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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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 June 30, 1996
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
Incorporation or Organization) Identification No.)
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. / / Yes / X / No
Common Stock, par value $.001 per share, outstanding as of
September 13, 1996: 3,682,455 shares
Units, each consisting of one share of Common Stock and one warrant to
purchase one share of common stock outstanding as of September 13, 1996:
1,232,143 Units
Transitional Small Business Disclosure format: / / Yes / X / No
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MEDJET INC.
INDEX
PART I. FINANCIAL INFORMATION Page No.
- ------------------------------
ITEM 1. Financial Statements
Condensed Interim Balance Sheets as of June 30, 1996 3
(Unaudited) . . . . . . . . . . . . . . . . . . . . .
Condensed Interim Statements of Operations for the
Three and Six Months Ended June 30, 1996 (Unaudited)
and the Three and Six Months Ended June 30, 1995
(Unaudited) . . . . . . . . . . . . . . . . . . . . . 4
Condensed Interim Statements of Cash Flows for the
Six Months Ended June 30, 1996 (Actual and Pro-Forma)
and 1995 and the Period from December 16, 1993
(Date of Inception), to June 30, 1996 (Unaudited) . . 5
Notes to Condensed Interim Financial Statements
(Unaudited) . . . . . . . . . . . . . . . . . . . . . 6
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . 7
PART II. OTHER INFORMATION
- ---------------------------
ITEM 2. Changes in Securities . . . . . . . . . . . . . . . 8
ITEM 4. Submission of Matters to a Vote of
Security-Holders . . . . . . . . . . . . . . . . . 8
ITEM 6. Exhibits and Reports on Form 8-K . . . . . . . . . 8
SIGNATURES
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
MEDJET INC.
(A Development Stage Company)
Condensed Interim Balance Sheets
June 30, 1996
(Actual and Pro-Forma)
(Unaudited)
ASSETS
Pro-Forma
Actual (1)
---------- ---------
CURRENT ASSETS:
- --------------
Cash and cash equivalents $ 61,046 $5,137,919
Accounts receivable 2,477 2,477
Prepaid expenses 756 756
---------- ----------
64,279 5,141,152
---------- ----------
PROPERTY, PLANT & EQUIPMENT:
- ---------------------------
Less accumulated depreciation of $63,811 86,517 86,517
---------- ----------
DEFERRED OFFERING COSTS 382,849 -
- ----------------------- ---------- ----------
ORGANIZATION COSTS
- ------------------
Less accumulated amortization of $16,400 20,987 20,987
---------- ----------
PATENT
- ------ ---------- ----------
Less accumulated amortization of $1,343 18,061 18,061
---------- ----------
SECURITY DEPOSITS 5,437 5,437
- ----------------- ---------- ----------
Total Assets $ 578,130 $5,272,154
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Pro-Forma
Actual (1)
----------- ---------
CURRENT LIABILITIES:
- -------------------
Accounts payable $ 416,566 $ 45,566
Accrued interest payable 15,985 8,780
Notes payable 300,000 -
Notes payable - officer 315,000 315,000
---------- ----------
Total Liabilities 1,047,551 367,346
--------- ----------
STOCKHOLDERS' EQUITY (DEFICIT):
- ------------------------------
Common stock (post-split), $.001 par value,
7,000,000 shares authorized, 2,450,312
shares (actual) and 3,682,455 shares (pro-
forma) issued and outstanding 2,450 3,682
Preferred stock, $.01 par value, 1,000,000
shares authorized, no shares issued - -
Additional paid-in capital (471,871) 4,901,136
Retained earnings (deficit) - -
---------- ----------
Total Stockholders' Equity (Deficit) (469,421) 4,904,818
---------- ----------
Total Liabilities and Stockholders'
Equity (Deficit) $ 578,130 $5,272,164
========== ==========
(1) Pro-Forma Adjustments:
- --------------------------
Upon completion of its initial public offering (see Note B of the Notes to
the Financial Statements), Medjet Inc.'s tax status changed from an "S"
corporation to a "C" corporation. Accordingly, the deficits accumulated
during the development stage were charged against paid-in capital.
