10-Q 1 d25593_f10q.txt QUARTERLY REPORT ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2001 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to -- -- Commission File Number: 1-11765 MEDJET INC. ( Name of Small Business Issuer as Specified in its Charter) DELAWARE 22-3283541 (State or Other Jurisdiction of (I.R.S. Employer Identification No.) Incorporation or Organization) 1090 King Georges Post Road, Suite 301 Edison, New Jersey 08837 (Address of Principal Executive Offices) (732) 738-3990 (Issuer's Telephone Number, Including Area Code) (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 [X] No [ ] As of April 27, 2001, 3,931,700 shares of Common Stock, par value $.001 per share, were outstanding. Transitional Small Business Disclosure Format: Yes [ ] No [X] ================================================================================ PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS

See notes to the condensed interim financial statements.

See notes to the condensed interim financial statements.

See notes to the condensed interim financial statements. MEDJET INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS NOTE A - NATURE OF ORGANIZATION AND BASIS OF PRESENTATION: (1) Nature of Organization: Medjet Inc. (the "Company") was incorporated in the State of Delaware on December 16, 1993, and is in the development stage. The Company is engaged in research and development of medical technology, with a current emphasis on ophthalmic surgical technology and equipment. (2) Basis of Presentation: The Condensed Interim Financial Statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted as permitted by such rules and regulations. The Condensed Interim Financial Statements included herein reflect, in the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the results for the interim periods. The results of operations for the three months ended March 31, 2001 are not necessarily indicative of results to be expected for the entire year ending December 31, 2001. NOTE B - NET LOSS PER SHARE: Net loss per share, in accordance with the provisions of Financial Accounting Standards No. 128, "Earnings Per Share," is computed by dividing net loss by the weighted average number of shares of Common Stock outstanding during the period. Common Stock equivalents have not been included in this computation as the effect would be anti-dilutive. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION This Quarterly Report on Form 10-QSB, including any documents that are incorporated by reference, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Generally, such statements are indicated by words or phrases such as "anticipates," "expects," "intends," "believes" and similar words and phrases. Such statements are based on the Company's current expectations and are subject to risks, uncertainties and assumptions. Certain of these risks are described below or in Part I, Item 6 of the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 2000, on file with the Securities and Exchange Commission, and are incorporated herein by this reference. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, expected, intended or believed. GENERAL The Company is engaged in research and development for manufacture of medical technology, with a current emphasis on ophthalmic surgical technology and equipment, and has developed a proprietary technology and derivative devices for corneal surgery based on microjets. The Company expects, during the remainder of 2001, assuming the appropriate regulatory clearances are obtained, to continue its research and development activities, focusing principally on ophthalmic surgical technology and equipment, and to offer for sale its first microjet microkeratome product. It also expects to commence early exploratory work on dental applications of microjet technology. The Company is a development stage company. RESULTS OF OPERATIONS The Company has not yet initiated sales of its products and, consequently, had no sales revenues during the three months ended March 31, 2001. Total expenses during the three months ended March 31, 2001 decreased by $54,778 (16 %) to $295,938 from $350,716 for the comparable period of 2000. This was primarily due to a decrease in legal fees, related to the NJIT litigation, and by a reduction of staff salaries. The Company also continued to curtail certain operational activities in order to conserve its existing capital. See "Liquidity and Capital Resources" below. Other income/(expense) consists of interest income, interest expense and finance charges. Net interest income for the three months ended March 31, 2001 decreased by $12,600 to $(2,392) from $10,992 for the comparable period of 2000. This decrease resulted principally from loss of income earned on the Company's short-term investments, which were lower in the 2001 period, and the increased borrowing interest expense. LIQUIDITY AND CAPITAL RESOURCES As of March 31, 2001, the Company's working capital was $1590. During March 1999 Dr. Eugene I. Gordon, The Company's Chairman and Chief Executive Officer, agreed to provide a $250,000 line of credit to the Company. As of April 17, 2001, $84,700 remained available for use by the Company. Throughout the fourth quarter of 2000 and into 2001, the Company sought additional capital to finance its 2001 business plan. Pending obtaining additional financing, the Company made the decision to curtail several operational activities as well as to cut its employees' salaries in order to conserve its existing capital. The specific goal was to reduce the Company's monthly expenditures by 80%, to approximately $27,000. During March 1999, Dr. Gordon agreed to make available to the Company a loan of up to $250,000. Under the terms of this agreement, the Company issued to Dr. Gordon warrants to purchase up to 50,000 shares of the Company's Common Stock and agreed to pay a market interest rate on amounts borrowed. Through March 31, 2001, amounts advanced under this agreement totaled $148,500. At March 31, 2001, $148,500 of this amount, plus accrued interest, had been repaid. GOING CONCERN As shown in the accompanying financial statements, the Company incurred a net loss of $298,330 during the quarter ended March 31, 2001. As of that date, the Company's cash was only $1,590 with a line of credit from Dr. Gordon of $101,500 still available. As of March 31, 2001 the Company's current liabilities exceeded its current assets by $37,261. As a result of these factors, as