U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 1997
Commission file number: 0-28154
SIMPLEX MEDICAL SYSTEMS, INC.
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(Exact name of small business issuer as specified in its Charter)
Colorado 84-1337509
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
430 Ansin Boulevard, Suite G, Hallandale, Florida 33009
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(Address of principal executive offices, including zip code)
(954) 455-0110
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(Issuer's telephone number)
Indicate by check mark 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 [ ]
There were 7,500,000 shares of the Registrant's Common Stock outstanding as of
May 15, 1997.
SIMPLEX MEDICAL SYSTEMS, INC. AND SUBSIDIARY
A DEVELOPMENT STAGE ENTERPRISE
CONSOLIDATED BALANCE SHEET
MARCH 31, 1997 AND 1996
(UNAUDITED)
ASSETS
3/31/97 3/31/96
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CURRENT ASSETS
CASH $ 46,616 $ 12,730
ACCOUNTS RECEIVABLE 13,549 4,367
INVENTORY 83,530 132,362
PREPAID EXPENSE 6,537 4,349
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TOTAL CURRENT ASSETS 150,232 153,808
PROPERTY, PLANT AND EQUIPMENT, AT COST
(NET OF ACCUMULATED DEPRECIATION) 80,696 9,269
PATENTS & OFFERING EXPENSE (NET OF
ACCUMULATED AMORTIZATION) 21,892 1,085
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TOTAL ASSETS $252,820 $164,162
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
CURRENT LIABILITIES
CUSTOMER DEPOSITS 134,788 125,386
ACCOUNTS PAYABLE 17,616 145,111
OTHER CURRENT LIABILITIES 4,960 8,807
NOTES PAYABLE 107,021 44,950
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TOTAL CURRENT LIABILITIES 264,385 324,254
LONG-TERM DEBT
COMMITTMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
COMMON STOCK (PAR VALUE $.0001,
AUTHORIZED 100,000,000 SHARES,
ISSUED AND OUTSTANDING 7,500,000
SHARES) 750 110
PAID IN CAPITAL IN EXCESS OF PAR 619,742 -
DEFICIT ACCUMULATED DURING THE
DEVELOPMENT STAGE (632,057) (160,202)
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TOTAL STOCKHOLDERS EQUITY (11,565) (160,092)
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $252,820 $164,162
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
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SIMPLEX MEDICAL SYSTEMS, INC. AND SUBSIDIARY
A DEVELOPMENT STAGE ENTERPRISE
CONSOLIDATED STATEMENT OF OPERATIONS
JANUARY 1 TO MARCH 31, 1997 AND 1996
(UNAUDITED)
3/31/97 3/31/96
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REVENUES - NET $ 14,074 $ 7,500
COST OF GOOODS SOLD 7,594 4,815
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GROSS PROFIT 6,480 2,685
OPERATING EXPENSES
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 107,999 110,399
DEPRECIATION AND AMORTIZATION EXPENSE 3,324 357
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TOTAL OPERATING EXPENSES 111,323 110,756
OPERATING LOSS (104,843) (108,071)
INTEREST EXPENSE (335) (3,745)
NET (LOSS) (105,178) (111,816)
NET (LOSS) PER SHARE $(0.014)
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 7,500,000
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
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SIMPLEX MEDICAL SYSTEMS, INC. AND SUBSIDIARY
A DEVELOPMENT STAGE ENTERPRISE
CONSOLIDATED STATEMENT OF CASH FLOWS
JANUARY 1, 1996 TO MARCH 31, 1997 AND MARCH 31, 1996
(UNAUDITED)
3/31/97 3/31/96
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CASH FLOWS FROM OPERATING ACTIVITIES:
NET LOSS $(105,178) $(111,816)
ADJUSTMENTS TO RECONCILE NET LOSS
TO NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 3,324 357
CHANGES IN OPERATING ASSETS AND
LIABILITIES:
ACCOUNTS RECEIVABLE (4,400) (1,103)
INVENTORY 6,040 (135,973)
PREPAID EXPENSE 0 0
ACCOUNTS PAYABLE (784) 130,213
OTHER CURRENT LIABILITIES 1,038 4,692
CUSTOMER DEPOSITS (4,011) 14,952
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NET CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES (103,971) (98,678)
CASH FLOWS FROM INVESTING ACTIVITIES:
ACQUISITION OF FIXED ASSETS 0 (7,146)
NOTES PAYABLE TO STOCKHOLDERS 99,381 39,450
PATENT COSTS (2,880) (745)
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NET CASH PROVIDED BY INVESTING
ACTIVITIES 96,501 31,559
NET INCREASE IN CASH (7,470) (67,119)
CASH - BEGINNING OF PERIOD 54,086 79,849
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CASH - END OF PERIOD $ 46,616 $ 12,730
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
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SIMPLEX MEDICAL SYSTEMS, INC. AND SUBSIDIARY
A DEVELOPMENT STAGE ENTERPRISE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
NOTE 1 - ORGANIZATION
The Company, Simplex Medical Systems, Inc., a development stage enterprise,
was formed on September 15, 1995, and is engaged in the development,
acquisition, marketing and manufacture of medical diagnostic products,
biological products for blood banking, bulk pharmaceuticals and specialty
chemicals. The financial statements include the accounts of the Company s
subsidiary, Analyte Diagnostics, Inc., from the date of its inception, June 6,
1995.
