UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2008
--------------
or
[ ] TRANSITION REPORT PURSUANT 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 registrant as specified in its charter)
FLORIDA 65-0714523
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
20 N.W. 181st Street
Miami, Florida 33169
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(Address of principal executive offices) (Zip code)
(305) 770-1141
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(Registrant's telephone number, including area code)
N/A
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Former name, former address and former fiscal year, if changed since last report
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 ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of the
Act).
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [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 ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: As of October 23, 2008 the
Issuer had 19,242,459 Shares of Common Stock outstanding.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements 2
Balance Sheets as of March 31, 2008 (unaudited) and December
31, 2007 (audited) 3
Statements of Loss for cumulative amounts from development stage
(January 1, 2005) through March 31, 2008 and for the three
months ended March 31, 2008 and 2007 (unaudited) 4
Statements of Cash Flows for the three months ended
March 31, 2008 and 2007 (unaudited) 5
Notes to the Financial Statements (unaudited) 6
Item 2. Management's Discussion and Analysis or Plan Operation 7
Item 3. Quantitative and Qualitative Disclosures About Market Risk 9
Item 4. 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 condensed financial statements of Americare Health
Scan, Inc. (the "Company") have been prepared in accordance with accounting
principles generally accepted in the United States of America for interim
financial information and with rules and regulations of the United States
Securities and Exchange Commission. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States of America for complete financial statements. In the
opinion of management, all adjustments consisting of a normal and recurring
nature considered necessary for a fair presentation have been included.
Operating results for the three months ended March 31, 2008, may not necessarily
be indicative of the results that may be expected for the year ended December
31, 2008.
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 SHEETS
================================================================================
MARCH DECEMBER
31, 2008 31, 2007
(UNAUDITED) (AUDITED)
------------- -------------
ASSETS
Current Assets
Cash and cash equivalents $ - $ 1,144
Deferred tax asset - -
------------ ------------
Total current assets - 1,144
------------ ------------
Total assets $ - $ 1,144
============ ============
LIABILITIES AND DEFICIENCY IN ASSETS
Current Liabilities
Accounts payable and accrued expenses $ 35,709 $ 34,933
Accrued interest payable 2,129,993 2,030,893
Accrued officer's compensation 2,444,000 2,392,000
Due to shareholder 53,831 53,831
Notes payable - related parties 2,923,764 2,923,764
------------ -------------
Total current liabilities 7,587,297 7,435,421
------------ -------------
Deficiency in assets
Common stock; $0.001 par value;
50,000,000 shares authorized;
19,242,459 shares issued and outstanding 19,242 19,242
Additional paid-in capital 1,662,250 1,662,250
Accumulated deficit from development stage (2,369,578) (2,216,558)
Accumulated deficit (6,899,211) (6,899,211)
------------ ------------
Total deficiency in assets (7,587,297) (7,434,277)
------------ ------------
Total liabilities and deficiency in assets $ - $ 1,144
============ ============
See accompanying notes.
3
AMERICARE HEALTH SCAN, INC. (A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF LOSS (UNAUDITED)
===============================================================================================================================
Cumulative Amounts
From Development
Stage (January 1, Three Three
2005) through Months Ended Months Ended
March 31, 2008 March 31, 2008 March 31, 2007
- ------------------------------------------------------------------- ----------------- ----------------- -----------------
REVENUE $ - $ - $ -
----------------- ----------------- -----------------
GENERAL AND ADMINISTRATIVE EXPENSES
Auto expense 3,226 - 18
Bank fees and service charges 10,779 - -
Insurance 23,044 - -
Legal and professional 42,545 - 561
Management fees 72,195 - 5,550
Meals and entertainment 4,073 - -
Office expense 7,336 - 510
Officer's compensation 676,000 52,000 52,000
Penalties and interest 23,353 1,645 50
Postage and delivery 2,060 275 -
Repairs and maintenance 3,730 - -
Salaries and wages 199,818 - -
Taxes and licenses 20,076 - -
Telephone 20,828 - 1,805
Travel 27,216 - -
Utilities 46,442 - 3,171
-------------------- ------------------ ----------------
Total general and administrative expenses 1,182,721 53,920 63,665
-------------------- ------------------ ----------------
Loss before other income (expenses) (1,182,721) (53,920) (63,665)
-------------------- ------------------ ----------------
OTHER INCOME (EXPENSES)
Other income 90,451 - 6,386
Interest expense (1,275,507) (99,100) (114,142)
Other expense (1,801) - -
-------------------- ------------------ ----------------
Total other expenses (1,186,857) (99,100) (107,756)
-------------------- ------------------ ----------------
