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 March 31, 2000
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 April 30, 2000 there were 18,362,170 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
March 31, 2000 (unaudited) and
June 30, 1999 .............................................. 2
Consolidated Statements of Operations
and Comprehensive (Loss) for the
nine and three Months Ended March
31, 2000 and 1999 (unaudited) .............................. 3 - 4
Consolidated Statements of Cash Flows
for the Nine Months Ended March 31,
2000 and 1999 (unaudited) .................................. 5 - 6
Notes to Consolidated 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 Reports 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 nine months ended March 31, 2000,
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
March 31, June 30,
----------- ----------
2000 1999
----------- ----------
(Unaudited)
Current Assets:
Cash ....................................... $ 9,090 $ 5,516
Marketable securities ...................... 257,020 409,272
Accounts receivable ........................ 24,000 -
Inventory .................................. 883,558 898,796
Due from licensees ......................... 55,000 -
Prepaid expenses ........................... 48,214 84,287
----------- ----------
Total Current Assets ................ 1,276,882 1,397,871
----------- ----------
Property and equipment - net ................. 1,579,381 1,803,974
Other assets - net ........................... 596,273 160,179
----------- ----------
TOTAL ASSETS ........................ $ 3,452,536 $3,362,024
=========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities:
Short-term debt ............................ $ 1,582,715 $1,274,271
Accounts payable ........................... 1,253,750 1,210,861
Accrued interest ........................... 443,607 224,279
Accrued salaries ........................... 1,299,472 1,106,119
Accrued expenses ........................... 357,451 84,213
----------- ----------
Total Current Liabilities ............... 4,936,995 3,899,743
----------- ----------
Long-term debt ............................... 1,908,709 1,827,009
----------- ----------
Total Liabilities ................... 6,845,704 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 18,362,170
and 18,070,200 shares ..................... 18,362 18,070
Additional paid-in-capital ................. 3,744,841 3,433,002
Deficit (7,111,391) (5,649,915)
Cumulative other comprehensive (loss) ...... (44,980) (165,885)
----------- ----------
Total Stockholders' Deficiency ...... (3,393,168) (2,364,728)
----------- ----------
TOTAL LIABILITIES AND STOCK-
HOLDERS' DEFICIENCY ................ $ 3,452,536 $3,362,024
=========== ==========
See notes to consolidated financial statements.
-2-
<PAGE>
SCANTEK MEDICAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended March 31, Three Months Ended March 31,
-------------------------- --------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Net sales .................................. $ 29,775 $ 127,775 $ 24,000 $ -
License fees ............................... 597,500 1,127,500 - 375,000
----------- ----------- ----------- -----------
Total Revenues ............................ 627,275 1,255,275 24,000 375,000
----------- ----------- ----------- -----------
Costs and Expenses:
Cost of sales .............................. 275,555 233,555 92,615 69,650
General and administrative expenses ........ 1,331,301 769,306 446,399 331,518
Research and development ................... 213,768 290,689 73,768 73,673
----------- ----------- ----------- -----------
Total Costs and Expenses .................. 1,820,624 1,293,550 612,782 474,841
----------- ----------- ----------- -----------
Net operating (loss) ......................... (1,193,349) (38,275) (588,782) (99,841)
----------- ----------- ----------- -----------
Other income (expense):
Interest and dividends ..................... 202 149 52 14
Gain (loss) on sale of
marketable securities ..................... 25,007 - (51,637) -
Interest expense ........................... (293,336) (167,366) (93,976) (77,748)
----------- ----------- ----------- -----------
(268,127) (167,217) (145,561) (77,734)
----------- ----------- ----------- -----------
Net (loss) ................................... $(1,461,476) $ (205,492) $ (734,343) $ (177,575)
=========== =========== =========== ===========
Loss per common share - basic ............... $ (.08) $ (.01) $ (.04) $ (.01)
=========== =========== =========== ===========
Loss per common share - diluted .............. $ (.08) $ (.01) $ (.04) $ (.01)
=========== =========== =========== ===========
Weighted average number of common
shares outstanding - basic ................. 18, 333,820 17,566,035 18,333,820 17,406,659
=========== =========== =========== ===========
Weighted average number of common
shares outstanding - diluted ............... 18,333,820 17,566,035 18,333,820 17,406,659
=========== =========== =========== ===========
</TABLE>
(Continued)
See notes to consolidated financial statements.
