U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 For the quarterly period ended September 30, 1999
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the transition period from _________ to ________
SURGICARE, INC.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
DELAWARE 58-1597246
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
6699 CHIMNEY ROCK, SUITE 105
HOUSTON, TEXAS(ADDRESS OF 77081
PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
ISSUER'S TELEPHONE NUMBER: (713) 665-1406
Check whether the Registrant: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 [ ]
As of November 8, 1999, 12,654,351 shares of Common Stock, $0.005 par value per
share, were outstanding. As of November 8, 1999, 1,350,000 shares of Preferred
"Series A" Stock, $0.001 par value per share, were outstanding.
Transitional Small Business Disclosure Format: Yes [ ] No [X]
<PAGE>
PART I
FINANCIAL INFORMATION
The information contained herein contains certain forward looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended and Section 21E of the Securities Exchange Act of 1934, as amended,
which are intended to be covered by the safe harbors created thereby. Investors
are cautioned that all forward looking statements involve risks and uncertainty,
including, without limitation, the ability of SurgiCare to continue its
expansion strategy, changes in federal or state healthcare laws and regulations
or third party payer practices, SurgiCare's historical and current compliance
with existing or future healthcare laws and regulations and third party payer
requirements, changes in costs of supplies, labor and employee benefits, as well
as general market conditions, competition and pricing. Although SurgiCare
believes that the assumptions underlying the forward looking statements
contained herein are reasonable, any of the assumptions could be inaccurate, and
therefore, there can be no assurance that the forward looking statements
included in this Form 10-QSB will prove to be accurate. In view of the
significant uncertainties inherent in the forward looking statements included
herein, the inclusion of such information should not be regarded as a
representation by SurgiCare or any other person that the objectives and plans of
SurgiCare will be achieved. SurgiCare undertakes no obligation to update or
revise forward-looking statements to reflect changed assumptions, the occurrence
of unanticipated events or changes to future operating results over time. Refer
to the Company's disclousers in its Form 10-SBfor additional information.
ITEM 1.
Financial Statements
The information required hereunder is included in this report as set forth
in the "Index to Financial Statements"
INDEX TO FINANCIAL STATEMENTS
Consolidated Balance Sheet as of September 30, 1999 Page
3
Consolidated Income Statement for the 3 months ending as
of September 30, 1998 and 1999, and the 9 months ending as
of September 30, 1998 and 1999 5
Consolidated Statement of Cash Flows for the 3 months ending
as of September 30, 1998 and 1999, and the 9 months ending as
of September 30, 1998 and 1999 6
<PAGE>
SURGICARE, INC.
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
September 30,
1999
(Unaudited)
ASSETS
<S> <C>
Current Assets
Cash and cash equivalents $ 204,767
Accounts receivable (less allowance for
contractual adjustments and doubtful accounts 1,695,181
of $1,470,530)
Inventory 48,067
Prepaid expenses 29,492
Other current Assets 8,152
Total Current Assets 1,985,659
Property and Equipment
Office furniture and equipment 39,196
Medical and surgical equipment 601,960
Leasehold improvements 51,392
Computer equipment 56,278
748,825
Less: Accumulated depreciation and 439,944
amortization
Total Property and Equipment 308,881
Other Assets
Goodwill 169,236
TOTAL ASSETS $ 2,463,776
<PAGE>
SURGICARE, INC.
CONSOLIDATED BALANCE SHEETS
LIABILITIES
Current Liabilities
Current portion of capital lease $ 22,441
Notes Payable 537,646
Accounts Payable 114,945
Accrued Expenses 17,599
Deferred federal income tax 568,516
Taxes payable 45,576
Total Current Liabilities 1,306,723
Long-Term Capital Lease Obligations 32,582
Total Liabilities 1,339,305
SHAREHOLDERS' EQUITY
Preferred Stock, Series A, par value
$.001, 1,650,000 authorized, 1,350,000 issued 1,350
and outstanding at September 30, 1999
Common Stock, par value $.005, 50,000,000 shares
authorized, 12,654,351 issued and outstanding 63,272
at September 30, 1999
Additional Paid-In Capital 892,506
Retained Earnings 180,321
Less: Treasury stock 150 shares at cost
Shareholders receivables (12,978)
Total Shareholders' Equity 1,124,471
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,463,776
</TABLE>
<PAGE>
SURGICARE, INC.
