UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[ X ] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 1995
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ___________ to ____________
Commission File Number 0-11808
INAV TRAVEL CORPORATION
(Exact name of Registrant as specified in its charter)
COLORADO 59-2219994
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2225 E. Randol Mill Road Suite 305
Arlington, Texas 76011
(817) 633-9400
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
None NASDAQ - OTC BULLETIN BOARD
Securities registered pursuant to Section 12(g) of the Act:
Common Stock $ .001 par value
(Title of Class)
Check whether the issuer (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] No
Check if there is no disclosure of delinquent filers response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.
[X] Yes [ ] No
1
<PAGE>
Issuer's revenues for its most recent fiscal year $754,152.
The aggregate market value of the voting stock held by non-affiliates computed
by reference to the price at which the stock was sold, or the average bid and
asked price of such stock, as of a specified date within the past 60 days. The
Company's common stock based on the average selling price on a date within the
past 60 days is $0.05 (See definition of affiliated in Rule 12b-2 of the
Exchange Act).
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Check whether the issuer has filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of Securities under a plan confirmed by a court.
Yes [ ] No [ ]
As of December 31, 1995, 49,485,000 shares of the Issuer's $.001 par value
common stock were outstanding.
2
<PAGE>
INAV TRAVEL CORPORATION
Form 10-KSB
For the Year Ended December 31, 1995
Page of
Form 10-KSB
ITEM 1. BUSINESS .............................................................4
ITEM 2. PROPERTIES ..........................................................11
ITEM 3. LEGAL PROCEEDINGS ...................................................12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS .................12
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDERS MATTERS ................................................13
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS ...........................................16
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA .........................16
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE ............................................16
ITEM 9. EXECUTIVE OFFICERS OF THE REGISTRANT ................................17
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT ..................17
ITEM 11. EXECUTIVE COMPENSATION ..............................................17
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT ..........................................................17
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS .....................18
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K ......19
3
<PAGE>
PART 1
ITEM 1. BUSINESS
INAV Travel Corporation (the "Company") was incorporated in 1982. The
Company is a leading provider of business management services and cash
management resources to physicians, dentists, chiropractors and medical billing
centers. As of December 31, 1995, the Company provided business management
services to approximately 3,200 physicians, dentists, chiropractors and 680
billing centers. The Company has an established base of over 2,200 physical
locations with at least one installation in all 50 states. The business
management services offered by the Company include (i) general management
services, (ii) strategic management services, (iii) financial management
services and (iv) billing and accounts receivable management services. (For a
History of the Company, see Notes to Consolidated Financial Statements, Note A
"The Company").
The Company's business strategy is to develop, through internal growth
and acquisitions, a national organization which efficiently and effectively
provides medical management services to its clients. Management believes that
healthcare reform and industry changes will create new opportunities for the
management services provided by the Company as physicians and dentists move into
larger group practices, merge with other medical specialties and create
alliances with hospitals and other providers to pool their resources.
The Company's primary markets are physician, dentist, chiropractic
groups, select HMO and PPO organizations. The Company markets its services
through a sales staff and advertising through direct mail and trade shows. The
Company also obtains clients through referrals from existing clients.
In 1993 and 1994 the Company was engaged in the medical receivables
servicing and consulting business and the development and marketing of smart
card hardware and software products including computer security systems ("smart
card products"). During 1994, the Company developed a frequent shopper product
that utilized a central computer host to record retail customer transactions for
Company clients. On-site testing of the product at a retail site was completed
in 1994, but further financial investment in aggressive marketing and full scale
electronic host infrastructure was not undertaken due to the decline in Company
revenues in the second half of 1994.
RECENT ACQUISITIONS
- -------------------
On August 1, 1995, the Company, through a subsidiary, Santiago SDS,
Inc., ("Santiago") acquired all of the assets and certain related liabilities of
Santiago Data Systems, Inc. for $529,000. Santiago develops, supports and
licenses medical and dental software through the comprehensive nationwide
program called OneClaim Plus. Procedure Code Review ensures accurate procedure
coding for a well managed practice. STATAccess provides physicians and hospitals
with instant access to vital information regarding patients' medical and health
history.
In September 1993, the Company effected a merger transaction with
Personal Computer Card Corporation ("PC3") and soon after was acquired by
MedBanc Data Corporation ("MedBanc"), both through exchanges of stock.
INDUSTRY OVERVIEW
- -----------------
Current political, economic and regulatory influences are leading to
fundamental changes in the healthcare industry in the United States. As the
healthcare delivery system evolves, the need for state-of-the-art information
management tools becomes critically important. With the evaluation of Electronic
Data Interchange, healthcare is becoming an industry of automation, but
currently less than 50% of the entire healthcare market is automated.
4
<PAGE>
PRODUCTS
- --------
ONECLAIM PLUS is comprehensive Practice Management Software package
which is designed to handle every aspect of a physicians practice; patient
management, accounts receivable, billing, electronic insurance claim processing,
reporting and information management. OneClaim Plus is fully compatible with
MSDOS/IBM-PC type computers as well as with Microsoft Windows and popular
accounting software such as Quicken and DAC Easy. The Company's trademarked
EasyRead graphic screens and OneStep pop-up windows make information accessible,
readable and clear.
ELECTRONIC CLAIMS PROCESSING - is electronic data whereby our computer
system transfers a paper insurance claim into an electronic document and
transmits such electronic document to the major insurance companies including
Medicare, Medicaid, Blue Shield, Aetna, Travelers and Metropolitan.
STATAccess - is service designed for convenience and accessibility with
built in security . It is intended to meet the needs of a wide range of people.
Subscribers complete medical and health history, list health care providers,
insurance plans and emergency phone numbers which can be accessed by doctors and
emergency personnel, 24 hours a day, in the event of a critical situation.
Information can be up-dated as subscribers' personal health profiles change. A
new feature now available is the Crisis Message Relay. In the event of a natural
disaster; brush fire, earthquake, hurricane or flood, at home or abroad,
STATAccess subscribers may contact the Company's operators to post a message in
the subscriber's family file. The message will automatically be relayed to
family members who call.
CODEREVIEW is comprehensive report, prepared by Santiago, which
contains the status and a current short description of each CPT Code (Current
Procedural Terminology) submitted by a physician's office. The report provides
the physician with a quick and easy interpretation of the codes used along with
their monthly frequency and associated fees.
SERVICE CONTRACT - On-line support is provided to OneClaim Plus
customers by the Company's technical support staff.
The Company is continually investigating the feasibility of enhancing
software platforms and developing new platforms to meet its client's needs.