Additionally, the proceeds from the offering were used to pay down accounts
payable and non-officer notes and associated interest payable; the balance
was invested in short-term money market instruments. The total amount of
deferred offering costs was also charged against additional paid-in
capital.
See Notes to the Financial Statements.
MEDJET INC.
(A Development Stage Company)
Condensed Interim Statements of Operations
For The Three and Six Months Ended June 30, 1996 and 1995
And The Period From December 16, 1993 (Date of Inception), to June 30, 1996
(Unaudited)
Three Months Ended
June 30,
-----------------------------
1996 1995
----------- -----------
Revenues:
- --------
Net Sales $ - $ -
Cost of Sales - -
----------- -----------
Gross Profit - -
----------- -----------
Expenses:
- --------
Research, development,
general and administrative 288,176 198,545
----------- -----------
Total costs and expenses 288,176 198,545
----------- -----------
Loss from operations (288,176) (198,545)
Other Income (Expense):
- ----------------------
Interest income - 1,854
Interest expense (10,662) -
----------- -----------
(10,662) 1,854
----------- -----------
LOSS BEFORE INCOME TAX (298,838) (196,691)
State income tax - -
----------- -----------
NET LOSS $ (298,838) $ (196,691)
=========== ===========
Net Loss Per Share $ (0.12) $ (0.09)
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Weighted Average Common
Shares Outstanding 2,450,312 2,181,563
=========== ===========
Six Months Ended Period from
June 30, December 16,
--------------------------- 1993 (Inception)
1996 1995 to June 30, 1996
----------- ----------- ----------------
Revenues:
- --------
Net Sales $ - $ - $ -
Cost of Sales - - -
----------- ----------- ------------
Gross Profit - - -
----------- ----------- ------------
Expenses:
- --------
Research, development,
general and administrative 455,382 356,649 1,439,039
----------- ----------- ------------
Total costs and expenses 455,382 356,649 1,439,039
----------- ----------- ------------
Loss from operations (455,382) (356,649) (1,439,039)
Other Income (Expense):
- ----------------------
Interest income - 7,928 15,263
Interest expense (16,030) - (16,030)
----------- ----------- ------------
(16,030) 7,928 (767)
----------- ----------- ------------
LOSS BEFORE INCOME TAX (471,412) (348,721) (1,439,806)
State income tax 151 281 450
----------- ----------- ------------
NET LOSS $ (471,563) $ (349,002) $(1,440,256)
=========== =========== ============
Net Loss Per Share $ (0.19) $ (0.16) $ (0.62)
=========== =========== ============
Weighted Average Common
Shares Outstanding 2,450,312 2,225,405 2,319,782
=========== =========== ============
See Notes to the Financial Statements.
MEDJET INC.
(A Development Stage Company)
Condensed Interim Statements of Cash Flows
For The Six Months Ended June 30, 1996 (Actual and Pro-Forma) and 1995
And The Period From December 16, 1993 (Date of Inception), to June 30, 1996
(Unaudited)
For the Six Months Ended June 30,
--------------------------------- Period from
1996 December 16,
---------------------- 1993
(Pro-Forma) 1995 (Inception) to
(Actual) (1) June 30, 1996
---------- ----------- ---------- --------------
Cash Flows from Operating
Activities $(430,165) $ (463,780) $(390,207) $(1,341,799)
Cash Flows from Investing
Activities (31,466) (31,466) 284,065 (212,593)
Cash Flows from Financing
Activities 465,000 5,575,487 - 6,692,311
---------- ----------- ---------- ------------
Net Increase (Decrease) in
Cash and Cash Equivalents 3,369 5,080,241 (106,142) 5,137,919
Cash and Cash Equivalents -
Beginning of Period 57,678 57,678 228,936 -
---------- ----------- ---------- ------------
Cash and Cash Equivalents -
End of Period $ 61,047 $ 5,137,919 $ 122,794 $ 5,137,919
========== =========== ========== ============
Supplemental Disclosures of
Cash Flow Information:
Cash paid during the period
for income taxes $ - $ - $ - $ 200
========== =========== ========== ============
(1) Pro-Forma Adjustments:
- -------------------------
Upon completion of its initial public offering (see Note B of the Notes to
the Financial Statements), Medjet Inc.'s tax status changed from an "S"
corporation to a "C" corporation. Accordingly, the deficits accumulated
during the development stage were charged against paid-in capital.
