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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________
FORM 10-QSB
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
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: 1-11765
MEDJET INC.
(Exact name of Small Business Issuer as Specified in its Charter)
DELAWARE 22-3283541
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
1090 KING GEORGES POST ROAD, SUITE 301
EDISON, NEW JERSEY 08837
(Address of Principal Executive Offices)
(908) 738-3990
(Registrant's Telephone Number, Including Area Code)
________________________________________________
(Former Name, Former Address and Former
Fiscal Year, if Changed Since Last Report
Check whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 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
Common Stock, par value $.001 per share, outstanding as of October 31,
1997: 3,674,930 shares.
Units, each consisting of one share of Common Stock and one warrant to
purchase one share of common stock, outstanding as of October 31, 1997: 22,309
Units
Transitional Small Business Disclosure format: [ ] Yes [ x/ ] No
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<CAPTION>
MEDJET INC.
INDEX
-----
PAGE NO.
PART I. FINANCIAL INFORMATION
- -----------------------------
<S> <C> <C>
ITEM 1. Financial Statements
Condensed Interim Balance Sheet as of September 30, 1997 (Unaudited).................. 3
Condensed Interim Statements of Operations.......................................... 4
Condensed Interim Statements of Cash Flows............................................ 5
Notes to Condensed Interim Financial Statements (Unaudited)........................... 6
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................................ 8
PART II. OTHER INFORMATION
- ---------------------------
ITEM 2(d). Changes in Securities and Use of Proceeds ............................................ 10
ITEM 6. Exhibits and Reports on Form 8-K...................................................... 10
SIGNATURES.............................................................................................. 11
</TABLE>
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<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
--------------------
MEDJET INC.
(A Development Stage Company)
Condensed Interim Balance Sheet
September 30, 1997
(Unaudited)
ASSETS LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT ASSETS: CURRENT LIABILITIES:
- -------------- -------------------
<S> <C> <C> <C>
Cash and cash equivalents $2,152,670 Accounts payable $ 109,685
Accounts receivable 1,948 Income taxes payable 150
----------
Prepaid expenses 91,936 Total Liabilities 109,835
---------- ----------
2,246,554
PROPERTY, PLANT & EQUIPMENT - STOCKHOLDERS' EQUITY:
- --------------------------- --------------------
Less accumulated depreciation of $159,246 188,636 Common stock, $.001 par value, 7,000,000 shares
---------- authorized, 3,708,719 shares issued and 3,674,930
ORGANIZATION COSTS - shares outstanding 3,709
- ------------------
Less accumulated amortization of $25,745 11,642 Preferred stock, $.01 par value,
---------- 1,000,000 shares authorized, no shares issued -
PATENTS AND TRADEMARKS - Additional paid-in-capital 4,896,955
- ----------------------
Less accumulated amortization of $6,442 83,912 Accumulated deficit (including deficit accumulated
---------- during development stage of $3,055,343 of which
SECURITY DEPOSITS 7,650 $1,556,211 was applied to additional paid-in capital
- ----------------- ---------- upon conversion from an "S" to a "C" corporation) (2,470,405)
Total Assets $2,538,394 Less: Treasury stock, 33,789 shares, at cost (1,700)
========= ------------
Total Stockholders' Equity $ 2,428,559
============
Total Liabilities and Stockholders' Equity $ 2,538,394
============
See Notes to the Condensed Interim Financial Statements.
