FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission File Number 000-27592
SCANTEK MEDICAL INC.
(Exact name of registrant as specified in its charter)
Delaware 84-1090126
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
321 Palmer Road, Denville, New Jersey 07834
(973) 366-5250
(Address and telephone number, including area code, of
registrant's principal executive office)
(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.
At October 31, 1999, there were 18,453,420 shares of Common Stock, $.001
par value, outstanding.
<PAGE>
SCANTEK MEDICAL INC.
INDEX
Page
----
Part I. Financial Information 1
Item 1. Financial Statements
Consolidated Balance Sheets as of
September 30, 1999 (unaudited) and
June 30, 1999 2
Consolidated Statements of Operations
and Comprehensive (Loss) for the
Three Months Ended September 30, 1999 and
1998 (unaudited) 3 - 4
Consolidated Statements of Cash Flows
for the Three Months Ended September 30,
1999 and 1998 (unaudited) 5 - 6
Notes to Financial Statements (unaudited) 7 - 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9 - 14
Part II. Other Information
Item 1. Legal Proceedings 15
Item 6. Exhibits and Report on Form 8-K 15
Signatures 16
<PAGE>
PART I. Financial Information
Item 1. Financial Statements
Certain information and footnote disclosures required under generally
accepted accounting principles have been condensed or omitted from the following
consolidated financial statements pursuant to the rules and regulations of the
Securities and Exchange Commission. It is suggested that the following
consolidated financial statements be read in conjunction with the year-end
consolidated financial statements and notes thereto included in the Company's
Annual Report on Form 10-KSB for the year ended June 30, 1999.
The results of operations for the three months ended September 30, 1999,
are not necessarily indicative of the results to be expected for the entire
fiscal year or for any other period.
-1-
<PAGE>
SCANTEK MEDICAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
September 30, June 30,
1999 1999
----------- -----------
(Unaudited)
Current Assets:
Cash $ 33,528 $ 5,516
Marketable securities 240,069 409,272
Inventory 898,796 898,796
Due from licensees 55,000 --
Prepaid expenses 84,452 84,287
----------- -----------
Total Current Assets 1,311,845 1,397,871
----------- -----------
Property and equipment - net 1,729,112 1,803,974
Other assets - net 644,077 160,179
----------- -----------
TOTAL ASSETS $ 3,685,034 $ 3,362,024
=========== ===========
LIABILITIES AND STOCKHOLDERS' (DEFICIENCY)
Current Liabilities:
Short-term debt $ 1,324,271 $ 1,274,271
Accounts payable 1,186,140 1,210,861
Accrued interest 342,602 224,279
Accrued salaries 1,176,119 1,106,119
Accrued expenses 120,902 84,213
----------- -----------
Total Current Liabilities 4,150,034 3,899,743
----------- -----------
Long-term debt 1,852,009 1,827,009
----------- -----------
Total Liabilities 6,002,043 5,726,752
----------- -----------
Commitments and Contingencies
Stockholders' Deficiency:
Preferred stock, par value $.001
per share - authorized 5,000,000
shares; none issued -- --
Common stock, par value $.001 per
share - authorized 45,000,000 shares;
outstanding 18,328,420 and 18,070,200 shares 18,328 18,070
Additional paid-in-capital 3,534,923 3,433,002
Deficit (5,734,537) (5,649,915)
Cumulative other comprehensive (loss) (135,723) (165,885)
----------- -----------
Total Stockholders' (Deficiency) (2,317,009) (2,364,728)
----------- -----------
TOTAL LIABILITIES AND STOCK-
HOLDERS' (DEFICIENCY) $ 3,685,034 $ 3,362,024
=========== ===========
See notes to consolidated financial statements.
