UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 2007
------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ______________ to _______________
COMMISSION FILE NUMBER 000-29062
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AMERICARE HEALTH SCAN, INC.
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(Exact name of small business issuer as specified in its charter)
FLORIDA 65-0714523
- ------------------------------------- ----------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
20 N.W. 181st Street
Miami, Florida 33169
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(Address of principal executive offices)
(305) 770-1141
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(Issuer's telephone number)
Not Applicable
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Former name, former address and former fiscal year, if changed since last report
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 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 ]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of September 30, 2007, the Issuer
had 19,242,459 Shares of Common Stock outstanding.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) 2
Balance Sheet as of September 30, 2007 (unaudited) 3
Statements of Loss for cumulative amounts from
development stage (January 1, 2005) through
September 30, 2007 and for the three and nine
months ended September 30, 2007 and 2006 (unaudited) 4
Statements of Cash Flows for the nine months ended
September 30, 2007 and 2006 (unaudited) 5
Notes to the Financial Statements (unaudited) 6
Item 2. Management's Discussion and Analysis or Plan Operation 7
Item 3. Controls and Procedures 9
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Unregistered sales of equity securities and use of proceeds 10
Item 3. Defaults upon senior securities 10
Item 4. Submission of matters to a vote of security holders 10
Item 5. Other Information 10
Item 6. Exhibits and reports on Form 8-K 10
1
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
The accompanying unaudited financial statements have been prepared in accordance
with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B, and,
therefore, do not include all information and footnotes necessary for a complete
presentation of financial position, results of operations, and cash flows, in
conformity with generally accepted accounting principles. In our opinion, all
adjustments considered necessary for a fair presentation of the results of
operations and financial position have been included and all such adjustments
are of a normal recurring nature. Operating results for the nine months ended
September 30, 2007, are not necessarily indicative of the results that can be
expected for the year ending December 31, 2007.
As used in this Quarterly Report, the terms "we," "us," "our," the "Company" and
"Americare" mean Americare Health Scan, Inc. unless otherwise indicated. All
dollar amounts in this Quarterly Report are in U.S. dollars unless otherwise
stated.
2
AMERICARE HEALTH SCAN, INC. (A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET (UNAUDITED)
SEPTEMBER 30, 2007
================================================================================
ASSETS
Cash $ 1,145
-----------
Total current assets 1,145
-----------
Total assets $ 1,145
===========
LIABILITIES AND DEFICIENCY IN ASSETS
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 34,874
Accrued interest payable 1,918,906
Accrued officer's compensation 2,340,000
Due to shareholder 53,832
Notes payable - related parties 2,923,264
-----------
Total current liabilities 7,270,876
-----------
DEFICIENCY IN ASSETS
Capital stock; $0.001 par value;
50,000,000 shares authorized;
19,242,459 shares issued and outstanding 19,242
Additional paid-in capital 1,662,250
Accumulated deficit (8,951,223)
-----------
Total deficiency in assets (7,269,731)
===========
Total liabilities and deficiency in assets $ 1,145
===========
See accompanying notes.
