<PAGE>
SECURITIES AND EXCHANGE COMMISSIONSECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q SB
(Mark One)
[ X ]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED APRIL 30, 1996
__________
AMERICAN MEDCARE CORPORATION
(Exact name of Small Business Issuer as specified in its charter)
Delaware 59-2248411
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2970 Clairmont Road, Suite 1050, Atlanta Georgia 30329
(Address of principal executive offices) (Zip Code)
404/315-0450 404/320-1080
(Registrant's telephone number, including area code)
Former Address:
4470 Chamblee Dunwoody Road, Atlanta, GA 30338
Indicate by check mark whether 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 registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.YES X NO
------- -------
41,349,299 Shares, $.001 par value as of April 30, 1996
(Indicate the number of shares outstanding of each of the registrant's classes
of common
stock, as of the latest practicable date)
<PAGE>
AMERICAN MEDCARE CORPORATION
FORM 10-QSB
QUARTER ENDED APRIL 30, 1996
TABLE OF CONTENTS
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
April 30, 1996 (unaudited) and January 31, 1996 3
Consolidated Statements of Operation (unaudited) 4
Three months ended April 30, 1996 and 1995
Consolidated Statements of Cash Flows (unaudited) 5
Three months ended April 30, 1996 and 1995
Notes to Consolidated financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition 6
and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 8
Item 2. Changes in Securities 8
Item 3. Default Upon Senior Securities 8
Item 4. Submission of Matters to a Vote of Security Holders 8
Item 5. Other Information 8
Item 6. Exhibits and Reports on Form 8-K 8
Signatures 9
<PAGE>
AMERICAN MEDCARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended
April 30
--------------------------
1996 1995
------------ ------------
Revenue $ 599,007 $ 820,364
Cost of sales 122,361 258,121
--------------------------
Gross margin 476,646 562,243
Expenses:
Salaries and operating expenses 470,928 522,691
Depreciation and amortization 16,786 26,551
--------------------------
487,714 549,242
--------------------------
Loss from operations (11,068) 13,001
Interest expense (19,175) (17,367)
Other income, net 671 112,441
--------------------------
Income (loss) before income taxes (29,572) 108,075
Provision for income taxes 0 0
--------------------------
Income (loss) $ (29,572) $ 108,075
============ ============
Earnings (loss) per share:
Primary $ 0.00 $ 0.00
============ ============
Weighted average number of shares 41,349,299 41,349,299
============ ============
See accompanying notes to consolidated financial statements.
3
<PAGE>
AMERICAN MEDCARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(unaudited)
April 30 January 31
1996 1996
----------- -------------
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 75,013 $ 249,698
Accounts and notes receivable, net of
allowance of $39,342 and $90,388. 214,409 158,192
Prepaid expenses and other current assets 30,899 32,620
----------- ----------
Total current assets 320,321 440,510
----------- ----------
Property and equipment, net of depreciation
of $576,045 and $570,445. 52,394 54,372
Other intangible assets 44,792 52,548
Capitalized software development costs, net of
accumulated amortization of $647,706 and
$656,505. 24,152 19,511
----------- ----------
Total assets $ 441,659 $ 566,941
=========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
April 30 January 31
1996 1996
----------- -----------
Current liabilities:
Accounts payable $ 330,135 $ 374,824
Accrued expenses 427,796 448,627
Deferred revenue 454,107 481,224
Current portion of long-term debt 171,122 335,542
---------- ----------
Total current liabilities 1,383,160 1,640,217
---------- ----------
Long-term debt, less current portion 697,629 544,780
Shareholders' equity
Common Stock, $.001 par value- authorized
50,000,000 shares; 41,577,778 shares issued and
41,349,299 outstanding 41,577 41,577
Treasury Stock (100,000) (100,000)
Stock purchase warrant 500,000 500,000
Additional paid-in capital 1,452,747 1,445,247
Accumulated deficit (3,533,454) (3,504,880)
---------- ----------
Total shareholders' equity (deficit) (1,639,130) (1,618,056)
---------- ----------
Total liabilities and shareholders' equity (deficit) $441,659 $566,941
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
AMERICAN MEDCARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
April 30
1996 1995
----------------------------------
<S> <C> <C>
Cash provided by (used for) operating activities
Net income (loss) $ (29,572) $ 108,075
Adjustments to reconcile net income (loss) to net
