U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(MARK ONE)
|X| Quarterly Report Pursuant to Section 13 or 15(d) of Securities
Exchange Act of 1934 (Fee Required)
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
|_| Transition report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
(No Fee Required)
For the transition period from _______ to _______.
Commission File No. 0-21851
PHARMASYSTEMS HOLDINGS CORP.
(Exact Name of Small Business Issuer in Its Charter)
COLORADO 84-1189040
- -------- ----------
(State or Other Jurisdiction of (I.R.S. Employer Identification
Incorporation or Organization) No.)
7350 NW 7TH STREET, SUITE 104, MIAMI,
FLORIDA 33126
- ---------------------------------------- ------
(Address of Principal Executive Offices) (Zip Code)
(305) 267-9500
--------------
(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, and (2) has
been subject to such filing requirements for the past 90 days. Yes |X| No |_|
There were 20,000,625 shares of Common Stock outstanding as of November
14, 1997.
Transitional Small Business Disclosure Format (check one): Yes |_| No |X|
<PAGE>
PHARMASYSTEMS HOLDINGS CORP.
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PART I - FINANCIAL INFORMATION PAGE
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS.
Condensed Consolidated Balance Sheet 3
Condensed Consolidated Statements of Operations 5
Condensed Consolidated Statements of Cash Flows 6
Notes to Condensed Consolidated Financial Statements 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. 8
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES. 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. 13
SIGNATURES 15
2
<PAGE>
PHARMASYSTEMS HOLDINGS CORP.
PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
================================================================================
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
SEPTEMBER 30,
1997
- --------------------------------------------------------------------------------
ASSETS
CURRENT
Cash $ 135,781
Accounts receivable, less allowance for doubtful
accounts of $8,000 209,007
Due from affiliates 105,153
Inventory 615,428
Prepaid expenses and other current assets 66,512
- --------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 1,131,881
- --------------------------------------------------------------------------------
Property and equipment, net 200,418
Loan fees, less $9,253 and $8,046 3,622
accumulated amortization
Intangible assets, less $28,260 and $17,664 183,713
accumulated amortization
Non-compete agreements, less $100,000 and $62,500 50,000
accumulated amortization
Other assets 10,499
- --------------------------------------------------------------------------------
TOTAL ASSETS $ 1,580,133
================================================================================
3
<PAGE>
PHARMASYSTEMS HOLDINGS CORP.
PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
================================================================================
SEPTEMBER
30,
1997
- --------------------------------------------------------------------------------
LIABILITIES AND CAPITAL DEFICIT
CURRENT
Bank note payable $ 300,000
Accounts payable 1,972,411
Accrued expenses and other 332,888
Current maturities of notes payable 535,246
Subordinated stockholder loan (non-interest 37,641
bearing) 537,500
Due to stockholder 1,450,330
Redemption notes payable
- --------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 5,166,016
- --------------------------------------------------------------------------------
TOTAL LIABILITIES 5,166,016
- --------------------------------------------------------------------------------
CAPITAL DEFICIT
Common stock, no par value - 100,000,000 shares
authorized, 20,000,625 and 10,461,892
issued and outstanding
Shares to be redeemed (1,450,330)
Additional paid-in capital 2,631,557
Deficit (4,767,110)
- --------------------------------------------------------------------------------
TOTAL CAPITAL DEFICIT (3,585,883)
- --------------------------------------------------------------------------------
TOTAL LIABILITIES AND CAPITAL DEFICIT $ 1,580,133
================================================================================
4
<PAGE>
PHARMASYSTEMS HOLDINGS CORP.