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<CAPTION>
MEDJET INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED INTERIM STATEMENTS OF OPERATIONS
Period from
Three Months Ended Nine Months Ended December 16, 1993
September 30, September 30, (Inception) to
---------------------------- -----------------------------
1997 1996 1997 1996 September 30, 1997
----------- ----------- ----------- ----------- ------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
REVENUES:
<S> <C> <C> <C> <C> <C>
Net Sales ........................ $ -- $ -- $ -- $ -- $ --
Cost of Sales .................... -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Gross Profit ..................... -- -- -- -- --
----------- ----------- ----------- ----------- -----------
EXPENSES:
Research, development,
general and administrative ..... 625,672 331,922 1,906,062 787,455 4,213,962
----------- ----------- ----------- ----------- -----------
Total costs and expenses ......... 625,672 331,922 1,906,062 787,455 4,213,962
----------- ----------- ----------- ----------- -----------
Loss from operations ............. (625,672) (331,922) (1,906,062) (787,455) (4,213,962)
OTHER INCOME (EXPENSE):
Interest income .................. 32,150 28,478 123,844 28,478 225,809
Interest expense ................. -- (10,821) (5,738) (26,851) (37,806)
----------- ----------- ----------- ----------- -----------
32,150 17,657 118,106 1,627 188,003
----------- ----------- ----------- ----------- -----------
LOSS BEFORE PROVISION
FOR INCOME TAX ................. (593,522) (314,265) (1,787,956) (785,828) (4,025,959)
Provision for income tax ......... 946,787 -- -- -- 650
----------- ----------- ----------- ----------- -----------
NET LOSS ................ $(1,540,309) $ (314,265) $(1,787,956) $ (785,828) $(4,026,609)
=========== =========== =========== =========== ===========
Net Loss Per Share ............... $ (0.42) $ (0.10) $ (0.49) $ (0.29) $ (1.46)
=========== =========== =========== =========== ===========
Weighted Average Common
Shares Outstanding ............ 3,669,785 3,151,399 3,655,783 2,685,713 2,755,913
=========== =========== =========== =========== ===========
See Notes to the Condensed Interim Financial Statements.
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<CAPTION>
MEDJET INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED INTERIM STATEMENTS OF CASH FLOWS
PERIOD FROM
FOR THE NINE MONTHS ENDED DECEMBER 16, 1993
SEPTEMBER 30, (INCEPTION) TO,
-------------------------------------
1997 1996 SEPTEMBER 30, 1997
-------------- -------------- ------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Cash Flows from Operating Activities.................. $(1,842,842) $ (667,907) $ 3,819,230
Cash Flows from Investing Activities.................. (107,575) (72,252) 483,275
Cash Flows from Financing Activities.................. (138,898) 5,623,269 6,455,175
----------- ----------- -----------
Net Increase (Decrease) in Cash
and Cash Equivalents ........................ (2,089,315) 4,883,110 2,152,670
Cash and Cash Equivalents -
Beginning of Period....................... 4,241,985 57,678 -
----------- ----------- ---------
Cash and Cash Equivalents -
End of Period............................. $ 2,152,670 $ 4,940,788 $2,152,670
=========== =========== =========
Supplemental Disclosures of
Cash Flow Information:
Cash Paid During the Period
for Income Taxes.......................... $ - $ - $ 450
=========== ============ ==========
Cash Paid During the Period
for Interest Expense....................... $ 12,967 $ - $ 37,896
=========== ============ ==========
See Notes to the Condensed Interim Financial Statements.
</TABLE>
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MEDJET INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE
CONDENSED INTERIM FINANCIAL STATEMENTS
NOTE A - NATURE OF ORGANIZATION AND BASIS OF PRESENTATION:
(1) NATURE OF ORGANIZATION:
----------------------
Medjet Inc. (the "Company") is a development stage company
incorporated in the State of Delaware on December 16, 1993.
The Company was organized as a medical device company with
the goal of developing, manufacturing and selling or
licensing new cutting, drilling, layer removal and shaping
tools for a variety of surgical procedures. The core
technology is based on small-diameter, fluid or ice jets
("microjets") moving at high speeds. The Company believes
that such microjets will bring new surgical capability and
performance to the clinic or operating room. The initial
product area is devices for surgical use in ophthalmology.
(2) BASIS OF PRESENTATION:
---------------------
The Condensed Interim Financial Statements included herein
have been prepared by the Company, without audit, pursuant to
the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures
normally included in financial statements prepared in
accordance with generally accepted accounting principles have
been condensed or omitted pursuant to such rules and
regulations.
The Condensed Interim Financial Statements included herein
reflect, in the opinion of management, all adjustments
(consisting primarily only of normal recurring adjustments)
necessary to present fairly the results for the interim
periods. The results of operations for the three- and
nine-month periods ended September 30, 1997 are not
necessarily indicative of results to be expected for the
entire year ending December 31, 1997.
NOTE B - INITIAL PUBLIC OFFERING:
On August 14, 1996, the Company consummated its initial public
offering (the "Offering") and, accordingly, issued and sold
to the public 1,071,429 Units (the "Units"), each Unit
consisting of one share of common stock, $.001 par value of
the Company (the "Common Stock"), and one redeemable Common
Stock Purchase Warrant (the "Warrants") to purchase one
share of Common Stock at $10.00 for a period of 24 months
commencing on November 6, 1996. The Units
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became separable on November 6, 1996 and the Common Stock and
the Warrants began trading on November 8, 1996.