BILLING AND COLLECTION SERVICES
- -------------------------------
The Company's services are provided to physicians, dentists, billing
centers and clinics under various contractual agreements. The agreements
generally range from eighteen months to three years in duration, can be renewed
and can be terminated upon a 60 day written notice by either party. No single
customer or organization accounted for 10% or more of the Company's total
revenue in 1995.
Billing and accounts receivable management services include coding,
automated patient billing, insurance claims submission, accounts receivable
management, past due and delinquent accounts receivable collection services and
shared systems services, whereby clients can access the Company's proprietary
collection system to enter accounts receivable data, follow-up on collection of
those receivables and monitor collection productivity.
Revenues from individual customers vary depending on the number and
type of services utilized. A substantial majority of the Company's contractual
arrangements call for servicing fees payable to the Company based on a
percentage of net collections. Servicing fees, which are typically 15% , are
based on the medical or dental specialty and type of services provided, expected
collectibility of a customer's portfolio and the cost of providing such
services. The Company strives to retain its customers to provide a recurring
base of revenue.
5
<PAGE>
All product is shipped C.O.D. and/or payment is received by credit card, thereby
eliminating a large accounts receivable. All electronic billing is received in
the Company's office by electronic transmission and billed to the on-line
customers.
The business management service industry is highly competitive. The Company
considers itself to be one of the leading providers of business management
services to physicians, dentist, chiropractors, and billing centers. With 12
years of specialized experience in practice automation, the Company offers its
customers efficient and effective ways of providing medical management services
at a very comparable price. With the Company's excellent service, it believes it
has an edge over its competitors.
OneClaim Plus, STATAccess and Procedure Code Review are trademarks of Santiago.
We have spent approximately $100,000 to $150,000 in each of the past two years
in research and development of new product which will be on line in mid 1996.
EMPLOYEES
- ---------
The Company currently employs approximately 30 full and part time
employees. The Company has no labor union contracts and believes relations with
its employees is good.
ITEM 2. PROPERTIES
The Company's principal executive office is leased and located in
Arlington, Texas. The lease expires in July, 1996. Santiago's principal office
is leased and located in Newport Beach, California. The lease expires on January
31, 1999.
ITEM 3. LEGAL PROCEEDINGS None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to security holders for a vote during the
fourth quarter of 1995.
PART II
ITEM 5.MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
At the Company's annual meeting of Shareholders in September, 1994, a
reverse split of 6:1 was approved. However, because of the significant cost
involved, management elected not to implement the reverse split. The Company's
common stock is traded under the symbol "INAV" on NASDAQ's OTC Electronic
Bulletin Board. The following table sets forth the range of high and low bid
prices of the Company's common stock.
BID PRICE
BY QUARTER ENDED: HIGH LOW
- ----------------- ---- ---
Year Ended 12/31/95
March, 1995 $ .05 $ .03
June, 1995 .03 .01
September, 1995 .03 .01
December, 1995 .08 .03
Year Ended 12/31/94
March, 1994 $ .04 $ .03
June, 1994 .05 .05
September, 1994 .05 .05
December, 1994 .05 .05
6
<PAGE>
The Company had approximately 7924 holders of record of its common stock as of
December 31, 1995. No dividends have been paid on common stock and none are
anticipated in the foreseeable future. The Company has determined that it will
utilize any earnings in the expansion of its business.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
This section discusses the financial condition, changes of financial
condition and results of operations of the Company and its subsidiaries for the
period from January 1, 1995 to December 31, 1995 as compared with the period
from January 1, 1994 to December 31, 1994. (See Notes to Consolidated Financial
Statements, Note A "The Company.") The nature of business and various business
development activities of the Company during 1995 are described in "Item 1,
Business."
Total Revenues generated in 1995 amounted to $754,152. Revenues of
$100,064 were generated by medical claims servicing fee income and medical
receivable funding brokerage/consulting activities. $634,644 of the revenues
generated were from medical software sales, electronic claims, statement
processing and maintenance contracts.
Cost of Revenues in 1995 was $180,600, as compared with Cost of
Revenues in 1994 of $162,852. The increase resulted from a combination of
reduced costs of claims servicing fee income and brokerage income related to
reduced revenues, and increased costs of software and maintenance sales related
to increased revenues.
Operating Expenses for 1995 were $1,367,196 as compared with $1,730,862
for 1994. Included in operating expenses were $135,000 of write downs of assets
held for sale and losses of approximately $112,000 relating to the sale of other
assets. The Company recorded gains of $74,394 and $153,856 resulting from debt
extinguishment and liabilities which will not be payable and which were reduced
and credited to income. Selling, General and Administrative expense declined
significantly mainly due to curtailment of spending and reducing overhead.
Net Loss in 1995 was $690,487 as compared with Net Loss of $949,527 for
1994, due to facts disclosed above. Net cash used by operating activities in
1995 amounted to $290,925 as compared to $426,129 in 1994. The change results
from a decrease in the net loss offset partially by changes in assets and
liabilities.
The Company is unable to predict the impact of future healthcare
insurance legislation, if any, on its medical receivable business. With new
product being developed in related areas and our commitment to continued
research in the healthcare field to expand our on line products, our future is
bright. The short and medium range impact of inflation, if any, on the Company's
business is expected to be minimal.
Liquidity and Capital Resources
- -------------------------------
As of December 31, 1995, the Company had Current Assets of $96,323 and
Other Assets of $1,025,712. Current Liabilities at December 31, 1995, were
$1,435,605 of which $130,172 were notes and advances loaned to the Company by
its Senior Officers, Directors and Shareholders. Included in Long Term
Liabilities at December 31, 1995 were $710,898 of notes and cash advances loaned
to the Company by its Senior Officers, Directors and Shareholders.
7
<PAGE>
The Company generated net cash of $308,955 from investing activities as
compared to cash used in investing activities of $198,651 in 1994. The cash
generated by investing activities in 1995 results primarily from collections on
notes receivable ($75,000) and proceeds from the sale of assets held for sale
($295,512), offset partically by the capitalization of software development
costs ($55,750).
In 1994 cash used in investing activities relates primarily to
purchases of property and equipment ($37,467) software development costs
capitalized ($102,770) advances on notes receivable ($150,470) and the
registration and renewal of patents($40,425). Cash provided from investing
activities results from collections in notes receivable ($94,702) and proceeds
from sale of assets($37,779).
During 1995 and 1994 cash provided by financing activities amounted to
$12,277 and $224,186, respectively. In 1995 payments on notes payable of
$556,854 was offset by proceeds from notes payable of $561,533. In 1994 payments
and proceeds on notes payable amounted to $108,503 and $431,966 respectively.
