SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended: Commission File Number:
March 31, 1997 0 - 19957
Quantech Ltd.
(Exact name of registrant as specified in its charter)
Minnesota 41-1709417
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) identification No.)
1419 Energy Park Drive
St. Paul, MN 55108
(Address of principal executive offices) (Zip code)
(612)-647-6370
(Registrant's telephone number, including area code)
N/A
(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 ____
Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practicable date: 47,675,759 shares of Common
Stock, par value $.01 per share, outstanding as of May 10 , 1997.
Transitional Small Business Disclosure Format: YES ___ NO X
<PAGE>
Index
PART I. FINANCIAL INFORMATION Page No.
Item 1: Financial Statements: 3
Balance Sheets as of March 31, 1997 and June 30, 1996
Statement of Operations for the Three Months and Nine
Months Ended March 31, 1997 and 1996 and from inception to
March 31, 1997 4
Statement of Stockholders' Equity from inception to
March 31, 1997 6
Statement of Cash Flows for the Nine Months ended
March 31, 1997 and 1996 and from inception to
March 31, 1997 7
Notes to Financial Statements 8
Item 2: Management's Discussion and Analysis or
Plan of Operation 9
PART II. OTHER INFORMATION 13
<PAGE>
PART I
QUANTECH LTD.
(A Development Stage Company)
BALANCE SHEET
<TABLE>
<CAPTION>
(Unaudited)
March 31, June 30,
1997 1996
------------------ ------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 457,670 $ 2,942,871
Other current assets 53,633 41,269
------------------ ------------------
511,303 2,984,140
------------------ ------------------
EQUIPMENT
Equipment 360,007 268,058
Leasehold Improvements 15,000 15,000
------------------ ------------------
375,007 283,058
Less:accumulated depreciation (123,680) (78,657)
------------------ ------------------
251,327 204,401
------------------ ------------------
OTHER ASSETS
License agreement, at cost, less amortization 2,152,502 2,320,334
Organization expenses, at cost, less amortization 150 4,675
------------------ ------------------
2,152,652 2,325,009
------------------ ------------------
TOTAL ASSETS $ 2,915,282 $ 5,513,550
================== ==================
LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)
CURRENT LIABILITIES
Short term debt $ 0 $ 24,455
Accounts Payable 264,641 114,934
Accrued Expenses:
Spectrum Diagnostics Inc. obligations 40,868 53,637
Minimum Royalty Commitment 93,750 0
Other 7,402 0
------------------ ------------------
Total Current Liabilites 406,661 193,026
------------------ ------------------
LONG-TERM OBLIGATIONS
Minimum Royalty Commitment 0 37,500
------------------ ------------------
STOCKHOLDERS EQUITY (DEFICIT)
Common stock, $.01 par value; authorized 90,000,000
shares; issued and outstanding 47,675,759 shares at
March 31, 1997; and 46,900,759 at June 30, 1996 $ 476,758 $ 469,008
Additional paid-in capital 15,475,796 15,296,856
Deficit accumulated during the development stage (13,443,933) (10,482,840)
------------------ ------------------
Total Stockholders Equity 2,508,621 5,283,024
------------------ ------------------
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 2,915,282 $ 5,513,550
================== ==================
</TABLE>
<PAGE>
QUANTECH LTD.
(A Development Stage Company)
STATEMENT OF OPERATIONS-UNAUDITED
<TABLE>
<CAPTION>
Three months Three months
Ended Ended
March 31, March 31,
1997 1996
-------------------- --------------------
<S> <C> <C>
Interest Income $ 14,655 $ 10,983
-------------------- --------------------
Expenses:
General & Administrative 423,016 270,769
Research and development 584,946 238,294
Sales and Marketing 108,354 -
Minimum royalty expense 18,750 18,750
Loses resulting from transactions
with Spectrum Diagnostics Inc. - -
Net exchange (gain) - -
Financing 1,471 3,501
-------------------- --------------------
1,136,537 531,314
-------------------- --------------------
Loss before income taxes (1,121,882) (520,331)
Income taxes - -
==================== ====================
Net loss $ (1,121,882) $ (520,331)
==================== ====================
Loss per common share $ (0.02) $ (0.01)
Weighted average common shares
outstanding 47,488,759 40,659,893
</TABLE>
<PAGE>
QUANTECH LTD.