<TABLE>
<CAPTION>
CONSOLIDATED INCOME STATEMENT
(unaudited)
FOR THE FOR THE
THREE MONTHS ENDING NINE MONTHS ENDING
September 30, September 30
1998 1999 1998 1999
<S> <C> <C> <C> <C>
Revenues, net .................................. $ 566,121 $ 1,199,163 $ 1,697,248 $ 3,172,933
Expenses
Direct Surgical Expenses
Surgical Costs ........................... 120,288 194,376 367,464 444,907
Salaries, wages and benefits ............. 88,986 141,753 277,324 373,954
Contract services ........................ 6,995 38,389 20,954 73,998
Management fees .......................... 40,529 18,285 147,027 172,254
-------------------------------------------------
Total Direct Surgical Expenses ... 256,798 392,803 812,769 1,065,113
Gen. and Admin. Expenses
Rent ..................................... 42,021 45,883 126,062 132,454
Depreciation and amortization ............ 29,557 34,352 86,740 90,961
Insurance ................................ 6,381 8,155 16,681 21,991
Professional fees ........................ 5,746 6,796 37,174 8,737
Interest expense ......................... 10,202 15,320 32,650 36,212
Repairs and maintenance .................. 15,185 9,408 43,293 36,128
Other operating expenses ................. 38,820 19,441 122,018 108,837
Taxes .................................... 0 4,059 17,631 21,585
-----------------------------------------------
Total Direct Gen. and Admin. Expenses 147,911 143,412 482,247 456,904
-----------------------------------------------
Management company termination fee ....... 0 164,333 0 164,333
Total Expenses ....................... 404,709 700,548 1,295,016 1,686,350
Other Income
Gain on sale of property and equipment ... 0 0 0 12,025
Miscellaneous income ..................... 31,253 1,893 32,875 6,550
------------------------------------------------
Total Other Income ................... 31,253 1,893 32,875 18,575
Earnings Before Federal Income Tax Expense ..... 192,665 500,508 435,107 1,505,158
Federal Income Tax Expense (Benefit)
Deferred ................................. 0 139,865 0 568,516
Current .................................. 0 18,319 0 18,319
-------------------------------------------------
Net Earnings ................................. $ 192,665 $ 342,323 $ 435,107 $ 918,323
=================================================
Pro forma income data (unaudited):
Earnings before federal income tax expense$ 192,665 $ 500,508 $ 435,107 $ 1,505,158
Proforma federal and state income tax .... (75,139) (195,198) (169,692) (587,012)
-------------------------------------------------
Pro forma Net Earnings ...................$ 117,526 $ 305,310 $ 265,415 $ 918,146
=================================================
Pro forma earnings per share - basic and .$ 0.01 $ 0.03 $ 0.02 $ 0.064
diluted
</TABLE>
<PAGE>
SURGICARE, INC.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
FOR THE FOR THE
THREE MONTHS ENDING NINE MONTHS ENDING
September 30, September 30,
<S> <C> <C> <C> <C>
1998 1999 1998 1999
Cash Flows From Operating Activities
Net earnings $ 192,665 $ 342,323 $ 435,107 $ 918,323
Adjustments to reconcile net earnings to
net cash provided by operations:
Depreciation and amortization 29,557 34,352 86,740 90,964
Gain on sale of property and 0 0 0 24,450
equipment
Deferred federal income tax 139,516 0 568,516
Management company termination fee 164,333 0 164,333
(Increase) Decrease in:
Accounts receivable 15,739 (322,745) 39,948 (771,749)
Inventory 0 0 (4,001) (2,013)
Prepaid expenses (3,922) (1,089) (4,404) (1,349)
Other current assets (365) 495 432 (2,290)
Federal income tax receivable 0 45,576 0 45,576
Increase (Decrease) in:
Accounts payable (55,479) (5,975) (52,666) 77,119
Accrued expenses 0 (17,601) (24,601) (32,212)
Net Cash Provided by Operating 178,195 379,185 476,555 1,079,668
Activities
Cash Flows From Investing Activities
Capital expenditures (27,251) (44,458) (9,016) (73,356)
Collections on shareholder receivable 6,000 8,271 8,363 80,772
Proceeds from sale of property and 0 25,893 (12,025)
equipment
Acquisition of SurgiCare, Inc. (172,105) 0 (172,105)
Net Cash Used in Investing Activities (21,251) (208,292) 25,240 (176,714)
