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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended September 30, 1995 Commission File Number 0-26538
HEALTHCARE ACQUISITION CORP.
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(Exact name of registrant as specified in its charter)
Delaware 65-0572565
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(State or Other Jurisdiction of (I.R.S. Employer Identification
Incorporation or Organization) Number)
2365 N.W. 41st Street, Boca Raton, Florida 33431
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (407) 994-3531
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 No X
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The number of shares of Common Stock outstanding as of September 30,
1995 was 425,000.
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HEALTHCARE ACQUISITION CORP.
(A CORPORATION IN THE DEVELOPMENT STAGE)
BALANCE SHEET
ASSETS SEPTEMBER 30, 1995
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Current assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 42,089
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Deferred registration costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183,791
Deferred financing costs net of amortization . . . . . . . . . . . . . . . . . . . . . . . 18,308
Organization costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,171
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TOTAL CURRENT ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 249,359
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bridge notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 186,464
Reimbursable expenses due to stockholder . . . . . . . . . . . . . . . . . . . . . 3,399
Accrued interest on notes payable . . . . . . . . . . . . . . . . . . . . . . . . 7,667
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,663
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TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . $ 228,193
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Commitment
Stockholders' Equity:
Preferred stock, $.001 par value--shares authorized 1,000,000;
none issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ---
Common stock, $.001 par value--shares authorized 20,000,000;
issued and outstanding 425,000 . . . . . . . . . . . . . . . . . . . . . 425
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,575
Deficit accumulated during the development stage . . . . . . . . . . . . . . . . . (23,834)
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Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,166
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$ 249,359
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The accompanying notes are an integral part of the financial statements.
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HEALTHCARE ACQUISITION CORP.
(A CORPORATION IN THE DEVELOPMENT STAGE)
STATEMENTS OF OPERATIONS
March 21, 1995 Three Months
(Inception) to ended
September 30, September 30,
1995 1995
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Expenses:
Amortization of financing costs on notes payable . . . . . . . $ 15,206 $ 10,137
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 7,667 5,111
Miscellaneous expenses . . . . . . . . . . . . . . . . . . . . 961 409
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Net loss for the period . . . . . . . . . . . . . . . . . . . . . . . . $(23,834) $(15,657)
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Net loss per share . . . . . . . . . . . . . . . . . . . . . . . . . . $ (0.06) $ (0.04)
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Weighted average common shares outstanding . . . . . . . . . . . . . . 425,000 425,000
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The accompanying notes are an integral part of the financial statements.
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HEALTHCARE ACQUISITION CORP.
(A CORPORATION IN THE DEVELOPMENT STAGE)
STATEMENT OF CASH FLOWS
MARCH 21, 1995 (INCEPTION) TO SEPTEMBER 30, 1995
Cash flows from operating activities:
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (23,834)
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Adjustments to reconcile net loss to net cash provided by operating activities:
Amortization of deferred financing costs . . . . . . . . . . . . . . . . . . . 15,206
Increase in:
Accrued interest on notes payable . . . . . . . . . . . . . . . . . . . . . . 7,667
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Total adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,873
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Net cash (used in) operating activities . . . . . . . . . . . . . . . . . . . (961)
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Cash flows from financing activities:
Proceeds from bridge notes payable . . . . . . . . . . . . . . . . . . . . . . 200,000
Advances from stockholders . . . . . . . . . . . . . . . . . . . . . . . . . 8,000
Repayments to stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . (8,000)
Proceeds from sale of common stock to founding stockholders . . . . . . . . . 25,000
Deferred registration and financing costs . . . . . . . . . . . . . . . . . . (176,779)
Organization costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,171)
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Net cash provided by financing activities . . . . . . . . . . . . . . . . . . 43,050
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Net increase in cash and balance end of period . . . . . . . . . . . . . . . . $ 42,089
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Supplemental disclosure of non-cash transactions:
Deferred registration costs of $30,663 and $3,399 are included in accrued expenses and due to
stockholder, respectively.
The accompanying notes are an integral part of the financial statements.
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HEALTHCARE ACQUISITION CORP.