(A Development Stage Company)
STATEMENT OF OPERATIONS-UNAUDITED (CONTINUED)
<TABLE>
<CAPTION>
Period From
September 30,
1991
Nine Months Nine Months (Date 0f
Ended Ended Inception), to
March 31, March 31, March 31,
1997 1996 1997
-------------------- --------------------- --------------------
<S> <C> <C> <C>
Interest Income $ 75,887 $ 23,310 $ 165,814
-------------------- --------------------- --------------------
Expenses:
General & Administrative 1,147,680 919,506 7,289,151
Research and development 1,648,359 691,585 4,179,478
Sales and Marketing 178,778 - 178,778
Minimum royalty expense 56,250 106,250 943,750
Loses resulting from transactions
with Spectrum Diagnostics Inc. - - 556,150
Net exchange (gain) - - (67,172)
Financing 5,913 106,329 487,017
-------------------- --------------------- --------------------
3,036,980 1,823,670 13,567,152
-------------------- --------------------- --------------------
Loss before income taxes (2,961,093) (1,800,360) (13,401,338)
Income taxes - - 42,595
==================== ===================== ====================
Net loss $ (2,961,093) $ (1,800,360) $ (13,443,933)
==================== ===================== ====================
Loss per common share $ (0.06) $ (0.07)
Weighted average common shares
outstanding 47,167,584 25,793,027
</TABLE>
<PAGE>
QUANTECH LTD
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS'EQUITY-UNAUDITED
Period From September 30, 1991 (date of Inception), to March 31, 1997
<TABLE>
<CAPTION>
Deficit
Accumulated
During
Par Additional the Paid for Due Cumulative
Shares Value Paid-In Development Subscriptions Not From Translation
Issued Amount Capital Stage Receivable Issued Officers Adjustment
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at Inception
Net Loss for 15 months ($3,475,608)
Common stock transactions:
Common stock issued,
October 1991 3,200,000 $3,154,574
Common stock issued,
November 1991 600,000 $611,746 $1,788,254
Common stock issuance costs ($889,849)
Cumulative translation adjustment $387,754
Common stock issued,
September 1992 700,000 $699,033 $875,967 ($53,689)
Common stock issuance costs ($312,755)
Common stock to be issued $120,000
Cumulative translation adjustment ($209,099)
Elimination of cumulative translation adjustment ($178,655)
Officers advances, net ($27,433)
---------------------------------------------------------------------------------------------
Balance, December 31, 1992 4,500,000 $4,465,353 $1,461,617 ($3,475,608)($53,689) $120,000 ($27,433) $0
Net loss ($996,089)
Common stock transactions:
Common stock issued,
January 1993 160,000 $1,600 $118,400 ($120,000)
Common stock issued,
April 1993 30,000 $300 $11,700
Change in common stock par
value resulting from merger
Change in common stock par
value resulting from merger ($4,420,353) $4,420,353
Repayments $5,137
----------------------------------------------------------------------------------------------
Balance,June 30, 1993 4,690,000 $46,900 $6,012,070 ($4,471,697)($53,689) $0 ($22,296) $0
Net loss ($1,543,888)
240,000 shares of common
stock to be issued $30,000
Repayments $53,689 $22,296
----------------------------------------------------------------------------------------------
Balance, June 30, 1994 4,690,000 $46,900 $6,012,070 ($6,015,585) $0 $30,000 $0 $0
Net loss ($2,070,292)
Common stock issued, June 1995 2,150,000 $21,500 $276,068 ($20,000) ($30,000)
Warrants issued for services $40,200
----------------------------------------------------------------------------------------------
Balance June 30, 1995 6,840,000 $68,400 $6,328,338 ($8,085,877)($20,000) $0 $0 $0
Common stock issued, net of
issuance costs of $848,877:
July, 1995 6,160,000 $61,600 $1,304,450
August, 1995 717,600 $7,176 $161,460
September, 1995 13,807,296 $138,073 $2,370,389
November, 1995 1,897,840 $18,978 $425,482
December, 1995 11,217,157 $112,172 $1,292,473
May, 1996 6,275,000 $62,750 $3,300,422
June, 1996 5,058 $51 $3,650
Payments received on
subscription receivable (19,192) ($192) ($14,808) $20,000
Compensation expense recorded
on stock options $125,000
Net loss ($2,396,963)
-----------------------------------------------------------------------------------------------
Balance, June 30, 1996 46,900,759 $469,008 $15,296,85 ($10,482,840) $0 $0 $0 $0
Stock offering costs ($12,310)
Common stock issued upon exercise of