3
AMERICARE HEALTH SCAN, INC. (A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF LOSS (UNAUDITED)
====================================================================================================================================
Cumulative
Amounts
From Development
Stage (January 1, For the Three For the Three For the Nine For the Nine
2005) through Months Ended Months Ended Months Ended Months Ended
September 30, 2007 September 30, 2007 September 30, 2006 September 30, 2007 September 30, 2006
- ------------------------------------------------------------------------------------------------------------------------------------
REVENUE $ - $ - $ - $ - $ -
------------------ ------------------ ------------------ ------------------ -----------------
GENERAL AND ADMINISTRATIVE EXPENSES
Auto expense 3,226 - - 18 -
Bank fees and service charges 10,779 40 1,394 40 3,033
Insurance 23,044 - 2,999 - 4,944
Legal and professional 42,686 - 1,698 6,552 18,421
Management fees 72,195 - 4,500 11,798 18,597
Meals and entertainment 4,073 - - - -
Office expense 7,336 - - 510 404
Officer's compensation 572,000 52,000 52,000 156,000 156,000
Penalties and interest 21,708 - 1,800 50 1,800
Postage and delivery 1,785 - 31 - 228
Repairs and maintenance 3,171 838 - 838 503
Salaries and wages 199,818 - 3,724 - 47,649
Taxes and licenses 20,076 - 285 75 4,864
Telephone 20,828 - 2,973 3,343 7,650
Travel 27,216 - - - -
Utilities 46,443 - 4,498 4,434 8,732
------------------ ------------------ ------------------ ------------------ -----------------
Total general and
administrative expenses 1,076,384 878 75,902 183,658 272,826
------------------ ------------------ ------------------ ------------------ -----------------
Loss before other income (expenses) (1,076,384) (52,878) (75,902) (183,658) (272,826)
------------------ ------------------ ------------------ ------------------ -----------------
OTHER INCOME (EXPENSES)
Other income 90,592 - 6,480 6,431 20,880
Interest expense (1,064,421) (115,227) (106,327) (347,327) (303,756)
Other expense (1,801) - - - (934)
------------------ ------------------ ------------------ ------------------ -----------------
Total other income
and (expenses) (975,630) (115,227) (99,847) (340,896) (283,810)
------------------ ------------------ ------------------ ------------------ -----------------
Loss before provision for
income taxes (2,052,014) (168,105) (175,749) (524,552) (556,636)
Provision for income taxes - - - - -
------------------ ------------------ ------------------ ------------------ -----------------
Net loss $ (2,052,014) $ (168,105) $ (175,749) $ (524,552) $ (556,636)
================== ================== ================== ================== =================
Net loss per share - basic and diluted $ (0.01) $ (0.01) $ (0.02) $ (0.03)
================== ================== ================== =================
Weighted average number of shares
of common stock outstanding -
basic and diluted 19,242,459 19,242,459 19,242,459 19,242,459
================== ================== ================== =================
<FN>
See accompanying notes.
</FN>
4
AMERICARE HEALTH SCAN, INC. (A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS (UNAUDITED)
=============================================================================================================
For the nine months ended September 30, 2007 2006
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CASH FLOWS FROM DEVELOPMENT STAGE ACTIVITIES
Net loss $(524,552) $ (556,636)
Change in assets and liabilities:
Decrease in accounts payable and accrued expenses (74,082) (3,882)
Increase in accrued interest payable 347,327 303,791
Increase in accrued officer's compensation 156,000 156,000
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NET CASH USED IN DEVELOPMENT STAGE ACTIVITIES (95,307) (100,727)
--------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net transactions from notes payable - related parties 69,526 100,907
Due to shareholder 25,707 -
--------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 95,233 100,907
--------- ----------
NET (DECREASE) INCREASE IN CASH (74) 180
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CASH AND CASH EQUIVALENTS, beginning of period 1,219 -
--------- ----------
CASH AND CASH EQUIVALENTS, end of period $ 1,145 $ 180
========= ==========
SUPPLEMENTAL DISCLOSURE:
Income taxes paid $ - $ -
========= ==========
Interest paid $ - $ -
========= ==========
<FN>
See accompanying notes.
</FN>
5
AMERICARE HEALTH SCAN, INC. (A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 2007
1. DEVELOPMENT STAGE ACTIVITIES
Americare Health Scan, Inc. (the "Company") was incorporated under the
laws of the State of Florida on February 3, 1994, and is engaged in the
business of developing technological solutions for medical, dental, and
high tech industries, and consequently bringing the developed
technologies to the market place. The Company has been researching
products for development. The Company has not yet obtained necessary
approvals to market the products it is developing. Commencing January
1, 2005, the Company is considered to be in the development stage.
BASIS OF PRESENTATION
The accompanying interim financial statements have been prepared by the
Company in conformity with generally accepted accounting principles in
the United States of America for interim financial statements. In the
opinion of management, the accompanying interim financial statements
contain all adjustments necessary (consisting of normal recurring
accruals) to present fairly the financial information contained
therein. These interim financial statements do not include all
disclosures required by generally accepted accounting principles in the
United States of America. The results of operation for the nine months
ended Septemeber 30, 2007, are not necessarily indicative of the
results to be expected for the year ending December 31, 2007.
RECLASSIFICATION
Certain amounts in the prior year financial statements have been
reclassified for comparative purposes to conform to the current year
presentation. There was no material changes in classifications made to
previously issued financial statements.
