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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 June 30, 1996 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)
200 East Broward Boulevard, P.O. Box 1900, Fort Lauderdale, Florida 33301
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (954) 761-2908
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 X No
--- ---
The number of shares of Common Stock outstanding as of August 12, 1996 was
2,100,000.
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HEALTHCARE ACQUISITION CORP.
QUARTERLY REPORT FORM 10-Q
INDEX
PART I
Item 1 - Financial statements: 3
Balance Sheets 3
Statements of Operations 4
Statement of Cash Flows 5
Notes to Financial Statements 6
Item 2 - Management's Discussion and Analysis of Financial 8
Condition and Results of Operations
PART II
Item 6 - Exhibits and Reports on Form 8-K 9
Signatures 10
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HEALTHCARE ACQUISITION CORP.
(A CORPORATION IN THE DEVELOPMENT STAGE)
BALANCE SHEETS
June 30, December 31,
A S S E T S 1996 1995
----------- -------- ------------
Current assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 555,332 $ 31,562
U.S. Treasury Bills and Cash held in Trust Fund. . . . . . . . . 8,509,476
Prepaid Expenses . . . . . . . . . . . . . . . . . . . . . . . . 62,910
Deferred registration costs. . . . . . . . . . . . . . . . . . . 184,056
Deferred financing costs net of amortization . . . . . . . . . . 12,543
Organization costs net of amortization . . . . . . . . . . . . . 4,935 5,195
---------- --------
T O T A L . . . . . . . . . . . . . . . . . . . . . . . . . . $9,132,653 $233,356
========== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Bridge notes payable . . . . . . . . . . . . . . . . . . . . . . $190,726
Reimbursable expenses due to stockholder . . . . . . . . . . . . 3,489
Accrued interest on notes payable. . . . . . . . . . . . . . . . 12,722
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . $ 169,071 20,340
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Total current liabilities . . . . . . . . . . . . . . . . . . 169,071 227,277
---------- --------
Common stock, subject to possible conversion,
344,999 shares at conversion value. 1,676,695
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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 2,100,000 shares at June 30,
1996 (including 344,999 shares subject to
possible conversion) and 375,000 shares
at December 31, 1995 . . . . . . . . . . . . . . . . . . . . . 1,755 375
Additional paid-in capital . . . . . . . . . . . . . . . . . . . 7,309,767 44,625
Deficit accumulated during the development
stage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (24,635) (38,921)
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Total stockholders' equity. . . . . . . . . . . . . . . . . . 7,286,887 6,079
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T O T A L . . . . . . . . . . . . . . . . . . . . . . . . . . $9,132,653 $233,356
========== ========
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
Six Months March 21, 1995 Three Moths Three Months March 21, 1995
Ended (Inception) to Ended Ended (Inception) to
June 30, 1996 June 30, 1995 June 30, 1996 June 30, 1995 June 30, 1996
------------- -------------- ------------- ------------- --------------
Interest Income $ 131,704 $ 114,310 $ 131,704
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Expenses:
General and administrative
expenses 91,777 $ 552 52,728 $ 552 92,743
Amortization of financing costs
on notes payable 21,817 5,069 5,069 47,050
Interest 3,824 2,556 2,556 16,546
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Total Expenses 117,418 8,177 52,728 8,177 156,339
---------- ------- ---------- ------- --------
Net Income (Loss) for the period $ 14,286 ($8,177) $ 61,582 ($8,177) ($24,635)
========== ======= ========== ======= ========
Net Income (Loss) per share $ 0.01 ($0.02) $ 0.03 ($ 0.02)
========== ======= ========== =======
Weighted average common shares
outstanding 1,397,033 375,000 2,093,571 375,000
========== ======= ========== =======
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 CASH FLOWS