The Company also purchased 4,852,059 shares into treasury for $121,300.
The Company has not been able to generate sufficient cash flow from
operations to fund its normal ongoing operations and administrative costs. The
Company is attempting to return to profitability through its medical software
business. In addition, the Company was unable to consummate its proposed stock
split and reincorporation in Delaware as a result of its financial condition.
The Company may attempt to sell capital stock through a private placement and/or
obtain loans as necessary to fund the needs of the Company. There can be no
assurance that the Company will be successful in these endeavors.
The Company will introduce two new products in mid 1996. The Company
anticipates that these products will generate tremendous response on the market.
The products should induce appreciable revenues.
ITEM 7. FINANCIAL STATEMENTS
Filed as exhibits hereto are the following statements of the Company
and its subsidiaries:
Page
----
Report of Independent Certified Public Accounts F- 3
Financial Statements
Consolidated Balance Sheets as of December 31, 1995 and 1994 F- 4
Consolidated Statements of Operations for the years ended
December 31, 1995 and 1994 F- 5
Consolidated Statements of Shareholder's Deficit for the
years ended December 31, 1995 and 1994 F- 6
Consolidated Statements of Cash Flows for the
years ended December 31, 1995 and 1994 F- 7
Notes to Consolidated Financial Statements F- 9
8
<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS AND
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
INAV TRAVEL CORPORATION
AND SUBSIDIARIES
DECEMBER 31, 1995 AND 1994
F-1
<PAGE>
INAV TRAVEL CORPORATION AND SUBSIDIARIES
CONTENTS
Page
Report of Independent Certified Public Accountants F-3
Financial Statements
Consolidated Balance Sheets as of December 31, 1995 and 1994 F-4
Consolidated Statements of Operations for the
years ended December 31, 1995 and 1994 F-5
Consolidated Statements of Shareholders' Deficit for the
years ended December 31, 1995 and 1994 F-6
Consolidated Statements of Cash Flows for the
years ended December 31, 1995 and 1994 F-7
Notes to Consolidated Financial Statements F-9
F-2
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
INAV Travel Corporation
We have audited the accompanying consolidated balance sheets of INAV Travel
Corporation and subsidiaries as of December 31, 1995 and 1994, and the related
consolidated statements of operations, shareholders' deficit and cash flows for
the years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of INAV
Travel Corporation and subsidiaries as of December 31, 1995 and 1994, and the
results of their operations and their cash flows for the years then ended, in
conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note C to the
consolidated financial statements, the Company sustained net losses and used
significant amounts of cash for operating activities in each of the years ended
December 31, 1995 and 1994, and as of December 31, 1995, the Company's current
liabilities exceed current assets and total liabilities exceed total assets.
These factors raise substantial doubt as to the Company's ability to continue as
a going concern. Management's plans in regard to these matters are also
described in Note C. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
KING, BURNS & COMPANY, P.C.
Dallas, Texas
April 12, 1996
F-3
<PAGE>
INAV TRAVEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 1995 and 1994
<TABLE>
<CAPTION>
ASSETS
1995 1994
---------- --------
<S> <C> <C>
CURRENT ASSETS
Cash $ 36,535 $ 6,228
Trade accounts receivable 59,788 17,491
Inventories - 40,732
Notes receivable - 26,520
Prepaid expenses and other - 22,479
-------------- --------
Total current assets 96,323 113,450
--------- -------
PROPERTY AND EQUIPMENT, NET 23,839 154,544
--------- -------
OTHER ASSETS
Goodwill, net of accumulated amortization of $103,319 956,045 -
Assets held for sale - 435,000
Notes receivable, less current portion - 228,434
Software development costs, net of accumulated amortization of $3,871 51,879 -
Patents, net of accumulated amortization of $1,784 - 38,641
Deposits 17,788 1,500
---------- ---------
Total other assets 1,025,712 703,575
--------- -------
$1,145,874 $971,569
========= =======
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES
Cash overdraft $ 29,616 $ 22,023
Notes payable, including $130,172 and $440,328
due to related parties 397,741 709,213
Accounts payable 177,266 300,287
Accrued liabilities 142,754 264,294
Other liabilities 527,350 115,894
Deferred revenues 160,878 -
--------- ----------------
Total current liabilities 1,435,605 1,411,711
LONG-TERM LIABILITIES
Noes payable less current maturities, all due to related parties 710,898 -
Other liabilities 130,000 -
----------- ----------------
Total liabilities 2,276,503 1,411,711
---------- ---------
COMMITMENTS AND CONTINGENCIES (Notes C, G, H, L, and M)
SHAREHOLDERS' DEFICIT
Common stock; $.001 par value; 50,000,000 shares
authorized; 49,485,000 shares issued 49,485 49,485
Additional paid-in capital 518,722 518,722
Accumulated deficit (1,551,797) (861,310)
Treasury stock, at cost; 4,909,577 shares (147,039) (147,039)
----------- ----------
Total shareholders' deficit (1,130,629) (440,142)
----------- ----------
$ 1,145,874 $ 971,569
========== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
INAV TRAVEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
---------- -------
<S> <C> <C>
REVENUES
Service fee and broker income $ 100,064 $ 927,391
Software and maintenance sales 639,644 111,762
Other 14,444 17,488
----------- ----------
Total revenues 754,152 1,056,641
---------- ---------
COST OF REVENUES
Cost of service fees and broker income 13,583 127,552
Cost of software and maintenance sales 167,017 35,300
--------- ----------
Total cost of revenues 180,600 162,852
--------- ---------
GROSS PROFIT 573,552 893,789
--------- ---------
OPERATING EXPENSES
Selling, general & administrative 990,872 1,629,363
Depreciation and amortization 129,467 15,710
Loss on write down of assets held for sale 135,000 68,294
Loss on disposition of fixed assets and assets
held for sale and related notes receivable 111,857 17,495
----------- ----------
Total operating expenses 1,367,196 1,730,862
---------- ---------
LOSS FROM OPERATIONS (793,644) (837,073)
---------- ----------
OTHER INCOME (EXPENSE)
Interest expense (83,104) (25,947)
Gain from reduction of liabilities 153,856 -
Other, net 1,978 35,848
----------- ----------
Total other income (expense) 72,730 9,901
---------- -----------
LOSS FROM CONTINUING OPERATIONS BEFORE
EXTRAORDINARY ITEM (720,914) (827,172)
DISCONTINUED OPERATIONS
Loss from operations of discontinued smart card products segment (61,911) (122,355)
Gain on sale of discontinued segment 17,944 -
--------- ------------
LOSS BEFORE EXTRAORDINARY ITEM (764,881) (949,527)
Gain on debt extinguishments 74,394 -
--------- ------------
NET LOSS $(690,487) $(949,527)
Loss per weighted-average common share:
Loss from continuing operations before extraordinary item $ (0.01) $ (0.02)
====== ======
Extraordinary item $ 0.00 $ 0.00