cash provided by (used for) operating activities:
Depreciation and amortization 7,387 17,982
Compensatory stock options 7,500 7,500
Changes in operating assets and liabilities:
Accounts and notes receivable (56,217) (48,041)
Prepaid expenses and other current assets 1,721 2,325
Accounts payable and accrued expenses (65,521) 69,337
Deferred revenue (27,117) (60,903)
----------------------------------
(161,819) 96,275
----------------------------------
Cash provided by (used for) investing activities
Property and equipment expenditures (3,623) (11,977)
Purchases of intangible assets 7,756 19,682
Expenditures for software development costs (5,952) 0
----------------------------------
(1,819) 7,705
----------------------------------
Cash provided by (used for) financing activities
Proceeds from issuance long term debt 0 94,500
Repayment of note payable 0 (73,028)
Treasury stock 0 (100,000)
Principal payments on long term debt (11,047) (8,850)
----------------------------------
(11,047) (87,378)
----------------------------------
Net increase (decrease) in cash (174,685) 16,602
Beginning, cash and cash equivalents 249,698 4,684
----------------------------------
Ending, cash and cash equivalents $ 75,013 $ 21,286
========== =========
</TABLE>
5
See accompanying notes to consolidated financial statements.
<PAGE>
AMERICAN MEDCARE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 1996
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q SB and Article 10
of Regulations S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three month period ended April 30, 1996 are not
necessarily indicative of the results that may be expected for the year ended
January 31, 1997. For further information, refer to the 10-KSB filed by
American Medcare Corporation for the year ended January 31, 1996.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION
RESULTS OF OPERATIONS
Sales for the three months ended April 30, 1996 compared to the first quarter of
the prior year decreased by $221,357, from $820,364 to $599,007. The overall
sales reduction was primarily due to the Company's focus in developing balanced
revenues between the primary profit centers, which reflect the restructuring
done over the past fiscal year. The three key products and profit centers are
the Large Systems products, the low-end suite of Small Systems products, and the
electronic data interchange products and services.
The net sales for the current quarter increased from the fourth quarter of the
prior fiscal year by $101,296, from $497,711 to $599,007. This quarterly
increase is attributed to increased, focused marketing.
Significantly, the Large Systems division revenues increased by $10,196, from
$193,790 to $203,986, an increase of 5% for the first quarter of the current
year compared to the same quarter of the prior year. This division continues to
provide significant revenues and margins. The division's margins increased by
6%, moving from $190,286 to $202,260, an increase of $11,974.
Small Systems division sales increased by $36,751, or 20% from $183,067 to
$219,818 for the first quarter of the current year compared to the same quarter
of the prior year. The Small Systems division continues to operate with strong
gross margins. Over the next 12 to 18 months, the division is expected to be in
a position to increase its operating margins, with growing penetration in
managed care niches, particularly as the Small Systems rolls out of the
Windows-based product suite.
Margins from electronic claims processing increased over the past year, moving
from $79,817 to $87,196, or $7,379, an increase of 9%. Electronic data
interchange services, including electronic claims and patient statements
continue to increase on a monthly basis, tracking the increased integration of
healthcare service providers with payors.
FORM 10-Q SB
PAGE 6 OF 9
<PAGE>
AMERICAN MEDCARE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 1996
(UNAUDITED)
The Company continues to use third-party vendors for hardware maintenance and
installations, where possible, in the continued trend towards more efficient
company operations.
Management expects future revenue growth will continue to come primarily from
the Small Systems division as market demand for an easy to use, low-cost product
remains strong, targeted at the significant market of smaller-sized healthcare
providers. The Company considers its multiple products and service lines to be
a significant strength and competitive advantage. Management continues to
pursue business combination opportunities that would increase revenue growth,
particularly through the acquisition of user bases in niche markets.