2. GOING CONCERN
As reflected in the accompanying financial statements, the Company
incurred net losses of $123,785 and $116,105 for the quarters ended
September 30, 2007 and 2006, due principally to expenses incurred for
general and administrative expenses and interest expense. To date the
Company has not generated sufficient cash flows to sustain the
operations. Management of the Company is developing a plan to finance
its continuing research and development activities through the issuance
of debt or equity securities. The ability of the Company to continue as
a going concern is dependent on the success of the plan and the
continued support of the Company's major shareholder. The financial
statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern.
3. NET LOSS PER COMMON SHARE
Net loss per common share has been computed (basic and dilutive) for
all periods presented and is based on the weighted average number of
shares outstanding during the period.
4. DUE TO RELATED PARTIES
The Company received loans from stockholders in exchange for on-demand
promissory notes. These notes accrued interest at a compounded rate of
the prime rate (8.25% at September 30, 2007) plus 2% as of the last day
of the quarter, but no less than 8% or greater than 18%. The aggregate
principal balance of these notes at September 30, 2007, amounted to
$2,923,264. Interest expense for the quarter ended September 30, 2007
amounted to $115,227.
5. COMMITMENTS AND CONTINGENCIES
The Company has not filed its 2006 or 2007 federal income tax returns.
6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements contained in this Quarterly Report constitute
"forward-looking statements." These statements, identified by words such as
"plan," "anticipate," "believe," "estimate," "should," "expect" and similar
expressions include our expectations and objectives regarding our future
financial position, operating results and business strategy. These statements
reflect the current views of management with respect to future events and are
subject to risks, uncertainties and other factors that may cause our actual
results, performance or achievements, or industry results, to be materially
different from those described in the forward-looking statements. Such risks and
uncertainties include those set forth under the caption "Management's Discussion
and Analysis or Plan of Operation" and elsewhere in this Quarterly Report. We
advise you to carefully review the reports and documents we file from time to
time with the Securities and Exchange Commission (the "SEC"), particularly our
Annual Reports on Form 10-KSB and our Current Reports on Form 8-K.
GENERAL
Americare Health Scan, Inc. is a development stage company that was incorporated
under the laws of the State of Florida on February 3, 1994. We developed the
first non-invasive, rapid, non-radioactive technology for the direct detection
of the disease process known as Active Helicobacter Pylori ("H-Pylori") for
patients with Peptic Ulcer diseases. The Ana-Sal(R) Saliva Test for H. Pylori is
simple, provides a cost-effective means for direct sampling, and requires only a
thirty second procedure for the detection of active H. Pylori infection.
Estimates suggest that almost 10 million Americans are diagnosed each year with
Peptic Ulcers. Although saliva diagnostic testing is in its infancy, the broader
diagnostic test market is highly competitive. As a result, it will be difficult
for saliva diagnostic tests to take market share from serum and urine diagnostic
tests. We believe that the market for the ANA-SAL(R) saliva based tests have a
significant growth potential. Demand for point of care and field diagnostics,
especially at border crossing points between countries, is also increasing. We
also believe that a saliva-based non-invasive method of testing will expand this
opportunity significantly.
PLAN OF OPERATION
Our ultimate objective is to build a fully integrated research and development,
manufacturing, marketing and distribution organization capable of providing the
medical diagnostic and drug delivery markets with products that offer accuracy,
efficacy, ease of use and reduced costs. In order to accomplish this objective,
we have developed the following strategy:
Provide a Broad Range of Products
We believe that a diversified product base can increase potential business
opportunities, provide a stream of new product introductions over time, and
reduce the risks associated with reliance on a single product or technology.
Focus on Large Market Opportunities
We will concentrate our development efforts on large existing markets in which
we believe there could be significant demand for our products.
7
Enter into Strategic Alliances
We intend to enter into strategic alliances with large medical diagnostic and
pharmaceutical companies for the marketing of our medical diagnostic products.
Since these companies have significantly greater financial, marketing and other
resources than we have, they would be able to market the our products through a
broad range of distribution channels. Our strategy with respect to the
development and commercialization of its transdermal drug delivery products is
to enter into strategic alliances with third parties that can, in some cases,
fund a portion of product development costs, participate in clinical testing,
obtain regulatory approval, and market the products. In an effort to exercise
control over the quality of our products and capture a larger portion of the
revenues, we will seek to retain manufacturing rights to products developed
under such strategic alliances.
