<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1997
OR
[x] 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 0-8527
------
DIALYSIS CORPORATION OF AMERICA
------------------------------------------------------
(Exact name of registrant as specified in its charter)
FLORIDA 59-1757642
---------------------------- ---------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2337 WEST 76TH STREET, HIALEAH, FLORIDA 33016
- --------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
(305) 364-1308
---------------------------------------------------------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
---------------------------------------------------------------
(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 [X] or No [ ]
Common Stock Outstanding
Common Stock, $.01 par value -- 3,488,844 shares as of July 31, 1997.
<PAGE> 2
DIALYSIS CORPORATION OF AMERICA AND SUBSIDIARIES
INDEX
PART I -- FINANCIAL INFORMATION
The Consolidated Condensed Statements of Operations (Unaudited) for the
three months and six months ended June 30, 1997 and June 30, 1996 include the
accounts of the Registrant and its subsidiaries.
ITEM 1. FINANCIAL STATEMENTS
1) Consolidated Condensed Statements of Operations for the three
months and six months ended June 30, 1997 and June 30, 1996.
2) Consolidated Condensed Balance Sheets as of June 30, 1997 and
December 31, 1996.
3) Consolidated Condensed Statements of Cash Flows for the six
months ended June 30, 1997 and June 31, 1996.
4) Notes to Consolidated Condensed Financial Statements as of
June 30, 1997.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
PART II -- OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<PAGE> 3
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DIALYSIS CORPORATION OF AMERICA AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Medical service revenue $ 1,045,966 $ 977,946 $ 2,080,454 $ 1,871,025
Interest and other income 87,638 68,673 167,521 106,495
----------- ----------- ----------- -----------
1,133,604 1,046,619 2,247,975 1,977,520
Cost and expenses:
Cost of medical services 662,091 604,586 1,288,698 1,233,500
Selling, general and administrative expenses 413,808 386,553 857,192 759,641
Interest expense 19,585 23,162 42,079 41,855
----------- ----------- ----------- -----------
1,095,484 1,014,301 2,187,969 2,034,996
----------- ----------- ----------- -----------
Income (loss) before income taxes and minority interest 38,120 32,318 60,006 (57,476)
Income tax provision 14,000 14,000
----------- ----------- ----------- -----------
Income before minority interest 24,120 32,318 46,006 (57,476)
Minority interest in earnings (loss) of consolidated
subsidiaries 3,940 2,734 3,621 (2,411)
----------- ----------- ----------- -----------
Net income (loss) $ 20,180 $ 29,584 $ 42,385 $ (55,065)
=========== =========== =========== ===========
Income (loss) per common share $ .01 $ .01 $ .01 $ (.02)
=========== =========== =========== ===========
</TABLE>
See notes to consolidated condensed financial statements.
<PAGE> 4
DIALYSIS CORPORATION OF AMERICA AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996(A)
----------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 3,826,028 $ 4,579,273
Restricted cash 141,035 137,896
Accounts receivable, less allowances of $133,000 at
June 30, 1997 and $154,000 at December 31, 1996 552,976 461,269
Inventories 136,693 156,648
Prepaid expenses and other current assets 68,997 85,278
----------- -----------
Total current assets 4,725,729 5,420,364
Property and Equipment:
Land 168,358 168,358
Buildings and improvements 1,372,397 1,221,531
Machinery and equipment 1,254,321 1,144,191
Leasehold improvements 463,361 265,556
----------- -----------
3,258,437 2,799,636
Less accumulated depreciation 826,562 716,728
----------- -----------
2,431,875 2,082,908
Deferred expenses and other assets 39,205 49,017
----------- -----------
$ 7,196,809 $ 7,552,289
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 205,691 $ 148,660
Accrued expenses 167,922 182,986
Current portion of long-term debt 543,586 560,120
Income taxes payable 14,000
----------- -----------
Total current liabilities 931,199 891,766
Long-term debt, less current portion 236,032 215,466
Advances from parent 117,310 369,547
Minority interest in subsidiaries 76,095 75,472
Commitments and Contingencies
Stockholder's Equity
Common stock, $.01 par value, authorized 20,000,000 shares; June 30, 1997 -
3,588,844 shares issued, 3,488,844 shares outstanding;
December 31, 1996 - 3,588,844 shares issued and outstanding 35,888 35,888
Capital in excess of par value 3,748,595 3,748,595
Retained earnings 2,257,940 2,215,555
Treasury stock at cost; 100,000 shares at June 30, 1997 (206,250)
----------- -----------
Total stockholders' equity 5,836,173 6,000,038
----------- -----------
$ 7,196,809 $ 7,552,289
=========== ===========
</TABLE>
(A) Reference is made to the Company's Annual Report on Form 10-K for the year
ended December 31, 1996 filed with the Securities and Exchange Commission in
March 1997.