(A CORPORATION IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS
The financial information herein is unaudited. However, in the
opinion of management, such information reflects all adjustments (consisting
only of normal recurring accruals) necessary to a fair presentation of the
results of operations for the periods being reported. Additionally, it should
be noted that the accompanying financial statements do not purport to contain
complete disclosures in conformity with generally accepted accounting
principles.
The results of operations for the period of March 21, 1995 (inception)
to September 30, 1995 are not necessarily indicative of the results of
operations for the period March 21, 1995 (inception) to December 31, 1995.
1. ORGANIZATION AND BUSINESS OPERATIONS
Healthcare Acquisition Corp. ("Company") was incorporated in
Delaware on March 21, 1995 with the objective of acquiring or merging
with an operating business in the healthcare industry. The Company's
founding directors and advisors purchased 425,000 common shares, $.001
par value, in April 1995. The Company has selected December 31 as its
fiscal year-end.
The Company's ability to commence operations is contingent
upon obtaining adequate financial resources through a proposed public
offering ("Proposed Offering") which is discussed in Note 4. The
Company's management has broad discretion with respect to the specific
application of the net proceeds of such offering, although
substantially all of the net proceeds of such offering are intended to
be generally applied toward consummating a business combination with
an operating business engaged in the healthcare industry ("Business
Combination"). Furthermore, there is no assurance that the Company
will be able to successfully effect a Business Combination. Upon the
closing of the Proposed Offering, after payment of certain amounts to
the underwriter, ninety percent (90%) of the estimated proceeds, or
$4.86 per share held by the Public Stockholders (as defined below)
will be held in a trust account ("Trust Fund") and invested in
government securities until the earlier of: (i) the consummation of a
Business Combination; or (ii) liquidation of the Company. The
remaining proceeds (10%) may be used to pay for business, legal and
accounting due diligence on prospective acquisitions, and continuing
general and administrative expenses in addition to other expenses.
The Company, after signing a definitive agreement for the
acquisition of a target business, will submit such transaction for
stockholder approval. All of the Company's
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stockholders immediately prior to the Proposed Offering, including all
of the officers, directors and the advisors of the Company ("Initial
Stockholders"), have agreed to vote the shares of common stock owned
by them as of the effective date of the Proposed Offering in
accordance with the vote of the majority in interest of all other
stockholders of the Company ("Public Stockholders") with respect to
any Business Combination. After consummation of the Company's first
Business Combination, this voting safeguard will no longer be
applicable.
With respect to the first Business Combination which is
approved and consummated, any Public Stockholder who votes against the
Business Combination may demand that the Company convert his shares
into cash. The per-share conversion price will equal the amount in
the Trust Fund as of the record date of determination of stockholders
entitled to vote on the Business Combination divided by the number of
shares held by Public Stockholders. The Company will not consummate a
Business Combination if 20% or more in interest of the Public
Stockholders exercise their conversion rights. Accordingly, Public
Stockholders holding approximately 19.99% of the aggregate number of
shares owned by all Public Stockholders may have their shares
converted to cash in the event of a Business Combination. Such Public
Stockholders are entitled to receive their per-share interest in the
Trust Fund computed without regard to shares held by Initial
Stockholders.
The Company's Certificate of Incorporation provides for
mandatory liquidation of the Company, without stockholder approval, in
the event that the Company does not consummate a Business Combination
within 18 months from the date of the consummation of the Proposed
Offering, or 24 months from the consummation of the Proposed Offering
if certain extension criteria have been satisfied. In the event of
liquidation, it is likely that the per-share value of the residual
assets remaining available for distribution (including Trust Fund
assets) will be less than the initial public offering price per share
in the Proposed Offering (assuming no value is attributed to the
Warrants contained in the Units to be offered in the Proposed Offering
discussed in Note 4).
2. SUMMARY OF ACCOUNTING POLICIES
DEFERRED FINANCING COSTS
Costs incurred in connection with the Company's initial bridge
financing are being amortized over the term of the notes.
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NET LOSS PER SHARE
Net loss per common share is computed on the basis of the
weighted average number of common shares outstanding during the
period. Warrants to purchase 400,000 shares of common stock (Note 5)
are anti-dilutive and are excluded from the calculation.