2
<PAGE>
SCANTEK MEDICAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS)
(Unaudited)
Three Months Ended September 30,
--------------------------------
1999 1998
------------ ------------
Revenues:
Net sales $ -- $ 94,792
License fees 597,500 500,000
------------ ------------
Total Revenues 597,500 594,792
------------ ------------
Costs and Expenses:
Cost of sales 85,275 57,415
General and administrative expenses 433,674 194,930
Research and development 70,000 81,391
------------ ------------
Total Costs and Expenses 588,949 333,736
------------ ------------
Net operating income 8,551 261,056
------------ ------------
Other income (expense):
Interest and dividends 73 119
Gain on sale of marketable securities 76,644 --
Interest expense (169,890) (40,539)
------------ ------------
(93,173) (40,420)
------------ ------------
Net earnings (loss) $ (84,622) $ 220,636
============ ============
Earnings (loss) per common share - basic $ -- $ .01
============ ============
Earnings (loss) per common share - diluted $ -- $ .01
============ ============
Weighted average number of common
shares outstanding - basic 18,328,420 17,220,200
============ ============
Weighted average number of common
shares outstanding - diluted 18,328,420 17,453,714
============ ============
(Continued)
See notes to consolidated financial statements.
3
<PAGE>
SCANTEK MEDICAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS)
(Unaudited) (Continued)
Three Months Ended September 30,
--------------------------------
1999 1998
----------- -----------
Net earnings (loss) $ (84,622) $ 220,636
Other comprehensive income
(expense) net of income taxes:
Unrealized gain (loss) on
marketable securities 30,162 (1,383,243)
----------- -----------
Comprehensive (loss) $ (54,460) $(1,162,607)
=========== ===========
See notes to consolidated financial statements.
4
<PAGE>
SCANTEK MEDICAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended September 30,
--------------------------------
1999 1998
--------- ---------
Cash flows from operating activities:
Net earnings (loss) $ (84,622) $ 220,636
Adjustments to reconcile net
earnings (loss) to net cash
used in operating activities:
Depreciation and amortization 91,764 22,592
Net gain on sale of mar-
ketable securities (76,644) --
Non-cash officers compensation 55,943 --
Other non-cash items (211,264) 14,218
Changes in operating
assets and liabilities (106,848) (375,283)
--------- ---------
Net Cash (Used in)
Operating Activities (331,671) (117,837)
--------- ---------
Cash flows from investing activities:
Proceeds from sale of
marketable securities 276,009 --
Purchase and deposits
of equipment -- (140,000)
--------- ---------
Net Cash Provided by
(Used in) Investing
Activities 276,009 (140,000)
--------- ---------
Cash flows from financing activities:
Proceeds from borrowings 60,000 100,000
Proceeds from officer loans 25,000 125,000
Repayment of officer loans (10,000) --
Repayment of notes (1,326) (1,202)
Proceeds from sale of common stock 10,000 --
--------- ---------
Net Cash Provided by
Financing Activities 83,674 223,798
--------- ---------
Net Increase (decrease) in Cash 28,012 (34,039)
Cash - beginning of period 5,516 55,929
--------- ---------
Cash - end of period $ 33,528 $ 21,890
========= =========
(Continued)
See notes to consolidated financial statements.
5
<PAGE>
SCANTEK MEDICAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
Three Months Ended September 30,
--------------------------------
1999 1998
----------- -----------
Changes in Operating Assets
and Liabilities Consist of:
(Increase) in inventory $ -- $ (54,224)
(Increase) decrease in
due from licensees (305,000) 75,000
(Increase) decrease in
prepaid expenses (165) 3,816
(Increase) in other assets (3,300) (63,792)
Increase in accounts payable
and accrued expenses 201,617 163,917
Increase (decrease) in
deferred income -- (500,000)
----------- -----------
$ (106,848) $ (375,283)
=========== ===========
Supplementary information:
Cash paid during the year for:
Interest $ 30,783 $ 1,531
=========== ===========
Income taxes $ -- $ --
=========== ===========
Non-cash investing activities:
Acquisition of investment in
connection with
licensing agreement $ (247,500) $ --
=========== ===========
Unrealized gain (loss)
on marketable securities $ 30,162 $(1,383,243)
=========== ===========
Other Non-Cash Activities:
Conversion of accrued
expenses to common stock $ 20,312 $ --
=========== ===========
Conversion of accounts
payable to stock options $ 15,924 $ 14,218
=========== ===========
Conversion of common stock
issued to officers for loan
financing $ 55,943 $ --
=========== ===========
See notes to consolidated financial statements.