Additionally, the proceeds from the offering were used to pay down accounts
payable and non-officer notes and associated interest payable; the balance
was invested in short-term money market instruments. The total amount of
deferred offering costs was also charged against additional paid-in
capital.
See Notes to the Financial Statements.
MEDJET INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE 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 to engage in the design, development,
production and sale of surgical technology and equipment for use
on the cornea.
(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 period.
The results of operations for the three and six month periods
ended June 30, 1996 are not necessarily indicative of results to
be expected for the entire year ending December 31, 1996.
NOTE B - SUBSEQUENT EVENT:
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 (the "Shares" or
"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
Common Stock and the Warrants will become separable on November
6, 1996, or earlier as may be agreed to by the Company and
Patterson Travis, Inc., the underwriter of the Offering (the
"Underwriter").
In conjunction with an option granted to the Underwriter 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 $400,000 (including indebtedness of $100,000
incurred after June 30, 1996) 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
shares and, immediately prior to the Offering, effected a
1.987538926-to-1 stock split of the then outstanding Common
Stock.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Medjet Inc. (the "Company), formed in December, 1993, is engaged in the
research and development of medical technology, with an 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 six months ended June 30, 1996.
Total costs and expenses during the three months ended June 30, 1996
increased by $89,631 (45%) to $288,176 from $198,545 for the comparable
period of 1995. This was primarily due to the net increase in staff (from
eight full-time and two part-time employees to ten full-time and one part-
time employees) and an increase in professional fees and consultant costs
as the Company continued its research and development activities. Expenses
were also higher during the 1996 period due to higher occupancy costs
(reflecting additional office and laboratory space assumed on April 1,
1996) and increased purchases for materials, testing and analysis.
During the six months ended June 30, 1996, total costs and expenses
increased by $98,733 (28%) to $455,382 from $356,649 for the comparable
period of 1995, generally for the same reasons as during the three-month
period.
Other income and expense for the three months ended June 30, 1996 shows a
$10,662 expense compared to income of $1,854 for the comparable period of
1995, reflecting the interest charges on short-term loans made to the
Company during 1996 and the redemption of the Company's short-term
investments made during 1995, which resulted in the elimination of interest
income.
For the six months ended June 30, 1996, other income and expense shows a
$16,030 expense compared to income of $7,928 for the comparable period of
1995, for the same reasons as during the three-month period.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, the Company's liquidity requirements have been 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
current directors ($50,000 from each director during the first quarter),
from the Company's president ($165,000 during the second quarter), and, in
connection with the Company's Offering (as defined below), from an
affiliate of the underwriter of the Offering ($100,000 during each of the
first and second quarters). Except for the loans made by the Company's
president, all loans were repaid during the third quarter of 1996 following
the Offering.
As a result of the Offering, the Company's liquidity position has 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 through
1998.
SUBSEQUENT EVENT
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 (the "Shares" or "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 Common Stock and the Warrants will become separable on November 6,
1996, or earlier as may be agreed to by the Company and Patterson Travis,
Inc., the underwriter of the Offering (the "Underwriter").
In conjunction with an option granted to the Underwriter to purchase
additional Units solely to cover over-allotments from the Offering, the
Company issued and sold to the public 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 $400,000 (including indebtedness of $100,000 incurred after
June 30, 1996) 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.
PART II - OTHER INFORMATION
---------------------------
Item 2. Changes in Securities.
---------------------
On May 13, 1996, the Company increased its authorized common
stock to 7,000,000 and authorized the issuance of 1,000,000 shares of
blank check preferred stock. Subsequent to June 30, 1996 and in connection
with the Company's initial public offering, the Company effected a
1.987538926-for-1 split of its outstanding Common Stock.
Item 4. Submission of Matters to a Vote of Security-Holders.
---------------------------------------------------
On May 2, 1996, the Company held its annual meeting of
stockholders in Edison, New Jersey.
