<PAGE>
UNITED STATES
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 period ended March 31, 1995
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: 0-8187
MEDICAL RESOURCE COMPANIES OF AMERICA
(Name of Small Business Issuer in its Charter)
NEVADA 75-2399477
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
4265 KELLWAY CIRCLE, ADDISON, TEXAS 75244
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (214) 407-8400
Securities registered pursuant to Section 12(b) of the Act: Common stock, par
value $.01
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past twelve months
(or for such shorter period that the issuer was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
YES X NO___
---
At May 10, 1995, the issuer had outstanding 17,541,000 shares of par value $.01
common stock.
1
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Medical Resource Companies of America
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
--------------------
The accompanying unaudited Consolidated Financial Statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310 of
Regulation S-B. These financial statements have not been examined by
independent certified public accountants, but in the opinion of management, all
adjustments (consisting of normal recurring accruals) necessary for a fair
presentation of consolidated results of operations, consolidated financial
position and consolidated cash flows at the dates and for the periods indicated,
have been included.
These financial statements do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. Operating results for the three month period ended March 31, 1995
are not necessarily indicative of the results that may be expected for the year
ended December 31, 1995. For further information, refer to the Consolidated
Financial Statements and notes thereto included in the Company's Annual Report
on Form 10-KSB for the fiscal year ended December 31, 1994.
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Medical Resource Companies of America
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
----------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 7,820 $ 8,376
Accounts receivable - trade, less
allowance of $81 in 1995 and
$630 in 1994 1,289 2,079
Loan receivable 3,100 -
Inventories 357 370
Deferred income tax benefit 587 2,185
Real estate under contract of sale 594 14,889
Due from affiliates 178 185
Other current assets 1,295 1,274
--------- ---------
Total current assets 15,220 29,358
REAL ESTATE 3,186 3,204
INVESTMENT IN SECURITIES, AT COST 1,678 1,678
MORTGAGE NOTE RECEIVABLE 6,700 6,700
PROPERTY, PLANT AND EQUIPMENT, AT COST
Land 100 100
Buildings and improvements 767 767
Equipment and furnishings 394 388
Rental equipment 1,755 1,663
--------- ---------
3,016 2,918
Less accumulated depreciation 1,101 993
--------- ---------
1,915 1,925
OTHER ASSETS
Excess of cost of purchased companies
over net assets acquired, net of
accumulated amortization of $448 and
$426 in 1995 and 1994, respectively 1,325 1,347
Patents, net of accumulated amortization
of $262 and $249 in 1995 and 1994,
respectively 586 598
Other 438 414
--------- ---------
2,349 2,359
--------- ---------
$ 31,048 $ 45,224
========= =========
</TABLE>
3
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Medical Resource Companies of America
CONSOLIDATED BALANCE SHEETS - CONTINUED
(Amounts in thousands, except share data)
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
----------- -------------
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Note payable $ - $ 5,022
Current maturities of long-term
debt 269 379
Long-term debt collateralized by
properties under contract of sale - 8,933
Accounts payable - trade 956 1,319
Accrued expenses 1,290 1,755
Other current liabilities 220 1,479
--------- ---------
Total current liabilities 2,735 18,887
LONG-TERM DEBT 1,108 1,110
DEFERRED GAIN 3,083 3,083
STOCKHOLDERS' EQUITY
Series A cumulative preferred stock,
$.10 par value; liquidation value of
$1,085 in 1995 and 1994; authorized,
10,000 shares; issued and outstanding,
1,085 shares in 1995 and 1994 108 108
Series B cumulative convertible preferred
stock, $.10 par value; liquidation
value of $1,351 in 1995 and 1994;
authorized, 100 shares; issued and
outstanding, 14 shares in 1995 and 1994 1 1
Series C cumulative convertible preferred
stock, $.10 par value; liquidation
value of $2,000; authorized, 20 shares;
issued and outstanding, 20 shares in 1995
and 1994 2 2
Common stock, $.01 par value; authorized,
100,000 shares; issued, 17,541 and
18,542 shares in 1995 and 1994,
respectively 176 185
Additional paid-in capital 35,462 36,442
Accumulated deficit (9,112) (12,156)
-------- --------
26,637 24,582
Less stock purchase notes receivable (2,515) (2,438)
-------- --------
24,122 22,144
-------- --------
$ 31,048 $ 45,224
======== ========
</TABLE>
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Medical Resource Companies of America