Cash Flows From Financing Activities
Borrowings on debt 161,000 0 161,000
Payments on debt (33,109) (61,553) (133,557) (168,632)
Principal payments on capital lease 0 (8,496) (13,604)
Contributions by shareholders 27,000 27,000
Dividends paid to preferred shareholders (162,000) (162,000)
Distributions to shareholders (84,000) (346,065) (599,000)
Net Cash Used in Financing Activities (117,109) (44,049) (479,622) (755,236)
Net Decrease in Cash and Cash Equivalents 39,835 126,844 22,173 147,718
Cash and Cash Equivalents - Beginning of 90,480 77,923 108,142 57,049
Period
Cash and Cash Equivalents - End of Period $ 130,315 $ 204,767 $ 130,315 $ 204,767
</TABLE>
<PAGE>
SURGICARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Basis of Presentation
In the opinion of the SurgiCare's management, the accompanying
unaudited condensed, consolidated financial statements include all adjustments
consisting of only normal recurring adjustments necessary for a fair
presentation of SurgiCare's financial position at September 30, 1999 and the
results of operations and cash flows for the three months and the nine months
ended September 30, 1999 and 1998, respectively.
Although the Company believes that the disclosures in these financial
statements are adequate to make the information presented not misleading,
certain information normally included in financial statements prepared in
accordance with generally accepted accounting principles has been condensed or
omitted pursuant to the rules and regulations of the Securities and Exchange
Commission. Results of operations for the nine months ending September 30, 1999
are not necessarily indicative of results of operations to be expected for the
year ending December 31, 1999. Refer to the Company's financial statements on
Form 10-SB for the year ended December 31, 1998 for additional information.
Note 2- Accounting Policies
SurgiCare, Inc. (the Company) maintains its accounts on the accrual
method of accounting in accordance with generally accepted accounting
principles. Accounting principles followed by the Company and the methods of
applying those principles which materially affect the determination of financial
position, results of operations and cash flows are summarized below:
Principles of Consolidation
These consolidated financial statements include the accounts of the
Company and its wholly owned subsidiary, Bellaire SurgiCare, Inc. All
material intercompany balances and transactions have been eliminated in
consolidation.
Cash and Cash Equivalents
The Company considers all short-term investments with an original
maturity of three months or less to be cash equivalents.
Revenue Recognition
Revenue is recognized on the date the procedures are performed, and
accounts receivable are recorded at that time. Revenues are reported at the
estimated realizable amounts from patients and third-party payers. Earnings
are charged with a provision for contractual adjustments and doubtful
accounts based on fee schedules, contracts and collection experience.
Contractual adjustments and accounts deemed uncollectible are applied against
the allowance account.
Inventory
Inventory consists of medical and pharmaceutical supplies which are
stated at the lower of cost or market. Cost is determined under the first-in,
first-out method.
<PAGE>
SURGICARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Property and Equipment
Property and equipment are presented at cost. Medical and surgical
equipment, of approximately $144,000, under capital lease is recorded at the
present value of future minimum lease payments. Depreciation and amortization
are computed at rates considered sufficient to amortize the cost of the
assets, using the straight-line method over their estimated useful lives as
follows:
Office furniture and equipment 7 years
Medical and surgical equipment 5 years
Leasehold improvements 5 years
Computer equipment 5 years
Goodwill
Goodwill arises from the acquisition of assets at an amount in
excess of their fair market value. Amortization is computed by the
straight-line method over 15 years.