(a) The stockholders elected the following directors with
corresponding votes for and withheld:
Number of Shares Number of
Director Voted For Shares Withheld
--------- -------------- ---------------
Eugene I. Gordon 1,066,667 0
Steven G. Cooperman 1,066,667 0
Sanford J. Hillsberg* 1,066,667 0
Steven Katz** 1,066,667 0
- -------------------------------
* To take office upon the consummation of the Company's initial public
offering
** To take office 30 days after the consummation of the Company's initial
public offering
(b) The stockholders voted to amend the Company's Certificate
of Incorporation to increase the number of shares of Common Stock which the
Company has authority to issue to 7,000,000 and to authorize the issuance
of 1,000,000 shares of blank check preferred stock, with the following
votes for, against and abstained:
FOR AGAINST ABSTAINED
___ _______ _________
1,066,667 0 0
(c) The stockholders voted to amend the Company's 1994 Stock
Option Plan to increase the number of shares of Common Stock authorized for
issuance thereunder by 200,000 (after giving effect to the 1.987538926-for-
1 stock split of the Common Stock effected in connection with the Company's
initial public offering), with the following votes for, against and
abstained:
FOR AGAINST ABSTAINED
___ _______ _________
1,066,667 0 0
(d) The stockholders voted to ratify the appointment of
Rosenberg Rich Baker Berman & Company, P.A. as independent certified public
accountants for the Company for the fiscal year ending December 31, 1996,
with the following votes for, against and abstained:
FOR AGAINST ABSTAINED
___ _______ _________
1,066,667 0 0
Item 6. Exhibits and Reports on Form 8-K.
--------------------------------
(a) Exhibits
--------
27. Financial Data Schedule
(b) Reports on Form 8-K
-------------------
Not applicable
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: September 19, 1996
MEDJET INC.
--------------------------------
(Registrant)
/s/ Eugene I. Gordon
--------------------------------
Eugene I. Gordon
President and Chief Executive Officer
/s/ Thomas M. Handschiegel
--------------------------------
Thomas M. Handschiegel
Chief Financial Officer and
Chief Accounting Officer
Exhibit No. 27
FINANCIAL DATA SCHEDULE
This schedule contains summary financial information extracted from the
June 30, 1996 (unaudited) financial statements of Medjet Inc. and is
qualified in its entirety by reference to each financial statements.
June 30, 1996
Iten Number Item Description (Unaudited)
- ----------- ---------------- -------------
5-02(1) Cash and cash items $ 61,046
5-02(2) Marketable securities -
5-02(3)(x)(1) Notes and accounts receivable - trade 2,477
5-02(4) Allowance for doubtful accounts -
5-02(6) Inventory -
5-02(9) Total current assets 64,279
5-02(13) Property, plant and equipment 86,517
5-02(14) Accumulated depreciation 63,811
5-02(18) Total assets 578,130
5-02(21) Total current liabilities 1,047,551
5-02(22) Bonds, mortgages and similar debt 615,000
5-02(28) Preferred stock-mandatory redemption -
5-02(29) Preferred stock-no mandatory redemption -
5-02(30) Common stock 2,450
5-02(31) Other stockholders' equipment (469,421)
5-02(32) Total liabilities and stockholders' equity 578,130
5-03(b)1(a) Net sales of tangible products -
5-03(b)1 Total revenues -
5-03(b)2(a) Cost of tangible goods sold -
5-03(b)2 Total costs and expenses applicable to
sales and revenues -
5-03(b)3 Other costs and expenses 455,382
5-03(b)5 Provisions for doubtful accounts and notes -
5-03(b)(8) Interest and amortization of debt discount 16,030
5-03(b)(10) Income before taxes and other items (471,412)
5-03(b)(11) Income tax expense 151
5-03(b)(14) Income/loss continuing operations (471,563)
5-03(b)(15) Discontinued operations -
5-03(b)(17) Extraordinary items -
5-03(b)(18) Cumulative effect - changes in accounting
principles -
5-03(b)(19) Net income or loss (471,563)
5-03(b)(20) Earnings per share - primary (.19)
5-03(b)(20) Earnings per share - fully diluted (.19)