options and warrants
September 1996 10,000 $100 $2,400
October 1996 170,000 $1,700 $40,800
November 1996 15,000 $150 $3,600
December 1996 270,000 $2,700 $64,800 ($57,500)
January 1997 20,000 $200 $4,800
February 1997 150,000 $1,500 $17,250
March 1997 140,000 $1,400 $33,600
Payments received on $57,500
subscription receivable
Compensation expense recorded
on stock options $24,000
Net loss ($2,961,093)
----------------------------------------------------------------------------------------------
Balance, March 31, 1997
(Unaudited) 47,675,759 $476,758 $15,475,796 ($13,443,933) $0 $0 $0 $0
===============================================================================================
</TABLE>
<PAGE>
QUANTECH LTD
(A Development Stage Company)
STATEMENTS OF CASH FLOWS - UNAUDITED
<TABLE>
<CAPTION>
Period From
September 30,
Nine Nine 1991
Months Months (Date of
ended ended Inception), to
March 31, March 31, March 31,
1997 1996 1997
-------------------- ------------------ -----------------
<S> <C> <C> <C>
Cash Flows From Operating Activities
Net Loss $ (2,961,093) $ (1,800,360) $ (13,443,933)
Adjustments to reconcile net loss to net cash used in
operating activities:
Elimination of cumulative translation adjustment - - (178,655)
Depreciation 45,023 27,884 170,034
Amortization 172,357 179,195 1,300,636
Noncash compensation and interest 24,000 125,000 513,250
Losses resulting from transactions with
Spectrum Diagnostics Inc. - - 556,150
Write down of investment - - 67,500
Change in assets and liabilities, net of effects from purchase of
Spectrum Diagnostics Inc.:
(Increase) decrease in current assets (12,364) (1,039) 22,804
Increase (decrease)in accounts payable 149,707 (640,184) 263,086
Increase (decrease) in accrued expenses 50,883 (536,784) 416,144
-------------------- ------------------ -----------------
Net cash used in operating activities (2,531,487) (2,646,288) (10,312,984)
-------------------- ------------------ -----------------
Cash Flows From Investing Activities
Purchase of property and equipment (91,949) (156,789) (414,390)
Organization expenses - - (97,547)
Officer advances, net - - (109,462)
Purchase of investment - - (225,000)
Purchase of license agreement - - (1,950,000)
Advances to Spectrum Diagnostics, Inc. - - (320,297)
Prepaid securities issuance costs - - (22,943)
Purchase of Spectrum Diagnostics, Inc., net of cash
and cash equivalents acquired - - (1,204,500)
-------------------- ------------------ -----------------
Net cash used in investing activities (91,949) (156,789) (4,344,139)
-------------------- ------------------ -----------------
Cash Flows From Financing Activities
Net proceeds from the sale of common stock $ 112,500 $ 3,312,952 $ 12,720,736
Proceeds on debt obligations - - 2,658,435
Payments received on stock subscription receivables 62,500 - 67,500
Stock offering costs (12,310) - (12,310)
Payments on debt obligations (24,455) (347,034) (522,810)
-------------------- ------------------ -----------------
Net cash provided by financing activities 138,235 2,965,918 14,911,551
-------------------- ------------------ -----------------
Effect of Exchange Rate Changes on Cash - - 203,242
-------------------- ------------------ -----------------
Net increase (decrease) in cash (2,485,201) 162,841 457,670
Cash
Beginning 2,942,871 4,276 -
-------------------- ------------------ -----------------
Ending $ 457,670 $ 167,117 $ 457,670
==================== ================== =================
</TABLE>
<PAGE>
QUANTECH LTD.
( A Development Stage Company )
NOTES TO UNAUDITED FINANCIAL STATEMENTS
Note 1. BASIS OF PRESENTATION
In the opinion of the management of the Company, the accompanying unaudited
financial statements contain all adjustments (consisting of only normal,
recurring adjustments) necessary to present fairly the financial position of the
Company as of March 31, 1997 and the results of operations and its cash flows
for the three month and nine month periods ended March 31, 1997 and 1996. The
results of operations for any interim period are not necessarily indicative of
the results for the year. These interim financial statements should be read in
conjunction with the Company's annual financial statements and related notes in
the Company's Annual Report on Form 10-KSB for the year ended June 30, 1996.
