
