See notes to consolidated condensed financial statements.
<PAGE> 5
DIALYSIS CORPORATION OF AMERICA AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-----------------------------
1997 1996
----------- -----------
<S> <C> <C>
Operating activities:
Net income (loss) $ 42,385 $ (55,065)
Adjustments to reconcile net income (loss) to net cash used
in by operating activities:
Depreciation 124,312 95,607
Amortization 6,359 4,595
Bad debt expense 23,854 66,768
Minority interest 3,621 (2,411)
Increase (decrease) relating to operating activities from:
Accounts receivable (115,561) (89,381)
Inventories 19,955 (23,221)
Prepaid expenses and other current assets 16,281 (57,065)
Accounts payable 57,031 (165,454)
Accrued expenses (15,064) (39,184)
Income taxes payable 14,000
----------- -----------
Net cash provided by (used in) operating activities 177,173 (264,811)
Investing activities:
Additions to property and equipment, net of minor disposals (408,279) (27,186)
Proceeds from restricted cash 207,251 198,421
Restricted cash (210,390) (201,425)
Deferred expenses and other assets 3,453 128,524
----------- -----------
Net cash (used in) provided by investing activities (407,965) 98,334
Financing activities:
Net proceeds from securities offering 3,445,158
(Decrease) increase in advances from parent (252,237) 344,546
Repurchase of stock (206,250)
Payments on long-term debt (60,968) (52,051)
Dividend payments to minority shareholder (2,998)
----------- -----------
Net cash (used in) provided by financing activities (522,453) 3,737,653
----------- -----------
(Decrease) increase in cash and cash equivalents (753,245) 3,571,176
Cash and cash equivalents at beginning of period 4,579,273 1,061,351
----------- -----------
Cash and cash equivalents at end of period $ 3,826,028 $ 4,632,527
=========== ===========
</TABLE>
See notes to consolidated condensed financial statements.
<PAGE> 6
DIALYSIS CORPORATION OF AMERICA AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1997
(UNAUDITED)
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION
The consolidated financial statements include the accounts of Dialysis
Corporation of America ("DCA") and its subsidiaries, collectively referred to as
the "Company". All material intercompany accounts and transactions have been
eliminated in consolidation. The Company is a 69.1% owned subsidiary of
Medicore, Inc. (the "Parent").
INTEREST AND OTHER INCOME
Interest and other income is comprised as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Rental income $ 31,725 $ 24,461 $ 56,867 $ 49,007
Interest income 48,568 43,335 99,640 54,174
Other income 7,345 877 11,014 3,314
-------- -------- -------- --------
$ 87,638 $ 68,673 $167,521 $106,495
======== ======== ======== ========
</TABLE>
INCOME PER COMMON SHARE
Income (loss) per share has been computed on the basis of the weighted
average number of shares outstanding plus dilutive common equivalent shares
using the modified treasury stock method for 1997 and on the basis of weighted
average shares outstanding for 1996.
RECLASSIFICATIONS
Certain reclassifications have been made to the 1996 financial
statements to conform to the 1997 presentation.
NOTE 2--INTERIM ADJUSTMENTS
The financial summaries for the three months and six months ended June
30, 1997 and June 30, 1996 are unaudited and include, in the opinion of
management of the Company, all adjustments (consisting of normal recurring
accruals) necessary to present fairly the earnings for such periods. Operating
results for the three months and six months ended June 30, 1997 are not
necessarily indicative of the results that may be expected for the entire year
ending December 31, 1997.
While the Company believes that the disclosures presented are adequate
to make the information not misleading, it is suggested that these Consolidated
Condensed Financial Statements be read in conjunction with the financial
statements and notes included in the Company's audited financial statements for
the year ended December 31, 1996.