================================================================================
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
- --------------------------------------------------------------------------------
REVENUES $ 3,328,406 $3,900,316 $ 987,978 $ 1,283,890
- --------------------------------------------------------------------------------
COST OF SALES 2,473,547 2,949,110 745,120 943,964
- --------------------------------------------------------------------------------
GROSS PROFIT 854,859 951,206 242,858 339,926
- --------------------------------------------------------------------------------
OPERATING EXPENSES
Selling, general
and administrative 2,263,440 2,722,213 731,871 1,274,447
Compensatory element of
common stock issuance
for services rendered 27,211 2,500
Interest 292,583 196,446 97,230 65,482
Depreciation and
amortization 62,296 49,716 1,830 16,572
- --------------------------------------------------------------------------------
Total operating expenses 2,645,530 2,968,375 833,431 1,356,501
- --------------------------------------------------------------------------------
NET LOSS $ 1,790,671 $2,017,169 $ 590,573 $ 1,016,575
================================================================================
Net loss per share $ 0.12 $ 0.21 $ 0.04 $ 0.09
- --------------------------------------------------------------------------------
Weighted average number of
common shares 14,283,329 9,549,661 15,001,032 10,369,516
5
<PAGE>
PHARMASYSTEMS HOLDINGS CORP.
================================================================================
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
<S> <C> <C> <C> <C>
1997 1996 1997 1996
- -----------------------------------------------------------------------------------------
OPERATING ACTIVITIES:
Net loss $(1,790,671) $(2,017,169) $(590,573) $(1,016,575)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation and amortization 62,296 49,716 1,830 (841)
Changes in operating assets
and liabilities
Decrease (increase) in:
Accounts receivable (11,835) 105,159 86,936 129,273
Due from affiliates (65,825) 104,392 (105,153) 194,812
Inventories (15,560) 107,922 (57,183) 136,399
Prepaid expenses
and other assets (15,276) 123,085 (1,473) (12,731)
Increase (decrease):
Accounts payable 594,694 (3,209) 624,990 (17,623)
Accrued expenses and 87,044 (112,125) 270,000 (38,694)
other
Due to affiliates (198,199) (48,462) (164,153) 121,289
- -----------------------------------------------------------------------------------------
Net cash (used in) provided by
operating activities (1,353,332) (1,690,691) 65,221 (504,691)
- -----------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Purchases of property and (3,284) (81,076) 2,944 809
equipment
Increase in other assets (16,456) 4,999 (2,324)
- -----------------------------------------------------------------------------------------
Net cash used in investing (3,284) (97,532) 7,943 (1,515)
activities
- -----------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Net borrowings under bank
note payable 200,000 100,000
Repayments of notes payable (16,724) (240,159) 22,406 536,675
Proceeds from subordinated
shareholder loan 17,641
Repayments of subordinated
shareholder loan (20,000)
Net proceeds from issuance of
common stock 1,033,211 1,664,656 540 (30,469)
- -----------------------------------------------------------------------------------------
Net cash provided by financing
activities 1,196,487 1,542,138 22,946 506,206
- -----------------------------------------------------------------------------------------
Net (decrease) increase in cash (160,129) (246,085) 96,110 -0-
Cash at beginning of period 295,910 246,085 39,671 -0-
- -----------------------------------------------------------------------------------------
Cash at end of period $ 135,781 $ -0- $ 135,781 $ -0-
=========================================================================================
</TABLE>
6
<PAGE>
PHARMASYSTEMS HOLDINGS CORP.
================================================================================
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The unaudited financial statements presented in this Quarterly Report
contain the financial information and results of operation of PharmaSystems Cost
Containment Corp., a privately held company which was merged (the "Merger") into
PharmaSystems Holdings Corp. (the "COMPANY") on June 20, 1997. Prior to this
merger transaction, the Company (then named "Euro-Tel, Inc.") had no material
assets and had conducted no operations. For a detailed description of these
relationships and transactions, a reader should refer to the Company's Form 8-K
filed on July 5, 1997 and Form 8-K/A2 filed on October 10, 1997, as well as the
descriptions contained elsewhere in this Quarterly Report.
