<PAGE> 1
SECURITIES 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, 1997
COMMISSION FILE NUMBER 2-82208-A
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AMERICAN MEDCARE CORPORATION
(Exact name of Small Business Issuer as specified in its charter)
Delaware 59-2248411
State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
2970 Clairmont Road, Suite 950, Atlanta Georgia 30329
(Address of principal executive offices) (Zip Code)
404/633-0046
(Registrant's telephone number, including area code)
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
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55,536,739 shares, $.001 par value as of
June 12, 1997 (Indicate the number of shares outstanding
of each of the registrant's classes of common
stock, as of the latest practicable date)
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AMERICAN MEDCARE CORPORATION
FORM 10-QSB
QUARTER ENDED APRIL 30, 1997
TABLE OF CONTENTS
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Page
Number
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets 3
April 30, 1997 (unaudited) and January 31, 1997
Consolidated Statements of Operation (unaudited) 4
Three months ended April 30, 1997 and 1996
Consolidated Statements of Cash Flows (unaudited) 5
Three months ended April 30, 1997 and 1996
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and 6
Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 8
Item 2. Changes in Securities 9
Item 3. Default Upon Senior Securities 9
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 9
Signatures 10
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AMERICAN MEDCARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(unaudited)
April 30 January 31
1997 1997
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ASSETS
Current Assets:
Cash $ 232,361 $ 198,735
Accounts and notes receivable, net of allowance of
$24,050 and $35,000 293,419 318,405
Prepaid expenses and other current assets 75,120 62,364
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Total current assets 600,900 579,504
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Property and equipment, net 81,310 94,157
Miscellaneous 101,283 100,389
Goodwill, net of accumulated amortization
of $53,508 and $21,408 1,983,209 2,015,309
Deferred acquisition costs 946,425 521,871
Deferred tax asset 903,000 871,000
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Total assets $ 4,616,127 $ 4,182,230
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LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
April 30 January 31
1997 1997
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Current liabilities:
Accounts payable $ 625,666 $ 483,730
Accrued expenses 462,958 358,671
Deferred revenue 802,691 814,383
Current portion of long-term debt 50,029 49,529
--------------------------
Total current liabilities 1,941,344 1,706,313
--------------------------
Long-term debt, less current portion 683,914 698,252
Note payable to stockholder 94,500 94,500
Note payable -- other 1,511,533 1,511,533
Shareholders' equity
Common Stock, $.001 par value- authorized
75,000,000 shares; 55,536,739 and
55,736,739, respectively, issued and outstanding 55,765 54,965
Treasury Stock and accrued stock repurchase, at cost (165,000) (165,000)
Stock purchase warrant 80,000 80,000
Additional paid-in capital 3,739,153 3,452,453
Accumulated deficit (3,325,082) (3,250,786)
--------------------------
Total shareholders' equity (deficit) 384,836 171,632
--------------------------
Total liabilities and shareholders' equity (deficit) $ 4,616,127 $ 4,182,230
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</TABLE>
See accompanying notes to consolidated financial statements.
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AMERICAN MEDCARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
April 30
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1997 1996
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<S> <C> <C>
Revenue $ 1,489,957 $ 599,007
Cost of sales 673,274 122,361
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Gross margin 816,683 476,646
Expenses:
Salaries and operating expenses 804,499 470,928
Depreciation and amortization 61,022 16,786
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865,520 487,714
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Loss from operations (48,837) (11,068)
Interest expense (60,820) (19,175)
Other income, net 3,361 671
---------------------------------------
Income (loss) before income taxes (106,296) (29,572)
Provision for income taxes (benefit) (32,000) 0
Provision for income taxes 0 0
---------------------------------------
Income (loss) $ (74,296) $ (29,572)
============ =============
Earnings (loss) per share:
Primary $ 0.00 $ 0.00
============ =============
Weighted average number of shares 56,213,482 41,349,299
============ =============
</TABLE>
See accompanying notes to consolidated financial statements.