NOTE 3--LONG TERM DEBT
The remaining combined principal balance under the Company's mortgages
on its buildings in Pennsylvania and Maryland amounted to approximately $468,000
and $504,000 at June 30, 1997 and December 31, 1996, respectively. The bank has
the right to demand repayment on the outstanding balance of the borrowings under
these mortgages which have accordingly been classified as current liabilities.
At December 31, 1996, the Company was in violation of certain covenants under
these loans principally relating to net worth and debt service ratio
requirements. The lender waived compliance with these covenants through December
31, 1997.
<PAGE> 7
DIALYSIS CORPORATION OF AMERICA AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS-(CONTINUED)
JUNE 30, 1997
(UNAUDITED)
NOTE 3--LONG TERM DEBT--CONTINUED
The Company has an equipment purchase agreement for kidney dialysis
machines for its facilities in Pennsylvania and Florida. Monthly payments were
originally $4,435 commencing September 1995, including principal and interest,
through June 2000 with additional monthly payments of $2,750 on 1996 financing
commencing December 1996, including principal and interest through September
2001 with interest at 12%. Additional monthly payments of $344 commenced March
1997 on new financing, including principal and interest through February 2002,
with interest at 8% with additional monthly payments of $975 commencing June
1997, including principal and interest through May 2002, with interest at 8%.
The initial principal balance of $195,130, additional financing of $124,096 in
1996, $17,000 in March 1997 and $48,000 in June 1997, net of down payments,
represent noncash financing activities which is a supplemental disclosure
required by FAS 95. The remaining principal balance under this agreement
amounted to approximately $312,000 and $272,000 at June 30, 1997 and December
31, 1996, respectively.
The prime rate was 8.5 % as of June 30, 1997 and 8.25% as of December
31, 1996.
Interest payments on long-term debt above amounted to
approximately $18,000 and $37,000 for the three months and six months ended
June 30, 1997 for the same periods of the preceding year.
NOTE 4--INCOME TAXES
The Company was included in the consolidated federal and state income
tax returns of the Parent until the completion of its public offering in April
1996. Subsequent to the completion of the Company's public offering, the Company
files separate federal and state income tax returns with the income tax
liability reflected on a separate return basis with its previously available net
operating loss carryforwards having been utilized prior to completion of its
public offering.
Deferred income taxes reflect the net tax effect of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.
There were no income tax payments for the three months and six months
ended June 30, 1997 or for the same periods of the preceding year.
NOTE 5--TRANSACTIONS WITH PARENT
The Parent provides certain administrative services to the Company
including office space and general accounting assistance. These expenses and all
other central operating costs are charged on the basis of direct usage, when
identifiable, or on the basis of time spent. In the opinion of management, this
method of allocation is reasonable. The amount of expenses allocated by the
Parent totaled approximately $60,000 and $120,000 for the three months and six
months ended June 30, 1997, and for the same periods of the preceding year.
The Company has an intercompany advance payable to the Parent of
approximately $117,000 and $370,000 at June 30, 1997 and December 31, 1996,
respectively, which bears interest at the short-term Treasury Bill rate.
Interest on this intercompany advance amounted to approximately $1,000 and
$4,000 for the three months and six months ended June 30, 1997, and $5,000 for
the three months and six months ended June 30, 1996, which is included in the
intercompany advance payable. The Parent has agreed not to require repayment of
the intercompany advances prior to July 1, 1998 and therefore, the advances have
been classified as long-term at June 30, 1997.
<PAGE> 8
DIALYSIS CORPORATION OF AMERICA AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS-(CONTINUED)
JUNE 30, 1997
(UNAUDITED)
NOTE 6--STOCK OPTIONS
In November, 1995, the Company adopted a stock option plan for up to
250,000 options. Pursuant to this plan, in November, 1995, the Board of
Directors granted 210,000 options to certain of its officers, directors,
employees and consultants of which 191,500 options were outstanding at June 30,
1997. These options are exercisable for a period of five years through November
9, 2000 at $1.50 per share.
In August 1996, the Board of Directors granted 15,000 options to the
medical directors at its three kidney dialysis centers. These options are
exercisable for a period of 3 years through August 18, 1999 at $4.75 per share.
NOTE 7--COMMON STOCK
In June 1997, the Company reacquired 100,000 shares of its common
stock at a cost of $206,250 with these shares reflected as treasury stock in the
balance sheet.
