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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITES EXCHANGE AT OF 1934
For the quarterly period ended June 30, 1996
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Commission File Number: 1-123620
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U.S. DRUG TESTING, INC.
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(Exact Name of registrant as specified in its charter)
DELAWARE #33-0539168
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
4517 N.W. 31ST AVENUE, FT. LAUDERDALE, FLORIDA 33309
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(Address of Principal Executive Offices) (Zip Code)
10410 TRADEMARK STREET, RANCHO CUCAMONGA, CALIFORNIA 91730
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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. [X] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the last practicable date.
As of August 1, 1996 - Common Stock, $.001 Par Value, 5,221,90
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Liquidity and Capital Resources
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The Company is a development stage enterprise with no
earnings history and initially derived its capital resources from
unsecured advances provided by its parent company, USAT, a
publicly traded company. During October and November 1993, the
Company sold 1,721,900 shares of its common stock to the public
at $5.00 per share and netted approximately $7,099,000. From the
net proceeds of the offering, the Company repaid the advances
made by USAT. During the period ended June 30,1996, the Company
had outstanding loans receivable from its parent company for
working capital purposes in the amount of $161,343. These
advances are evidenced by notes due December 31, 1996, bearing
interest at the rate of 8% per annum at June 30, 1996 and secured
by USAT's shares in the Company. USAT has agreed to repay these
loans by August 31, 1996 and has committed to advance $500,000 to
the Company to fund continuing research and development. The
Company is dependent on continuing advances from its parent
company to continue the research, development and ultimate
marketing of its products and to fund its working capital
requirements for the next 12 months. There are presently no
unfunded commitments for capital expenditures.
The Company is currently conducting a feasibility study as
to the saliva based drug testing products currently under
development. The Company expects to complete the feasibility
study by November 1996 at the cost of $1.2 million during the
July 1996 to November 1996 period. Assuming the study indicates
that the Company should proceed, the Company estimates that it
will be approximately two years before the drug testing products
will be available for marketing. There can be no assurance that
the Company will successfully complete its
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development program on a timely basis, that it will thereafter
obtain the necessary governmental approval or that marketing will
start when contemplated.
U.S. Drug will require approximately $10,000,000, in
addition to the approximately $6,800,000 already expended, to
complete development of a saliva based testing product. Although
U.S. Drug management believes that its parent company, USAT, can
raise the necessary funds to complete this project, failure to
raise the funds will result in the cessation of operations of
U.S. Drug because it has no other product to market or service to
furnish.
Results of Operations
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During the quarter ended June 30, 1996, the Company spent
$163,000 on research and development as compared with $187,000 in
the prior year, a decrease of $24,000 or 13%. The decrease
reflects the timing of expenses over a short period and not a
slow down in the project.
General and administrative expense for the quarter ended
June 30, 1996 was $72,000 as compared with $75,000 in the same
period of the prior year, a decrease of $3,000 or 4%.
Depreciation expense for the quarter ended June 30, 1996 was
$20,000 as compared with $31,000 in the same period of the prior
year. Management fees paid to the parent company, USAT, were
$105,000 in the quarter ended June 30 of both the current and
prior years.
Interest expense in the quarter ended June 30, 1996 was $400
as compared with $43,000 in the same period of the prior year.
The prior year expense was the result of interest on broker
margin loans secured by REMIC bond owned by the Company. The
REMIC bonds were sold in the quarter ended September 30, 1995.
Other income was $4,000 in the quarter ended June 30, 1996
as compared with $336,000 in the same period of the prior year.
Prior year other income includes interest income generated
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by the REMIC bonds of $75,000, unrealized gain on marketable securities
of $249,000 and interest income from loans to the parent company,
USAT, of $12,000.
Since inception the Company has spent $2,719,197 on research
and development and an additional $2,089,860 on general and
administrative expenses.
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SIGNATURES
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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 thereto duly authorized.
U.S. DRUG TESTING, INC.
Registrant
Date: April 15, 1997
BY: /s/ Robert Stutman
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Robert Stutman, Chief Executive Officer
Date: April 15, 1997
BY: /s/ Robert Muccini
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Robert Muccini, Vice President - Finance
and Chief Financial Officer