The accompanying condensed consolidated financial statements should be read
in conjunction with the Company's consolidated financial statements and notes
thereto included in the Company's 8-K/A2 filed on October 10, 1997.
The condensed consolidated financial statements were prepared from the
books and records of the Company without audit or verification. In the opinion
of management all adjustments which are of a normal recurring nature and
necessary to present fairly the financial position, results of operations and
cash flows for all the periods presented have been made. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted.
The results of operations for the nine month period ended September 30,
1997 are not necessarily indicative of the operating results for the full fiscal
year. The accompanying financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All significant intercompany balances and
transactions have been eliminated.
PER SHARE DATA
Net loss per common share for each period was computed by retroactively
reflecting mergers, splits and issuances of common shares. 4,997,334 shares of
common stock issued to an affiliate on June 17, 1997, which are being held in
escrow, were not included in the calculation as the conditions for such common
share's release from escrow have not been met.
7
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS.
FORWARD LOOKING STATEMENTS AND ASSOCIATED RISKS. This Quarterly Report
contains forward-looking statements, including statements regarding, among other
things, (a) the Company's growth strategies, (b) anticipated trends in the
Company's industry and (c) the Company's future financing plans. In addition,
when used in this Quarterly Report, the words "believes," "anticipates" and
similar words are intended to identify forward-looking statements. Such
statements are based largely on the Company's expectations and are subject to a
number of risks and uncertainties, many of which are beyond the Company's
control. Actual results could differ materially from these forward-looking
statements as a result of changes in trends in the economy and the Company's
industry, reductions in the availability of financing and other factors. In
light of these risks and uncertainties, there can be no assurance that the
forward-looking statements contained in this Quarterly Report will in fact
occur. The Company does not undertake any obligation to publicly release the
results of any revisions to these forward-looking statements that may be made to
reflect any future events or circumstances.
GENERAL
PharmaSystems Holdings Corp. (the "COMPANY") is engaged in the business of
selling pharmaceutical products by mail order and through retail outlets owned
and operated by Lee's Prescription Shops, Inc., a wholly owned subsidiary of
Lee's Acquisition Corporation, a wholly owned subsidiary of the Company. Lee's
Prescription Shops, Inc. owns and operates three licensed community pharmacies
in the greater Miami area. In addition, the Company is developing home care
respiratory and intravenous infusion services through a subsidiary of its
affiliate, Advanced Respiratory Care, Inc.
The Company has identified and focused on three principal areas, including:
(i) the development of a retail pharmacy network through Lee's Prescription
Shops, Inc.; (ii) the development of a mail order distribution system for
pharmacy products; and (iii) the creation and marketing of a private label brand
of vitamins and supplements. In addition, the Company and its management has
devoted a substantial amount of time and energy obtaining additional capital
necessary to finance the Company's operations. With the exception of the retail
pharmacies owned and operated by Lee's Prescription Shops, Inc., the Company is
a "holding" company which is dependent on external financing to sustain
operations. The Company anticipates raising up to $4,000,000 in additional
capital through the issuance of common stock in a private placement in the
fourth quarter of this year. The issuance of such common stock will dilute the
percentage ownership and voting rights of existing shareholders. No assurances
can be made that the Company will successfully complete the private offering or
that the Company will receive any proceeds from this offering.
The Company expects to incur substantial start-up costs which will be in
excess of the revenues generated by the Company. As a result, the Company
expects to incur substantial losses for the foreseeable future and will require
external financing to sustain future operations.
8
<PAGE>
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
The Company's revenues decreased $572,000 or 14.7% in the nine month period
ending September 30, 1997 from the comparable nine month period in the prior
year. This decrease is attributable, in part, to the closing of two unprofitable
facilities, a mail order facility and Penalver Clinic, an on-site HMO pharmacy.
