FOCUS SURGERY INC
8-K, 1997-07-10
ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS
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<PAGE>

                          SECURITIES AND EXCHANGE COMMISSION

                                Washington, D.C. 20549

                                     ___________

                                      FORM 8 - K

                                    CURRENT REPORT

                       Pursuant to Section 13  or 15(d) of the 

                         Securities and Exchange Act of 1934

Date of Report (Date of earliest event reported)     MAY 31, 1997 
                                                ------------------------------

                                 FOCUS SURGERY, INC.
- ------------------------------------------------------------------------------
                (Exact name of registrant as specified in charter)

           DELAWARE                   0-22136                77-0332937
- ------------------------------------------------------------------------------
(State or other jurisdiction   (Commission File Number)     (IRS Employer 
      of incorporation)                                   Identification No.)


      895 SAN MATEO DRIVE, MENLO PARK CA              94025
- ------------------------------------------------------------------------------
   (Address of principal executive offices)         (Zip Code)

Registrant's telephone number, including area code    (415) 328-2614
                                                   ---------------------------

                                         N/A
- ------------------------------------------------------------------------------ 
          (Former name or former address, if changed since last report.)


<PAGE>

Item 3.  Bankruptcy or Receivership

    On February 9, 1996, the Registrant filed for protection under Chapter 11
of the federal bankruptcy laws in the United States Bankruptcy Court, Northern
District of California, Oakland division pursuant to which the Registrant's
existing directors and officers will continue in possession but subject to the
supervision and orders of the bankruptcy court.

    The Company is currently reviewing the claims of its various creditors.  It
is unclear at this time whether there will be any funds available for
distribution to shareholders.  This information is currently anticipated to be
available in the first quarter of 1997, although this schedule is subject to
change.  Once this information has been determined, the Company may file a plan
of reorganization with the bankruptcy court.

Item 7. Financial Statements and Exhibits

Exhibit No.     Description

99.16           Summary of Financial Status of the Registrant for the month 
                ended May 1997, as filed with the United States Bankruptcy 
                Court, Northern District of California, Oakland division.


<PAGE>

                                      SIGNATURES

    Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                            Focus Surgery, Inc.
                                       --------------------------------
                                                (Registrant)


Date:  July 11, 1997                   By:  /s/ RICK REDETT
                                          -----------------------------
                                       Name:     Rick Redett
                                       Title:    President and Chief 
                                                 Executive Officer

<PAGE>


                                                                 Exhibit 99.16

<PAGE>

                         UNITED STATES BANKRUPTCY COURT
                        NORTHERN DISTRICT OF CALIFORNIA


                                           |
IN RE: FOCUS SURGERY, INC., DEBTOR.        |  CASE NO. 96-41107-N
                                           |           -------------
Employer's Tax Identification              |  CHAPTER 11
No.:  77-0332937                           |  MONTHLY OPERATING REPORT
                                           |  (GENERAL BUSINESS CASE)
___________________________________________|

                           SUMMARY OF FINANCIAL STATUS

MONTH ENDED    May-97
            ------------

 1.  Debtor in possession (or trustee) hereby submits this Monthly Operating 
     Report on the Accrual Basis of accounting (or if checked here __ the Office
     of the U.S. Trustee or the Court has approved the Cash Basis of Accounting 
     for the Debtor). Dollars reported in ($_____).

<TABLE>
<CAPTION>
                                                                          END OF        END OF        AS OF
                                                                          CURRENT       PRIOR        PETITION
 2.  ASSET/LIABILITY SUMMARY                                               MONTH        MONTH         FILING
                                                                           -----        -----         ------
<S>                                                                  <C>          <C>           <C>
      Current Assets (Market Value)                                      $758,345     $757,003       $502,204
                                                                       ------------ ------------ --------------
      Total Assets (Market Value)                                        $758,345     $757,003     $2,152,204
                                                                       ------------ ------------ --------------
      Current Liabilities                                                 $90,092      $66,193 
                                                                       ------------ ------------ --------------
      Total Liabilities                                                  $796,105     $768,505       $831,829
                                                                       ------------ ------------ --------------