6
<PAGE>
SCANTEK MEDICAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION
The consolidated balance sheet as of September 30, 1999, and the
consolidated statements of operations and comprehensive (loss) and cash
flows for the three months ended September 30, 1999 and 1998 have been
prepared by the Company and are unaudited. In the opinion of management,
all adjustments (consisting of normal recurring adjustments) necessary to
present fairly the financial position, results of operations and
comprehensive (loss) and cash flows for all periods presented have been
made. Certain items in the September 30, 1998 financial statements have
been reclassified to conform to September 30, 1999 classifications. The
information for June 30, 1999 was derived from audited financial
statements.
2. BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared
on a going concern basis, which contemplates the realization of assets and
the satisfaction of liabilities in a normal course of business.
The Company has experienced losses during its development stage. The
Company is no longer a development stage Company but losses and negative
cash flows from operations have continued in the current fiscal year. As of
September 30, 1999, the Company has a working capital deficit of
approximately $2.3 million.
The activities of the Company are being financed through the sale of
its common stock and debt securities. The Company's continued existence is
dependent upon its ability to obtain needed working capital through
additional equity and/or debt financing, and the commercial acceptability
of the (BreastCare(TM)) device throughout the world. This uncertainty
raises substantial doubt about the ability of the Company to continue as a
going concern.
The financial statements do not include any adjustments relating to
the recoverability and classification of recorded asset amounts or the
amounts and classifications of liabilities the might be necessary should
the Company be unable to continue as a going concern.
3. EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per common share are computed using the weighted
average number of common shares outstanding during the period. Diluted
earnings per common share are computed using the weighted average number of
common shares and potential common shares outstanding during the period.
7
<PAGE>
SCANTEK MEDICAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. SEGMENTS - GEOGRAPHIC AREAS
The Company does not have reportable operating segments as defined in
Statement of Financial Accounting Standards No. 131, "Disclosure about
Segments of an Enterprise and Related Information" (SFAS 131). The method
for attributing revenues to individual countries is based on the
destination to which finished goods are shipped. The Company operates
facilities in the United States and South America.
One hundred (100%) percent of the sales ($94,792) of the
BreastCare(TM) device for the three months ended September 30, 1998 were to
the Company's former South American licensee, Sandell Corporation S.A.
Sales of the BreastCare(TM) device were not recorded by the Company until
Sandell Corporation S.A. shipped the BreastCare(TM) device to unrelated
entities. Revenues include license fees received by the Company in
connection with various arrangements contracted throughout the world. The
following is a summary of key financial data:
Three Months Ended
September 30,
1999 1998
--------- ---------
Total Revenues:
United States $ 597,500 $ 557,415
South America -- 94,792
Less intergeographic revenue -- (57,415)
--------- ---------
$ 597,500 $ 594,792
========= =========
Income (loss) from operations:
United States $ 160,427 $ 319,402
South America (151,876) (58,346)
--------- ---------
$ 8,551 $ 261,056
========= =========
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The Company's quarterly and annual operating results are affected by a
wide variety of factors that could materially and adversely affect revenues
and profitability, including competition from other suppliers; changes in
the regulatory and trade environment; changes in consumer preferences and
spending habits; the inability to successfully manage growth; seasonality;
the ability to introduce and the timing of the introduction of new products
and the inability to obtain adequate supplies or materials at acceptable
prices. As a result of these and other factors, the Company may experience
material fluctuations in future operating results on a quarterly or annual
basis, which could materially and adversely affect its business, financial
condition, operating results, and stock price. Furthermore, this document
and other documents filed by the Company with the Securities and Exchange
Commission (the "SEC") contain certain forward-looking statements under the
Private Securities Litigation Reform Act of 1995 with respect to the
business of the Company. These forward-looking statements are subject to
certain risks and uncertainties, including those mentioned above, and those
detailed in the Company's Annual Report on Form 10-KSB for the year ended
June 30, 1999, which may cause actual results to differ significantly from
these forward-looking statements. The Company undertakes no obligation to
publicly release the results of any revisions to these forward-looking
statements which may be necessary to reflect events or circumstances after
the date hereof or to reflect the occurrence of unanticipated events. An
investment in the Company involves various risks, including those mentioned
above and those which are detailed from time to time in the Company's SEC
filings.