Both facilities had experienced losses without any foreseeable contributions to
gross profit, and the residual business is being serviced by the retail
pharmacies. In addition, the AlphaNet program, in which the Company had the
exclusive rights to distribute Prolastin, was terminated by the distributor for
lack of adequate financing and credit availability. The Company's costs of goods
sold decreased by corresponding amount of approximately $475,000 or 16.1%. The
Company had a gross profit relative to gross revenue of 25.7% and 23.4% for the
nine month periods ending September 30, 1997 and September 30, 1996,
respectively. The higher gross profit percentage in 1997 is attributable to more
retail sales which tend to yield higher prices than mail order.
Selling, general and administrative expenses for the nine month period
ending September 30, 1997 decreased $459,000 or 16.9% to $2,263,000 from
$2,722,000 over the comparable period in the prior year. Such costs represent
68.0% and 69.8% of gross revenues in 1997 and 1996, respectively. The decrease
is attributable, in large part, to savings from staff reductions.
Interest expense increased $97,000 (49.5%) in the nine month period ending
September 30, 1997 from the comparable period in the prior year due to, in part,
the increase in the bank note payable and due to stockholder.
Depreciation and amortization expense increased $12,000 (24.0%) in 1997from
the 1996 level. This increase is primarily due to the increased amortization of
loan fees, intangible assets and non-compete agreements.
Total operating expenses decreased $322,000 (10.9%) in 1997 from the 1996
level. This decrease is primarily due to the savings from staff reductions.
Since the gross profit between the periods remained almost unchanged, the
aforementioned accounts for the $226,000 (11.2%) decrease in the net loss of
$1,791,000 during the nine months ended September 30, 1997 from $2,017,000 for
the nine months ended September 30, 1996.
THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
The Company's revenues decreased $296,000 (23.0%) in the current three
month period from the comparable period in 1996. This period has historically
been a slow sales period for the Company. This period was unusually weak
compared to the prior year. Costs of sales decreased $199,000 (21.1%) during the
current period from the prior period resulting from the decrease in revenue. The
gross profit percentages were 24.6% and 26.5% for 1997 and 1996, respectively.
Selling, general and administrative expenses for the three months ended
September 30, 1997 decreased $542,000 (42.5%) to $732,000 from $1,274,000 in
1996. These amounts represented 74.1% and 99.2% of gross revenues in 1997 and
1996, respectively. The principal reason for the decrease in such expenses was
due to staff reduction.
9
<PAGE>
Interest expense increased $32,000 (49.2%) in the three months ended
September 30, 1997 resulting, in part, from the increase in the bank note
payable and due to stockholder.
The previously mentioned decrease in selling, general and administrative
expenses is the reason the net loss decreased by $426,000 (41.9%) to $591,000
during the three months ended September 30, 1997 from $1,017,000 for the three
months ended September 30, 1996.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1997, the Company had a working capital deficiency of
$4,081,000 compared to a deficiency of $1,782,000 on December 31, 1996. The
deficiency is due, in part, to the operating losses incurred by the Company
during the interim period ending September 30, 1997 and to the incurrence of the
stock redemption promissory notes payable. Such losses are the result of
incurring expenses in the development of a retail pharmacy network, establishing
and growing a mail order operation and creating and marketing its private label
brand of vitamins and natural wellness products. Additionally, the Company has
expended approximately $300,000 in connection with the Merger. The Company
believes that the Merger will assist the Company in raising additional capital
and in making future acquisitions, although no assurances can be given.
Since inception, to finance its operations, the Company has raised capital
in three separate private placements, with net proceeds of approximately
$3,200,000 of which approximately $1,000,000 was raised in 1997. In addition,
during 1997, the Company borrowed $200,000 from its bank to finance its
operations. Additional financing will be necessary for the Company to continue
operations and to achieve its growth plans. The Company anticipates raising
approximately $4,000,000 in additional capital during the fourth quarter of this
year through a private placement.