</TABLE>
<TABLE>
<CAPTION>
                                                                                                     PETITION
                                                                          CURRENT       PRIOR         DATE TO
 3.  STATEMENT OF CASH RECEIPTS & DISBURSEMENTS FOR MONTH                  MONTH        MONTH        MONTH END
                                                                           -----        -----        ---------
<S>                                                                  <C>          <C>           <C>
      a.  Total Receipts                                                    $342        $1,503      $1,469,939
                                                                       ------------ ------------ --------------
      b.  Total Disbursements                                                 $0        $1,850        $985,764
                                                                       ------------ ------------ --------------
      c.  Excess (Deficiency) of Receipts Over Disbursements (a - b)        $342         ($347)       $484,175
                                                                       ------------ ------------ --------------
      d.  Cash Balance Beginning of Month                               $503,407      $503,754
                                                                       ------------ ------------ 
      e.  Cash Balance End of Month (c + d)                             $503,749      $503,407
                                                                       ------------ ------------ 
                                                                       ------------ ------------ 
</TABLE>
<TABLE>
<CAPTION>
 4.  POST-PETITION LIABILITIES & RECEIVABLES                           RECEIVABLES                LIABILITIES
                                                                       -----------                -----------
<S>                                                                  <C>                        <C>
      Balance at End of Previous Month                                                               $66,193
                                                                       ------------              --------------
      Balance at End of Current Month                                                                $90,092
                                                                       ------------              --------------

 5.  PAST DUE POST-PETITION LIABILITIES
      Balance at End of Previous Month (over 30 days)                                                $25,916
                                                                                                 --------------
      Balance at End of Current Month (over 30 days)                                                 $25,916
                                                                                                 --------------
</TABLE>
<TABLE>
<CAPTION>
                                                                                         YES            NO
                                                                                         ---            --
<S>                                                                               <C>           <C>
 6.  Are all federal, state, and local taxes current? 
     (if no, attach schedule of unpaid items)                                             X
                                                                                    ------------ --------------
 7.  Have any payments been made to pre-petition creditors, other than payments
     in the normal course to secured creditors or lessors? (if yes, attach 
     listing including date of payment, amount of payment and name of payee)                            X
                                                                                    ------------ --------------
 8.  Have any payments been made to officers, insiders, shareholders, relatives?
     (if yes, attach listing including date of payment, amount and reason for 
     payment, and name of payee)                                                                        X
                                                                                    ------------ --------------
 9.  Have any payments been made to professionals? (if yes, attach listing 
     including date of payment, amount of payment and name of payee)                      X
                                                                                    ------------ --------------
10.  If you answered yes to line 7, 8, or 9, were all such payments approved 
     by the court?                                                                        X
                                                                                    ------------ --------------
11.  Is the estate insured for replacement cost of assets and for general 
     liability?                                                                                         X
                                                                                    ------------ --------------
12.  Are U.S. Trustee quarterly fees current?                                             X
                                                                                    ------------ --------------

</TABLE>

     I DECLARE UNDER PENALTY OF PERJURY THAT I HAVE REVIEWED THE ABOVE SUMMARY 
     AND ATTACHED FINANCIAL STATEMENTS, AND AFTER MAKING REASONABLE INQUIRY 
     BELIEVE THAT THESE DOCUMENTS ARE CORRECT.

     DATE:     6/26/97                    /s/ RICK REDETT
               -------                   -----------------------------------
                                               RESPONSIBLE INDIVIDUAL
         EFFECTIVE 1/1/95

<PAGE>


                           BALANCE SHEET
                       (GENERAL BUSINESS CASE)

                     FOR THE MONTH ENDED May-97

                              ($_____)

<TABLE>
<CAPTION>

   ASSETS

                                                     FROM SCHEDULES         MARKET VALUE
                                                     --------------         ------------
<S>                                                  <C>                    <C>
   CURRENT ASSETS
1    Cash and cash equivalents - unrestricted                                   $503,749
                                                                            ------------
2    Cash and cash equivalents - restricted
                                                                            ------------
3    Accounts receivable (net)                              A                   $248,000
                                                                            ------------
4    Inventory                                              B                         $0
                                                                            ------------
5    Prepaid expenses                                                             $3,000
                                                                            ------------
6    Other: Interest receivable                                                   $1,000
            --------------------------------------------                    ------------
            Payroll taxes                                                         $2,596
            --------------------------------------------                    ------------

8       TOTAL CURRENT ASSETS                                                    $758,345
                                                                            ------------