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AMERICAN MEDCARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
April 30
1997 1996
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CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES
Net loss $ (74,296) $ (29,572)
Adjustments to reconcile net income (loss) to net cash
provided by (used for) operating activities:
Depreciation and amortization 61,022 16,786
Allowance for doubtful accounts (11,000) (51,000)
Compensatory stock options 7,500 7,500
Income tax benefit (32,000) --
Changes in operating assets and liabilities:
Accounts and notes receivable 35,986 (5,217)
Prepaid expenses and other current assets (20,718) 1,721
Accounts payable and accrued expenses (113,777) (65,520)
Deferred revenue (11,692) (27,117)
------------------------
(158,975) (152,419)
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CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES
Property and equipment expenditures (3,622)
Cash paid for deferred acquisition costs (64,554)
Expenditures for software development costs (9,007) (7,073)
------------------------
(73,561) (10,695)
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES
Proceeds from issuance of common stock 280,000 0
Principal payments on long term debt (13,838) (11,571)
------------------------
266,162 (11,571)
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Net increase (decrease) in cash 33,626 (174,685)
Beginning, cash and cash equivalents 198,735 249,698
Ending, cash and cash equivalents $ 232,361 $ 75,013
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</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 6
AMERICAN MEDCARE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 1997
(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 30,1997 are not
necessarily indicative of the results that may be expected for the year ended
January 31, 1998. For further information, refer to the 10-KSB filed by American
Medcare Corporation (AMC) for the year ended January 31, 1997.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
For the periods shown herein, AMC functioned with operations in a single
operating subsidiary, International Computer Solutions (ICS) in the prior
period, and with the combined operations of ICS and the Health Care Division
(HCD) in the current period. The Company purchased HCD in December 1996 in an
acquisition transaction accounted for as a purchase. The following discussion
and analysis should be read in conjunction with the accompanying financial
statements.
THREE MONTHS ENDED APRIL 30, 1997 COMPARED TO THREE MONTHS ENDED APRIL 30, 1996
Overall revenues increased by $890,950, or 149%, to $1,489,957 for the three
months ended April 30, 1997 from $599,007 for the three months ended April 30,
1996. This increase was primarily due to the purchase of the HCD customer base,
maintenance and revenue streams, which contributed revenues of $1,058,153.
System and software sales revenue increased by $599,382 or 285%, to $809,429 for
the three months ended April 30, 1997 from $210,047 for the three months ended
April 30, 1996. This change was due to $712,176 in HCD sales revenue, and a
decrease in ICS sales revenues of $110,000 resulting from a shift in marketing
and sales focus from new customer sales towards maintenance and electronic
transaction services.
Software maintenance and electronic services revenue increased by $291,568, or
75%, to $680,528 for the three months ended April 30, 1997 from $388,960 for the
three months ended April 30, 1996. This increase was primarily due to an
additional $345,977 of sales revenue from the acquisition of the HCD customer
and maintenance base.
The gross margin for the current quarter increased by $340,037, or 71%, to
$816,683 for the three months ended April 30, 1997 from $476,646 for the three
months ended April 30, 1996. This was due primarily to the purchase of HCD,
which contributed $430,324.
Operating expenses increased by $377,806, or 77%, to $865,520 for the three
months ended April 30, 1997 from $487,714 for the three months ended April 30,
1996. This increase was due to operating expenses totaling $200,217 associated
with the HCD purchase, and the additional personnel and overhead associated with
opening the second office for purposes of implementing AMC's acquisition
strategy.
<PAGE> 7
AMERICAN MEDCARE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 1997
(UNAUDITED)
Depreciation and amortization increased by $44,236, or 264%, to $61,022 for the
three months ended April 30, 1997 from $16,786 for the three months ended April
30, 1996. This increase was primarily due to the additional goodwill and
depreciation expenses associated with the HCD acquisition.
The loss from operations increased by $37,769 to $48,837 for the three months
ended April 30, 1997 from a loss of $11,068 for the three months ended April 30,
1996. This loss was due to increased compensation expenses and additional
operating expenses associated with AMC's acquisition strategy.
LIQUIDITY AND CAPITAL RESOURCES
Overall AMC had a net loss of $74,296 for the three months ended April 30, 1997,
compared with a loss of $29,572 for the three months ended April 30, 1996.