====== ======
Net loss $ (0.01) $ (0.02)
====== ======
Weighted-average common shares outstanding 49,485,000 49,485,000
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
INAV TRAVEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
Years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
Retained
Additional Earnings
Common Stock Paid-in (Accumulated Treasury
Shares Amount Capital Deficit) Stock Total
------ ------ ------- -------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1993 49,485,000 $49,485 $518,722 $ 88,217 $ (25,739) $ 630,685
Purchase of treasury stock - - - - (121,300) (121,300)
Net loss - - - (949,527) - (949,527)
----------- ----------- ----------- ----------- ------------ ----------
Balances at December 31, 1994 49,485,000 49,485 518,722 (861,310) (147,039) (440,142)
Net loss - - - (690,487) - (690,487)
----------- ----------- ----------- ----------- ------------ ----------
Balances at December 31, 1995 49,485,000 $49,485 $518,722 $(1,551,797) $(147,039) $(1,130,629)
========== ====== ======= ========== ======== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
INAV TRAVEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
------------ --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the year $(690,487) $(949,527)
Adjustments to reconcile net loss to net cash
used by operating activities
Depreciation and amortization 129,467 28,585
Loss on disposal of fixed assets 77,885 -
Loss on write down of software
development costs - 68,294
Loss on disposition and write down of assets held for
sale and related notes receivable 168,972 15,268
Gain on disposition of PC3 assets and certain liabilities (17,944) -
Change in allowance for doubtful accounts - (24,000)
Changes in assets and liabilities, net of effects of
acquisition and disposition
Trade accounts receivable (3,420) 103,362
Inventories 18,732 6,743
Prepaid expenses and other 22,479 30,114
Deposits 1,500 1,831
Accounts payable (58,059) 161,849
Accrued liabilities (113,384) 214,004
Other liabilities 12,456 (82,702)
Deferred revenues 160,878 -
--------- ----------
Net cash used by operating activities (290,925) (26,179)
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (3,227) (37,467)
Software development costs capitalized (55,750) (102,770)
Registration and renewal of patents - (40,425)
Cash paid in connection with sale of PC3 (2,580) -
Proceeds from sale of asset held for sale
and related notes receivable 295,512 37,779
Collections on notes receivable 75,000 94,702
Advances on notes receivable - (150,470)
---------- --------
Net cash provided (used) by investing activities 308,955 (198,651)
-------- --------
</TABLE>
- Continued -
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE>
INAV TRAVEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS -
Continued Years ended December 31,
1995 and 1994
<TABLE>
<CAPTION>
1995 1994
----------- --------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on notes payable $(556,854) $(108,503)
Proceeds from notes payable 561,538 431,966
Increase in cash overdraft 7,593 22,023
Purchase of treasury stock - (121,300)
--------- --------
Net cash provided by financing activities 12,277 224,186
--------- --------
INCREASE (DECREASE) IN CASH 30,307 (400,644)
Cash at beginning of period 6,228 406,872
--------- --------
Cash at end of period $ 36,535 $ 6,228
======== =========
SUPPLEMENTAL INFORMATION
Cash paid during the period for interest $ 87,427 $ 13,537
======== ========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES
Issuance of note payable for acquisition of assets and certain
liabilities of Santiago $529,000 $ -
======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-8
<PAGE>
INAV TRAVEL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. The Company
------------
INAV Travel Corporation ("INAV" or the "Company") was incorporated in
1982 and is a provider of business management services and cash
management resources to physicians, dentists, chiropractors and medical
billing centers. The Company's primary markets are physicians, dentists,
chiropractic groups, select HMO and PPO organizations throughout the
United States. The Company's revenue to date has consisted of sales of
software and related maintenance contracts.
During 1994 and 1995, the Company engaged in the medical receivables
servicing and consulting business and the development and marketing of
smart card hardware and software products including computer security
systems. During 1994, the Company developed a frequent shopper product
that utilized a central computer host to record retail customer
transactions for Company clients. On-site testing of the product at a
retail site was completed in 1994, but further investment in aggressive
marketing and full scale electronic host infrastructure was not
undertaken due to the decline in Company revenues in 1994. In October
1995, the smart card product business was sold and the entity through
which the Company conducted this business, Personal Computer Card
Corporation ("PC3") was dissolved.
On May 18, 1994, Santiago SDS, Inc. ("SDS") was formed as a Nevada
Corporation for the purpose of selling software and maintenance
contracts. INAV Travel Corporation acquired 750 shares of $.01 par value
stock of the corporation for a 100% ownership interest. Through its
subsidiary in 1995, the Company acquired all of the assets and certain
related liabilities of Santiago Data Systems, Inc. ("Santiago") for a
note payable of $529,000. Santiago develops, supports and licenses
medical and dental software through the comprehensive nationwide program
called OneClaim Plus. Procedure Code Review ensures accurate procedure
coding for a well managed practice. STAT Access provides physicians and
hospitals with immediate access to vital information regarding patients'
medical and health history (Note B).
2. Consolidation Policy
---------------------
The consolidated financial statements include the accounts of INAV and
its wholly owned subsidiaries. All material intercompany accounts and
transactions have been eliminated in consolidation.
3. Use of estimates and assumptions
---------------------------------
Management uses estimates and assumptions in preparing financial
statements in accordance with generally accepted accounting principles.
Those estimates and assumptions affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities, and the
reported revenues and expenses. Actual results could vary from the
estimates that were used.
4. Inventories
------------
Inventories are stated at the lower of cost or market using the first-in,
first-out method. Inventory consists primarily of smart card computer
components and related items.
F-9
<PAGE>
INAV TRAVEL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
5. Property and Equipment
-----------------------
Property and equipment are stated at cost. Depreciation for financial
statement purposes is computed principally on the straight-line method
over the estimated useful lives of the related assets ranging from three
to seven years. Maintenance and repairs are expensed as incurred.
Replacements and betterments are capitalized.