   PROPERTY AND EQUIPMENT (MARKET VALUE)
9    Real property                                          C                         $0
                                                                            ------------
10   Machinery and equipment                                D                         $0
                                                                            ------------
11   Furniture and fixtures                                 D                         $0
                                                                            ------------
12   Office equipment                                       D                         $0
                                                                            ------------
13   Leasehold improvements                                 D                         $0
                                                                            ------------
14   Vehicles                                               D                         $0
                                                                            ------------
15   Other:                                                 D                         
            ---------------------------------------                         ------------
16                                                          D               
     ----------------------------------------------                         ------------
17                                                          D               
     ----------------------------------------------                         ------------
18                                                          D               
     ----------------------------------------------                         ------------
19                                                          D               
     ----------------------------------------------                         ------------

20      TOTAL PROPERTY AND EQUIPMENT                                                  $0
                                                                            ------------

   OTHER ASSETS
21   Patents, copyrights, and other intellectual property                             $0
     ----------------------------------------------------                   ------------
22   All technology sold to Takai Hospital in July 1996.    
     ----------------------------------------------------                   ------------
23  
     ----------------------------------------------------                   ------------
24
     ----------------------------------------------------                   ------------


25      TOTAL OTHER ASSETS                                                            $0
                                                                            ------------

26      TOTAL ASSETS                                                            $758,345
                                                                            ------------
                                                                            ------------
</TABLE>

    NOTE:
         Indicate the method used to estimate the market value of assets 
         (e.g., appraisals; familiarity with comparable market prices, etc.) 
         and the date the value was determined.______________________________
         ____________________________________________________________________
         ____________________________________________________________________
         ____________________________________________________________________
         ____________________________________________________________________
         ____________________________________________________________________

<PAGE>


                       LIABILITIES AND EQUITY
                       (GENERAL BUSINESS CASE)

                              ($_____)

<TABLE>
<CAPTION>

LIABILITIES
  POST-PETITION

                                                     FROM SCHEDULES     
                                                     --------------     
<S>                                                  <C>                    <C>
   CURRENT LIABILITIES
27   Salaries and wages                 
                                                                            ------------
28   Payroll taxes
                                                                            ------------
29   Real and personal property taxes
                                                                            ------------
30   Income taxes
                                                                            ------------
31   Notes payable (short term)
                                                                            ------------
32   Accounts payable (trade)                               A                    $33,443
                                                                            ------------
33   Real property lease arrearage
                                                                            ------------
34   Personal property lease arrearage
                                                                            ------------
35   Accrued professional fees                                                   $35,049
                                                                            ------------
36   Current portion of long-term debt (due within 12 months)
                                                                            ------------
37   Other: Other accruals                                                       $21,600
            --------------------------------------------                    ------------
38           
            --------------------------------------------                    ------------
39
            --------------------------------------------                    ------------

40      TOTAL CURRENT LIABILITIES                                                $90,092
                                                                            ------------

41   LONG-TERM DEBT, NET OF CURRENT PORTION
                                                                            ------------
42      TOTAL POST-PETITION LIABILITIES                                          $90,092
                                                                            ------------
   PRE-PETITION LIABILITIES (ALLOWED AMOUNT)
43   Secured claims                                         E                   $115,778
                                                                            ------------
44   Priority unsecured claims                              E                         $0
                                                                            ------------
45   General unsecured claims                               E                   $590,234
                                                                            ------------
46      TOTAL PRE-PETITION LIABILITIES                                          $706,013
                                                                            ------------
47      TOTAL LIABILITIES                                                       $796,105
                                                                            ------------
   EQUITY (DEFICIT)
48                                                                         
     ----------------------------------------------                         ------------
49                                                                         
     ----------------------------------------------                         ------------
50                                                                         
     ----------------------------------------------                         ------------
51                                                                         
     ----------------------------------------------                         ------------
52   Market value adjustment                          
                                                                            ------------
53      TOTAL EQUITY (DEFICIT)                                                  ($37,760)
                                                                            ------------

54      TOTAL LIABILITIES AND EQUITY (DEFICIT)                                  $758,345
                                                                            ------------
                                                                            ------------
</TABLE>

<PAGE>

                                 SCHEDULES
                          (GENERAL BUSINESS CASE)
                                 ($_____)