Note 2. LICENSE AGREEMENT
The Company has a license agreement for certain patents, proprietary information
and associated hardware related to SPR technology. The license calls for an
ongoing royalty of 6 percent on all products utilizing the SPR technology which
are sold by the Company. In addition, if the Company sublicenses the technology,
the Company will pay a royalty of 15 percent of all revenues received by the
Company under any sublicense. If the cumulative payments of these two royalties
fail to reach at least $1,000,000 by December 31, 1997, the licensor has the
right to deprive the Company of its exclusive rights under the license
agreement. As of December 31, 1996, the Company has paid $850,000 of the
cumulative royalty payments. The Company has also ratably accrued additional
minimum royalty payments of $93,750 as of March 31, 1997, because sales or
sublicense revenues through December 31, 1997 may not be adequate to meet the
cumulative minimum royalty payments. The Company intends to accrue the entire
$150,000 by December 31, 1997.
<PAGE>
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION
History
Quantech Ltd. ("Quantech" or the "Company") was formed under the laws of
Minnesota for the purpose of effecting the change of domicile of Spectrum
Diagnostics S.p.A. ("SDS") from Italy to the state of Minnesota through the
merger with SDS on April 14, 1993. Quantech had no operations prior to the
merger and is continuing the business of SDS to commercialize Surface Plasmon
Resonance ("SPR") technology licensed from Ares-Serono. SPR, the core technology
of Quantech's proposed medical diagnostic system, enables the Company to
integrate the existing diagnostic methodologies of immunoassays, DNA probes and
chemical binding into a single, simple economical system in order to provide
rapid, quantitative, diagnostic results. The Quantech system configuration
consists of a small bench top instrument and a series of disposables each
offering a particular test or series of tests. It is anticipated that the
Quantech system will have the ability to analyze body fluids (e.g. whole blood,
urine, saliva) without preparation or addition of reagents. The Company's
initial focus is to develop its SPR instrument for Critical Care Units of
hospitals, the first such unit being the emergency department. Its first test
will aid physicians in assessing whether a patient has suffered a heart attack,
with additional disposable tests being introduced after the initial introduction
of the Quantech system.
Quantech is a development stage company which has suffered losses from
operations and will require additional financing to commercialize its product.
The Company's product development must be completed, FDA approval obtained, the
product introduced to the market, and ultimately, Quantech will need to
successfully attain profitable operations. These factors raise substantial doubt
about the Company's ability to continue as a going concern.
Results of Operations
The Company has incurred a net loss of $13,443,933 from September 30, 1991
(date of inception) through March 31, 1997 due to expenses related to formation
and operation of SDS in Italy, continuing costs of raising capital, normal
expenses of operating over an extended period of time, funds applied to research
and development, royalty payments related to the SPR technology, losses due to
expenses of Quantech's predecessor, Spectrum Diagnostics Inc., and interest on
borrowed funds. In addition, an investment of $3,356,629 was made when Quantech
purchased the exclusive rights to the SPR technology.
For the three and nine months ended March 31, 1997, the Company had
interest income of $14,655 and $75,887, respectively, compared to $10,983 and
$23,310, respectively, for the same periods in 1996 as a result of a greater
amount of cash on hand obtained from Quantech's 1996 private placement of
securities. General and administration expenses increased to $423,016 and
$1,147,680 for such three and nine months ended March 31, 1997, respectively,
from $270,769 and $919,506 for the three and nine months ended March 31, 1996,
respectively. These increases were in part a result of adding general and
administration personnel and other costs associated with Quantech continuing to
build its infrastructure in anticipation of commercial production of its system.
A significant portion of the increase was also attributable to increased public
relations expenditures and costs associated with pursuing additional short and
long term funding. General and administration expenses are anticipated to
increase in the future as the Company nears market introduction of, and begins
to sell, its system.
<PAGE>
Research and development costs increased from $238,294 and $691,585 in the
three and nine months ended March 31, 1996, respectively, to $584,946 and
$1,648,359 in the same respective periods of 1997. These increases are a result
of accelerated research and development activity, including hiring of employees
and consultants, purchasing of chemistry supplies and engaging firms to perform
contract development work, including design engineering on Quantech's disposable
and instrument. It is expected that research and development expenditures will
continue to increase as Quantech completes development of its system, begins
work on additional disposable tests for its system and maintains a level of
activity to continually improve and advance the Company's technology and testing
system.