-3-
<PAGE>
SCANTEK MEDICAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS)
(UNAUDITED)
(CONTINUED)
<TABLE>
<CAPTION>
Nine Months Ended March 31, Three Months Ended March 31,
-------------------------- --------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net loss ...................... $(1,461,476) $ (205,492) $ (734,343) $ (177,575)
Other comprehensive income
(expense) net of income taxes:
Unrealized gain (loss) on
marketable securities ..... 120,905 (2,723,732) 120,331 (168,717)
----------- ----------- ----------- -----------
Comprehensive (loss) .......... $(1,340,571) $(2,929,224) $ (614,012) $ (346,292)
=========== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
-4-
<PAGE>
SCANTEK MEDICAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended March 31,
--------------------------
2000 1999
----------- -----------
Cash flows from operating activities:
Net (loss) ........................... $(1,461,476) $ (205,492)
Adjustments to reconcile net
(loss) to net cash used in
operating activities:
Depreciation and amortization ....... 275,299 199,967
Net gain on sale of mar-
ketable securities ................. (25,007) --
Non-employee stock based
compensation ....................... 47,772 44,929
Non-cash officers compensation ...... 171,093 65,625
Other non-cash items ................ (164,234) 84,375
Changes in operating
assets and liabilities ............. 463,145 (356,480)
----------- -----------
Net Cash (Used in)
Operating Activities ........ (693,408) (167,076)
----------- -----------
Cash flows from investing
activities:
Proceeds from sale of
marketable securities .............. 298,164 --
Purchase and deposits
of equipment ....................... -- (1,202,980)
----------- -----------
Net Cash Provided by
(Used in) Investing
Activities .................. 298,164 (1,202,980)
----------- -----------
Cash flows from financing
activities:
Proceeds from borrowings ........... 367,715 1,050,000
Proceeds from officer loans ........ 133,513 249,500
Repayment of officer loans ......... (76,084) --
Repayment of notes ................. (36,326) (1,202)
Proceeds from sale of common stock . 10,000 100,000
----------- -----------
Net Cash Provided by
Financing Activities ........ 398,818 1,398,298
----------- -----------
Net Increase in Cash .................. 3,574 28,242
Cash - beginning of period ............ 5,516 55,929
----------- -----------
Cash - end of period .................. $ 9,090 $ 84,171
=========== ===========
(Continued)
See notes to consolidated financial statements.
-5-
<PAGE>
SCANTEK MEDICAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
Nine Months Ended March 31,
----------- -----------
2000 1999
----------- -----------
Changes in Operating Assets
and Liabilities Consist of:
(Increase) in accounts receivable ............. $ (24,000) $ --
Decrease (increase) in inventory .............. 15,238 (1,017,632)
(Increase) decrease in
due from licensees .......................... (291,000) 401,900
(Increase) decrease in
prepaid expenses ............................. 36,073 (141,808)
(Increase) in other assets .................... (3,300) (62,255)
Increase in accounts payable
and accrued expenses ......................... 730,134 1,215,815
(Decrease) in deferred income ................. -- (752,500)
----------- -----------
$ 463,145 $ (356,480)
=========== ===========
Supplementary information:
Cash paid during the year for:
Interest ............................... $ 37,083 $ 94,668
=========== ===========
Income taxes ........................... $ 200 $ 5,637
=========== ===========
Non-cash investing activities:
Acquisition of investment in
connection with
licensing agreement .......................... $ (247,500) $ --
=========== ===========
Unrealized gain (loss)
on marketable securities ..................... $ 120,905 $(2,723,732)
=========== ===========
Other Non-Cash Activities:
Conversion of accounts
payable to stock options ...................... $ 47,772 $ 44,929
=========== ===========
Conversion of accrued officers'
salaries to common stock ...................... $ 9,375 $ --
=========== ===========
Conversion of accrued officers'
salaries to common stock ...................... $ -- $ 65,625
=========== ===========
Common stock issued for loan
financing ..................................... $ 73,891 $ 84,375
=========== ===========
Compensation for the cancellation
and re-issuance of stock options .............. $ 171,093 $ --
=========== ===========
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 March 31,2000, and the
consolidated statements of operations and comprehensive (loss) and cash
flows for the nine months ended March 31, 2000 and 1999 have been prepared
by Scantek Medical Inc and Subsidiaries ("Scantek" or 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. 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
March 31, 2000, the Company has a working capital deficit of approximately
$3.4 million.
The activities of the Company are being financed through the sale of
its common stock and debt securities and the sale of marketable securities
owned by the Company. 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 that 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.