Results of Operations
The following table sets forth for the periods indicated, the
percentage increase or (decrease) of certain items included in the
Company's consolidated statement of operations:
% Increase (Decrease) from Prior Period
---------------------------------------
Three Months Ended
September 30, 1999
compared with three
months ended
September 30, 1998
------------------
Sales (1) -- %
License fee revenue 19.5
Cost of sales 48.5
General and administrative expense 122.5
Research and development (14.0)
Interest expense 319.1
Net earnings (loss) (138.4)
(1) Percentage not meaningful
9
<PAGE>
Three Months Ended September 30,1999 vs.
Three Months Ended September 30,1998
Revenues
Net sales decreased to $-0- during the three months ended September 30, 1999
from $94,792 during the three months ended September 30, 1998 as the Company is
re-focusing its South American marketing strategy in Brazil. The Company expects
its distribution operations in Brazil to be in full operation during the latter
part of the fourth quarter of calendar 1999, while shipments to Ireland
commenced in October 1999. The Company will manufacture the BreastCare(TM)
device in its U.S. facilities. Manufacturing in Brazil will commence during the
second quarter of calendar 2000 after the Company establishes a new
manufacturing facility in Brazil.
License fee revenue increased to $597,500 during the three months ended
September 30, 1999 from $500,000 for the three months ended September 30, 1998
as the Company recognized higher license fees from Nugard Healthcare Ltd. as
compared to Sandell from the preceding year.
Cost of Sales
Cost of sales increased to $85,275 during the three months ended September 30,
1999 from $57,415 during the three months ended September 30, 1998 primarily due
to depreciation expense of $69,211 on the production equipment compared to the
cost of sales of the initial shipments of its product during the first quarter
of the Company's prior year.
General and Administrative Expenses
General and administrative expenses increased 122.5% for the three month period
ending September 30, 1999 as compared with the three month period ended
September 30, 1998. This increase is primarily due to increases in consulting
services in connection with the Company's South American marketing strategies in
Brazil.
Interest Expense
Interest expense was $169,890 for the three months ended September 30, 1999
compared to $40,539 for the three months ended September 30, 1998. The 319.1%
increase was attributable to the increase on the Company's short-term debt.
Research and Development Expenses
Research and development expense decreased 14.0% to $70,000 during the three
months ended September 30, 1999 from $81,391 during the three months ended
September 30, 1998. The decrease is primarily attributable to decreased salaries
incurred by the Company in the experimental area of development of its product.
10
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's need for funds has increased from period to period as it has
incurred expenses for among other things, research and development; applications
for domestic and international trademarks and international patent protection;
licensing and pre-marketing activities; and attempts to raise the necessary
capital for initial production. Since inception, the Company has funded these
needs through private placements of its equity and debt securities and advances
from the Company's President, Chief Executive Officer and major shareholder. The
Company has entered into various license agreements that have raised additional
funds and borrowed money against common stock received in connection with the
license agreements. In addition, the Company's auditors' report for the year
ended June 30, 1999 dated August 24, 1999 expressed an opinion as to the Company
continuing as a going concern.
During September 1998, the Company commenced the sale of its BreastCare(TM)
device in Brazil, Uruguay and Paraguay through its South American licensee.
During February 1999, the Brazilian economy declined and the Brazilian currency
lost fifty (50%) percent of its value. Brazil increased the import and value -
added tax from approximately twenty - one (21%) percent in December 1998 to
approximately seventy - four (74%) percent in February 1999. Due to these
factors, sales substantially decreased in Brazil, which represents approximately
eighty (80%) percent of the Company's present revenue. The Company plans to move
the production facility from Uruguay to Brazil. This will eliminate the high
value - added tax and will be able to facilitate sales. The Company terminated
its license agreement with its former licensee in South America and signed a
letter of intent to create a joint venture with exclusive rights to import,
manufacture, market and distribute the BreastCare(TM) device in Brazil.
The Company expects to commence its distribution operations in Brazil during the
fourth quarter of calendar 1999 while shipments to Ireland commenced in October
1999. However, until cash flow generated from the shipment of the BreastCare(TM)
device is sufficient to support the Company's operations, the Company needs
financing to fund its current overhead and various capital requirements. As of
September 30, 1999, the Company borrowed $1,200,000 from unaffiliated third
parties. These loans are payable by the Company on various dates through June
2000. In addition, the Company's president advanced the Company an additional
$342,000. These loans have supported the Company through the prior fiscal year
and the current first quarter, and the Company expects the cash flow from sales
commencing in the latter part of 1999 to cover the operations of the Company in
calendar 2000 providing the Company is successful in raising additional capital
to support the operations until cash flows generated for the sales of the
BreastCare(TM) device commences.