The Company's business plan provides for, among other things, (i) the
private placement discussed above; (ii) increases in revenues from its retail
stores and mail order service; (iii) alternative distribution channels for its
vitamins and wellness products; (iv) the reduction of certain expenses; and (v)
alternative sources of financing and capital.
The Company anticipates that some of the proceeds generated from the
proposed private placement will be used to develop the Company's home care
business products and services such as infusion, durable medical equipment and
respiratory services. The Company believes that the home care business is
currently one of the most profitable segments of the healthcare industry.
In order to reduce expenses and thereby conserve financial resources for
carrying out the Company's business plan, the Company's President and Secretary
have voluntarily deferred for an indefinite period of time approximately sixty
seven percent (67%) and one hundred percent (100%) of their base compensation,
respectively. Each of the President and Secretary have reserved the right to (i)
not defer any additional base compensation and (ii) demand payment of any
compensation already deferred at any time without advance notice to the Company
or its shareholders.
10
<PAGE>
PART II
OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES.
2(C) SALES OF UNREGISTERED SECURITIES.
During July, August and September, 1997, PharmaSystems sold the following
shares of its Common Stock in private placement transactions:
AMOUNT NUMBER OF
PURCHASER DATE ($) SHARES
--------- ---- ------ ---------
1. Avila, Ada August 18, 1997 100 25
2. Calenzani, Graciela L. August 18, 1997 100 25
3. Diaz, Nerly August 18, 1997 100 25
4. Diez, Rosa August 18, 1997 100 25
5. Garciga, Isabel I. August 18, 1997 100 25
6. Gonzalez, Elsa August 18, 1997 100 25
7. Greenfield, Ann & Irving August 18, 1997 100 25
8. Guilarte, Steny M. August 18, 1997 100 25
9. Jorge, Yordanka August 18, 1997 100 25
10. Lugo, Miriam August 18, 1997 100 25
11. Martinez, Caridad August 18, 1997 100 25
12. Martinez, Elena August 18, 1997 100 25
13. Munoz, Evelyn August 18, 1997 100 25
14. Munoz, Jason J. August 18, 1997 100 25
15. Munoz, John August 18, 1997 100 25
16. Navas, Gustavo A. August 18, 1997 100 25
17. Pascual, Maria Teresa August 18, 1997 100 25
18. Perez, Diana August 18, 1997 100 25
19. Rad, Diana C. August 18, 1997 100 25
20. Reyes, Dayana August 18, 1997 100 25
21. Rivera Mary Foy August 18, 1997 100 25
22. Rodriguez, Hilda R. August 18, 1997 100 25
23. Socarras, Teresita August 18, 1997 100 25
24. Torres, Carmina August 18, 1997 100 25
25. Veunes, Ramon August 18, 1997 100 25
All of these issuances of Common Stock were intended to be exempt from
registration as private placement transactions under the Securities Act of 1933,
as amended (the "SECURITIES ACT"), pursuant to Section 4(2) ("SECTION 4(2)")
promulgated thereunder. Other exemptions from registration under the Securities
Act may have also been available.
11
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(A) EXHIBITS.
EXHIBIT
NO. DESCRIPTION LOCATION
- ------- ----------- --------
2.1 Agreement and Plan of Incorporated by reference to Exhibit
Reorganization dated June 20, 1997 No. 2.1 to Registrant's Form 8-K
filed on July 8, 1997
2.2 Plan of Merger dated June 20, 1997 Incorporated by reference to Exhibit
No. 2.2 to Registrant's Form 8-K
filed on July 8, 1997
2.3 Articles of Merger dated June 20, Incorporated by reference to Exhibit
1997 No. 2.3 to Registrant's Form 8-K
filed on July 8, 1997
3.1 Amended and Restated Articles of Incorporated by reference Exhibit
Incorporation of the Company No. 2.1 to the Registrant's Form
10-SB/A1 filed with the SEC on
February 5, 1997
3.2 By-laws of the Company Incorporated by reference Exhibit
No. 3.2 to the Registrant's Form
10-SB/A1 filed with the SEC on
February 5, 1997
10.1 Executive Employment Agreement Incorporated by reference to Exhibit
dated June 19, 1997 by and between 10.1 to Registrant's Form 10-QSB
the Company and Antonio M. filed on August 19, 1997
Rodriguez
10.2 Executive Employment Agreement Incorporated by reference to Exhibit
dated June 19, 1997 by and between 10.2 to Registrant's Form 10-QSB
the Company and Aurelio Alonso filed on August 19, 1997
10.3 Executive Employment Agreement Incorporated by reference to Exhibit
dated June 19, 1997 by and between 10.3 to Registrant's Form 10-QSB
the Company and Jose L. Rodriguez, filed on August 19, 1997
M.D.
