SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
{x} QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2003
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 1-16655
AMERICARE HEALTH SCAN, INC.
(Exact name of registrant as specified in its charter)
Florida 65-0714523
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
20 N.W. 181st Street, Miami, Florida 33169
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (305) 770-1141
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 12 months (or 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 [ ]
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date:
Class Outstanding As of June 30, 2003
Common Stock $ .001 par value 19,242,459
This report has not been reviewed by the independent auditor in accordance with
the Act, however, the Company intends to submit an amended report reviewed by
the independent auditor.
AMERICARE HEALTH SCAN, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2003 AND DECEMBER 31, 2002
ASSETS
30-Sep-03 31-Dec-02
--------------- ---------------
CURRENT ASSETS
Cash $ - $ -
Notes receivables- related parties 29,323 29,323
Prepaid expenses - -
--------------- ---------------
TOTAL CURRENT ASSETS 29,323 29,323
--------------- ---------------
PROPERTY AND EQUIPMENT, NET OF DEPRECIATION 81,692 97,329
--------------- ---------------
OTHER ASSETS
Investments 615 615
Patents, net of amortization 116,444 122,907
Other assets - ----------------- -----------------
--------------- ---------------
TOTAL OTHER ASSETS 117,059 123,522
--------------- ---------------
TOTAL ASSETS $ 228,074 $ 250,174
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 171,641 $ 172,093
Accrued officer's compensation 1,508,000 1,352,000
Accrued expenses 1,925,670 1,756,080
Notes payable-stockholders 488,696 444,296
Notes payable-related parties 922,702 847,950
Convertible notes payable 282,650 199,460
Accrued interest- stockholder and related
parties 2,010,579 1,632,178
Accrued interest- other - -
--------------- ---------------
TOTAL CURRENT LIABILITIES 7,309,938 6,404,057
CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, par value $.001 per share;
50,000,000 shares authorized; 19,242,459
and 19,224,970 shares issued and outstanding
in 2003 and 2002,respectively 19,242 19,225
Additional paid-in capital 1,699,314 1,696,531
Deficit accumulated during the development
stage (8,800,420) (7,869,639)
--------------- --------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (7,081,864) (6,153,883)
--------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 228,074 $ 250,174
=============== ==============
F-1
AMERICARE HEALTH SCAN, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR PERIODS ENDED SEPTEMBER 30, 2003 AND DECEMBER 31, 2002
AND THE PERIOD FROM FEBRUARY 3, 1994 (DATE OF INCEPTION) TO SEPTEMBER 30, 2003
September 30, December 31, Inception
2003 2002 to 2003
----------------- ----------------- -----------------
SALES $ - $ - $ -
OPERATING EXPENSES:
Other general and administration 185,488 381,803 2,371,478
Wages 198,139 274,793 1,919,576
Rent 169,252 239,075 1,361,260
Research and development costs 1,615 - 1,088,398
----------------- ----------------- -----------------
TOTAL OPERATING EXPENSES 554,494 895,671 6,740,712
----------------- ----------------- -----------------
OPERATING LOSS (554,494) (895,671) (6,740,712)
OTHER INCOME (EXPENSE)
Settlement and miscellaneous income 2,115 4,301 6,416
Litigation-settlement proceeds - - 459,143
Litigation expense (22,500) (22,500)
Interest expense (378,401) (430,031) (2,008,924)
Loss from investments - (5,386)
Loss from flood - - (274,694)
Loss on disposal of fixed asset - - (6,117)
----------------- ----------------- -----------------
(376,286) (448,230) (1,852,062)
LOSS BEFORE INCOME TAXES (930,780) (1,343,901) (8,592,774)
INCOME TAX EXPENSE (BENEFIT) - - (207,646)
----------------- ----------------- -----------------
NET LOSS $ (930,780) $ (1,343,901) $ (8,800,420)
-================ ================= =================
NET LOSS PER SHARE (0.05) (0.07)
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 19,242,459 19,224,970
F-2
AMERICARE HEALTH SCAN, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM FEBRUARY 3, 1994 (DATE OF INCEPTION) TO SEPTEMBER 30, 2003
ADDITIONAL
COMMON STOCK PAID-IN DEFICIT
SHARES AMOUNT CAPITAL ACCUMULATED TOTAL
---------------------------------------------- ----------------- ----------------
INCEPTION, FEBRUARY 3, 1994 50,000 50 $ 5,750 $ - $ 5,800
Net loss (Inception to December 31, 1995) - - - (98,832) (98,832)
--------------- ----------- ----------- ----------------- -----------------
BALANCES AT DECEMBER 31, 1995 50,000 50 5,750 (98,832) (93,032)
Stock split (116 to 1) 5,750,000 5,750 (5,750) - -
Issuance of common shares
regarding acquisition of assets from
Americare Transtech, Inc.,acquisition of
subsidiary Americare Biologicals, Inc.,
and regarding pretrading private placements. 6,541,800 6,542 1,259,516 - 1,266,058
Issuance of common shares
regarding merger with Enironmental Digital
Systems, Inc. 370,370 370 (370) - -
Net loss - - - (765,181) (765,181)
--------------- ----------- ----------- ----------------- -----------------
BALANCES AT DECEMBER 31, 1996 12,712,170 12,712 1,259,146 (864,013) 407,845
Issurance of common shares
for services rendered 5,000 5 16,245 - 16,250
Net loss - - - (785,509) (785,509)
--------------- ----------- ----------- ----------------- -----------------
BALANCES AT DECEMBER 31, 1997 12,717,170 12,717 1,275,391 (1,649,522) (361,414)
Issuance of common shares
to acquire 25% interest in Americare
Diagnostics, Inc. and Americare
International Diagnostics, Inc.