Cash used in operations was $158,975 for the three months ended April 30, 1997,
due primarily to decreased accounts receivable, increased payables, and
decreased deferred claims revenue. Cash used for investing activities totaled
$73,561; this cash was used primarily for expenses associated with the planned
public offering.
Cash provided by financing activities during the three months ended April 30,
1997 was $266,162, which came primarily from the sale of common stock during the
quarter.
<PAGE> 8
AMERICAN MEDCARE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 1997
(UNAUDITED)
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As previously reported in the 10-KSB for the year ending January 31, 1997, the
suit filed in January 1995 by James H. Potter v. American Medcare Corporation
was dismissed by the Trial Court in July, 1996 with prejudice. Potter appealed
to the Court of Appeals of the State of Georgia, which in March, 1997 upheld the
dismissal by the Trial Court with prejudice, terminating Potter's claims against
the Company. The Company's counter-claim against Potter is still pending.
As reported in the Company's 10-KSB for the year ending January 31, 1997, the
Company, its officers and directors and certain other individuals settled the
claims of the Trustee in bankruptcy for Integrated Computer Systems, Inc.
(Integrated) and Electronic Transmitting Solutions, Inc. (Electronic). The
Company filed suit against the previous owners of Integrated and Electronic in
October 1996. The two former owners of Integrated and Electronic, the Trustee in
bankruptcy of Integrated and Electronic and the Company have entered into a
settlement agreement in which the two former owners of the shares of Integrated
and Electronic who were paid 963,235 shares each (totaling 1,926,470) have
subsequently returned the shares to the Company pursuant to the settlement and
subject to any interest of the Trustee. The Bankruptcy Court has approved the
settlement and signed an order allowing implementation of the settlement. The
Company has agreed to pay the sum of $50,000 to the Trustee to settle all claims
or interest that the Trustee may have in said shares. In addition the Company
settled for $20,000 the claim of the Trustee alleging preference payments to
have been made by Integrated and Electronics to the Company or ICS.
As previously reported, AMC and its subsidiary, ICS are defendants in a law suit
filed in Berkeley County, North Carolina in November 1994 by a former customer
of Integrated seeking to "pierce the corporate veil", unspecified damages and
class action status. AMC and ICS continue to vigorously defend the suit which
management believes has no merit. The case is presently in the discovery phase.
In the opinion of management, none of the above litigation will have a material
or adverse effect on AMC.
<PAGE> 9
AMERICAN MEDCARE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 1997
(UNAUDITED)
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. As of April 30, 1997 the Company has executed a definitive agreement to
purchase a privately-held practice management system vendor. In addition the
Company has agreed to merge with InfoCure Corporation, a newly formed
corporation, which intends to acquire three other privately held practice
management system vendors simultaneously upon the merger and a public offering
to raise the funds necessary to consummate the acquisitions. There can be no
assurance that InfoCure Corporation will be able to obtain the required
financing to purchase these businesses or that the terms of such agreements will
not be modified hereafter.
In June, 1996 the Company contracted with an investment banking financial
advisor to assist in the financial analysis of the target companies, and
development of a consolidation business plan. The advisors are also assisting
the Company in identifying finance alternatives and finance sources. The Company
has agreed to pay the advisor a fee based upon the amount of funds raised. In
addition, the Company has entered into an agreement with an investor to provide
partial, interim financing of the intended acquisitions contingent upon
obtaining long term financing.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits and Reports on Form 8-K:
a) Exhibits:
EX-27 Financial Data Schedule (for SEC use only).
b) Reports on Form 8-K:
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Date Description
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<S> <C>
April 4, 1997 Item 5 - Announcement of postponement of proposed merger with
InfoCure Corporation
May 12, 1997 Notice of intent to proceed with the Proposed Merger with
Infocure
</TABLE>
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AMERICAN MEDCARE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 1997
(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 16, 1997 BY:/s/ Frederick L. Fine
------------------------------
Frederick L. Fine
Chairman, President and CEO
BY:/s/ Michael Warren
------------------------------
Michael Warren
Chief Financial Officer, Director
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