United States revenues include license fees received by the Company in
connection with various arrangements contracted throughout the world.
Revenues in South America for the nine months ended March 31, 2000 were
shipments to Colombia from the Company's subsidiary in Uruguay. Revenues in
South America for the nine months ended March 31, 1999 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.
Nine Months Ended March 31,
--------------------------
2000 1999
----------- -----------
Total Revenues:
United States .............. $ 597,500 $ 1,127,775
South America .............. 24,000 127,500
Europe ..................... 5,775 --
Less intergeographic revenue -- (75,436)
----------- -----------
$ 627,275 $ 1,179,839
=========== ===========
Income (loss) from operations:
United States .............. $(1,168,512) $ (101,051)
South America .............. (292,964) (104,441)
----------- -----------
$(1,461,476) $ (205,492)
=========== ===========
-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 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 materially 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.
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 and maintaining of 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. 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.
-9-
<PAGE>
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 expected revenue. The Company is establishing a production
facility in Brazil. This will eliminate the high value - added tax and
hopefully will be able to facilitate sales. The Company terminated its
license agreement with its former licensee in South America but all key
personnel for the licensee have joined Scantek. The Company's Brazilian
subsidiary plans to manufacture, market and distribute the BreastCare(TM)
device in Brazil and export to other South American countries.
The Company expects to commence its distribution operations in South
America during the second half of calendar 2000 while shipments to Ireland
commenced in October 1999 and shipments to other parts of Europe will
commence during the second half of calendar 2000. 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 March 31, 2000,
the Company borrowed $1,582,715 from unaffiliated third parties of which
approximately $308,000 was advanced since June 30, 1999. These loans are
payable by the Company on various dates through December 2000. In addition,
as of May 12, 2000 the Company's president advanced the Company an
additional $177,000 since July 1999. These loans have supported the Company
through the prior fiscal year and the current nine months, and the Company
expects the cash flow from sales commencing in the second quarter of
calendar 2000 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.
In July 1999 the Company, through its Brazilian subsidiary Scantek do
Brazil LTDA, executed a letter of intent with another entity to create a
joint venture with exclusive rights to import, manufacture, market and
distribute the BreastCare(TM) device in Brazil. After completing its due
diligence the Company terminated the letter of intent.
-10-
<PAGE>
Through its Brazilian subsidiary, the Company signed an agreement with
the State of Pernambuco in December 1999. The State of Pernambuco has the
second largest concentration of hospitals in Brazil offering quality care
and is also the most desirable location for production, shipping, financing
and tax incentives. The Company is establishing a 2,550 square meter
manufacturing facility in Recife, Pernambuco at the new port of Suape. The
Company plans to start construction in early 2000 and anticipates
construction to be completed by August 2000. The Company will ship the
production equipment for arrival by the time construction is complete.
The State of Penambuco has offered various incentives including
acreage to build the facility, a 75% reduction in taxes for 11 years, free
shipping outside the state and in connection with the federal programs
offered in Northeast Brazil financing programs to help fund the operations
and capital improvements.
The Company plans to ship the BreastCare(TM) device from the United
States until the production facility in Brazil is operational.
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
$59,000 was received as of March 31, 2000, 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 on a pilot basis through December
1999 and will begin fulfilling the required minimum purchase agreement
after various clinical tests are completed.
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 March 31, 2000, has advanced Zigmed Inc. payments of $940,604 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 $810,076 will be paid
when the Company raises the additional capital.
-11-
<PAGE>
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.
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
----------------------------------------
Nine Months Ended Three Months Ended
March 31, 2000 March 31, 2000
compared with 1999 compared with 1999
------------------ ------------------
Sales (1) ....................... (76.7)% (1)%
License fee revenue ............. (47.0) (1)
Cost of sales ................... 18.0 33.0
General and administrative
expense ........................ 73.1 34.7
Research and development ........ (26.5) .3
Interest expense ................ 75.3 20.9
Net earnings (loss) ............. (611.2) (313.5)
----------
(1) Percentage not meaningful
NINE MONTHS ENDED MARCH 31,2000 VS. NINE MONTHS ENDED MARCH 31,1999
AND THREE MONTHS ENDED MARCH 31, 2000 VS. THREE MONTHS ENDED MARCH 31,
1999
REVENUES
Net sales decreased to $29,775 during the nine months ended March 31,
2000 from $127,775 during the nine months ended March 31, 1999 as the
Company is re-focusing its South American marketing strategy in Brazil. The
Company will ship the BreastCare(TM) device from the United States during
the second quarter to South America until the manufacturing facility in
Brazil is completed. Shipments to Ireland commenced in October 1999 and
shipments to other parts of Europe will commence during the second half of
calendar 2000. Manufacturing in Brazil is planning to commence during the
second half of calendar 2000 after the Company completes construction of
its new manufacturing facility in Brazil. Until then the Company will
manufacture the BreastCare(TM) device in its U.S. facilities. Manufacturing
for Europe will continue in its U.S. facilities until the Company
establishes a manufacturing facility in Europe.