NOTE 8--COMMITMENTS AND CONTINGENCIES
Effective January 1, 1997 the Company established a 401(k) savings plan
(salary deferral plan) with an eligibility requirement of 1 year of service and
21 year old age requirement.
<PAGE> 9
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The statements contained in this Quarterly Report on Form 10-Q that are
not historical are forward looking statements within the meaning of Section 27A
of the Securities Act and Section 21E of the Securities Exchange Act of 1934
(the "Exchange Act"), including statements regarding the Company's expectations,
intentions, beliefs, or strategies regarding the future. Forward looking
statements include the Company's statements regarding liquidity, anticipated
cash needs and availability, and anticipated expense levels in "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
including anticipated development and acquisition of dialysis centers, new
facility completions and related anticipated costs. All forward looking
statements included in this document are based on information available to the
Company on the date hereof, and the Company assumes no obligation to update any
such forward looking statement. It is important to note that the Company's
actual results could differ materially from those in such forward looking
statements. Among the factors that could cause actual results to differ
materially are the factors detailed in the risks discussed in the "Risk Factors"
section included in the Company's Registration Statement Form SB-2, as filed
with the Securities and Exchange Commission (effective on April 17, 1996).
The dialysis industry is highly competitive and subject to extensive
regulation, including the limitation on fees for dialysis treatment and
services. Significant competitive factors include quality of care and service,
convenience of location and pleasant environment. Additionally, there is intense
competition for retaining qualified nephrologists who normally are the sole
source of patient referrals and are responsible for the supervision of the
dialysis centers. There is also substantial competition for obtaining qualified
nurses and technical staff. Major companies, some of which are public companies
or divisions of public companies, have many more centers, physicians and
financial resources than does the Company, and by virtue of such have a
significant advantage in competing for acquisitions of dialysis facilities in
areas targeted by the Company.
The Company's future growth depends primarily on the availability of
suitable dialysis centers for acquisition or development in appropriate and
acceptable areas, and the Company's ability to compete with larger companies
with greater personnel and financial resources to develop these new potential
dialysis centers at costs within the budget of the Company. Its ability to
retain qualified nephrologists, nursing and technical staff at reasonable rates
is also a significant factor. Management continues in negotiations with
nephrologists for the acquisition or development of new dialysis facilities, as
well as with hospitals and other health care maintenance entities. The Company
has recently opened its fourth center in Carlisle, Pennsylvania. A lease has
been completed for a fifth center located in Manahawkin, New Jersey and the
Company is seeking certain regulatory approvals from the state which if not
granted will result in further delays in opening that new dialysis facility.
Several agreements for acute inpatient services are under review but there is no
assurance that such agreements will be completed. There is no certainty as to
when any new centers or service contracts will be implemented, or the number of
stations, or patient treatments such may involve, or if such will ultimately be
profitable. As noted below, newly established dialysis centers, although
contributing to increased revenues, also adversely affect results of operations
due to start-up costs and expenses with a smaller developing patient base.
RESULTS OF OPERATIONS
Medical service revenue increased approximately $68,000 (7%) and
$209,000 (11%) for the three months and six months ended June 30, 1997 compared
to the same periods of the preceding year. This increase was largely
attributable to increased revenues of approximately $134,000 (43%) and $317,000
(56%) compared to the same periods of the preceding year at the Company's
dialysis center in Lemoyne, Pennsylvania which commenced treatments in June
1995. Revenues attributable to the Company's center in Wellsboro, Pennsylvania
which commenced treatments in October 1995 decreased approximately $24,000 (19%)
and $41,000 (17%) compared to the preceding year. Revenues attributable to the
Company's Florida dialysis center decreased $42,000 (8%) and $65,000 (6%)
compared to the preceding year.
Interest and other income increased approximately $19,000 and $61,000
for the three months and six months ended June 30, 1997 compared to the same
periods of the preceding year largely due to interest earned on proceeds
invested from the Company's security offering completed in the second quarter of
1996.
<PAGE> 10
RESULTS OF OPERATIONS-CONTINUED
Cost of medical services sales, although increasing to 63% from 62%
during the second quarter of 1997 compared to the preceding year, largely as a
result of increases in supply costs, decreased to 62% for the six months ended
June 30, 1997 compared to 66% for the same period of the preceding year, largely
as a result of a decrease in healthcare salaries as a percentage of sales due to
the increased sales revenues generated by the Company's Lemoyne, Pennsylvania
facility with salaries at that facility remaining approximately the same.