<TABLE>
<CAPTION>
                                SCHEDULE A
                    ACCOUNTS RECEIVABLE (NET)/PAYABLE
                                                      ACCOUNTS     ACCOUNTS PAYABLE          PAST DUE
Receivables and Payables Ageings                    RECEIVABLES     [POST PETITION]     POST PETITION DEBT
                                                    -----------     ---------------     ------------------
<S>                                               <C>            <C>                 <C>
   0-30 Days                                               $0               $7,528
                                                   ------------     ----------------   --
  31-60 Days                                               $0                            |
                                                   ------------     ----------------     |
  61-90 Days                                               $0                            |       $25,916
                                                   ------------     ----------------     |----------------
  91+ Days                                           $248,000              $25,916       |
                                                   ------------     ----------------   --
  Total accounts receivable/payable                  $248,000              $33,443
                                                   ------------     ----------------
                                                                    ----------------
  Allowance for doubtful accounts
                                                   ------------
  Accounts receivable (net)                          $248,000
                                                   ------------
                                                   ------------
</TABLE>

                                SCHEDULE B
                       INVENTORY/COST OF GOODS SOLD

<TABLE>
<CAPTION>
                                       
TYPES AND AMOUNT OF INVENTORY(IES)                        COST OF GOODS SOLD
- ----------------------------------                        ------------------
<S>                                  <C>                <C>                               <C>
                                      INVENTORY(IES)      Inventory Beginning of Month
                                        BALANCE AT                                                  -----------
                                      END OF MONTH        Add -
                                      ------------
Retail/Restaurants -                                           Net purchases                        -----------
   Product for resale                                          Direct labor                         -----------
                                      ------------             Manufacturing overhead               -----------
Distribution -                                                 Freight in                           -----------
   Product for resale                                          Other:
                                      ------------             
                                                               -----------                          -----------
Manufacturer -                                                 -----------                          -----------
   Raw materials                              $0
                                      ------------             
   Work-in-progress                           $0          Less -
                                      ------------              Inventory End of Month              -----------
   Finished goods                             $0                Shrinkage                           -----------
                                      ------------              Personal Use                        -----------

Other -                               
                                      ------------
   Explain_______________________                         Cost of Goods Sold                           $0
   ______________________________                                                                   -----------
                                                                                                    -----------
       TOTAL                                  $0
                                      ------------
                                      ------------

</TABLE>
<TABLE>
<CAPTION>

METHOD OF INVENTORY CONTROL                                    INVENTORY VALUATION METHODS
- ---------------------------                                    ---------------------------
<S>                                                           <C>
Do you have a functioning perpetual inventory system?          Indicate by a checkmark method of inventory valuation used.
                   Yes  X      No
                       ---         ---
How often do you take a complete physical inventory?           Valuation methods -
                                                                      FIFO cost             X
Weekly                                                                                 -----------
                       ---                                            LIFO cost        
Monthly                                                                                -----------
                       ---                                            Lower of cost or
Quarterly                                                               market              X
                       ---                                                             -----------
Semi-annually                                                         Retail method
                       ---                                                             -----------
Annually                X
                       ---                                            Other -
                                                                                       -----------
Date of last physical inventory was          12/31/94                   Explain
                                          --------------                ___________________________________
Date of next physical inventory is        not scheduled                 ___________________________________
                                          --------------
</TABLE>

Effective 1/1/95

<PAGE>

                             SCHEDULE C
                            REAL PROPERTY

<TABLE>
<CAPTION>

DESCRIPTION                                                             COST                  MARKET VALUE
- -----------                                                             ----                  ------------
<S>                                                                     <S>                   <S>

- ---------------------------------------------------------------      ----------             ----------------
- ---------------------------------------------------------------      ----------             ----------------
- ---------------------------------------------------------------      ----------             ----------------
- ---------------------------------------------------------------      ----------             ----------------
    TOTAL                                                                   $0                           $0
                                                                     ----------             ----------------
                                                                     ----------             ----------------

</TABLE>

                             SCHEDULE D
                      OTHER DEPRECIABLE ASSETS

<TABLE>
<CAPTION>

DESCRIPTION                                                             COST                  MARKET VALUE
- -----------                                                             ----                  ------------
<S>                                                                     <S>                   <S>
MACHINERY & EQUIPMENT - 
See listing attached to original petition filing -                          $0                          $0
- ---------------------------------------------------------------      ----------             ----------------
All equipment sold to Takai Hospital in July 1996.
- ---------------------------------------------------------------      ----------             ----------------
- ---------------------------------------------------------------      ----------             ----------------
- ---------------------------------------------------------------      ----------             ----------------
    TOTAL                                                                   $0                           $0
                                                                     ----------             ----------------
                                                                     ----------             ----------------