6. Goodwill
---------
Goodwill is the difference between the purchase price paid and
liabilities assumed over the estimated fair market value of assets
acquired in connection with Santiago. Goodwill acquired amounted to
$1,059,364 and is being amortized using the straight-line method over 4
years. Amortization expense for 1995 amounted to $103,319. On an on-going
basis management reviews recoverability, the valuation and amortization
of goodwill. As a part of this review, the Company considers the
undiscounted value of the projected future net earnings in evaluating the
value of goodwill. If the undiscounted future net earnings is less than
the stated value, the goodwill would be written down to fair value.
7. Patents
--------
Patents are stated at cost. Amortization is computed on the straight-line
method over 17 years, the legal life of the patents.
8. Earnings Per Common Share and Common Share Equivalents
-------------------------------------------------------
Earnings per share is based on the weighted average number of shares of
common stock outstanding during the period. Common equivalent shares are
comprised of dilutive stock options, the effect of which is
insignificant.
9. Cash and Cash Equivalents
--------------------------
The Company considers all cash on hand and in banks, demand and time
deposits, certificates of deposit, and all other highly liquid debt
investments with maturities of three months or less when purchased, to be
cash and cash equivalents. There were no cash equivalents at December 31,
1995 and 1994.
10. Business and Credit Risk Concentrations
----------------------------------------
In the normal course of business, the majority of service fee and broker
income with respect to medical receivables are received in cash at time
of completion of each transaction. Clients are located throughout the
United States. During the year ended December 31, 1995 and 1994 customers
accounting for 10% or more of service fee and broker income are as
follows:
1995 1994
---- ----
Customer A - $462,000
Customer B - $262,000
Customer C - $171,000
- Continued -
F-10
<PAGE>
INAV TRAVEL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
10. Business and Credit Risk Concentrations - Continued
-----------------------------------------------------
In the normal course of the software sales business, the Company extends
unsecured credit to some of its customers. None of the customers are
individually significant. A significant portion of the customers pay for
the software in cash. Service maintenance contracts are paid for in
advance and amortized over the period of the contract. Customers are
located throughout the United States. Management evaluates accounts
receivable balances on an ongoing basis and provides allowances as
necessary for amounts estimated to eventually become uncollectible. There
was no allowance for uncollectible accounts receivable at December 31,
1995. In the event of complete non-performance of accounts receivable,
the maximum exposure to the Company is the recorded amount on the
financial statements at the date of non-performance.
11. Income Taxes
-------------
The Company accounts for income taxes in accordance with the asset and
liability method. Deferred income tax assets and liabilities are computed
annually for differences between the financial statement and tax bases of
assets and liabilities that will result in taxable or deductible amounts
in the future based on enacted tax laws and rates applicable to the
periods in which the differences are expected to affect taxable income.
Valuation allowances are established when necessary to reduce deferred
tax assets to the amount expected to be realized. Income tax expense is
the tax payable or refundable for the period plus or minus the change
during the period in deferred tax assets and liabilities.
The Company has not provided for state income taxes, as the effect on the
consolidated financial statements is not significant.
12. Software Development
---------------------
The Company was previously involved in developing frequency software and
hardware to be sold as an integrated system. During 1995 after the
acquisition of Santiago assets and liabilities, the Company was involved
in developing software related to the medical profession as described
earlier. The Company begins to capitalize software development costs
after technological feasibility has been established in accordance with
Financial Accounting Standards Board Statement Number 86, "Accounting for
the Costs of Computer Software to be Sold, Leased or Otherwise Marketed".
Software costs are amortized over the estimated economic life of the
software from the time that a particular product is completed. No
amortization on frequency related software has been recorded during 1995
and 1994 as the asset was being held for sale and has now been fully
expensed (See Note E). Software development costs of $102,770 were
captialized in 1994 in connection with the frequency software.
Software development costs of $55,750 were capitalized during 1995.
13. Accounting Standards Not Yet Adopted
-------------------------------------
In October 1995, Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-based Compensation" ("SFAS 123"), was issued. This
statement requires the fair value of stock options and other stock-based
compensation issued to employees to either be included as compensation
expense in the income statement, or the pro forma effect on net income
and earnings per share of such compensation expense to be disclosed in
the footnotes to the Company's financial statements commencing with the
Company's 1996 fiscal year. The Company expects to adopt SFAS 123 on a
disclosure basis only. As such, implementation of SFAS 123 is not
expected to impact the Company's balance sheet or statement of
operations.
14. Reclassification
-----------------
Certain prior year amounts have been reclassified to conform with the
1995 presentation.
F-11
<PAGE>
INAV TRAVEL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued
NOTE B - ACQUISITION AND DISPOSITION
Acquisition
- -----------
As discussed in Note A1, INAV acquired the assets and certain liabilities of
Santiago in August 1995 for a note payable of $529,000.
A summary of the fair value of assets acquired and liabilities assumed is as
follows:
Accounts receivable $ 40,567
Property and equipment 17,788
Goodwill 1,059,364
Amount due by Santiago to INAV (183,486)
Current liabilities (54,763)
Other liabilities (350,470)
---------
$ 529,000
Unaudited pro forma financial information for the years ended December 31, 1995
and 1994 as though the acquisition had occurred on January 1, 1994 is as
follows:
1995 1994
---------- -------
Revenues $1,573,000 $2,336,000
Loss from continuing operations before
extraordinary item $(927,000) $(1,469,000)
Net loss $(1,001,000) $(1,469,000)
Net loss per share $(0.02) $(0.03)
Disposition
- -----------
Effective in October 1995, the Company disposed of substantially all of the
assets and liabilities of PC3 (Note A1), and dissolved this entity. The Company
recorded a gain on disposition of $17,944. Revenues for PC3 for the years ended
December 31, 1995 and 1994 amounted to $42,896 and $350,149, respectively. The
statement of operations for the year ended December 31, 1994 has been restated
to conform with the 1995 presentation.
NOTE C - GOING CONCERN UNCERTAINTY
As reflected in the consolidated statements of operations, the Company suffered
net losses of $690,487 and $949,527 in 1995 and 1994, respectively. In addition,
cash used for operating activities in each of the years amounted to $290,925 and
$426,179, respectively. At December 31, 1995, current liabilities exceed current
assets by $1,339,282 and total liabilities exceed total assets by $1,130,629.
These factors, among others, raise substantial doubt as to the Company's ability
to continue as a going concern. Management is, however, in the process of
raising additional financing and obtained cash for a note payable due in 1997,
amounting to $525,000 in early 1996. In addition, since its acquisition of
Santiago, the Company had generated net income of approximately $100,000
(unaudited) during the three months ended March 31, 1996. Management believes
that this portion of the business will continue to be profitable and provide the
cash flow necessary to grow its business going forward.
The financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
or classification of liabilities which may result from the possible inability of
the Company to continue as a going concern.
F-12
<PAGE>
INAV TRAVEL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued
NOTE D - NOTES RECEIVABLE
Notes receivable consist of the following as of December 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
----------- --------
<S> <C> <C>
Note receivable from Santiago settled in connection
with the acquisition of assets and certain
liabilities of Santiago (Note B). $ - $150,470
Ten notes receivable from individuals; sold in 1995
to a shareholder for $75,000. - 104,484
------------ -------
- 254,954
Current portion - (26,520)
------------ --------
Non-current portion $ - $228,434
============ =======
</TABLE>
NOTE E - ASSETS HELD FOR SALE
Assets held for sale include a Twistee store structure (carrying value of
$300,000) and software development costs held for resale. The store structure
was sold during 1995 for approximately $300,000. In 1994, electronic frequent
shopper software development costs were written down to estimated net realizable
value of $135,000, resulting in a loss on write-down of $68,294 in 1994. In 1995
the remaining capitalized costs were charged to operations as the Company is no
longer pursuing this line of business.
NOTE F - PROPERTY AND EQUIPMENT
Property and equipment consists of the following at December 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
--------- --------
<S> <C> <C>
Vehicles $ - $ 3,539
Computer equipment 37,468 80,864
Furniture and fixtures 1,056 105,931
Leasehold improvements - 4,375
----------- --------
38,524 194,709
Less accumulated depreciation and amortization (14,685) (40,165)
------- -------
$ 23,839 $154,544
======= =======
</TABLE>
F-13
<PAGE>
INAV TRAVEL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued
NOTE G - NOTES PAYABLE
Notes payable consist of the following as of December 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
---------- -------
<S> <C> <C>
Unsecured note to a shareholder due on
December 31, 1997, bearing interest at 8%. $ 276,090 $ -
Unsecured note to a shareholder due on
demand, bearing interest at prime plus 1%. - 66,000
Note to an officer and director due on demand,
bearing interest at 14%. - 167,500
Unsecured note to a shareholder due on demand,
bearing no interest. - 16,451
Unsecured note to an individual due December 1994, bearing
interest at 6%. - 15,497
Unsecured note to an employee, officer and shareholder
due on December 31, 1997, bearing interest at 8%. 434,808 -
Unsecured note to an employee, officer and shareholder
due on demand, bearing no interest. - 35,000
Unsecured note to an employee, officer and shareholder due
on demand, bearing no interest. - 05,377
Unsecured note to an unaffiliated company settled in 1995. - 94,733
Unsecured note to an unaffiliated company settled in 1995. - 38,655
Note to a shareholder due on demand bearing interest at 9%. 40,000 50,000
Note to an unaffiliated company settled in 1995. - 120,000
Note payable to an individual to be settled in 1996
through the issuance of 4,500,000 shares of common
stock held in treasury. 45,000 -
Note payable to shareholder of Santiago assumed during
purchase of Santiago assets and assumption of certain
liabilities due on demand bearing no interest. 62,741 -
Note payable to third parties assumed in connection with
Santiago purchase, due on demand, bearing no interest. 222,569 -
Note payable to shareholder of Santiago assumed during Santiago
purchase, due on demand bearing no interest. 27,431 -
----------- --------------
1,108,639 709,213
Less current portion (397,741) (709,213)
--------- --------
Long-term portion $ 710,898 $ -
========= ==============
</TABLE>
F-14
<PAGE>
INAV TRAVEL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued
NOTE G - NOTES PAYABLE - Continued
In accordance with revised notes payable entered into subsequent to December 31,
1995, note payable to shareholders and an employee, officer and shareholder were
converted from demand to long-term notes payable due on December 31, 1997.
NOTE H - OTHER LIABILITIES
Other current liabilities at December 31, 1994 include amounts payable to
unsecured creditors amounting to $115,894 that were included in the bankruptcy
proceedings for which the final order of discharge was issued in 1992. During
1995, the remaining obligation was reduced to zero based on estimates of amounts
which will ultimately be payable (Also see Note M).
Other current and long-term liabilities at December 31, 1995 include the
liability of $529,000 in connection with the acquisition of assets and certain
liabilities of Santiago. In early 1996, the amount due was discounted to
$389,000 to reflect revised terms and an accelerated payment plan. Under this
revised agreement, $100,000 was paid immediately. Of the remaining amount,
$230,000 is due in 23 monthly installments of $10,000 beginning in March 1996.
The balance due, $59,000 will be paid on behalf on Santiago to the State of
California upon settlement of a tax dispute with the State; provided that if the
amount of such settlement is less than $59,000, the amount to be paid by the
Company will be reduced accordingly. In accordance with its payment terms,
$130,000 of the $230,000 is classified as long term.
All amounts due are non-interest bearing.
NOTE I - TREASURY STOCK
On May 12, 1994, the Company entered a debt repayment and stock redemption
agreement whereby 4,852,059 shares of INAV Travel Corporation common stock, $.01
par, were repurchased for $121,300.
Subsequent to December 31, 1995, the Company issued 4,500,000 common shares out
of treasury in settlement of a note payable of $45,000. (Note G)
NOTE J - FEDERAL INCOME TAXES
A reconciliation of the expected federal income tax benefit based on the U.S.
Corporate income tax rate of 34% to actual benefit for 1995 and 1994 is as
follows:
1995 1994
--------- ------
Expected income tax benefit $(234,889) $(322,839)
Valuation allowance and other 234,889 322,839
-------- --------
$ - $ -
-------------- --------------
F-15
<PAGE>
INAV TRAVEL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued
NOTE J - FEDERAL INCOME TAXES - Continued
Deferred tax assets and liabilities as of December 31, 1995 and 1994 are as
follows:
1995 1994
---------- -------
Current deferred tax asset $ - $ 78,125
Current deferred tax liability - (78,125)
Valuation allowance for current
deferred tax asset - -
--------- ----------
Net current deferred tax asset $ - $ -
========= ===========
Non-current deferred tax asset $ 03,799 512,498
Non-current deferred tax liability (17,639) (13,833)
Valuation allowance for non-current
deferred tax asset (686,160) (498,665)
-------- --------
Net non-current deferred tax asset $ - $ -
========= ===========
The current and non-current deferred tax liability results from software
development charges capitalized for financial reporting purposes and deducted
for Federal income tax purposes. The non-current deferred tax asset results from
differences in amortization of goodwill for financial and federal income tax
reporting purposes and the deferred tax benefit of net operating losses. The net
non-current deferred tax asset has a 100% valuation allowance, as it does not
appear more likely than not that the net operating benefit will be utilized.