Selling, general and administrative expenses increased approximately
$27,000 and $98,000 for the three months and six months ended June 30, 1997
compared to the same periods of the preceding year reflecting increases
associated with the new Pennsylvania dialysis centers. Selling general and
administrative expenses as a percentage of medical service revenues remained
relatively stable amounting to 40% and 41% for the three months and six months
ended June 30, 1997 and for the same periods of the preceding year.
Interest expense decreased approximately $4,000 for the three months
ended June 30, 1997 compared to the same period of the preceding year with
interest expense for the six months ended June 30 being approximately the same
for both years. Included was interest of $1,000 and $4,000 on the advances
payable to the Parent for the three months and six months ended June 30, 1997
compared to $5,000 for the same periods of the preceding year with this interest
computed at the short-term Treasury Bill rate. Other interest including interest
on mortgages and equipment purchase agreements for dialysis machines was
approximately the same for the three months and six months ended June 30, 1997
compared to the same periods of the preceding year. The prime rate was 8.5% at
June 31, 1997 and 8.25% at December 31, 1996.
LIQUIDITY AND CAPITAL RESOURCES
Working capital totaled $3,795,000 at June 30, 1997, which reflected a
decrease of approximately $734,000 during the six months ended June 30, 1997.
Included in the changes in components of working capital was a decrease in cash
and cash equivalents of $753,000, which included net cash provided by operating
activities of $177,000, net cash used in investing activities of $408,000
relating to additions to property and equipment (of which $193,000 are for the
new Carlisle, Pennsylvania facility and $134,000 are for renovations and
improvements to the Company building in Lemoyne, Pennsylvania) and net cash used
in financing activities of $522,000 (including a decrease in the advances from
the Parent of $252,000, repurchase of stock of $206,000 and debt repayments of
$61,000).
During 1988, the Company obtained mortgages totaling $1,080,000 on its
two buildings, one in Lemoyne, Pennsylvania and the other in Easton, Maryland.
The mortgages had a combined remaining balance of $468,000 and $504,000 at June
30, 1997 and December 31, 1996, respectively. The bank has liens on the real and
personal property of the Company, including a lien on all rents due and security
deposits from the rental of these properties. At December 31, 1996, the Company
was in default of certain covenants principally relating to net worth and debt
service ratio requirements under these loan agreements for which the lender has
waived compliance through December 31, 1997. See Note 3 to "Notes to
Consolidated Condensed Financial Statements".
The Company has an equipment purchase agreement for kidney dialysis
machines for its Florida and Pennsylvania dialysis facilities which had a
remaining balance of $312,000 and $272,000 at June 30, 1997 and December 31,
1996, respectively, which included additional equipment financing of
approximately $17,000 in the first quarter of 1997 and $48,000 in the second
quarter of 1997. See Note 3 to "Notes to Consolidated Condensed Financial
Statements".
The Company believes that current levels of working capital, including
the proceeds of its 1996 securities offering, will enable it to successfully
meet its liquidity demands for at least the next twelve months.
The Company, having operated on a larger scale in the past, is seeking
to expand its outpatient dialysis treatment facilities and inpatient dialysis
care. Such expansion, whether through acquisitions of existing centers, or the
development of its own dialysis centers, requires capital, which was the basis
for the Company's 1996 security offering. No assurance can be given that the
Company will be successful in implementing its growth strategy or that the funds
from its securities offering will be adequate to finance such expansion.
In June 1997, the Company repurchased 100,000 shares of its common
stock for $206,250. See Note 7 to "Notes to Consolidated Condensed Financial
Statements".
The Company commenced operations at its newly established dialysis
center in Carlisle, Pennsylvania in July 1997 and has entered into an agreement
with a medical director, and intends to establish another new dialysis center,
in New Jersey. Establishment of the New Jersey center is subject to meeting
various regulatory requirements.
<PAGE> 11
IMPACT OF INFLATION
Inflationary factors have not had a significant effect on the Company's
operations, although the Company has experienced increased costs of supplies,
salaries and general and administrative expenses.