(based on book value of affiliated
companies) 2,000,000 2,000 - - 2,000
Net loss - - - (846,859) (846,859)
--------------- ----------- ----------- ----------------- -----------------
BALANCES AT DECEMBER 31, 1998 14,717,170 14,717 1,275,391 (2,496,381) (1,206,273)
Issuance of common shares
for private placement 30,000 30 49,970 - 50,000
Issuance of common shares
for services rendered
(based on value of services) 12,278 12 23,252 - 23,264
Issuance of common shares
for corporate counsel and director fees
(based on trading activity at time of issuance) 2,500 3 4,272 - 4,275
Net loss - - - (1,471,031) (1,471,031)
--------------- ----------- ----------- ----------------- -----------------
BALANCES AT DECEMBER 31, 1999 14,761,948 14,762 1,352,885 (3,967,412) (2,599,765)
Issuance of common shares
for director fees (based on trading activity) 3,200 3 2,333 2,336
Net loss - - - (1,123,574) (1,123,574)
--------------- ----------- ----------- ----------------- -----------------
BALANCES AT DECEMBER 31, 2000 14,765,148 14,765 1,355,218 (5,090,986) (3,721,003)
Net loss - - - (1,227,107) (1,227,107)
--------------- ----------- ----------- ----------------- -----------------
BALANCES AT DECEMBER 31, 2001 14,765,148 14,765 1,355,218 (6,318,093) (4,948,110)
Issuance of common shares
for conversion of note payable 340,000 340 171,124 - 171,464
Issuance of common shares in exchange
for services performed 10,000 10 9,490 - 9,500
Issuance of common shares
pursuant to merger 4,109,822 4,110 160,699 (207,645) (42,836)
Net loss - - - (1,343,901) (1,343,901)
--------------- ----------- ----------- ----------------- -----------------
BALANCES AT DECEMBER 31, 2002 19,224,970 19,225 1,696,531 (7,869,639) (6,153,883)
Issuance of common shares
pursuant to merger 14,689 15 (15) (1) (1)
Issuance of common shares
for director fees (based on trading activity) 2,800 2 2,798 2,800
Net loss - - - (930,780) (930,780)
--------------- ----------- ----------- ----------------- -----------------
BALANCES AT SEPTEMBER 30, 2003 19,242,459 19,242 1,699,314 (8,800,420) (7,081,864)
=============== =========== =========== ================= =================
F-3
AMERICARE HEALTH SCAN, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR PERIODS ENDED SEPTEMBER 30, 2003 AND DECEMBER 31, 2002
September 30, December 31,
2003 2002
------------------ -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (930,780) $ (1,343,901)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 22,100 41,155
Undepreciated cost of equipment
destroyed in flood - -
Loss on disposal of fixed asset - -
Changes in assets and liabilities:
Other assets (58,380) -
Accounts payable (89) 107,520
Accrued officer's compensation 156,000 208,000
Accrued expenses 169,228 228,730
Accrued interest-stockholder and
related parties 385,036 432,208
Accrued interest-other - -
------------------ -----------------
Net cash used in operating activities (256,885) (326,288)
------------------ -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Amounts loaned to related entities (899) (29,323)
Collections of loans receivable - -
Purchase of investment - -
Loss from investment - -
Purchase of property and equipment - (5,750)
Payment for patents - -
------------------ ----------------- -
Net cash provided by (used in) investing
activities (899) (35,073)
------------------ -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in cash overdraft - -
Proceeds from stockholder notes 44,400 13,169
Proceeds from related party notes 127,394 81,609
Proceeds from convertible notes 83,190 223,664
Note repayments-related parties - -
Proceeds from the issuance of common stock 2,800 9,500
------------------ -----------------
Net cash provided by financing
activities 257,784 327,942
------------------ -----------------
NET INCREASE (DECREASE) IN CASH - (33,419)
CASH AND EQUIVALENTS, BEGINNING - 33,419
------------------ -----------------
CASH AND EQUIVALENTS, ENDING $ - $ -
================== =================
F-4
ITEM 1: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATION
THREE MONTHS ENDED SEPTEMBER 30, 2003
The Company has had no revenues from operations since its inception. Our only
income has been from litigation settlements and collection of judgments.