well as the absence of a firm commitment for financing, the Company can no longer be characterized as a going concern. Management of the Company is developing a plan to reduce its costs and is evaluating financial and strategic options. The ability of the Company to continue is dependent on successful completion of one or more of these opportunities. As a result of the change in status, the financial statements include adjustments to the Deferred Tax Asset and the potential for filing future NOL's to the State of New Jersey's program for tax credit. The Company anticipates that its cash on hand, plus the line of credit available from Dr. Gordon will be sufficient to meet the Company's needs to June 1, 2001. The Company does require additional financing prior to June 1, 2001 in order to maintain its current operations. Moreover, during 2001, the Company intends to seek additional funding in order to accelerate its product development efforts and augment its working capital. The Company currently has no commitment or arrangement for any capital, and there can be no assurance whether or on what terms it will be able to obtain any needed capital. If additional financing is not available, the Company would be materially adversely affected and be required to further curtail or cease altogether its current operations. ADDITIONAL FACTORS THAT MAY AFFECT FUTURE RESULTS The Company has been in the development stage and has not sold any products. To date, the Company's research and development activities on vision correction have been limited to constructing and testing experimental versions of microkeratomes for eye surgery and conducting a limited number of feasibility studies using enucleated porcine, rabbit and human cadaver eyes and live rabbits to prove that the beam of water can smoothly incise and shape the anterior surface of the cornea and that the cornea will heal properly after the surgery. Although the Company currently intends to undertake the manufacture and marketing of its microjet products on a limited scale, it continues to have discussions with several potential strategic partners and is investigating other possible arrangements for larger-scale manufacturing, marketing and distribution. These discussions are in the early stages, and no formal understanding or agreement has been reached with any potential strategic partner. The Company's objective in entering into any such arrangements in addition would be to obtain adequate funding to support development of other products, in addition to their manufacture, promotion and marketing. To the extent that the Company fails to enter into such arrangements, the Company would be subject to the risks and uncertainties described under "Additional Factors That May Affect Future Results - No Manufacturing Experience; Dependence on Third Parties," in the Company's Annual Report on Form 10-KSB, which information is incorporated herein by reference. The Company's dependence on third parties for the manufacture of components of its products may adversely affect the Company's profit margins and its ability to develop and deliver such products on a timely basis. Moreover, there can be no assurance that such third parties will perform adequately, and any failures by third parties may delay the submission of products for regulatory approval, impair the Company's ability to deliver products on a timely basis, or otherwise impair the Company's competitive position and any such failure could have a material adverse effect on the Company. If the Company does not enter into license or distribution arrangements with respect to its products, it may undertake the marketing and sale of its own products. In such event, the Company intends to market and sell its products in the United States and certain foreign countries, if and when regulatory approval is obtained, through a direct sales force or a combination of a direct sales force and distributors. The Company currently has no marketing organization and has never sold a product. Establishing sufficient marketing and sales capabilities will require significant resources. There can be no assurance that the Company will be able to recruit and retain skilled sales management, direct salespersons or distributors, or that the Company's marketing or sales efforts will be successful. To the extent that the Company enters into distribution arrangements for the sale of its products, the Company will be dependent on the efforts of third parties. There can be no assurance that such efforts will be successful. Uncertainty of Market Acceptance; Reliance on Single Technology. Acceptance of the Company's products is difficult to predict and will require substantial marketing efforts and the expenditure of significant funds by the Company. There can be no assurance that the products will be accepted by the medical community once they are permitted or approved. Market acceptance of the Company's products will depend in large part upon the Company's ability to demonstrate the operational advantages, safety and cost-effectiveness of its products compared to other comparable surgical techniques. Failure of the products to achieve market acceptance will have a material adverse effect on the Company's financial condition and results of operations. At present, the Company's only products (although still in development stage) are its microkeratomes, and the Company expects that its microkeratomes will be, if and when commercially available, its sole products for an indefinite period of time. The Company's present narrow focus on particular products makes the Company vulnerable to the development of superior competing products and changes in technology that could eliminate the need for the Company's products. There can be no assurance that significant changes in the foreseeable future in the need for the Company's products or the desirability of those products will not occur. PART II - OTHER INFORMATION Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits None (b) Reports on Form 8-K None 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 thereunto duly authorized. Dated: April 27, 2001 MEDJET INC. /s/ Eugene I. Gordon -------------------------------------------- Eugene I. Gordon, Ph.D. Chairman of the Board and Chief Executive Officer /s/ Cheryl A. Blake -------------------------------------------- Cheryl A. Blake Vice President - Finance and Human Resources (Principal financial and accounting officer)

MEDJET INC 10-Q