3. DEFERRED REGISTRATION AND FINANCING COSTS
As of September 30, 1995, the Company has incurred deferred
registration costs of $183,791, relating to expenses incurred in
connection with the Proposed Offering, and deferred financing costs of
$27,050 ($18,308 net of amortization) related to the financing
discussed in Note 5. Upon consummation of the Proposed Offering, the
deferred registration costs will be charged to equity and the deferred
financing costs will be charged to operations. Should the Proposed
Offering prove to be unsuccessful, the deferred registration costs
will also be charged to operations, along with additional expenses to
be incurred.
4. PROPOSED PUBLIC OFFERING
The Proposed Offering calls for the Company to offer for
public sale up to 1,700,000 units ("Units"). Each Unit consists of
one share of the Company's common stock, $.001 par value, and two
Redeemable Common Stock Purchase Warrants ("Warrants"). Each Warrant
entitles the holder to purchase from the Company one share of common
stock at an exercise price of $5.00 during the period commencing on
the later of one year from the effective date of the Proposed Offering
or the consummation of a Business Combination and ending seven years
from the effective date of the Proposed Offering. The Warrants will
be redeemable at a price of $.01 per Warrant upon 30 days notice at
any time, only in the event that the last sale price of the common
stock is at least $8.50 per share for 20 consecutive trading days
ending on the third day prior to date on which notice of redemption is
given.
5. BRIDGE NOTES PAYABLE
In May 1995, the Company issued an aggregate of $200,000 of
promissory notes to certain accredited investors. These notes bear
interest at the rate of 10% per annum and are due on the earlier of
July 1996 or the consummation of the Company's initial public
offering. In addition, the investors were issued warrants to purchase
400,000 shares of common stock (valued at $20,000) which have been
accounted for as a debt discount increasing the effective interest
rate to 19%. These warrants are identical to the Warrants discussed
in Note 4, except that they are not redeemable by the Company until 90
days after the consummation of a Business Combination.
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6. RELATED PARTY TRANSACTIONS
The Company presently occupies office space provided by
MedVest, Inc., an affiliate of John H. Abeles, M.D., the President,
Chief Executive Officer and a director of the Company.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
Healthcare Acquisition Corp. (the "Company") is a newly organized
"Special Purpose Acquisition Company," the objective of which is to acquire or
merge with an operating business in the Healthcare Industry (a "Business
Combination"). The Company was incorporated on March 21, 1995. The Initial
Stockholders paid an aggregate of $25,000 for a total of 425,000 shares of
Common Stock and have agreed to contribute an additional $25,000 to the Company
if it liquidates prior to the consummation of a Business Combination. To date,
the Company's efforts have been limited to organizational activities.
In May 1995, the Company consummated a Bridge Financing in order to
pay certain organizational expenses, the costs of such Bridge Financing and
certain costs of the Company's proposed initial public offering ("IPO"). Six
Bridge Investors loaned an aggregate of $200,000 to the Company and were issued
promissory notes in that amount, bearing interest at the rate of 10% per annum
and 400,000 warrants to purchase Common Stock ("Bridge Warrants"). The Bridge
Warrants are identical to the warrants to be issued in the IPO except that they
are not redeemable by the Company until 90 days after consummation of a
Business Combination and the Bridge Investors have agreed not to transfer the
Bridge Warrants until after the consummation of a Business Combination and not
to exercise them until 90 days after such consummation.
Prior to the consummation of a Business Combination, substantially all
of the Company's working capital will be used to identify, evaluate and select
a suitable Target Business and, thereafter, to structure and negotiate a
Business Combination with such Target Business. Such working capital needs are
expected to be satisfied from the net proceeds of the IPO not deposited in the
Trust Fund.
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits
27 - Financial Data Schedule (for SEC use only)
(B) Reports on Form 8-K
None
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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 duly authorized.
Date: May 12, 1996 HEALTHCARE ACQUISITION CORP.
(Registrant)
By: /s/ John H. Ables
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John H. Abeles
President and Treasurer:
(Principal Financial Officer)
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