Analyte Diagnostics, Inc., a predecessor corporation, was merged into Simplex
Medical Systems, Inc., on October 31, 1995, with all account balances recorded
at cost.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Simplex Medical
Systems, Inc., and its wholly owned subsidiaries, Simplex Medical Systems,
Inc. (a Florida corporation) and Analyte Diagnostics, Inc. All intercompany
accounts and transactions have been eliminated in consolidation.
INVENTORY
Inventory for sale is recorded at cost. Inventory is valued at the lower of
cost (first-in, first-out) or market.
PROPERTY, PLANT AND EQUIPMENT
Property, Plant and Equipment, acquired from outside sources, are recorded at
cost. Depreciation is computed using the straight-line method over the
estimated useful lives of the assets, which range from 3 to 7 years.
Expenditures for maintenance and repairs are charged against operations as
incurred.
INCOME TAXES
The Company accounts for income taxes under the liability method in accordance
with Statement of Financial Accounting Standards No. 109 Accounting for Income
Taxes. Deferred income taxes are determined based upon the difference between
the financial statement carrying amount and the tax basis of assets and
liabilities using tax rates expected to be in effect in the years in which the
differences are expected to reverse.
REVENUE RECOGNITION
Revenue from sales are recognized upon shipment to the customer.
NOTE 3 - BASIS OF PRESENTATION AND CONTINUED EXISTENCE
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. Since inception, the Company has
experienced losses aggregating $632,057 and has been dependent upon loans from
stockholders and other third parties in order to satisfy operations to date.
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Management believes that funds generated from operations will provide the
Company with sufficient cash flow resources to fund the operations of the
Company. The financial statements do not include any adjustments to reflect
the possible future effects on the recoverability and classification of assets
or the amounts and classifications of liabilities that may result from the
possible inability of the Company to continue as a going concern.
NOTE 4 - INVENTORY
Inventory consists of $83,530 of finished goods as of March 31, 1997.
NOTE 5 - PROPERTY, PLANT AND EQUIPMENT
Property and equipment consists of the following at March 31, 1997:
Office Furniture And Equipment $ 767
Lab Equipment 83,271
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Total Equipment 84,038
Less: Accumulated Depreciation 3,342
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Total Property, Plant And Equipment $ 80,696
NOTE 6 - NOTES PAYABLE TO STOCKHOLDERS
Interest expense for the period
ended March 31, 1997, amounted to: $ 335
Interest expense for the period
ended March 31, 1996, amounted to: $ 3,745
NOTE 7 - INCOME TAXES
To date the Company has incurred tax operating losses and therefore has
generated no income tax liabilities. As of March 31, 1997, the Company has
generated net operating loss carryforwards totaling $(632,657) which are
available to offset future taxable income, if any, through the year 2010. As
utilization of such an operating loss for tax purposes is not assured, the
deferred tax asset has been fully reserved through the recording of 100%
valuation allowance.
The components of the net deferred tax asset are as follows at March 31, 1997:
Deferred Tax Assets:
Net Operating Loss Carryforward $(632,057)
Valuation Allowance (632,057)
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The following should be read in conjunction with the attached Financial
Statements and Notes thereto of the Company.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 VERSUS THREE MONTHS ENDED MARCH 31,
1996
During the three months ended March 31, 1997, the Company had $14,074 in
revenue compared to $7,500 in revenue during the corresponding prior year
period. The increase in revenue was the result of international sales of
samples for testing and evaluation purposes.
The Company expects sales to increase significantly in the second
quarter due to the orders that were received during the first quarter. Sales
contracts have been executed with vendors in Brazil, Saudi Arabia, Thailand,
the Phillippines and other third world countries. The Company has also
received permission from the Federal Drug Administration to commence human
testing of its products in Broward County, Florida, for eventual approval
within the United States.
Expenses for the three months ended March 31, 1997, were approximately
$500 more than the corresponding prior year period. General selling and other
administrative expenses decreased by approximately $2,400 from the
corresponding period.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1997, the Company had negative working capital of
approximately ($114,153) compared to approximately $153,808 at March 31, 1996.
Due to existing in-house orders, working capital is expected to increase
during the second quarter of 1997.
As of March 31, 1997, the Company had no material commitments for
capital expenditures.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings. None.
Item 2. Changes in Securities. None.
Item 3. Defaults Upon Senior Securities. None.
Item 4. Submission of Matters to a Vote of Security Holders.
On March 28, 1997, a special meeting of shareholders was called to
approve an amendment to the Company's Articles of Incorporation to change the
name of the Company to "Simplex Medical Systems, Inc."
Item 5. Other Information. None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 Financial Data Schedule Filed herewith
electronically
(b) Reports on Form 8-K.
A Current Report on Form 8-K dated March 5, 1997 was filed by
the Company on March 17, 1997, reporting the acquisition of Simplex Medical
Systems, Inc. in response to Items 1,2,5 and 7.
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SIGNATURES
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.
SIMPLEX MEDICAL SYSTEMS, INC.
Date: May 20, 1997 By /s/ Nicholas G. Levandoski
Nicholas G. Levandoski
Acting President, Treasurer and
Director
EXHIBIT INDEX
EXHIBIT METHOD OF FILING
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27. Financial Data Schedule Filed herewith electronically