INAV and PC3 generated net operating losses for financial reporting and Federal
income tax reporting prior to their reorganization in 1993. (see Note A1). As of
December 31, 1995, subject to limitations under Internal Revenue Code ss.382,
approximately $469,000 of these net operating losses are available for use after
the reorganization. These net operating losses expire in 2008 if not utilized.
Net operating losses generated since the reorganization amount to approximately
$1,560,000 and begin expiring in 2008 if not utilized.
NOTE K - RELATED PARTY TRANSACTIONS
Prior to and during the years ended December 31, 1995 and 1994, the Company
received and repaid portions of advances from shareholders and officers. (Note
G)
During 1995, in order raise cash, notes receivable amounting to $104,484 were
sold to a shareholder at a discount of approximately $29,000.
F-16
<PAGE>
INAV TRAVEL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued
NOTE L - LEASE COMMITMENTS
The Company has two non-cancelable leases for office space. Future minimum
payments under these leases and other equipment leases are payable as follows:
Year Ended
December 31, Amount
------------ --------
1996 $112,153
1997 121,973
1998 125,441
1999 101,756
-------
$461,323
Lease and rent expense under non-cancelable operating leases for 1995 and 1994
was $85,066 and $75,041, respectively.
NOTE M - COMMITMENTS AND CONTINGENCIES
During 1994, the Company reduced the obligation to creditors as determined under
bankruptcy proceedings in 1992 by $21,997 based on estimates of amounts which
will ultimately be payable and further reduced the obligation to zero during
1995. Although management believes these amounts will never be paid, the Company
remains liable in the event the claim is made.
The Company does not carry general liability or workman's compensation liability
insurance for the corporate office in Arlington, Texas.
NOTE N - STOCK OPTIONS
Non-qualified Stock Options
- ---------------------------
In March 1991, INAV granted non-qualified stock options to purchase 515,000
shares of common stock to an officer, director, and shareholder of the Company.
The options are exercisable at any time up to March 1997. In October 1992, the
Board of Directors of INAV repriced these options to $.05 per share to reflect
the current market value of the shares. As of June 12, 1995, options to purchase
the 515,000 shares had vested, but none had been exercised.
F-17
<PAGE>
INAV TRAVEL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued
NOTE N - STOCK OPTIONS - Continued
Incentive Stock Options
Effective May 5, 1994, the Board of Directors approved an Incentive Stock Option
Plan ("Plan") for key executives and employees. The Plan provides for 1,045,000
shares. A summary of the activity relating to the Plan follows:
Options Price
Outstanding Per Share
Balance at December 31, 1993 - -
Options granted 975,000 $.12
Options granted 300,000 .18
Options terminated (250)000 .12
---------- -----------
Balance at December 31, 1995 1,025,000 .12-.18
Options granted 70,000 $.05
Options granted 420,000 $.02
Options terminated (625,)00 $ 12
---------- -----------
Balance as of December 31, 1995 890,000 $.02 - .18
========= =========
Of the 890,000 outstanding shares at December 31, 1995, 655,000 shares are fully
vested at December 31, 1995; 17,500 shares vest in 1996; and 217,500 shares vest
in 1997.
F-18
<PAGE>
INAV TRAVEL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued
NOTE O - BUSINESS SEGMENT INFORMATION
The Company's operations have been classified into two principal business
segments: medical receivables and software and maintenance sales. Summarized
financial information by significant business segments as of and for the years
ended December 31, 1995 and 1994 is as follows:
1995 1994
---------- --------
Revenues:
Medical receivables $ 100,064 $ 927,391
Software and maintenance sales 639,644 111,762
Other 14,444 17,488
-------- -----------
$ 754,152 $1,056,641
======= =========
Operating loss:
Medical receivables $ (531,262) $ (906,830)
Software and maintenance sales (262,382) 69,757
Corporate - -
------------- ------------
$ (793,644) $ (837,073)
======== ========
Total assets:
Medical receivables $ - $ 32,982
Smart card products - 130,821
Software and maintenance sales 1,098,732 -
Corporate 47,142 807,766
----------- --------
$1,145,874 $ 971,569
========= =======
Depreciation and amortization:
Medical receivables $ - $ 15,711
Smart card products - 11,090
Software and maintenance sales 107,191 -
Corporate 22,276 1,784
----------- -------
$ 129,467 $ 28,585
========== =======
Capital expenditures:
Medical receivables $ - $ -
Smart card products - 3,500
Software and maintenance sales - -
Corporate 3,227 33,967
----- ------
$3,227 $37,467
===== ======
F-19
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, CONTROL PERSONS; COMPLIANCE WITH SECTION
16(A) OF THE EXCHANGE ACT.
The following table sets forth certain information regarding the
directors and executive officers of the Company:
Year First
Name Age Position Elected
- ---- --- -------- -------
Scott A. Haire 31 President, Director 1993
Dale A. Blubaugh 71 Director 1994
Araldo A. Cossutta 71 Director 1994
Steven W. Evans 44 Director 1994
Robert E. Gross 50 Director 1994
Thomas J. Kirchhofer 54 Director 1994
Lucy J. Singleton 58 Secretary 1995
Executive Officers of the Company are elected on an annual basis and
serve at the discretion of the Board of Directors. Directors of the Company are
elected on an annual basis.
Scott A. Haire President and Director. Mr. Haire is the founder of MedBanc Data
Corporation, which effectively acquired INAV in late 1993. Previously, Mr. Haire
was president of Preferred Payment Systems, a company specializing in electronic
claims and insurance system related projects. Mr. Haire also held positions with
Healthcare Solutions and Mid Atlantic ICS as National Sales Director.
Dale A. Blubaugh Director. Mr. Blubaugh has been engaged in real estate and
investing since 1983. Previously, he was employed by the Fort Worth Star
Telegram from 1953 to 1983.
Araldo A. Cossutta Director. Mr. Cossutta is president of Cossutta and
Associates, an architectural firm based in New York City. He is also a director
of Computer Integration Corporation of Boca Raton, Florida.
Steven W. Evans Director. Mr. Evans is a certified public account and president
of Evans Phillips & Co., PSC, an accounting firm. He is a founder and active in
PTRL which operates contract research laboratories in Kentucky, North Carolina,
California and Germany. He is active in environmental management and financial
and hotel corporations in Kentucky and Tennessee.