The Company for the three months ended March 31, 1997 incurred sales and
marketing expenses of $108,354. There are no comparative periods for such sales
and marketing expenditures as the Company established its sales and marketing
activity in the quarter ended December 31, 1996. Sales and Marketing activity in
the three month period ended March 31, 1997 consisted of market research,
including attending the winter symposiums of Emergency Physicians, integrating
user requirements into the disposable and instrument designs and initiating work
on Quantech's marketing plan. The Company anticipates sales and marketing
expenses to increase substantially as it nears product introduction and begins
system sales.
Minimum royalty expense decreased in the nine months ended March 31, 1997
as compared to the same 1996 period as a result of the declining minimum
royalties owed under Quantech's license with Ares-Serono. Such expense was equal
in the comparable three month periods.
For the three and nine months ended March 31, 1997 Quantech had a loss of
$1,121,882 and $2,961,093, respectively, as compared to $520,331 and $1,800,360,
respectively, for the same periods ended March 31, 1996. These increases were
the result of the rise in general and administration, research and development
and sales and marketing expenditures exceeding decreases in such periods in
minimum royalty and financing expenses and the increase in interest income.
The Company to date has contracted for the development and design of its
prototype instrument and disposable and their manufacture, finalized
specifications for the grating component of its disposable, completed
operational prototypes of its instrument and continued to develop the
chemistries necessary to do specific tests. Quantech is currently completing
development of its chemistries to provide its system with the sensitivity
required for market introduction. Management anticipates that the Company will
be able to submit its system to the FDA for approval in the summer of 1997 and
will introduce its product into the United States after receiving such FDA
approval. This timetable will be influenced by the Company's ability to complete
the final development of its system and necessary testing for submission of its
FDA filing and delays it may encounter with the FDA in its review of the system.
Liquidity and Capital Resources
From inception to March 31, 1997, Quantech has raised approximately
$15,500,000 through a combination of public stock sales, private stock sales and
debt obligations. Quantech will not have sufficient funds to continue its
current operations beyond May 31, 1997. To provide it with additional funding,
the Company, through its investment banker, is currently raising a minimum of
$1,000,000 and a maximum of $2,500,000 through the sale of notes (the "Notes")
and warrants (the "Warrants"). The Notes will be due and payable on June 1,
1998, or earlier upon Quantech completing a transaction that provides it with a
minimum of $5,000,000 (the "Additional Funding"). Interest will be the prime
rate plus five percent and the Notes will be secured by all of the assets of the
Company. For each dollar invested in the Note the investor will receive a
Warrant to purchase two shares of Quantech Common Stock at an exercise price
equal to 80% of the price of the Additional Funding or, if the Additional
Funding has not occurred prior to June 1, 1998, the lower of 80% of the market
price of the Company's Common Stock for the 20 consecutive trading days prior to
the issuance of the Warrant or June 1, 1998. Terms are subject to negotiation
and may change. The Company believes it will complete the sale of the minimum of
$1,000,000 of the Notes by May 31, 1997 and the maximum of $2,500,000 by June
30, 1997, but there can be no assurance that the Company will be able to raise
this or any other funding and continue its operations. See "Cautionary
Statements - Future Capital Needs."
<PAGE>
The Company anticipates that the minimum of $1,000,000 will be sufficient
to allow it to complete development of its system to start its FDA work and the
maximum of $2,500,000 will allow it to submit its system to the FDA and continue
its market introduction schedule. Funds of at least $15 million will be needed
to significantly expand sales and marketing activity, including establishing a
sales force once development of the Company's product is completed, and to
establish manufacturing capabilities, to fund inventory and accounts receivable
and repay the Notes. Quantech is currently reviewing multiple avenues of future
funding including a secondary offering of securities, private sale of equity or
debt with equity features or arrangements with strategic partners. The Company
does not have any commitments for any such financing and there can be no
assurance that the Company will obtain additional capital when needed or that
additional capital will not have a dilutive effect on current shareholders.
Although the Company has a limited lending arrangement with its bank, it does
not anticipate receiving significant funding from commercial lenders.
Quantech incurred capital expenditures of $91,949 in the nine month period
ended March 31, 1997. The Company anticipates significant capital expenditures
in fiscal 1997 for laboratory and production equipment and office expansion as
the Company nears product introduction. The timing and amount of such
expenditures will be governed by the Company's development and market
introduction schedules which are subject to change due to a number of factors
including development delays, FDA approval and availability of future financing.
In addition to capital expenditures, the Company has a final minimum royalty
payment of $150,000 due to Ares-Serono on December 31, 1997.