</TABLE>


<TABLE>
<CAPTION>
FURNITURE & FIXTURES -

<S>                                                                     <S>                   <S>
                                                                                                         $0
- ---------------------------------------------------------------      ----------             ----------------
- ---------------------------------------------------------------      ----------             ----------------
- ---------------------------------------------------------------      ----------             ----------------
- ---------------------------------------------------------------      ----------             ----------------
    TOTAL                                                                   $0                           $0
                                                                     ----------             ----------------
                                                                     ----------             ----------------

</TABLE>


<TABLE>

<S>                                                                     <S>                   <S>
OFFICE EQUIPMENT - 
See listing attached to original petition filing -                            
- ---------------------------------------------------------------      ----------             ----------------
All equipment sold to Takai Hospital in July 1996.  
- ---------------------------------------------------------------      ----------             ----------------
- ---------------------------------------------------------------      ----------             ----------------
- ---------------------------------------------------------------      ----------             ----------------
    TOTAL                                                                   $0                           $0
                                                                     ----------             ----------------
                                                                     ----------             ----------------

</TABLE>


<TABLE>
<CAPTION>
LEASEHOLD AND IMPROVEMENTS - 

<S>                                                                     <S>                   <S>
None - the Company does not currently lease facilities                      
- ---------------------------------------------------------------      ----------             ----------------
- ---------------------------------------------------------------      ----------             ----------------
- ---------------------------------------------------------------      ----------             ----------------
- ---------------------------------------------------------------      ----------             ----------------
    TOTAL                                                                   $0                           $0
                                                                     ----------             ----------------
                                                                     ----------             ----------------

</TABLE>


<TABLE>
<CAPTION>
VEHICLES - 

<S>                                                                     <S>                   <S>
None                                                                        
- ---------------------------------------------------------------      ----------             ----------------
- ---------------------------------------------------------------      ----------             ----------------
- ---------------------------------------------------------------      ----------             ----------------
- ---------------------------------------------------------------      ----------             ----------------
    TOTAL                                                                   $0                           $0
                                                                     ----------             ----------------
                                                                     ----------             ----------------

</TABLE>

                             SCHEDULE E
                      PRE-PETITION LIABILITIES

<TABLE>
<CAPTION>

                                                                       CLAIMED                  ALLOWED
LIST TOTAL CLAIMS FOR EACH CLASSIFICATION -                            AMOUNT                  AMOUNT (b)
- -------------------------------------------                            ------                  ----------
<S>                                                                  <C>                    <C>

    Secured claims (a)                                                $115,778
                                                                     ----------             ----------------
    Priority claims other than taxes                                        $0
                                                                     ----------             ----------------
    Priority tax claims                                                     $0
                                                                     ----------             ----------------
    General unsecured claims                                          $586,534
                                                                     ----------             ----------------

</TABLE>

     (a)  List total amount of claims even if under secured.

     (b)  Estimated amount of claim to be allowed after compromise or 
          litigation. As an example, you are a defendant in a lawsuit 
          alleging damages of $10,000,000 and a proof of claim is filed in 
          that amount. You believe that you can settle the case for a claim 
          of $3,000,000. For Schedule E reporting purposes you should list 
          $10,000,000 as the Claimed Amount and $3,000,000 as the Allowed 
          Amount.

                             SCHEDULE F
                      RENTAL INCOME INFORMATION
              Not applicable to General Business Cases.


<PAGE>

                         STATEMENT OF OPERATIONS
                         (GENERAL BUSINESS CASE)
                    FOR THE MONTH ENDED    MAY-97
                                       -------------
                            $
                             -------------