Robert E. Gross Director. Mr. Gross is president of R. E. Gross & Associates,
which provides consulting and system projects for clients in the multi-location
service, banking and healthcare industries.
Thomas J. Kirchhofer Director. Mr. Kirchhofer is president of Synergy Wellness
Centers of Georgia, Inc., and a past president of the Georgia Chiropractic
Association.
9
<PAGE>
Lucy Singleton Secretary. Ms. Singleton has been comptroller of INAV since 1990.
Prior to 1990 Ms. Singleton was comptroller of Southland Diviersifed, Inc. for
20 years.
Barry A. Swartz Former Director and Treasurer resigned on February 2, 1996.
Henry T. Stanley Former Chairman and Director of the Company resigned December
29, 1995.
ITEM 10. EXECUTIVE COMPENSATION
The Company provides health benefits to its employees and may provide
additional benefits in the future, as may be authorized by the Board of
Directors. No retirement, pension, profit sharing or other similar program has
been adopted by the Company.
The Company may offer stock bonuses, stock options, profit sharing or
pension plans to key employees or executive officers of the Company in such
amounts and upon such conditions as the Board of Directors may, in its sole
discretion, determine.
SUMMARY COMPENSATION TABLE
The following sets forth information concerning the compensation of the
Company's Executive Officers for the fiscal years shown.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Name and Long Term Compensation
Principal Annual Compensation Restricted Options All
Position Stock /SARS Other
Year Salary($) Bonus Other Awards # shares<F2> Comp.($)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Henry T. Stanley 1995 -0- -0- -0- -0- -0- -0-
Chairman 1994 63,750<F1> -0- -0- -0- -0- -0-
1993 56,250 -0- -0- -0- -0- -0-
Scott A. Haire 1995 -0- -0- -0- -0- -0- -0-
President 1994 58,750 -0- -0- -0- 1,800,000<F2> -0-
- ---------------------------------------------------------------------------------------------------------------
<FN>
<F1> Mr. Stanley and Mr. Haire elected not to receive their compensation from
late July 1994 through December 1995.
<F2> In 1994, Mr. Haire was awarded a stock option of 1,800,000.
</FN>
</TABLE>
Aggregated Options/SAR Exercises in Last Fiscal Year
and FY-End Options/SAR Values
The following table provides information concerning option exercises in fiscal
1995 and the value of unexercised options held by each of the named Executive
Officers at December 31, 1995.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Name Shares Acquired Value No. of unexercised Value of unexercised
on Exercise (#) Realized ($) options /SARs at in-the-money options/
at FY-End (#) SARs at FY-end($)
exercisable/unexercisable exercisable/unexercisable
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Henry T. Stanley -0- N/A 515,000 $ 25,750.00
Scott A. Haire -0- N/A 1,800,000 $180,000.00
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the holdings of common stock of the
Company by each individual who holds record or is known by the Company to hold
beneficially or of record, more than 5 percent of the Company's common stock, by
each Executive Officer and Director and by all Executive Officers and Directors
as a group. All shares are owned beneficially, as noted, and of record as of
April 1, 1996.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Name and Address Shareholdings
of Beneficial Owner Number of Shares Percent of Class
- --------------------------------------------------------------------------------
<S> <C> <C>
Scott A. Haire 11,029,841<F1> 25.00 %
2225 E. Randol Mill Road Suite 305
Arlington, Texas 76011
Dale A. Blubaugh -0- 0 %
5125 Stephanie Drive
Fort Worth, Texas 76117
Araldo A. Cossutta 2,982,025 6.68 %
600 Madison Avenue, 23rd Floor
New York, NY 10022
Steven W. Evans 750,000 1.68 %
89 Daniel Boone Drive
Barbourville, KY 40906
Thomas J. Kirchoffer -0- 0 %
630 Church Street NE
Marietta, Georgia 30060
Keystone Medical Management Group 7,845,075<F1> 17.5 %
5125 Stephanie Drive
Fort Worth, TX 76117
Robert E. Gross -0- 0 %
1217 Old Mountain Road South
Joppa, Maryland 21085
All Executive Officers and
Directors as a group 15,257,949 59.08 %
(seven in number)
- --------------------------------------------------------------------------------
<FN>
<F1> Keystone's shares are voted by Mr. Haire, who is the trustee of a
children's trust which owns Keystone.
</FN>
</TABLE>
* Mr. Haire will receive 7,500,000 shares in accordance with the Agreement of
Sept. 1994.
* Keystone will receive 7,500,000 shares in accordance with the Agreement of
Sept. 1994.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As noted in the Liquidity and Capital resources section, loans have
been made to the Company by certain Senior Officers, Directors, Shareholders.
Scott A. Haire and Henry T. Stanley have made loans to the Company. Mr. Haire's
loan is in the amount of $434,808.08 at 8 percent interest. Mr. Stanley's loan
is in the amount of $276,090.39 at 8 percent interest. Both loans are due
December 31, 1997. During 1995 notes receivable totaling $104,484 were sold at a
discount of approximately $29,000 to Henry T. Stanley.
11
<PAGE>
ITEM 13. EXHIBITS REPORTS ON FORM 8-K
1. Reports on Form 8-K --None.
2. Exhibits -- All exhibits incorporated by reference from prior filings
with the Commission.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
INAV TRAVEL CORPORATION
By: /s/ Scott A. Haire
Scott A. Haire, President, CFO
Date: May 1, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated. Signature Title
Date
/s/ Scott A. Haire President and Director 5/1/96
Scott A. Haire
/s/ Steven W. Evans Director 5/1/96
Steven W. Evans
/s/ Thomas J. Kirchhofer Director 5/1/96
Thomas J. Kirchhofer
/s/ Dale A. Blubaugh Director 5/1/96
Dale A. Blubaugh
12
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 36,535
<SECURITIES> 0
<RECEIVABLES> 59,788
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 96,323
<PP&E> 38,523
<DEPRECIATION> 14,684
<TOTAL-ASSETS> 1,145,874
<CURRENT-LIABILITIES> 1,435,605
<BONDS> 0
0
0
<COMMON> 49,485
<OTHER-SE> 1,551,797
<TOTAL-LIABILITY-AND-EQUITY> 114,874
<SALES> 754,152
<TOTAL-REVENUES> 754,152
<CGS> 573,552
<TOTAL-COSTS> 573,552
<OTHER-EXPENSES> 1,367,196
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 83,104
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 720,914
<DISCONTINUED> 43,967
<EXTRAORDINARY> 74,394
<CHANGES> 0
<NET-INCOME> 690,487
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