Federal Income Taxes
Prior to July 1, 1999, the Company had elected to be taxed as an S
corporation under provisions of the Internal Revenue Code. As such, current
taxable income had been included on the income tax returns of the
shareholders for federal income tax purposes and no provision had been made
for federal income taxes.
Effective July 1, 1999, the Company changed its election to be taxed
as a C corporation under the Internal Revenue Code. Taxes on income are
provided based upon Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," which requires an asset and liability approach
to financial accounting and reporting for income taxes. Deferred income tax
assets and liabilities are computed for differences between the financial
statement and tax bases of assets and liabilities that will result in taxable
or deductible amounts in the future. Such deferred income tax asset and
liability computations are based on enacted tax laws and rates applicable to
periods in which the differences are expected to affect taxable income.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Note 3 - Unaudited Pro Forma Net Earnings and Pro Forma Earnings Per Share
Pro forma earnings per share represent pro forma net earnings (after a
pro forma provision for income taxes as if the Company had been subject to
federal and state income taxation as a C corporation since inception) available
to common shareholders divided by the pro forma weighted average number of
common shares outstanding during the period. Pro forma weighted average shares
were calculated giving effect to the 7,304 to 1 exchange of SurgiCare common
stock for Bellaire common stock, as if the reverse acquisition had occurred at
the beginning of each period presented.
<PAGE>
The following table sets forth the computation of basic and diluted earnings per
share:
<TABLE>
<CAPTION>
For the Three For the Nine
Months Ended Months Ended
September 30, September 30,
------------- -------------
1998 1999 1998 1999
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Basic Earnings Per Share:
Pro forma net earnings $ 117,526 $ 342,323 $ 265,415 $ 918,146
Less: Preferred dividends (162,000)
-------------- -------------- -------------- ---------------
Pro forma net earnings available for common shareholders
$ 117,526 $ 342,323 $ 265,415 $ 756,146
============== =============== ============== ===============
Weighted average shares outstanding 11,823,980 11,214,560 11,823,980 11,536,272
============== =============== ============== ==============
Pro forma net earnings per share - basic $.01 $.03 $.02 $.066
============== =============== ============== ===============
Diluted Earnings Per Share:
Pro forma net earnings $ 117,526 $ 342,323 $ 265,415 $ 756,146
============== =============== =============== ===============
Weighted average shares outstanding 11,823,980 11,214,560 11,823,980 11,536,272
Plus: Shares from assumed conversion of preferred stock
191,038 191,038
-------------- ------- -------------- --------------
Weighted average shares assuming dilution 11,823,980 11,405,598 11,823,980 11,727,310
============== =============== ============== ===============
Pro forma net earnings per share - diluted $.01 $.03 $.02 $.064
=============== =============== ============== ===============
</TABLE>
Note 4 - Preferred Stock
The Series A preferred stock is convertible at a rate of one share of
preferred stock into one share of $.005 par value common stock. The Company can
redeem the stock at $5 per share. The Series A preferred stock accrues dividends
at a rate of $.48 per share per annum which are payable, in arrears, on the
first day of the month. Holders of Series A preferred stock are entitled to one
vote for each share of Series A preferred stock held.
ITEM 2.
Management's Discussion and Analysis of Financial Condition and results of
Operation.
SurgiCare principal business strategies are to (i) increase physician
utilization of existing facilities, (ii) increase both the revenue and profits,
from current cases and procedures being performed in existing facilities and,
(iii) achieve growth and expand revenues by pursuing strategic acquisitions of
existing, and the development of new, physician owned ambulatory surgical
centers.