In conjunction with an option granted to the underwriter of
the Offering to purchase additional Units solely to cover
over-allotments from the Offering, the Company issued and sold
an additional 160,714 Units on September 13, 1996.
The proceeds from these transactions (amounting to
approximately $6 million) were used, in part, to repay
outstanding indebtedness of approximately $550,000 and legal,
accounting and other expenses (totaling approximately
$500,000) associated with the Offering; the balance (to be
used to fund future operations, research and development) was
invested in short-term money market instruments.
In connection with the Offering, the Company increased the
number of shares of Common Stock it is authorized to issue to
7,000,000 and, immediately prior to the Offering, effected a
1.987538926-to-1 stock split of the then outstanding Common
Stock.
NOTE C - NET LOSS PER SHARE:
Net loss per share is computed by dividing net loss by the
weighted average number of shares of Common Stock outstanding
during the period, after giving effect to the 1.987538926-to-1
stock split of the Common Stock explained above. Common stock
equivalents have not been included in this computation as the
effect would be anti-dilutive.
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
THIS QUARTERLY REPORT ON FORM 10-QSB CONTAINS FORWARD-LOOKING STATEMENTS WITHIN
THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND
SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. ACTUAL RESULTS,
EVENTS AND CIRCUMSTANCES COULD DIFFER MATERIALLY FROM THOSE SET FORTH IN SUCH
STATEMENTS DUE TO VARIOUS FACTORS.
GENERAL
Medjet Inc. (the "Company"), formed in December, 1993, is engaged in the
research and development of medical technology, with an initial emphasis on
corneal surgical technology and equipment. The Company is a development stage
company.
RESULTS OF OPERATIONS
The Company has not yet initiated sales of its products and, consequently, had
no revenues during the three months or nine months ended September 30, 1997.
Total costs and expenses during the three months ended September 30, 1997
increased by $293,750 (88.5%) to $625,672 from $331,922 for the comparable
period of 1996. This was primarily due to the net increase in staff (from twelve
full-time and one part-time employees to seventeen full-time employees) and an
increase in professional fees and consultant costs as the Company continued its
research and development activities and initiated regulatory filings and
clinical trials. Expenses were also higher during the 1997 period due to
increased purchases for materials, testing and analysis and higher occupancy
costs (reflecting additional office and laboratory space assumed on January 1,
1997).
During the nine months ended September 30, 1997, total costs and expenses
increased by $1,118,607 (142.1%) to $1,906,062 from $787,455 for the comparable
period of 1996, generally for the same reasons as during the three-month period.
Other income and expense for the three months ended September 30, 1997 shows net
interest income of $32,150 compared to $17,657 for the comparable period of
1996. This reflects interest income earned on the Company's short-term
investments, reduced by interest charges on short-term loans made to the Company
during 1996. These loans were substantially repaid during the three months ended
September 30, 1996 (more fully described under the caption, "Initial Public
Offering," following).
For the nine months ended September 30, 1997, other income and expense shows net
interest income of $118,106 compared to $1,627 for the comparable period of
1996, for the same reasons as during the three-month period.
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LIQUIDITY AND CAPITAL RESOURCES
From its inception until its initial public offering (the "Offering"), the
Company's liquidity requirements were met through private sales of the Company's
common stock. During the fourth quarter of 1995, in order to continue to fund
its operations, the Company obtained five loans from its president in the
aggregate amount of $150,000. Additional loans were obtained during 1996 from
two of the Company's directors ($50,000 from each such director during the first
quarter), from the Company's president ($165,000 during the second quarter),
and, in connection with the Offering, from an affiliate of the underwriter of
the Offering ($100,000 during each of the first and second quarters). During the
third quarter of 1996, prior to the Offering, an additional $100,000 was
borrowed from a stockholder of the Company. All loans made by persons other than
the Company's president were repaid during the third quarter of 1996, following
the Offering. All loans (except for two loans totalling $165,000) made by the
Company's president were repaid during the fourth quarter of 1996; the remaining
loans were repaid during the second quarter of 1997.