10.4 Stock Redemption Agreement dated Incorporated by reference to Exhibit
June 7, 1997 by and between the 10.4 to Registrant's Form 10-QSB
Company, PSI Holdings, Inc., and filed on August 19, 1997
Orlando Lopez-Fernandez, Jr., M.D.
10.5 Stock Pledge Agreement dated Incorporated by reference to Exhibit
June 7, 1997 by and between the 10.5 to Registrant's Form 10-QSB
Company and PSI Holdings, Inc. filed on August 19, 1997
10.6 Stock Pledge Agreement dated Incorporated by reference to Exhibit
June 7, 1997 by and between the 10.6 to Registrant's Form 10-QSB
Company and Orlando Lopez- filed on August 19, 1997
Fernandez, Jr., M.D.
10.7 Intermark Trade Centre Lease Incorporated by reference to Exhibit
Agreement dated August 1, 1995 by 10.7 to Registrant's Form 10-QSB
and between Shusho Investment, filed on August 19, 1997
Inc. and the Company
10.8 Promissory Note dated March 25, Incorporated by reference to Exhibit
1997 given by Lee's Prescription 10.8 to Registrant's Form 10-QSB
Shops, Inc., a wholly owned filed on August 19, 1997
subsidiary of Lee's Acquisition
Corporation which is a wholly
owned subsidiary of the Company,
to United National Bank in the
original amount of $300,000
10.9 Letter Agreement effective Incorporated by reference to Exhibit
June 19, 1997 by and between Uni, 10.9 to Registrant's Form 10-QSB
Co. and the Company filed on August 19, 1997
12
<PAGE>
10.10 Business Lease dated July 14, 1994 Incorporated by reference to Exhibit
by and between Lee's Prescription 10.10 to Registrant's Form 10-QSB
Shop's Inc., a wholly owned filed on August 19, 1997
subsidiary of Lee's Acquisition
Corporation, a wholly owned
subsidiary of the Company, and
2525 Coral Way Bldg.
10.11 Business Property Lease dated Incorporated by reference to Exhibit
October 2, 1995 by and between 10.11 to Registrant's Form 10-QSB
LBJ Properties and Lee's filed on August 19, 1997
Acquisition Corporation, a
wholly owned subsidiary of the
Company
10.12 Lease Agreement dated October 1, Incorporated by reference to Exhibit
1995 by and between Sanford I. 10.12 to Registrant's Form 10-QSB
Rakofsky, M.D. and Lee's filed on August 19, 1997
Prescription Shops, Inc., a
wholly owned subsidiary of Lee's
Acquisition Corporation, a wholly
owned subsidiary of the Company
10.13 Stock Purchase Agreement dated Incorporated by reference to Exhibit
June 17, 1997 by and among 10.13 to Registrant's Form 10-QSB
PharmaSystems Cost Containment filed on August 19, 1997
Corp., Jose L. Rodriguez, M.D.
and Maria Rodriguez and Carlos M.