Loss before income taxes (2,369,578) (153,020) (171,421)
Provision for income taxes - - -
-------------------- ------------------ ----------------
Net loss $ (2,369,578) $ (153,020) $ (171,421)
==================== ================== ================
Net loss per share - basic and diluted $ (0.01) $ (0.01)
================== ================
Weighted average number of shares
of common stock outstanding - basic and diluted 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 three months ended March 31, 2008 2007
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CASH FLOWS FROM DEVELOPMENT STAGE ACTIVITIES
Net loss $ (153,020) $ (171,421)
Change in assets and liabilities:
Increase (Decrease)in accounts payable and accrued expenses 776 (78,822)
Increase in accrued interest 99,100 114,142
Increase in accrued officer's compensation 52,000 52,000
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NET CASH USED IN DEVELOPMENT STAGE ACTIVITIES (1,144) (84,101)
- ---------------------------------------------------------------------------------------- --------------------- -------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net transactions from notes payable - related parties - 57,374
Due to stockholder - 26,275
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NET CASH PROVIDED BY FINANCING ACTIVITIES - 83,649
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,144) (452)
CASH AND CASH EQUIVALENTS, beginning of period 1,144 1,220
- ---------------------------------------------------------------------------------------- --------------------- -------------------
CASH AND CASH EQUIVALENTS, end of period $ - $ 768
==================================================================================================================================
SUPPLEMENTAL DISCLOSURES:
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)
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 three months
ended March 31, 2008, are not necessarily indicative of the results to
be expected for the year ending December 31, 2008.
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 $153,020 and $171,421 for the quarters ended
March 31, 2008 and 2007, 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 (5.25% at March 31, 2008) 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 March 31, 2008 amounted to
$2,923,764. Interest expense for the quarter ended March 31, 2008
amounted to $99,100.
5. COMMITMENTS AND CONTINGENCIES
The Company has an employment agreement with the President and Chief
Executive Officer for an indefinite period of time or until there is a
majority vote by the Board of Directors to elect a new President and
Chief Executive Officer. The agreement calls for compensation in the
amount of $208,000 per calendar year, which has been accrued and
amounts to $2,444,000 and $2,236,000 at March 31, 2008 and 2007.
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-K 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 $600,000 over the twelve months beginning
January 1, 2008 for general and administrative,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, and interest expense. 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 $153,020 during the quarter ended March 31, 2008.
We do not anticipate earning revenues until such time as we have entered all
technologies or products for sale in the country-regionplaceUnited 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 the prime rate plus 2 %. Since January 2004, the
Company has not paid interest on these notes. 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
--------------------------- ---------------------------- ---------------------------
March 31, 2008 March 31, 2007 Percentage
Increase / (Decrease)
--------------------------- ---------------------------- ---------------------------
Current Assets $ - $ 768 (100.00) %
Current Liabilities 7,587,297 6,917,369 10.01 %
--------------------------- ---------------------------- ---------------------------
Working Capital Deficiency $ (7,587,297) $ (6,916,601) 10.01 %
=========================== ============================ ===========================
Cash Flows
Three Months Ended March Three Months Ended March
31, 2008 31, 2007
---------------------------- ---------------------------
Cash Flows Used In Development Stage Activities $ (1,144) $ (84,101)
Cash Flows Provided By Investing Activities $ - $ -
Cash Flows Provided By Financing Activities $ - $ 84,101
---------------------------- ---------------------------
Net (Decrease) Increase In Cash During Period $ (1,144) $ -
============================ ===========================
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 our exploration
expenditures and may implement additional actions to reduce general and
administrative expenditures. We anticipate that our working capital will
continue to decline until we receive additional funding.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes in our primary risk exposures or management
of market risks from those disclosed in our Form 10-KSB for the fiscal year
ended December 31, 2007.
ITEM 4. 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 March 31, 2008, 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 AND CHIEF EXECUTIVE
OFFICER
Date: October 23, 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 AND CHIEF EXECUTIVE
OFFICER
Date: October 23, 2008
By:/s/ Robert Cano
----------------------------
ROBERT CANO
CHIEF FINANCIAL OFFICER
11