A substantial portion of the Company's revenue is subject to
reimbursement rates established and regulated by the federal government. These
rates do not automatically adjust for inflation. Any rate adjustments relate to
legislation and executive and Congressional budget demands, and have little to
do with the actual cost of doing business. Therefore, dialysis services revenues
cannot be voluntarily increased to keep pace with increases in nursing and other
patient care costs.
<PAGE> 12
PART II-OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders
On June 11, 1997, the Company held its annual meeting of
shareholders to elect its three member Board of directors to serve
until the next annual meeting in 1998. Each director, Messrs. Thomas K.
Langbein, Bart Pelstring and Michael Duke, was elected by a vote of
2,410,622 shares for and no votes against. There were no abstentions
and no broker non-votes due to the meeting being called pursuant to an
Information Statement under Regulation 14C of the Securities and
Exchange Act of 1934 with no proxy solicitation since the Parent
owned 67% of the voting equity of the Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
Part I Exhibits
(11) Statement re: computation of per share earnings.
(27) Financial Data Schedule (for SEC use only)
Part II Exhibits
(10) Material contracts
(i) Schedule of Leased Equipment 0597 commencing June 1,
1997 to Master Lease BC-105 dated November 22, 1996
between the Company and B. Braun Medical, Inc.
(ii) Schedule of Leased Equipment 0697 commencing July 1,
1997 to Master Lease BC-105 dated November 22, 1996
between the Company and B Braun Medical, Inc.
(b) Reports on Form 8-K
The Company filed a Current Report on Form 8-K on June 19, 1997 with
respect to Item 5, "Other Events" relating to certain agreements for
In-Hospital Dialysis Service; there were no financial statements filed.
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.
DIALYSIS CORPORATION OF AMERICA
By: /s/ DANIEL R. OUZTS
------------------------------------------
DANIEL R. OUZTS, Vice President/Finance
Controller and Principal Financial Officer
Dated: August 13, 1997
<PAGE> 13
EXHIBIT INDEX
Exhibit
No.
Part I Exhibits
(11) Statement re: computation of per share earnings (loss)
(27) Financial Data Schedule (for SEC use only)
Part II Exhibits
(10) Material contracts
(i) Schedule of Leased Equipment 0597 commencing June 1, 1997 to
Master Lease BC-105 dated November 22, 1996 between the
Company and B. Braun Medical, Inc.
(ii) Schedule of Leased Equipment 0697 commencing July 1, 1997 to
Master Lease BC-105 dated November 22, 1996 between the
Company and B Braun Medical, Inc.
<PAGE> 1
Exhibit 10(i)
SCHEDULE OF LEASED EQUIPMENT 0597
TO MASTER LEASE BC-105
B. Braun Medical Inc. ("Lessor") and Dialysis Corporation of America ("Lessee")
Pursuant to the Master Lease dated November 22, 1996 between Lessor and Lessee
which is incorporated herein by reference, Lessee agrees to Lease the below
described Equipment from Lessor, its successors or assigns, and Lessor, by
acceptance of this lease, agrees to lease the Equipment to Lessee, on the terms
set forth in this Schedule of Leased Equipment.
The equipment listed on this schedule will be located at:
Dialysis Services of Pennsylvania, Inc. - Lemoyne
27 Miller Street
Lemoyne, PA 17043
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Date of 1st
Equipment Description Aggregate Monthly Commencing Monthly Rental Purchase
Rental Rental Date Option
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
(4) new HD-secura $58,500 $975 June 1, 1997 June 1, 1997 $1.00
systems; S/N 832,833,
834,835 plus taxes plus taxes
including Blood Pressure
monitors, standard accessories
package and necessary hoses
and fittings
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
Lease Term: The term of this Lease for the items described in this Schedule
shall be 60 months.
Rentals: For said term or any portion thereof, Lessee shall pay to Lessor the
stated above aggregate rentals in 60 equal, successive, monthly payments as
stated, commencing on the date set forth above, and continuing on a like date of
each month thereafter until fully paid.
Purchase Option: the purchase option is available at the end of the lease term
on the terms and conditions set forth within the "Option to Purchase" agreement
attached to the Master Lease.
This schedule of Leased Equipment together with the Master Lease incorporated
herein by reference constitute the entire Agreement between the parties as to
the Lease and Equipment.