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in thousands, except per share data)
<TABLE>
<CAPTION>
For the Three
Month Period Ended
March 31, March 31,
1995 1994
----------- --------------
(Unaudited)
<S> <C> <C>
REVENUE
Sales and rentals of mobility
products $ 310 $ 346
Long-term care facilities
operating revenue 555 2,043
Real estate operations 195 1,192
Gain on sales of assets 5,149 2,764
Interest and dividends 193 91
Other 9 -
------- -------
6,411 6,436
EXPENSES
Cost of mobility products sales
and rentals 334 400
Long-term care facilities
operating expenses 318 1,280
Real estate operations 97 773
General and administrative 837 889
Interest 121 906
------- -------
1,707 4,248
------- -------
Earnings from continuing operations
before income taxes 4,704 2,188
Income tax expense 1,598 744
------- -------
Earnings from continuing operations 3,106 1,444
Loss from discontinued operations, net of
income taxes - (46)
------- -------
NET EARNINGS 3,106 1,398
Preferred stock dividend requirement (81) (80)
------- -------
Earnings allocable to common
shareholders $ 3,025 $ 1,318
======= =======
Earnings per share
Continuing operations $ .17 $ .07
Net earnings $ .17 $ .07
Weighted average number of common
and equivalent shares
outstanding 18,274 18,395
</TABLE>
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Medical Resource Companies of America
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
<TABLE>
<CAPTION>
For The Three
Month Period Ended
March 31, March 31,
1995 1994
----------- ------------
(Unaudited) (Unaudited)
<S> <C> <C>
Cash flows from operating activities
Net earnings $ 3,106 $ 1,398
Adjustments to reconcile net
earnings to net cash used in
operating activities
Depreciation and amortization 206 555
Gain on sales of assets (5,149) (1,984)
Recognition of deferred gain - (780)
Changes in operating assets
and liabilities
Due from/to affiliates 7 (68)
Accounts receivable 790 (581)
Deferred tax benefit 1,598 721
Inventories 13 69
Other current and noncurrent
assets 1,096 360
Accounts payable and other
liabilities (2,087) 241
------- -------
Total adjustments (3,526) (1,467)
------- -------
Net cash used in operating
activities (420) (69)
Cash flows from investing activities
Proceeds from sales of assets, net 18,276 19,161
Additions to loan receivable (3,100) -
Additions to real estate (33) (177)
Purchase of property and equipment (103) (353)
------- -------
Net cash provided by
investing activities 15,040 18,631
</TABLE>
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Medical Resource Companies of America
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
(Amounts in thousands)
<TABLE>
<CAPTION>
For The Three
Month Period Ended
March 31, March 31,
1995 1994
--------- ----------
(Unaudited) (Unaudited)
<S> <C> <C>
Cash flows from financing activities
Proceeds from borrowings
Affiliates $ - $ 1,000
Other - 766
Payments on debt (14,049) (13,960)
Dividends on preferred stock (62) (29)
Purchase of treasury stock (1,065) -
-------- --------
Net cash used in
financing activities (15,176) (12,223)
-------- --------
NET INCREASE (DECREASE)
IN CASH (556) 6,339
Cash at beginning of period 8,376 1,083
-------- --------
Cash at end of period $ 7,820 $ 7,422
======== ========
</TABLE>
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ITEM 2. Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations.
------------------------------------
Medical Resource Companies of America ("Medical Resource" or the "Company") is
currently focusing its primary efforts on developing and managing facilities
which will provide full service residential retirement and personal assistance
with the Activities of Daily Living (ADLs) as needed for the elderly. The
Company also provides mobility assistance services for all ages in tourist
attractions and airports. Medical Resource's services are provided through a
number of subsidiaries comprising two divisions: residential retirement care and
mobility assistance services. Through its subsidiary, EquiVest Inc., the Company
also owns commercial real estate investments.
Originally founded in 1974 as a real estate investment trust organized in
California, in May 1991 Medical Resource transferred all its assets to a Nevada
corporation bearing the same name in order to continue operations in a more
conventional incorporated form. Its primary focus was on residential retirement
and healthcare services and products for the elderly and mobility impaired.
During 1994 and early 1995 the Company disposed of its nursing homes and
retirement center properties and changed its healthcare focus to meeting the
full service residential retirement and assisted living needs of the elderly.
RESIDENTIAL RETIREMENT AND ASSISTED LIVING
During the past four years a basic strategy of Medical Resource was to acquire
retirement, nursing and other healthcare facilities with the intention of
improving the physical structure, occupancy and efficiency of those facilities.