-12-
<PAGE>
Net sales increased to $24,000 during the three months ended March 31,
2000 from $-0- during the three months ended March 31, 1999. In 2000 the
Company shipped the BreastCare(TM) device to Colombia. Shipments in 1999
were discounted due to economic conditions in Brazil.
License fee revenue decreased to $597,500 during the nine months ended
March 31, 2000 from $1,127,500 for the nine months ended March 31, 1999 as
the Company recognized license fees from Nugard Healthcare Ltd. as compared
to higher license fees from Sandell Corp, D-Lanz Corp and HumaScan from the
preceding year.
License fee revenue decreased to $-0- during the three months ended
March 31, 2000 from $375,000 during the three months ended March 31, 1999.
The Company recognized license fee income from HumaScan Corp during 1999
but received no license fee income during 2000.
COST OF SALES
Cost of sales increased to $275,555 during the nine months ended March
31, 2000 from $233,555 during the nine months ended March 31, 1999
primarily due to depreciation expense of $207,633 on the production
equipment compared to $132,192 for the same nine month period ended March
31, 1999.
Cost of sales increased 33% to $92,615 during the three month period
ended March 31, 2000 from $69,650 during the three months period ended
March 31, 1999 for primarily the same reasons set forth in the nine month
analysis.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses increased 73.1% to $1,331,301
during the nine months ended March 31, 2000 compared to $769,306 during the
nine months ended March 31, 1999. This increase is primarily due to
increases in consulting services, compensation expense and travel expense
in connection with the Company's South American marketing strategies in
Brazil.
General and administrative expenses increased 34.7% to $446,399 during
the three months ended March 31, 2000 compared to $331,518 during the three
months ended March 31, 1999 for principally the same reasons set forth in
the nine month analysis.
RESEARCH AND DEVELOPMENT EXPENSES
Research and development expense decreased 26.5% to $213,768 during
the nine months ended March 31, 2000 from $290,389 during the nine months
ended March 31, 1999. The decrease is primarily attributable to decreased
salaries incurred by the Company in the experimental area of development of
its product.
Research and development expenses increased .3% to $73,768 during the
three month period ended March 31, 2000 from $73,673 during the three
months ended March 31, 1999 as these expenses stayed constant during the
period.
-13-
<PAGE>
INTEREST EXPENSE
Interest expense was $293,336 for the nine months ended March 31, 2000
compared to $167,366 for the nine months ended March 31, 1999. The 75.3%
increase was attributable to the increase on the Company's short-term debt.
Interest expense was $93,976 for the three months ended March 31, 2000
compared to $77,748 for the three months ended March 31, 1999. The 20.9%
increase is primary for the same reasons as set forth in the nine month
analysis.
-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 March 31, 2000.
-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: May 12, 2000
-16-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SCANTEK
MEDICAL INC. FINANCIAL STATEMENTS AT MARCH 31, 2000 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> MAR-31-2000
<CASH> 9,090
<SECURITIES> 257,020
<RECEIVABLES> 24,000
<ALLOWANCES> 0
<INVENTORY> 883,558
<CURRENT-ASSETS> 1,276,882
<PP&E> 2,058,560
<DEPRECIATION> 479,179
<TOTAL-ASSETS> 3,452,536
<CURRENT-LIABILITIES> 4,936,995
<BONDS> 0
<COMMON> 18,362
0
0
<OTHER-SE> (3,411,530)
<TOTAL-LIABILITY-AND-EQUITY> 3,452,536
<SALES> 29,775
<TOTAL-REVENUES> 627,275
<CGS> 275,555
<TOTAL-COSTS> 1,820,624
<OTHER-EXPENSES> 268,127
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 293,336
<INCOME-PRETAX> (1,461,476)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,461,476)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,461,476)
<EPS-BASIC> (.08)
<EPS-DILUTED> (.08)
</TABLE>