Accepted Dialysis Corporation of America, a Florida corporation
Lessee: /s/ BART PELSTRING ; Attest:
---------------------------- ---------------------
Bart Pelstring, Dialysis Corporation of America
Lessor: /s/ EDWARD ZELEZEN
----------------------------
Edward Zelezen, Controller, B. Braun Medical Inc.
<PAGE> 1
Exhibit 10(ii)
SCHEDULE OF LEASED EQUIPMENT 0697
TO MASTER LEASE BC-105
B. Braun Medical Inc. ("Lessor") and Dialysis Corporation of America ("Lessee")
Pursuant to the Master Lease dated November 22, 1996 between Lessor and Lessee
which is incorporated herein by reference, Lessee agrees to Lease the below
described Equipment from Lessor, its successors or assigns, and Lessor, by
acceptance of this lease, agrees to lease the Equipment to Lessee, on the terms
set forth in this Schedule of Leased Equipment.
The equipment listed on this schedule will be located at:
Dialysis Services of Pennsylvania, Inc. - Carlisle
101 Noble Blvd., Suite 103
Carlisle, PA 17013
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Date of 1st
Equipment Description Aggregate Monthly Commencing Monthly Rental Purchase
Rental Rental Date Option
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
(9) new HD-secura $131,640 $2,194 July 1, 1997 July 1, 1997 $1.00
systems; S/N 836,837,
838,839,840 plus taxes plus taxes
841,842,843
844
including Blood Pressure
monitors, standard accessories
package and necessary hoses
and fittings
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Lease Term: The term of this Lease for the items described in this Schedule
shall be 60 months.
Rentals: For said term or any portion thereof, Lessee shall pay to Lessor the
stated above aggregate rentals in 60 equal, successive, monthly payments as
stated, commencing on the date set forth above, and continuing on a like date of
each month thereafter until fully paid.
Purchase Option: the purchase option is available at the end of the lease term
on the terms and conditions set forth within the "Option to Purchase" agreement
attached to the Master Lease.
This schedule of Leased Equipment together with the Master Lease incorporated
herein by reference constitute the entire Agreement between the parties as to
the Lease and Equipment.
Accepted Dialysis Corporation of America, a Florida corporation
Lessee: /s/ BART PELSTRING ; Attest:
---------------------------- ---------------------
Bart Pelstring, Dialysis Corporation of America
Lessor: /s/ EDWARD ZELEZEN
----------------------------
Edward Zelezen, Controller, B. Braun Medical Inc.
<PAGE> 1
DIALYSIS CORPORATION OF AMERICA AND SUBSIDIARIES
EXHIBIT 11 -- COMPUTATION OF EARNINGS (LOSS) PER SHARE
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
PRIMARY AND FULLY DILUTED
Weighted average shares outstanding 3,561,371 3,334,493 $ 3,575,032 2,883,668
=========== ===========
Net effect of dilutive stock options based on the modified
treasury stock method 84,317 107,139
----------- -----------
3,645,688 3,682,171
=========== ===========
Net income (loss) $ 20,180 $ 29,584 $ 42,385 $ (55,065)
=========== =========== =========== ===========
Net income (loss) per share $ .01 $ .01 $ .01 $ (.02)
=========== =========== =========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 3,826,028
<SECURITIES> 0
<RECEIVABLES> 552,976<F1>
<ALLOWANCES> 0
<INVENTORY> 136,693
<CURRENT-ASSETS> 4,725,729
<PP&E> 3,258,437
<DEPRECIATION> 826,562
<TOTAL-ASSETS> 7,196,809
<CURRENT-LIABILITIES> 931,199
<BONDS> 236,032
0
0
<COMMON> 35,888
<OTHER-SE> 5,800,285
<TOTAL-LIABILITY-AND-EQUITY> 7,196,809
<SALES> 2,080,454
<TOTAL-REVENUES> 2,247,975
<CGS> 1,288,698
<TOTAL-COSTS> 1,288,698
<OTHER-EXPENSES> 857,192
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 42,079
<INCOME-PRETAX> 60,006
<INCOME-TAX> 14,000
<INCOME-CONTINUING> 42,385
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 42,385
<EPS-PRIMARY> .01
<EPS-DILUTED> 0
<FN>
<F1>
ACCOUNTS RECEIVABLE ARE NET OF ALLOWANCE OF $133,000 AT JUNE 30, 1997.
</FN>
</TABLE>