Marin
10.14 Security Agreement dated July 23, Incorporated by reference to Exhibit
1996 by and between Lee's 10.14 to Registrant's Form 10-QSB
Acquisition Corporation, a wholly filed on August 19, 1997
owned subsidiary of the Company,
and Lee's Prescription Shops,
Inc., a wholly owned subsidiary
of Lee's Acquisition Corporation,
and Carlos M. Marin
10.15 Agreement dated July 23, 1996 by Incorporated by reference to Exhibit
and between the Company, Lee's 10.15 to Registrant's Form 10-QSB
Acquisition Corporation, a wholly filed on August 19, 1997
owned subsidiary of the Company,
Lee's Prescription Shops, Inc., a
wholly owned subsidiary of Lee's
Acquisition Corporation and
Carlos M. Marin, Jr.
10.16 Promissory Note and Security Incorporated by reference to Exhibit
Agreement dated July 23, 1996 10.16 to Registrant's Form 10-QSB
given by the Company to Carlos M. filed on August 19, 1997
Marin, Jr.
27. Financial Data Schedule Provided herewith
13
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: November 14, 1997 PHARMASYSTEMS HOLDINGS CORP.
By: /S/ AURELIO E. ALONSO
-----------------------------
Aurelio E. Alonso
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
14
<PAGE>
EXHIBIT INDEX
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(A) EXHIBITS.
EXHIBIT
NO. DESCRIPTION LOCATION
- ------- ----------- --------
2.1 Agreement and Plan of Incorporated by reference to Exhibit
Reorganization dated June 20, 1997 No. 2.1 to Registrant's Form 8-K
filed on July 8, 1997
2.2 Plan of Merger dated June 20, 1997 Incorporated by reference to Exhibit
No. 2.2 to Registrant's Form 8-K
filed on July 8, 1997
2.3 Articles of Merger dated June 20, Incorporated by reference to Exhibit
1997 No. 2.3 to Registrant's Form 8-K
filed on July 8, 1997
3.1 Amended and Restated Articles of Incorporated by reference Exhibit
Incorporation of the Company No. 2.1 to the Registrant's Form
10-SB/A1 filed with the SEC on
February 5, 1997
3.2 By-laws of the Company Incorporated by reference Exhibit
No. 3.2 to the Registrant's Form
10-SB/A1 filed with the SEC on
February 5, 1997
10.1 Executive Employment Agreement Incorporated by reference to Exhibit
dated June 19, 1997 by and between 10.1 to Registrant's Form 10-QSB
the Company and Antonio M. filed on August 19, 1997
Rodriguez
10.2 Executive Employment Agreement Incorporated by reference to Exhibit
dated June 19, 1997 by and between 10.2 to Registrant's Form 10-QSB
the Company and Aurelio Alonso filed on August 19, 1997
10.3 Executive Employment Agreement Incorporated by reference to Exhibit
dated June 19, 1997 by and between 10.3 to Registrant's Form 10-QSB
the Company and Jose L. Rodriguez, filed on August 19, 1997
M.D.
10.4 Stock Redemption Agreement dated Incorporated by reference to Exhibit
June 7, 1997 by and between the 10.4 to Registrant's Form 10-QSB
Company, PSI Holdings, Inc., and filed on August 19, 1997
Orlando Lopez-Fernandez, Jr., M.D.
10.5 Stock Pledge Agreement dated Incorporated by reference to Exhibit
June 7, 1997 by and between the 10.5 to Registrant's Form 10-QSB
Company and PSI Holdings, Inc. filed on August 19, 1997
10.6 Stock Pledge Agreement dated Incorporated by reference to Exhibit
June 7, 1997 by and between the 10.6 to Registrant's Form 10-QSB
Company and Orlando Lopez- filed on August 19, 1997
Fernandez, Jr., M.D.