Eventually the facilities would be sold, to generate profits and provide working
capital to grow the Company and increase stockholders' equity.
The Company began development of a focused full service residential retirement
and assisted living strategy in 1994. Medical Resource believes the overall
demand for alternative lifestyles for the elderly is rapidly increasing.
Providing a residential lifestyle, maximizing choices and independence while
enhancing the quality of life of a growing segment of elderly, upscale
consumers, particularly the frail elderly, is a "growth" industry. Medical
Resource has discussed affiliations and joint ventures with several companies
involved in the full service residential retirement and assisted living
industry. The Company also investigated markets and development sites in
several states with a view toward designing and building a chain of proprietary
assisted living centers. These efforts will be continued. The Company will
manage some facilities and may employ third party managers in others.
8
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MOBILITY ASSISTANCE SERVICES
The Company, through its subsidiary, Odyssey Mobility Systems, Inc. (Odyssey),
provides electric convenience vehicles (ECVs), manual wheelchairs and children's
strollers to theme parks, zoos and other attractions throughout the United
States. ECVs are three and four wheel battery powered units which travel
approximately 5 miles per hour and are utilized principally by the elderly and
handicapped to assist in their mobility.
Odyssey currently provides its products to 25 theme parks and zoos including
SeaWorld, Disney World, The San Diego Zoo, Busch Gardens and the State Fair of
Texas, among others. The products are supplied either under a lease agreement
or by a concession contract in which Odyssey shares the revenue on an agreed
upon basis. Under certain agreements, Odyssey supplies all personnel and
equipment. The theme park business of Odyssey is highly seasonal.
Approximately 50% of its volume occurs during the summer months when children
are not in school and families tend to take vacations in greater numbers.
The Company, through its subsidiary Aviation Mobility, Inc. (Aviation), provides
manual wheelchairs and aisle chairs to the airline industry for use in airline
terminals to transport the handicapped and elderly throughout the airport
facilities. The products are provided to the airlines on a lease basis. The
Company currently provides products to Continental Airlines, Delta Airlines and
USAir.
EQUIVEST INC.
On March 24, 1993, the stockholders of Medical Resource and EquiVest Inc.
("EquiVest") approved the merger of EquiVest into a wholly owned subsidiary of
Medical Resource, which then changed its name to EquiVest Inc. The then
existing shareholders of EquiVest received 3,703,227 shares of Medical Resource
stock.
At the time of the merger, EquiVest was a REIT that owned and managed real
estate properties. Medical Resource has sold and will continue to liquidate the
acquired real estate and use the proceeds for acquisitions and to expand its
existing operations.
As of March 31, 1995, EquiVest owned four retail shopping centers: three in
Georgia and one in Florida. The aggregate value of the four centers in
accordance with generally accepted accounting principles was $3,780,000. The
property in Florida is under contract of sale.
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LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1995 current assets exceeded current liabilities by $12,485,000.
During this quarter the Company continued its program of selling its existing
healthcare facilities and its commercial real estate and using the proceeds to
acquire additional businesses and invest in existing operations.
In January 1995 the Company sold "The Fountainview", a retirement center in West
Palm Beach, Florida. The net sales proceeds were approximately $18,000,000.
The Company used approximately $9,000,000 of the proceeds to repay the mortgage.
The balance was used to increase working capital.
Also, in January 1995, the Company used approximately $5,000,000 of its cash to
payoff short-term bank debt.
As of March 31, 1995, the Company, through its subsidiary EquiVest Inc., owns
four retail shopping centers; three in Georgia and one in Florida. The Company
has entered into an agreement to sell the property in Florida and has classified
its investment in that property as real estate under contract of sale. It is
anticipated that this sale will occur in the second quarter of 1995.
The board of directors of the Company has authorized management to re-purchase
up to 1,500,000 shares of the Company's common stock at such prices and times as
management deems appropriate. During the first quarter of 1995, the Company has
purchased a total of 1,051,000 shares of its common stock.
Odyssey, on a lease or concession basis provides ECVs, wheelchairs and
children's strollers to amusement parks, zoos, and other attractions where these
products are used by the public. In addition, Aviation leases and maintains
wheelchairs for the airline industry for use in the airports. Odyssey and
Aviation acquire their products either by producing them or purchasing them from
third parties. These subsidiaries currently have a sufficient inventory of
equipment to service their existing contracts. The Company anticipates any
capital expenditures during 1995 will be funded by a combination of internal
working capital and credit extended by suppliers.