(i) Bellaire SurgiCare is currently operating at or near capacity. In
order to facilitate growth, SurgiCare is in the process of adding one
additional operating room to its Bellaire facility. This additional
operating room will increase the capacity at Bellaire by 50%. The
architectural and mechanical plans for this expansion must meet the
approval of both the Texas Department of Health, and the City of
Houston. This approval process can be lengthy, however management
expects to begin its expansion and remodeling project before the end
of fiscal 1999.
(ii) SurgiCare is constantly striving to achieve increase profits from
existing revenues. This process includes evaluating the use of billing
codes, to insure proper reimbursement. Revenues generated at
ambulatory surgical centers are primarily derived from third party
payers. In an effort to standardize the billing and paying processes
the industry uses an elaborate, extremely complicated coding system.
Subsequently there can be more than one acceptable set of codes used
to bill for any given procedure. SurgiCare is constantly evaluating
the codes used, in order to maximize the greatest reimbursement for
any given procedures. Surgical supply costs are the single largest
cost component of any ambulatory surgical center. Therefore SurgiCare
is always looking for ways to decrease the cost of surgical supplies.
Through participation in national buying groups SurgiCare has been
able to negotiate discounts on most of the commonly used surgical
supplies. SurgiCare has also implemented a "Just in Time" approach to
inventory. This allows the center to minimize the amount of supplies
that it is required to keep in inventory. SurgiCare is also always
looking for new distributors of its surgical supplies that have the
capability to deliver the majority of its surgical supplies "Just in
Time", provide quality service, at reduced prices. SurgiCare has found
that the purchasing policy that govern the acquisition of surgical
equipment, is an important key to maximize a center's profit.
Therefore all equipment is purchased at the corporate level, this
control enables SurgiCare to aquire the lowest resonably possible
price.
(iii)SurgiCare is in the process of identifying ambulatory surgical centers
as potential acquisition targets, and has, in some cases, conducted
preliminary discussions with representatives of centers. At the time
of this filing there are no commitments, understandings, or agreements
with any potential acquisition targets. All of such discussions have
been tentative in nature and there can be no assurance that SurgiCare
will acquire any center with whom discussions have been conducted.
SurgiCare expects that generally the acquisition of another surgery
center would take the form of a merger, stock-for-stock exchange or
stock-for-assets exchange, and that in most instances the target
company will wish to structure the business combination to be within
the definition of a tax-free reorganization under Section 368 of the
Internal Revenue Code of 1986, as amended. SurgiCare may, however, use
other acquisition structuring techniques, including purchases of
assets or stock for cash or cash and stock, or through formation of
one or more limited partnerships or limited liability companies.
RESULTS OF OPERATION
The following table sets forth for the period indicated the number of surgical
cases.
<TABLE>
<CAPTION>
For the For the
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1999 1998 1999
<S> <C> <C> <C> <C>
Total Number of Cases 399 718 1312 1918
Total Revenues Generated $ 566,121 $ 1,199,163 $ 1,697,248 $ 3,172,933
Revenue Generated per Case $ 1,418 $ 1,670 $ 1,293 $ 1,654
Earnings Before Federal Income Tax per Case $ 482 $ 697 $ 331 $ 784
</TABLE>
THREE MONTHS ENDING SEPTEMBER 30, 1999 vsTHREE MONTHS ENDING SEPTEMBER 30, 1998
Bellaire SurgiCare made a concerted effort beginning in September of 1998
to increase both revenues and profits. The strategic plan that was implemented
consisted of decreasing the number of cases being done in the less profitable,
high cost services, and increasing the number of cases being done in the more
profitable less cost intensive services. The results were realized almost
immediately, 718 case performed by September 30, 1999 compared to 399 procedures
done for the same period in 1998, this represents 80% increase in average
monthly utilization. The revenues generated per case increased 18% from $1,418
for the three month period ending September 30, 1999, to $1,670 for the same
three month period in 1999. The pre-tax earnings generated per case increased by
44% from $482 per case for the three month period ending September 30, 1999, to
$697 for the same three month period in 1999.