10.7 Intermark Trade Centre Lease Incorporated by reference to Exhibit
Agreement dated August 1, 1995 by 10.7 to Registrant's Form 10-QSB
and between Shusho Investment, filed on August 19, 1997
Inc. and the Company
10.8 Promissory Note dated March 25, Incorporated by reference to Exhibit
1997 given by Lee's Prescription 10.8 to Registrant's Form 10-QSB
Shops, Inc., a wholly owned filed on August 19, 1997
subsidiary of Lee's Acquisition
Corporation which is a wholly
owned subsidiary of the Company,
to United National Bank in the
original amount of $300,000
15
<PAGE>
10.9 Letter Agreement effective Incorporated by reference to Exhibit
June 19, 1997 by and between Uni, 10.9 to Registrant's Form 10-QSB
Co. and the Company filed on August 19, 1997
10.10 Business Lease dated July 14, 1994 Incorporated by reference to Exhibit
by and between Lee's Prescription 10.10 to Registrant's Form 10-QSB
Shop's Inc., a wholly owned filed on August 19, 1997
subsidiary of Lee's Acquisition
Corporation, a wholly owned
subsidiary of the Company, and
2525 Coral Way Bldg.
10.11 Business Property Lease dated Incorporated by reference to Exhibit
October 2, 1995 by and between 10.11 to Registrant's Form 10-QSB
LBJ Properties and Lee's filed on August 19, 1997
Acquisition Corporation, a
wholly owned subsidiary of the
Company
10.12 Lease Agreement dated October 1, Incorporated by reference to Exhibit
1995 by and between Sanford I. 10.12 to Registrant's Form 10-QSB
Rakofsky, M.D. and Lee's filed on August 19, 1997
Prescription Shops, Inc., a
wholly owned subsidiary of Lee's
Acquisition Corporation, a wholly
owned subsidiary of the Company
10.13 Stock Purchase Agreement dated Incorporated by reference to Exhibit
June 17, 1997 by and among 10.13 to Registrant's Form 10-QSB
PharmaSystems Cost Containment filed on August 19, 1997
Corp., Jose L. Rodriguez, M.D.
and Maria Rodriguez and Carlos M.
Marin
10.14 Security Agreement dated July 23, Incorporated by reference to Exhibit
1996 by and between Lee's 10.14 to Registrant's Form 10-QSB
Acquisition Corporation, a wholly filed on August 19, 1997
owned subsidiary of the Company,
and Lee's Prescription Shops,
Inc., a wholly owned subsidiary
of Lee's Acquisition Corporation,
and Carlos M. Marin
10.15 Agreement dated July 23, 1996 by Incorporated by reference to Exhibit
and between the Company, Lee's 10.15 to Registrant's Form 10-QSB
Acquisition Corporation, a wholly filed on August 19, 1997
owned subsidiary of the Company,
Lee's Prescription Shops, Inc., a
wholly owned subsidiary of Lee's
Acquisition Corporation and
Carlos M. Marin, Jr.
10.16 Promissory Note and Security Incorporated by reference to Exhibit
Agreement dated July 23, 1996 10.16 to Registrant's Form 10-QSB
given by the Company to Carlos M. filed on August 19, 1997
Marin, Jr.
27. Financial Data Schedule Provided herewith
16
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<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 135,781
<SECURITIES> 0
<RECEIVABLES> 217,007
<ALLOWANCES> 8,000
<INVENTORY> 615,428
<CURRENT-ASSETS> 1,131,881
<PP&E> 271,864
<DEPRECIATION> 71,446
<TOTAL-ASSETS> 1,580,133
<CURRENT-LIABILITIES> 5,166,016
<BONDS> 0
0
0
<COMMON> 2,631,557
<OTHER-SE> (3,585,883)
<TOTAL-LIABILITY-AND-EQUITY> 1,580,133
<SALES> 3,328,406
<TOTAL-REVENUES> 3,328,406
<CGS> 2,473,547
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,352,947
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 292,583
<INCOME-PRETAX> (1,790,671)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,790,671)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,790,671)
<EPS-PRIMARY> (.12)
<EPS-DILUTED> (.12)
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