Management no longer uses consultants to pursue business acquisitions.
As of April 30, 1996, the Company continues to operate in an environment that is
substantially affected by healthcare cost containment trends. Sales and gross
margin in the Unix-based, larger system environment have been affected by this
trend. The market continues to be very competitive and there is very limited
opportunity for price increases.
General and administrative expenses have decreased for the three-month period
ended April 30, 1996 versus the same period in 1995. This decrease is
attributed to strong cost-containment programs. Total operating expenses were
down from $522,691 in the first quarter of the previous year to $470,928, a
decrease of $51,764 or 10%. The continued emphasis on efficiency and cost
containment provides the Company with increased opportunities in discretionary
expense areas such as product development and target marketing.
Overall net income for the quarter decreased from $108,075 to ($29,572), a
decrease of $137,646. This decrease was attributed to a non-recurring, non-
operational income item in the prior year related to settlement of a lawsuit the
Company had filed against a software purchaser in the amount of $100,000.
To meet growth needs, the Company entered into a short-term lease for additional
office space. The lease is cancellable in 30 days.
LIQUIDITY AND CAPITAL RESOURCES
The Company had a net loss of $29,572 for the quarter ended April 30, 1996.
Cash flows used in operations were $161,819 for the three months ended April 30,
1996. This is attributed primarily to increased accounts receivable, decreased
payables, and decreases in deferred claims revenues. The Company applied a
significant amount of cash obtained in an electronic claims loan towards working
capital needs.
Cash flows used by investing activities was $1,819. This included cash used in
the purchase of equipment, and software development costs.
Cash used by financing activities during the three months ended April 30, 1996
was $11,047, for repayment of debt.
FORM 10-Q SB
PAGE 7 OF 9
<PAGE>
AMERICAN MEDCARE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 1996
(UNAUDITED)
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
No significant changes from the previously filed 10KSB.
ITEM 2. CHANGES IN SECURITIES - NOT APPLICABLE
ITEM 3. DEFAULT UPON SENIOR SECURITIES - NOT APPLICABLE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - NOT
APPLICABLE
ITEM 5. OTHER INFORMATION
The Company continues to consider acquisitions and has had discussions with
companies marketing software for use in medical or dental practice management
fields. The Company has executed letters of intent to purchase 4 separate,
privately-held practice management system vendors. The letters of intent are
non-binding, and the companies are expected to be acquired during the current
fiscal year. No definitive contracts have been written or executed. The
acquisitions would be made only upon the conclusion of lengthy, and thorough due
diligence procedures, and are expected to be made through cash obtained from an
equity offering. There can be no assurances that any such discussions will
result in an acquisition.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K - NOT APPLICABLE
FORM 10-Q SB
PAGE 8 OF 9
<PAGE>
AMERICAN MEDCARE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 1996
(UNAUDITED)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, The
Registrant has duly caused this Quarterly Report to be signed on its behalf by
the undersigned, there unto duly authorized.
AMERICAN MEDCARE CORPORATION
(REGISTRANT)
June 11, 1996 BY: /s/ Robert L. Fine
--------------------------------
Robert L. Fine
Chairman, Director
June 11, 1996 BY: /s/ Michael Warren
---------------------------------
Michael Warren
Chief Financial Officer, Director
FORM 10-Q SB
PAGE 9 OF 9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FIRST
QUARTER 10QSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-START> FEB-01-1996
<PERIOD-END> APR-30-1996
<CASH> 75,013
<SECURITIES> 0
<RECEIVABLES> 214,409
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 320,321
<PP&E> 628,439
<DEPRECIATION> 576,045
<TOTAL-ASSETS> 441,659
<CURRENT-LIABILITIES> 1,383,160
<BONDS> 697,629
0
0
<COMMON> 41,557
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 441,659
<SALES> 599,007
<TOTAL-REVENUES> 599,007
<CGS> 122,361
<TOTAL-COSTS> 487,714
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (19,175)
<INCOME-PRETAX> (29,572)
<INCOME-TAX> 0
<INCOME-CONTINUING> (29,572)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (29,572)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