In the three months ending September 30, 1999 Bellaire recorded record
revenue of $1,199,163 compared to $566,121 for the same period in 1998, this
represents a 112% increase. The significance of this increase is amplified by
the disproportionate increase in expenses for the same period. Direct surgical
expenses rose only 53% from $256,798 to $392,803. As a percentage of total
revenue, the same surgical cost dropped from 21% to 16% for the same three-month
period ending September 20, 1999. General and Administrative expenses fell from
$147,911 in 1998 to $143,412 for the same three-month period in 1999, and as a
percentage of total revenue, General and Administrative expenses also dropped
from 26% in 1998 to 12% for the same three month period in 1999. The results of
the record revenues, coupled with the decrease in virtually all cost as a
percentage of total revenue, translated to an increase in pre-tax earning of 160
% to $500,508 from $192,665.
NINE MONTHS ENDING SEPTEMBER 30, 1999 vs. NINE MONTHS ENDING SEPTEMBER 30, 1998
The nine months ending September 30, 1999 dramatically demonstrated the
success of SurgiCare's strategic effort to increase the number of profitable low
cost procedures while decreasing the number of high cost, low profit procedures.
The number of surgical cases rose 46% from 1312 cases for the nine month period
ending September 30, 1998, to 1918 for the same period in 1999. Revenues
generated per case for the same period rose 27% from an average of $1293 per
case to $1654. Most significant was the 136% increase in pre-tax earnings
generated per case, from $331 for the nine month period ending September 30,
1998, to $784 for the same period in 1999.
In the nine months ending September 1999, Bellaire posted record revenues
of $3,172,933 compared to $1,697,248 for the same period in 1998, a 87%
increase. For the same period direct surgical expenses rose only 31% from
$812,769 to $1,065,113. As a percentage of revenue direct surgical expenses
dropped from 47% for the nine month period ending September 30, 1998, to 34% for
the same period in 1999. General and Administrative expenses dropped 4% from
$482,247 for the nine month period ending September 30, 1998, to $456,904 for
the same period in 1999. As a percentage of revenue General and Administrative
Expenses fell from 28% for the nine months ending September 30, 1998 to 14% for
the same period in 1999. The increased revenue, along with the decrease in
expenses yielded a increase in pre tax earnings of 245% to $1,505,158 for the
nine month period ending September 30,1999, from $435,107 for the same period in
1998.
This increase was due to the effort which beginning in September of
1998 to increase both revenues and profits. The strategic plan that was
implemented consisted of decreasing the number of cases being done in the less
profitable, high cost service, and increasing the number of cases being done in
the more profitable less cost intensive services.
In 1999, in an effort to better capture and track incremental direct
expense, some expenses previously classified, as "Professional Fees" have been
re-classified to "Contract Services". This change in classification dramatically
altered the total expenses as a percentage of revenue for both of these
accounts, however the net effect is unaltered.
In July of 1999, SurgiCare incurred a one-time charge of $164,333. This
charge was a fee for the termination of Bellaire's pre-existing management
contract with Surgery Centers of America. As a direct result of the termination
of this contract, there was a slight decrease in the management fee as a
percentage of revenue, in the seven months ending July 31, 1999 over the same
period in 1998. The management fee was decreased in July of 1999 only, therefore
estimates that the cost of management will decrease more significantly in future
periods.
LIQUIDITY and CAPTIAL RESOURCES
SurgiCare's current source of liquidity consists primarily of funds
from operations. SurgiCare believes that the cash available from operations is
adequate to meet the company's requirements.
YEAR 2000 COMPLIANCE
Many computer systems and software products are not capable of
distinguishing twenty-first century ("Y2K") dates. As a result, many companies
could experience operating problems because of the century change. There exists
uncertainty concerning the magnitude of the problem associated with the century
change.
Throughout the first half of 1999 SurgiCare evaluated all of its
computer hardware and software for Y2K compatibility. SurgiCare has since
upgraded its computer hardware and software to insure Y2K compatibility. This
upgrade was completed in August 1999. In addition SurgiCare has contracted
through an independent biomedical engineering firm, to research and survey the
Y2K compatibility of all of its patient care equipment. The survey was completed
in September 1999, and the results were immediately made available to
management. The survey discovered no Y2K incompatibilities in any of the patient
care equipment. However as a contingency SurgiCare plans to test all of its
patient critical equipment prior to patient use in the first days of January
2000.