March 21, 1995 March 21, 1995
Six Months (Inception) (Inception)
Ended to to
June 30, June 30, June 30,
1996 1995 1996
----------- -------------- --------------
Cash flows from operating activities:
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,286 $ (8,177) $ (24,635)
---------- --------- -----------
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Amortization of organization costs. . . . . . . . . . . . . . . . . 260 260
Amortization of deferred financing costs 21,817 5,069 47,050
Increase (decrease) in cash from changes in:
Interest receivable and interest on trust fund investments (125,976) (125,976)
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . (62,910) (62,910)
Accrued interest on notes payable. . . . . . . . . . . . . . . . . (12,722) 2,556
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . 26,977 26,977
Reimbursable expenses due to Stockholder 218
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Total adjustments . . . . . . . . . . . . . . . . . . . . . . . . (152,554) 7,843 (114,599)
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Net cash (used in) operating
activities . . . . . . . . . . . . . . . . . . . . . . . . . . . (138,268) (334) (139,234)
---------- --------- -----------
Cash flows from investing activities:
Cash in trust fund. . . . . . . . . . . . . . . . . . . . . . . . . . (8,383,500) (8,383,500)
---------- -----------
Cash flows from financing activities:
Proceeds from public offering,
net of underwriting discount and
offering expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 9,085,311 9,085,311
Registration costs. . . . . . . . . . . . . . . . . . . . . . . . . . 160,227 (143,243)
Proceeds from bridge notes payable. . . . . . . . . . . . . . . . . . 200,000 200,000
Advances from stockholders. . . . . . . . . . . . . . . . . . . . . . 8,000 8,000
Repayment of bridge notes payable . . . . . . . . . . . . . . . . . . (200,000) (200,000)
Repayments to stockholders. . . . . . . . . . . . . . . . . . . . . . (8,000) (8,000)
Proceeds from sale of common stock to
founding stockholders. . . . . . . . . . . . . . . . . . . . . . . . 25,000 25,000
Financing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . (20,519) (27,050)
Organization costs. . . . . . . . . . . . . . . . . . . . . . . . . . (2,554) (5,195)
---------- --------- -----------
Net cash provided by financing activities . . . . . . . . . . . . 9,045,538 58,684 9,078,066
---------- --------- -----------
NET INCREASE IN CASH . . . . . . . . . . . . . . . . . . . . . . . . . 523,770 58,350 555,332
Cash at beginning of period. . . . . . . . . . . . . . . . . . . . . . 31,562
---------- --------- -----------
CASH AT END OF PERIOD. . . . . . . . . . . . . . . . . . . . . . . . . $ 555,332 $ 58,350 $ 555,332
========== ========= ===========
Supplemental disclosures of noncash
transactions:
Registration costs included in accrued expenses. . . . . . . . . . . $ 121,754 $ 31,406 $ 142,094
Financing costs included in accrued expenses . . . . . . . . . . . . 6,531
Organization costs included in accrued expenses . . . . . . . . . . 525
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 for 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 six months ended June 30, 1996 are not
necessarily indicative of the results of operations for the full fiscal year
ending December 31, 1996. The balance sheet as of December 31, 1995 was
extracted from the audited balance sheet appearing in the Company's Form 10-K
for the year ended December 31, 1995.
These statements should be read in conjunction with the Company's financial
statements for the period March 21, 1995 (inception) to December 31, 1995
appearing in the Company's Form 10-K for the year ended December 31, 1995.
(NOTE 1) - Organization and Business Operations:
Healthcare Acquisition Corp. (the "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. In
January 1996, the stockholders contributed 100,000 shares back to the Company.
In addition, in March 1996, the Company effected a 1 2/13 for 1 stock split.
The contribution and stock split have been reflected retroactively in the
accompanying financial statements. The Company has selected December 31 as its
fiscal year-end.