As a result of the Offering, the Company's liquidity position improved
significantly. The Company anticipates that its current cash and cash
equivalents, as well as projected cash flows from operations, will be sufficient
to cover working capital and capital equipment needs for at least the next nine
months.
INITIAL PUBLIC OFFERING
On August 14, 1996, the Company consummated the Offering and, accordingly,
issued and sold to the public 1,071,429 Units (the "Units"), each Unit
consisting of one share of common stock, $.001 par value of the Company (the
"Common Stock"), and one redeemable Common Stock Purchase Warrant (the
"Warrants") to purchase one share of Common Stock at $10.00 for a period of 24
months commencing on November 6, 1996. The Units became separable on November 6,
1996 and the Common Stock and the Warrants began trading on November 8, 1996.
In conjunction with an option granted to the underwriter of the Offering to
purchase additional Units solely to cover over-allotments from the Offering, the
Company issued and sold an additional 160,714 Units on September 13, 1996.
The proceeds from these transactions (amounting to approximately $6 million)
were used, in part, to repay outstanding indebtedness of approximately $550,000
and legal, accounting and other expenses (totaling approximately $500,000)
associated with the Offering; the balance (to be used to fund future operations,
research and development) was invested in short-term money market instruments.
In connection with the Offering, the Company increased the number of shares of
Common Stock it is authorized to issue to 7,000,000 and, immediately prior to
the Offering, effected a 1.987538926-to-1 stock split of the then outstanding
Common Stock.
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PART II - OTHER INFORMATION
Item 2(d). CHANGES IN SECURITIES AND USE OF PROCEEDS
-----------------------------------------
The Company has reported on the use of proceeds from the Offering on Form SR and
Amendment No. 1 to such Form SR, each previously filed with the Securities and
Exchange Commission. Since the filing of such Amendment No. 1 in May 1997 and
through September 30, 1997, the Company has used the following amounts of
proceeds from the Offering: $35,000 for the purchase and installation of
machinery and equipment; $165,000 for the repayment of indebtedness to an
officer and director of the Company; $495,000 for working capital; $20,000 for
patent filings; $721,000 for research and development and human clinical trials
(which amount includes $277,000 paid as compensation to employees performing
solely research and development functions); and $2,100,000 for temporary
investments, of which $1,804,000 is intended for research and development and
human clinical trials, $14,000 for patent filings, and $282,000 for working
capital, and all of which has been invested in short-term money market
instruments. Other than the retirement of indebtedness, which was made to an
officer and director of the Company, none of such payments were made to
directors, officers, general partners of the Company or their associates, to
persons owning 10% or more of any class of equity securities of the Company, or
to affiliates of the Company. The use of proceeds described herein represents a
material change in the use of proceeds in the prospectus used in the Offering in
that an officer and director of the Company deferred repayment of loans in the
aggregate amount of $315,000 made by him to the Company, of which $150,000 was
repaid prior to the reporting period covered hereby and the remaining $165,000
was repaid during the reporting period covered hereby as described above.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
--------------------------------
(a) EXHIBITS
27. Financial Data Schedule
(b) REPORTS ON FORM 8-K
-------------------
No Report on Form 8-K was filed during the quarter for which
this Quarterly Report on Form 10-QSB is filed.
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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.
Dated: November 13, 1997 MEDJET INC.
--------------------------
(Registrant)
/S/ EUGENE I. GORDON
--------------------------
Eugene I. Gordon
Chairman and President
/S/ THOMAS M. HANDSCHIEGEL
--------------------------
Thomas M. Handschiegel
Chief Financial Officer and
Chief Accounting Officer
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EXHIBIT INDEX
Exhibit Page
Number Description Number
- -------- ----------- ------
27 Financial Data Schedule
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
SEPTEMBER 30, 1997 (UNAUDITED) FINANCIAL STATEMENTS OF MEDJET, INC. AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> $2,152,670
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,246,554
<PP&E> 347,882
<DEPRECIATION> 159,246
<TOTAL-ASSETS> 2,538,394
<CURRENT-LIABILITIES> 109,835
<BONDS> 0
0
0
<COMMON> 3,709
<OTHER-SE> 2,424,850
<TOTAL-LIABILITY-AND-EQUITY> 2,538,394
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,906,062
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,738
<INCOME-PRETAX> (1,787,956)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,787,956)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,787,956)
<EPS-PRIMARY> (.49)
<EPS-DILUTED> (.49)
</TABLE>