SurgiCare has contacted its major vendors to determine if there are any
Y2K issues that would cause an interruption in the delivery of surgical
supplies. SurgiCare is confident at this time that all of it's major vendors
have prepared for Y2K and expect no delays or interruption in the delivery of
supplies. The Company has, as a contingency, located and arranged additional
sources for it's daily supplies. Therefore should current vendors encounter any
Y2K problems, it would not prevent the Company from obtaining necessary supplies
and materials from its other sources.
The costs of the Company's Y2K program will not be material to
financial condition or results of operations. The Company believes that there
will be no significant disruptions in operations from Y2K related issues.
However, failure of telecommunications or banking service providers to be Y2K
compliant could have a material effect on the Company's financial position or
results of operations. SurgiCare has received disclosures from its banking
service provider that it is Y2K compliant, and expects no disruption due to any
Y2K complications.
PART II
OTHER INFORMATION
ITEM 1.
Legal Proceedings
SurgiCare is not currently involved in any legal proceedings.
ITEM 2.
Change in Securities and Use of Proceeds
There has been no change in securities since SurgiCare filled its
Form 10-SB on August 20, 1999.
ITEM 3.
Default Upon Senior Securities
SurgiCare has not defaulted on any payments of principle or interest on
any securities.
ITEM 4.
Submission of Matters to a Vote of Security Holder
By notice dated October 18, 1999, By "NOTICE OF TAKING CORPORATE ACTION
WITHOUT A MEETING BY WRITTEN CONSENTS". dated October 18, 1999, SurgiCare
notified is'a stockholders of the following actions taken by written consent of
a majortiy of its stockholders:
1. Election of Directors
2. Amendment and Restatement of Certificate of Incorporation; Change of
Name
3. Approval of Stock Exchange Agreement
On August 20,1999, the Company filed a registration statement on Form
10-SB (the "Form 10-SB") with the Commission to register shares of its common
stock and Series A Redeemable Preferred Stock with the Commission under Section
12(g) of the Exchange Act. On November 4, 1999 the Company filed an amend Form
10-SB in response to initial comments by the Commission. The Form 10-SB
will also be subject to further amendment by the Company in response to any
later comments by the Commission. On October 19,1999, through lapse of time,
the Form 10-SB become effective and the Company's obligation to file periodic
reports, as required by Section 13 of the Securities and Exchange Act, began
on that date.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this Report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: November 5, 1999 REGISTRANT:
SurgiCare, Inc
By: /s/ David Blumfield
Dr. David Blumfield
President and CEO
By: /s/ CHARLES S. COHEN
Charles S. Cohen
Chief Operating Officer
ITEM 6.
INDEX TO EXHIBITS
DESCRIPTION
EXHIBIT
NUMBER
3.1 * Amended and Restated Certificate of Incorporation of
SurgiCare, Inc.
3.2 * Articles of Incorporation of Bellaire SurgiCare, Inc.
3.3 * By-Laws of Technical Coatings Incorporated
(now SurgiCare, Inc.)
3.4 * By-Laws of Bellaire SurgiCare, Inc.
4 * Certificate of Designation, Powers, Preferences and Rights
of Series A Redeemable Preferred Stock, par value $.001
per share, of SurgiCare, Inc.
10.1 * Agreement, dated July 29, 1989, 1999, between
SurgiCare, Inc. and Surgery Centers of
America II, Inc.
10.2 * Letter agreement with SCOA
27 * Financial Data Schedule
* Incorporated herein by reference to the Company's Current Report on form 10-SB
filed on August 20, 1999.
During the three months ended September 30, 1999, SurgiCare filed the following
current reports on 10-SB 1) August 20,1999 - Form 10-SB 2) November 4, 1999 -
Amended Form 10-SB
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