<TABLE>
<CAPTION>

            CURRENT MONTH
- ----------------------------------------                                                    CUMULATIVE            NEXT MONTH
  ACTUAL         FORECAST       VARIANCE                                                  (CASE TO DATE)           FORECAST
  ------         --------       --------                                                  --------------           --------
<S>              <C>            <C>           <C>                                        <C>                      <C>
                                                   REVENUES
      $0                            $0         1  Gross Sales
- ------------   ------------   ------------                                                ---------------         --------------
      $0                            $0         2  less: Sales Returns & Allowances
- ------------   ------------   ------------                                                ---------------         --------------
      $0             $0             $0         3  Net Sales                                                                $0
- ------------   ------------   ------------                                                ---------------         --------------
      $0                            $0         4  less: Cost of Goods Sold (Schedule 'B')
- ------------   ------------   ------------                                                ---------------         --------------
      $0             $0             $0         5  Gross Profit                                                             $0
- ------------   ------------   ------------                                                ---------------         --------------
                                    $0         6  Interest
- ------------   ------------   ------------                                                ---------------         --------------
                                               7  Other Income:
                                    $0         8  Other Income                                    $565
- ------------   ------------   ------------        -----------------------------------     ---------------         --------------
                                    $0         9
- ------------   ------------   ------------        -----------------------------------     ---------------         --------------

      $0             $0             $0        10           TOTAL REVENUES                         $565                     $0
- ------------   ------------   ------------                                                ---------------         --------------


                                                   EXPENSES

                                    $0        11  Compensation to Owner(s)/Officer(s)
- ------------   ------------   ------------                                                ---------------         --------------
                                    $0        12  Salaries/Commissions
- ------------   ------------   ------------                                                ---------------         --------------
                                    $0        13  Management Fees                         
- ------------   ------------   ------------                                                ---------------         --------------
                     $0             $0        14  Depreciation                                $368,860                     $0
- ------------   ------------   ------------                                                ---------------         --------------
                                    $0        15  Taxes
- ------------   ------------   ------------                                                ---------------         --------------
                                    $0        16      Employer Payroll Taxes
- ------------   ------------   ------------                                                ---------------         --------------
                                    $0        17      Real Property Taxes
- ------------   ------------   ------------                                                ---------------         --------------
                                    $0        18      Other Taxes
- ------------   ------------   ------------                                                ---------------         --------------
                                    $0        19  Other Selling
- ------------   ------------   ------------                                                ---------------         --------------
                   $800           $800        20  Other Administrative                         $32,290                    $800
- ------------   ------------   ------------                                                ---------------         --------------
                                    $0        21  Interest
- ------------   ------------   ------------                                                ---------------         --------------
                                              22  Other Expenses:
               ------------                                                               ---------------         --------------
                                    $0        23  Writedown of receivables and other           $23,406
- ------------   ------------   ------------        -----------------------------------     ---------------         --------------
                                    $0        24
- ------------   ------------   ------------        -----------------------------------     ---------------         --------------
                                    $0        25
- ------------   ------------   ------------        -----------------------------------     ---------------         --------------
                                    $0        26
- ------------   ------------   ------------        -----------------------------------     ---------------         --------------
                                    $0        27
- ------------   ------------   ------------        -----------------------------------     ---------------         --------------
                                    $0        28
- ------------   ------------   ------------        -----------------------------------     ---------------         --------------
                                    $0        29
- ------------   ------------   ------------        -----------------------------------     ---------------         --------------
                                    $0        30
- ------------   ------------   ------------        -----------------------------------     ---------------         --------------
      $0           $800           $800        31        TOTAL EXPENSES                        $424,556                    $800
- ------------   ------------   ------------                                                ---------------         --------------
      $0          ($800)          $800        32  SUBTOTAL                                   ($423,991)                  ($800)
- ------------   ------------   ------------                                                ---------------         --------------
                                                  REORGANIZATION ITEMS
  $3,099          $3,200          $101        33  Professional Fees                           $220,121                  $3,200
- ------------   ------------   ------------                                                ---------------         --------------
                                    $0        34  Provisions for Rejected Executory 
- ------------   ------------   ------------         Contracts                              ---------------         --------------
                                                  Interest earned on Accumulated Cash 
 ($1,343)         ($1,500)       ($158)       35   Resulting from Chp 11 Case                  (15,465)               ($1,500)
- ------------   ------------   ------------                                                ---------------         --------------
                                    $0        36  Loss from Sale of Equipment, Inventory      $450,000
- ------------   ------------   ------------         and Patents                            ---------------         --------------
                                    $0        37  Miscellaneous                                $15,702
- ------------   ------------   ------------        -----------------------------------     ---------------         --------------
 $20,000          $20,000           $0        38  Settlements                                 $662,500                 $20,000
- ------------   ------------   ------------        -----------------------------------     ---------------         --------------