The Company consummated an initial public offering of its common stock on
March 13, 1996 (the "Offering") and raised net proceeds of approximately
$7,826,000. On March 25, 1996 and April 10, 1996, the underwriters of the
Offering exercised their over-allotment option and the Company received net
proceeds of approximately $864,000 and $351,000, respectively. The Company's
management has broad discretion with respect to the specific application of the
net proceeds of the Offering, although substantially all of the net proceeds of
the Offering are intended to be generally applied toward consummating a business
combination with an operating business engaged in the healthcare industry (the
"Business Combination"). Furthermore, there is no assurance that the Company
will be able to successfully effect a Business Combination. As of June 30,
1996, $8,383,500 or $4.86 per share held by the Public Stockholders (as defined
below) is being held in a trust account (the "Trust Fund"), and has been
invested in government securities until the earlier of (i) the consummation of a
Business Combination or (ii) the liquidation of the Company. The remaining
proceeds 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 stockholders immediately prior to the Offering, including all of
the officers, directors and the advisors of the Company (the "Initial
Stockholders"), have agreed to vote the shares of common stock owned by
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them as of the effective date of the Offering in accordance with the vote of
the majority in interest of all other stockholders of the Company (the "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 Offering, or 24 months from the consummation of
the 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 Offering.
(NOTE 2) - 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
shares of common stock are anti-dilutive and are excluded from the calculation.
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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 (as
hereinafter defined) paid an aggregate of $25,000 for a total of 375,000 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.
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 initial public offering of its securities (the "IPO").
Six Bridge Investors loaned an aggregate of $200,000 to the Company and were
issued promissory notes ("Bridge Notes") in that amount, bearing interest at
the rate of 10% per annum and 400,000 warrants to purchase shares of Common
Stock ("Bridge Warrants"). The Bridge Notes were paid in full with a portion
of the proceeds from the IPO which was consummated on March 13, 1996. The
Bridge Warrants are identical to the Warrants issued by the Company 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.
The resale of the Bridge Warrants and the issuance of the underlying Common
Stock ("Bridge Warrant Shares") were registered under the Registration
Statement filed with respect to the IPO.
On March 13, 1996, the Company consummated the IPO and the Company
received net proceeds of approximately $7,609,000, after the Company repaid the
Bridge Notes, including the interest thereon, and the payment of offering
expenses. $7,290,000 of such proceeds were placed in a "Trust Fund" and
invested in United States Government Securities. The Company's management has
broad discretion with respect to the specific application of the net proceeds
of the IPO, although substantially all of the net proceeds will be used toward
consummating a Business Combination with an operating business in the
Healthcare Industry. There is no assurance that the Company will be able to
successfully effect a Business Combination. The amounts in the Trust Fund will
not be released until the earlier of the consummation of a Business Combination
or the liquidation of the Company. The remaining net proceeds will be used to
pay for business, legal and accounting due diligence on prospective Target
Businesses, and to pay for the general and administrative expenses of the
Company, including legal and accounting fees and expenses in connection with
the Company's reporting obligations to the Securities and Exchange Commission.
On March 25, 1996, the underwriters of the IPO exercised a portion of
their over-allotment option pursuant to the IPO and the Company received net
proceeds of approximately $864,000. From these proceeds, approximately
$777,600 has been placed in the Trust Fund and invested in government
securities.
On April 10, 1996, the underwriters of the IPO exercised the remaining
portion of their over-allotment option and the Company received additional net
proceeds of approximately $351,000. From these proceeds, approximately
$315,900 has been placed in the Trust Fund and invested in government
securities.
In the event that the Company does not consummate a Business Combination
by September 13, 1997 (March 13, 1998 if certain extension criteria are met),
the Company will dissolve and will distribute to all the stockholders other
than the Initial Stockholders ("Public Stockholders") in
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proportion to their respective equity interests in the Company, an aggregate
sum equal to the amount in the Trust Fund, inclusive of any interest thereon,
plus any remaining net assets of the Company. All of the Company's
stockholders immediately prior to the IPO ("Initial Stockholders") have waived
their respective rights to participate in any liquidation distribution with
respect to the shares of Common Stock owned by them immediately prior to the
IPO. A Public Stockholder is also entitled to receive funds from the Trust
Fund in the event that such stockholder seeks redemption of his shares in
connection with a Business Combination which the stockholder votes against and
which is actually consummated by the Company.
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.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedule (for SEC use only)
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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: August 12, 1996 HEALTHCARE ACQUISITION CORP.
(Registrant)
By: /s/ JOHN H. ABELES
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John H. Abeles
President and Treasurer:
(Principal Financial Officer)
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