As previously noted, the Company terminated its license agreement with its South
American licensee. The Company will manufacture, market and distribute the
BreastCare(TM) device throughout South America through the Company's South
American subsidiaries.
On July 19,1999 the Company, through its Brazilian subsidiary Scantek
Medical Do Brazil LTDA, executed a letter of intent with Contrutoro CEC LTDA
("CEC") and EPIC - Empressa de Participacano, Investimnto e Consultoia s/c LTDA.
("EPIC") to create a joint venture with exclusive rights to import, manufacture,
market and distribute the BreastCare(TM) device in Brazil. The letter of intent
is subject to a definitive agreement which is still in negotiations between the
parties.
11
<PAGE>
On July 29, 1999 the Company granted an exclusive license to Nugard
Healthcare Ltd, an Irish company,, ("Nugard") to market Scantek's BreastCare(TM)
device in Ireland and the United Kingdom. Nugard will pay a non-refundable
licensing fee of $350,000 in various stages, of which $45,000 was received as of
September 30, 1999, and the Company received common shares equivalent to fifteen
(15%) percent of Nugard's total outstanding common shares. The agreement
requires minimum purchase of 5,000 units per month. The purchase price will
range from $10 to $15 per unit based on shipment of the BreastCare(TM) device to
the government or private physicians. Sales commenced to Nugard in October 1999.
The Company executed a letter of intent on August 20, 1997 with respect to
the acquisition of a Hungarian based manufacturer of plastic medical packaging
products and the manufacturing facility for an aggregate purchase price of
$1,750,000. It is the Company's intention to use this facility as a production
center for the BreastCare(TM) device for Eastern Europe. The acquisition is
subject to the Company obtaining financing for the purchase of the Hungarian
manufacturer.
The Company's working capital and capital requirements will depend on
numerous factors, including the level of resources that the Company devotes to
the purchase of manufacturing equipment to support start-up production and to
the marketing aspects of its products. The Company intends to construct
production and/or assembly centers abroad to manufacture, market and sell the
BreastCare(TM) in the international market. The Company entered into an
agreement with Zigmed Inc. pursuant to which Zigmed Inc. will manufacture the
production equipment needed for manufacturing of the BreastCare(TM) device for
the contract price of $1,850,680. The Company as of September 30, 1999, has
advanced Zigmed Inc. payments of $989,679 and issued Zigmed Inc. 100,000 shares
of the Company's common stock (valued at $1.00 per share) against the contract
price. The balance of $861,001 will be paid when the Company raises the
additional capital.
The Company's success is dependent on raising sufficient capital to
establish a production and assembly facility to manufacture the BreastCare(TM)
for the international market. The Company believes the BreastCare(TM) will be
commercially accepted throughout the international market. The Company does not
have all the financing in place at this time, nor may it ever, to meet these
objectives.
Other Matters
Year 2000
Background
The Year 2000 problem is the result of computer programs being written
using two digits (rather than four) to define the applicable years. Any of the
Company's programs that have time-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000, which could result in
miscalculations or system failures.
12
<PAGE>
The Company will rely heavily on computer technologies to operate its
business. In 1998, the Company conducted an initial assessment of its
information technology to determine which Year 2000 related problems might cause
processing errors or computer system failures. The Company also did a complete
analysis of its present computer system and its needs for the future. Based on
the results of that analysis, the Company's executive management identified the
Year 2000 problem as a top corporate priority and established an internal group
to provide a solution.
The following discussion of the implications of the Year 2000 problem for
the Company contains numerous forward-looking statements based on inherently
uncertain information. The cost of the project and the date on which the Company
plans to complete its internal Year 2000 modifications are based on the
Company's best estimates, which were derived utilizing a number of assumptions
of future events including the continued availability of internal and external
resources, third party modifications and other factors. However, there can be no
guarantee that these estimates will be achieved, and actual results could
differ. Moreover, although the Company believes it will be able to make the
necessary modifications in advance, there can be no guarantee that failure to
modify the systems would not have a material adverse effect on the Company.