The Company currently has outstanding 47,675,759 shares of Common Stock. It
also has options and warrants outstanding to purchase an additional 15,873,603
shares.
Issued But Not Yet Adopted Accounting Standard
In October 1995, the Financial Accounting Standards Board (FASB) issued
Statement No. 123, "Accounting for Stock-Based Compensation", which establishes
financial accounting and reporting standards for stock-based employee
compensation plans. The Company will be required to adopt Statement No. 123 in
fiscal 1997. The Company does not intend to adopt Statement No. 123 in measuring
expense; however, it will present the pro forma disclosures and those pro forma
amounts will likely be less than the amounts shown in future statements of
income.
Cautionary Statements
As provided for under the Private Securities Litigation Act of 1995, the
Company wishes to caution investors that the following important factors, among
others, in some cases have affected, and in the future could affect, the
Company's actual results of operations and cause such results to differ
materially from those anticipated in forward-looking statements made in this
document and elsewhere by or on behalf of the Company:
<PAGE>
No History of Operations; Development Stage Company; Going Concern Uncertainty
To date, the Company does not have a product ready to be brought to market
and its proposed operations are subject to all of the risks inherent in a new
business enterprise, including completion of commercial development and FDA
approval of its instrument within reasonable time frames and financial
constraints, lack of marketing experience and lack of production history. The
likelihood of the success of the Company must be considered in light of the
expenses, difficulties and delays frequently encountered in connection with the
start-up of new businesses, and specifically those historically encountered by
Quantech, the development of a new product and the competitive environment in
which the Company will operate. The report of the independent auditors on the
Company's financial statements for the period ended June 30, 1996, includes an
explanatory paragraph relating to the uncertainty of the Company's ability to
continue as a going concern. The Company is a development stage company which
has suffered losses from operations, requires additional financing, and
ultimately needs to successfully attain profitable operations. These factors
raise substantial doubt about the Company's ability to continue as a going
concern. There can be no assurance that the Company will be able to develop a
commercially viable product or marketing system or attain profitable operations.
Future Capital Needs
The Company does not have sufficient funds to continue operations past May
31, 1997 or commence commercial production and sales of its system. The
Company's ability to continue operations and begin commercial production and
sales of its system will depend upon the continued availability of investment
capital, funding made by strategic partner(s) or licensing revenues until
revenues from sale of Quantech's instruments and associated test disposables are
sufficient to maintain operations. Additional funds may have to be raised
through equity or debt financing which could dilute current shareholders. If
funding is not available when needed, the Company may be forced to cease
operations and abandon its business. In such event, Company shareholders could
lose their entire investment.
Other Factors
As described in the Company's Form 10-KSB for the year ended June 30, 1996
under Cautionary Statements and Prospectus dated September 12, 1996 under Risk
Factors, there are additional factors concerning the Company that should be
considered including: uncertainty of market acceptance of Quantech's product
once introduced, inability or delay in , effects of government regulation on
Quantech's product and its sale, ability to manufacture its product, exposure to
the risk of product liability and market for the Company's shares.
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
Not Applicable
Item 2. Changes in Securities
Not Applicable
Item 3. Defaults upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable
Item 5. Other Materially Important Events
Not Applicable
Item 6. Exhibits and Reports on 8-K
a. Exhibits -
27. Financial Data Schedule (filed in electronic format only)
b. Reports on 8-K - None
<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, thereunto duly authorized.
QUANTECH LTD
/s/ R.H. Joseph Shaw
R.H. Joseph Shaw
President and Chief Executive Officer
/s/ Gregory G. Freitag
Gregory G. Freitag
Chief Financial Officer
Date: May 13, 1997
<PAGE>
EXHIBIT INDEX
QUANTECH LTD.
FORM 10-QSB for Quarter Ended
March 31, 1997
Exhibit Number Description
- ------------------- ---------------------------------------------
27. Financial Data Schedule (filed in electronic
format only)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
financial statements contained in the Registrant's Form 10-QSB for the
quarter ended March 31, 1997 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Jun-30-1997
<PERIOD-START> Jul-01-1996
<PERIOD-END> Mar-31-1997
<EXCHANGE-RATE> 1
<CASH> 457,670
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 511,303
<PP&E> 375,007
<DEPRECIATION> (123,680)
<TOTAL-ASSETS> 2,915,282
<CURRENT-LIABILITIES> 406,661
<BONDS> 0
0
0
<COMMON> 476,758
<OTHER-SE> 15,475,796
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