As of September 30, 2003 the Company's current liabilities exceeded current
assets and this fact, and the need for additional financing, creates an
uncertainty about the Company's ability to continue as a going concern. The
Company is currently developing a plan to finance its operations through the
sale of products, and the issuance of debt and/or equity securities. The ability
of the Company to continue as a going concern is dependent on the success of the
plan, the continued financial support from Dr. D'Angelo, his family, related
entities, and other individuals and the Company's ability in the future to
generate revenues from the marketing and sale of its technology, products or
services.
There have been no significant research and development expenditures since 1999,
except for minimal research by Dr. D'Angelo that he financed with his personal
funds. The primary reason that there have been no Company research and
development expenses for the past few years is that there have not been
sufficient funds available to finance both the litigation in which the Company
has been involved and research and development. Management's focus during this
period has been protecting the Company's intellectual property.
Operation expenses decreased for the three months ended September 30, 2003 and
the period from December 31, 2002 respectively, primarily due to the reduction
of costs in connection with litigation which is in the process of being settled.
All of the Company's activities for the three months ended September 30, 2003
and 2002 were financed with loans from the Company's President, Dr. D'Angelo,
his family, and affiliated entities and other individuals. Interest expense of
$378,401, relating to those and previous loans from related parties and other
individuals and accrued expenses payable to related parties, accrued for three
months ended September 30, 2003.
As of September 30, 2003, the Company has no cash reserves, and total assets
were $232,016. In addition total liabilities as of December 31, 2002 were
$6,404,057. This debt includes the demand notes totaling $1,491,706 plus
interest, due and payable to Dr. D'Angelo, his family and affiliated entities to
secure loans. All accrued expenses total $1,756,080, accrued interest to
shareholders and related parties total $1,632,178, as reflected in the Amended
Balance Sheet of September 30, 2003. Payment of the notes can be demanded at any
time at the discretion of the holder.
The Company has not been profitable, and has had negative cash flow from
operations in part due to substantial expenditures for litigation to protect its
intellectual property and proprietary technology. For the past several years
this litigation has taken up the vast majority of management's time and energy.
Management's plan for the future is to focus on raising funds and obtaining
orders for the Company's Saliva HIV Test and other technologies so that adequate
management, technical and other personnel can be hired, and laboratory equipment
and supplies purchased for the Company to perform remaining research and
development on its products. Such funds would also enable the Company to pursue
FDA approval of its products and expand marketing efforts. These activities will
require tens of millions of dollars.
PART II: OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS:
The Corporation is involved in several pieces of litigation, which are set forth
in the Corporation's Form 10KSB. There was no new litigation commenced during
the quarter.
The Corporation's annual report on Form 10-KSB under Section 13 of the
Securities and Exchange Act of 1934 was filed April 15, 2003.
ITEM 2: CHANGES IN SECURITIES:
None.
ITEM 3: DEFAULTS UPON SENIOR SECURITIES:
None.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
None.
ITEM 5: OTHER INFORMATION:
None.
ITEM 6: EXHIBITS & REPORTS:
Exhibits
(a) 31 Certification of Chief Executive Office and Chief Financial Officer
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(b) 32 Certification of Chief Executive Office and Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
SIGNATURE
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 thereunto duly authorized.
Dated: November 12, 2003 /s/ Dr. Joseph P. D'Angelo
--------------------------
Dr. Joseph P. D'Angelo
President