 $21,757          $21,700         ($57)       39       TOTAL REORGANIZATION ITEMS           $1,332,859                 $21,700
- ------------   ------------   ------------                                                ---------------         --------------
($21,757)        ($22,500)        $743        40   NET PROFIT (LOSS) BEFORE                ($1,756,850)               ($22,500)
- ------------   ------------   ------------         FEDERAL & STATE TAXES                  ---------------         --------------
                                    $0        41      Federal & State Income Taxes         ($1,756,850)               ($22,500)
- ------------   ------------   ------------                                                ---------------         --------------
($21,757)        ($22,500)        $743        42  NET PROFIT (LOSS)                        ($1,756,850)               ($22,500)
- ------------   ------------   ------------                                                ---------------         --------------
- ------------   ------------   ------------                                                ---------------         --------------



EXPLANATION OF VARIANCE TO STATEMENT OF OPERATIONS
(FOR VARIANCES GREATER THAN +/- 10% ONLY)

Professional Services were lower than expected as the timing and amount of services cannot easily estimated.
- ----------------------------------------------------------------------------------------------------------------------------------
Printing costs for Form 8-k filings represent cumulative billings from Feb through April that were billed in April. Monthly costs 
- ----------------------------------------------------------------------------------------------------------------------------------
should now run approximately $800.
- ----------------------------------------------------------------------------------------------------------------------------------

- ----------------------------------------------------------------------------------------------------------------------------------
         Effective 1/1/95
- ----------------------------------------------------------------------------------------------------------------------------------


</TABLE>


<PAGE>

                  SUMMARY OF CASH RECEIPTS AND DISBURSEMENTS
                           (GENERAL BUSINESS CASE)

                    FOR THE MONTH ENDED     May-97
                                       -----------------





CASH BALANCE BEGINNING OF MONTH                                    $503,407
                                                               ---------------
                                                               ---------------
Cash Receipts (1)                                                      $342
                                                               ---------------
Cash Disbursements (1)
                                                               ---------------
Excess (Deficiency) of Receipts Over Disbursements                     $342
                                                               ---------------
Cash Balance End of Month                                          $503,749
                                                               ---------------
                                                               ---------------


RECAPITULATION OF FUNDS HELD AT END OF MONTH

<TABLE>
<CAPTION>

                             ACCOUNT 1                            ACCOUNT 2                           ACCOUNT 3
                             ---------                            ---------                           ---------
<S>                    <C>                                <C>                                 <C>
Bank                     Silicon Valley Bank                    Merrill Lynch                       Trust acct -
                      --------------------------          --------------------------          -------------------------- 
Account Type                 Checking                             Checking                         Murray & Murray
                      --------------------------          --------------------------          -------------------------- 
Account No.                 3300023699                           233-07K66
                      --------------------------          --------------------------          -------------------------- 
Account Purpose        General operating acct.                   Investment
                      --------------------------          --------------------------          -------------------------- 

Balance, End of Month                $6,455                              $71                               $350,595
                      --------------------------          --------------------------          -------------------------- 

<CAPTION>

                             ACCOUNT 4                            ACCOUNT 5                           ACCOUNT 6
                             ---------                            ---------                           ---------
<S>                    <C>                                <C>                                 <C>
Bank                     Silicon Valley Bank
                      --------------------------          --------------------------          -------------------------- 
Account Type                 Checking
                      --------------------------          --------------------------          -------------------------- 
Account No.                 3300023699
                      --------------------------          --------------------------          -------------------------- 
Account Purpose            Money Market
                      --------------------------          --------------------------          -------------------------- 

Balance, End of Month              $146,628
                      --------------------------          --------------------------          -------------------------- 


TOTAL FUNDS ON HAND FOR ALL ACCOUNTS                                $503,749
                                                         --------------------------
                                                         --------------------------
</TABLE>


(1) Excluding bank transfers between your accounts.

       Effective 1/1/95



<PAGE>

                                       ATTACHMENT TO MONTHLY OPERATING REPORT


                                    FOCUS SURGERY
                        Schedule of Payments to Professionals


DATE                     PROFESSIONAL                           AMOUNT
- ----                     ------------                           ------

2/6/97   Woodard, Emhardt, Naughton, Moriarty & McNett       $ 5,285.88
2/6/97   Blakely, Sokoloff, Taylor, Zafman                   $ 8,281.40
2/6/97   Murray & Murray                                     $63,547.84
2/6/97   Rick Redett Management Group                        $21,273.00
3/21/97  Marsha C. Jones & Associates                        $14,343.68



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