In addition, the Company places a high degree of reliance on computer
systems of third parties, such as customers, trade suppliers and computer
hardware and commercial software suppliers. Although the Company is assessing
the readiness of these third parties and preparing contingency plans, there can
be no guarantee that the failure of these third parties to modify their systems
in advance of December 31, 1999, would not have a material adverse effect on the
Company.
Readiness
The Year 2000 project is intended to ensure that all critical systems,
devices and applications, as well as data exchanged with customers, trade
suppliers and other third parties have been evaluated and will be suitable for
continued use into and beyond the Year 2000.
The Company was formerly a development stage company and became fully
operational in early 1999. All computers the Company operates now are compatible
with the Year 2000. The Company expects to vastly upgrade its computer system as
it becomes fully operational in the latter part of 1999.
Since early 1998, the Company has required Year 2000 compliance statements
from all suppliers of the Company's computer hardware and commercial software.
Regardless of the compliance statements, all third party hardware and software
will also be subjected to testing to reconfirm the Year 2000 readiness.
Cost
The Company estimates that the total cost of achieving Year 2000 readiness
for its internal systems, devices and applications and a complete upgrade of its
computer system is approximately $250,000. The cost of the Year 2000 problem is
not material but the extent of upgrading the computer system will absorb most of
the cost. Year 2000 project costs are difficult to estimate accurately and the
projected cost could change due to unanticipated technological difficulties and
Year 2000 readiness of third parties.
13
<PAGE>
Contingency Plans
In the event that the efforts of the Company's Year 2000 project do not
address all potential systems problems, the Company is currently developing
business interruption contingency plans. The Company believes, however, that due
to the widespread nature of potential Year 2000 issues, the contingency planning
process is an ongoing one which will require further modifications as the
Company obtains additional information regarding (1) the Company's internal
systems during the remediation and testing phases of its Year 2000 project and
(2) the status of third party Year 2000 readiness. Contingency planning for
possible Year 2000 disruptions will continue to be defined, improved and
implemented.
Risks
The Company believes that completed and planned modifications and
conversions of its critical systems, devices and applications will allow it to
be Year 2000 compliant in a timely manner. There can be no assurances, however,
that the Company's internal systems, devices and applications or those of a
third parties on which the Company relies will be Year 2000 compliant by year
2000 or that the Company's or third parties' contingency plans will mitigate the
effects of any noncompliance. An interruption of the Company's ability to
conduct its business due to a Year 2000 readiness problem could have a material
adverse effect on the Company.
14
<PAGE>
PART II. Other Information
Item 1. Legal Proceedings
See Item 3 of the Company's Annual Report on Form 10-KSB for the year
ended June 30, 1999.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: Exhibit 27.1 Financial Data Schedule.
(b) There were no Current Reports on Form 8-K filed by the registrant
during the quarter ended September 30, 1999.
15
<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.
SCANTEK MEDICAL INC.
By: /s/ Zsigmond Sagi
----------------------------
Zsigmond Sagi, President and
Chief Financial Officer
Dated: November 13, 1999
16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACED FROM SCANTEK
MEDICAL INC. FINANCIAL STATEMENTS AT SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> SEP-30-1999
<CASH> 33,528
<SECURITIES> 240,069
<RECEIVABLES> 55,000
<ALLOWANCES> 0
<INVENTORY> 898,796
<CURRENT-ASSETS> 1,311,845
<PP&E> 2,058,560
<DEPRECIATION> 329,448
<TOTAL-ASSETS> 3,685,034
<CURRENT-LIABILITIES> 4,150,034
<BONDS> 0
18,328
0
<COMMON> 0
<OTHER-SE> (2,335,337)
<TOTAL-LIABILITY-AND-EQUITY> 3,685,034
<SALES> 0
<TOTAL-REVENUES> 597,500
<CGS> 85,275
<TOTAL-COSTS> 588,949
<OTHER-EXPENSES> 93,173
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 169,890
<INCOME-PRETAX> (84,622)
<INCOME-TAX> 0
<INCOME-CONTINUING> (84,622)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (84,622)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