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RESULTS OF OPERATIONS
Three month period ended March 31, 1995 compared to three month period ended
March 31, 1994.
Net earnings for the three month period ended March 31, 1995 were $3,106,000 as
compared to $1,398,000 for the three month period ended March 31, 1994.
Mobility Products
- -----------------
Revenue from Odyssey and Aviation was $310,000 in 1995 as compared to $269,000
in 1994. Expenses associated with Odyssey and Aviation were $334,000 in 1995 as
compared to $280,000 in 1994. During the first quarter of 1994 the Company was
selling ECV's through the use of distributors. Sales in 1994 were $77,000 and
cost of sales were $120,000.
The Company's theme park operation is highly seasonal. The substantial portion
of the Company's revenue occurs in the warm weather months when children are no
longer in school and families tend to take vacations.
Long Term Care Facilities
- -------------------------
The Company sold "The Fountainview" on January 28, 1995 and recorded a gain of
$5,149,000. During the month of January "The Fountainview" generated revenue of
$555,000 and operating expenses of $318,000. For the comparable periods during
1994 the Company owned both The Fountainview and Rivermont Retirement Center, a
facility which was sold in December 1994. The revenue and expenses reflected in
long term care for 1994 reflect the operations of both The Fountainview and
Rivermont for the entire three month period.
Real Estate Operations
- ----------------------
Revenue from real estate operations was $195,000 for the three month period
ended March 31, 1995 as compared to $1,192,000 for the prior period. Costs of
operating these properties were $97,000 for the three month period ended March
31, 1995 as compared to $773,000 for the comparable period in the prior year.
Real estate operations reflect the revenue and expenses from the EquiVest
properties. When the Company acquired EquiVest, it was the stated intention to
sell the acquired assets. The reduced level of revenue and expenses for
EquiVest reflects the ongoing sale of those properties.
Interest Income and Expense
- ---------------------------
Interest and dividend income was $193,000 for the three month period ended March
31, 1995 as compared to $91,000 for the comparable period in the prior year.
Interest expense was $121,000 in 1995 as compared to $906,000 for 1994.
11
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Interest Income and Expense - Continued
- ---------------------------
Throughout 1994 the Company disposed of assets not essential to its long range
healthcare strategy. The proceeds from those sales were used to reduce debt and
increase working capital. The increase in interest income is the result of
having more working capital to invest. The decrease in interest expense is due
to the reduction in debt due both to the payoff of mortgages when real estate
assets were sold and the reduction of corporate debt when the proceeds from the
sale of assets were used to pay off that debt.
Discontinued Operations
- -----------------------
In 1994 management concluded that operations of skilled medical care facilities
such as nursing homes and eating disorder clinics were not in the best interest
of the Company. During 1994 the Company sold all operations associated with
those businesses. The loss from discontinued operations for 1994 of $46,000
represents the loss from operations net of income taxes for those businesses for
the three month period ended March 31, 1994.
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
--------------------------------
There were no Exhibits and reports on Form 8-K filed by the Company during the
quarter ended March 31, 1995.
12
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MEDICAL RESOURCE COMPANIES OF AMERICA
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
registrant has duly caused this report to be signed on its behalf by
undersigned, thereunto duly authorized.
MEDICAL RESOURCE COMPANIES OF AMERICA
Date: May 10, 1995 By: Gene S. Bertcher
--------------------------
Executive Vice President
Chief Financial Officer
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FORM
10QSB CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1995 AND THE CONSOLIDATED
STATEMENT OF EARNINGS FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 7,820
<SECURITIES> 0
<RECEIVABLES> 4,470
<ALLOWANCES> 81
<INVENTORY> 357
<CURRENT-ASSETS> 15,220
<PP&E> 3,016
<DEPRECIATION> 1,101
<TOTAL-ASSETS> 31,048
<CURRENT-LIABILITIES> 2,735
<BONDS> 1,108
<COMMON> 176
0
111
<OTHER-SE> 23,835
<TOTAL-LIABILITY-AND-EQUITY> 31,048
<SALES> 0
<TOTAL-REVENUES> 6,411
<CGS> 0
<TOTAL-COSTS> 749
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 121
<INCOME-PRETAX> 4,704
<INCOME-TAX> 1,598
<INCOME-CONTINUING> 3,106
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,106
<EPS-PRIMARY> .17
<EPS-DILUTED> 0
</TABLE>