Cash Requirements for Next Twelve Months
We anticipate that we will incur over $550,000, over the twelve months beginning
January 1, 2008, for general and administrative, and interest expenses,
including professional legal and accounting expenses associated with our
reporting obligations under the U.S. Securities and Exchange Act of 1934 and the
estimated costs of providing products. Based on our cash position, we will
require additional financing to enable us to pay for our expenses. We anticipate
that additional funding will be in form of equity financing from the sale of our
common stock during the fourth quarter of 2008.
Revenue
We have incurred a net loss of $116,105 during the quarter ended September 30,
2007. We do not anticipate earning revenues until such time as we have entered
all technologies or products for sale in the United States. As such, there are
no costs of revenue. These previously mentioned products or technologies have
not been approved by the Food and Drug Administration ("FDA"). Except for the
Saliva Collector and HIV Saliva Test, none of our technologies is ready for sale
outside of the United States either. The completion of research and development
that would be necessary to turn our technologies into working prototypes and
viable products will require a significant influx of funding. We do not
currently have the funds to undertake any research and development efforts with
regard to our technologies, and there is no assurance that we will ever be able
to obtain such funding.
Interest Expense
On-demand promissory note agreements entered into with stockholders currently
accrue compounded interest at rates ranging from 8 % to the prime rate plus 2 %.
Since January 2004, the Company has not paid interest on these notes. For the
quarter ended September 30, 2007, no principal amount has been repaid. Once
additional equity financing is received, management intends to repay these notes
and unpaid interest. Additional financing is anticipated in the fourth quarter
of 2008.
8
LIQUIDITY AND FINANCIAL CONDITION
Working Capital
--------------------------- ---------------------------- ---------------------------
September 30, 2007 September 30, 2006 Percentage
Increase / (Decrease)
--------------------------- ---------------------------- ---------------------------
Current Assets $ 1,145 $ 180 536%
Current Liabilities 7,270,876 6,559,748 11 %
--------------------------- ---------------------------- ---------------------------
Working Capital Deficiency $ (7,269,731) $ (6,559,568) 11%
=========================== ============================ ===========================
Cash Flows
---------------------------- ---------------------------
Nine Months Ended Nine Months Ended
September 30, 2007 September 30, 2006
---------------------------- ---------------------------
Cash Flows Used in Development Stage Activities $ (95,307) $ (100,727)
Cash Flows Provided By Investing Activities $ - $ -
Cash Flows Provided By Financing Activities $ 95,233 $ 100,907
---------------------------- ---------------------------
Net Increase (Decrease) in Cash During Period $ (74) $ 180
============================ ===========================
Future Financing Requirements
We require additional financing if we are to continue as a going concern to
finance our business operations. We anticipate that any additional financing
would be through the sale of our common stock. We are presently in the process
of negotiating private placements of securities to raise working capital to
finance our operations. However, we expect to raise the additional capital that
we require to continue operations. In the event that we are unable to raise
additional financing on acceptable terms, we intend to reduce general and
administrative expenditures. We anticipate that our working capital will
continue to decline until we receive additional funding.
ITEM 3. CONTROLS AND PROCEDURES.
Under the supervision and with the participation of our management, including
our Chief Executive Officer and Chief Financial Officer, we have evaluated the
effectiveness of our disclosure controls and procedures as required by Exchange
Act Rule 13a-15(b) as of the end of the period covered by this report. Based on
that evaluation, the Chief Executive Officer and Chief Financial Officer have
concluded that these disclosure controls and procedures are effective.
There were no changes in our internal control over financial reporting during
the quarter ended September 30, 2007, that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
9
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
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 AND REPORTS ON FROM 8K.
None.
10
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
/ S / AMERICARE HEALTH SCAN, INC.
---------------------------------
(Registrant)
By:/s/ Dr. Joseph P. D'Angelo
----------------------------------
DR. JOSEPH P. D'ANGELO
PRESIDENT
Date: October 16, 2008
In accordance with the Exchange Act, this report has been signed by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By:/s/ Dr. Joseph P. D'Angelo
--------------------------
DR. JOSEPH P. D'ANGELO
PRESIDENT
Date: October 16, 2008
By:/s/ Robert Cano
----------------------------
ROBERT CANO
CHIEF FINANCIAL OFFICER
Date: October 16, 2008