SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended April 30, 1996 Commission File No. 2-98314-W
MEDICAL ADVISORY SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 52-1233960
(State of other Jurisdiction of (I.R.S. Employer Identification No.)
incorporated or organization)
8050 Southern Maryland Boulevard, Owings, Maryland 20736
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (301) 855-8070
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes (X) No __
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
3,882,873 shares of Common Stock ($0.005 par value per share)
outstanding at January 31, 1996
INDEX
MEDICAL ADVISORY SYSTEMS, INC.
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Unaudited)
Balance Sheet - April 30, 1996 and October 31, 1995
Statement of Operations - Six months ended April 30, 1996 and 1995
Statement of Cash Flow - Six months ended April 30, 1996 and 1995
Notes of Condensed Financial Statements: April 30, 1996
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults from Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Reports on Form 8-K and Exhibits.
SIGNATURES
MEDICAL ADVISORY SYSTEMS, INC.
CONSOLIDATED BALANCE SHEET
April 30 October 31
1996 1995
--------------------------
UNAUDITED
(NOTE-A)
ASSETS
CURRENT ASSETS
Cash $ 461,612 $ 402,768
Receivables, net 600,971 430,474
Prepaid expenses and other 14,871 12,698
--------- -------
TOTAL CURRENT ASSETS 1,077,454 845,940
PROPERTY AND EQUIPMENT, NET 315,705 269,873
OTHER ASSETS
Investments 427,468 427,468
Inventory - Pharmaceuticals 25,787 23,295
Deferred income taxes 333,625 333,625
--------- ---------
TOTAL OTHER ASSETS $ 786,880 $ 784,388
TOTAL ASSETS $ 2,180,039 $ 1,900,201
========== ==========
The accompanying notes are an integral part of these statements.
MEDICAL ADVISORY SYSTEMS, INC.
CONSOLIDATED BALANCE SHEET - CONTINUED
April 30 October 31
1996 1995
----------------------------
UNAUDITED
(NOTE-A)
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES
Current Maturities LT Debt $ 22,886 $ 39,660
Accounts payable & accrued expenses 252,287 303,745
Deferred income 199,387 79,689
--------- ---------
TOTAL CURRENT LIABILITIES 474,560 423,094
Long-term liabilities to Banks and Others 140,461 146,756
TOTAL LIABILITIES $ 615,021 $ 569,850
JOINT VENTURER'S INTEREST 103,462 24,507
SHAREHOLDERS' EQUITY
Common Stock, $0.005 par value -
Authorized: 6,000,000 shares
Issued: 3,869,938 shares 19,415 19,415
Convertible Preferred Stock,
$1.75 par value
Authorized: 1,000,000 shares
Issued: none 0 0
Additional capital 3,824,778 3,824,778
Accumulated deficit (2,339,054) (2,494,766)
Treasury Stock at Cost - 65,940 shares (43,583) (43,583)
----------- ----------
NET SHAREHOLDER EQUITY $ 1,461,556 $ 1,305,844
----------- -----------
TOTAL LIABILITIES AND EQUITY $ 2,180,039 $ 1,900,201
=========== ===========
The accompanying notes are an integral part of these statements.
MEDICAL ADVISORY SYSTEMS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
Three Months Six Months
Ended April 30 Ended April 30
1996 1995 1996 1995
-------------------- --------------------
Revenues:
Maritime Program Services $ 191,609 $ 224,821 $ 378,541 $ 449,995
Assistance Services 195,333 86,315 386,116 145,507
Pharmaceutical Sales 129,239 112,197 220,209 220,164
Training Services 76,592 43,351 109,010 88,923
Clinic Program 3,620 6,948 36,859 15,384
Other revenue 875 1,635 875 1,992
--------- --------- --------- ---------
Total revenue 597,268 475,267 1,131,610 921,965
--------- --------- --------- ---------
Costs and expenses:
Pharmaceutical cost of goods $ 66,400 $ 65,214 $ 115,618 $ 124,103
Medical professional services 86,284 68,490 159,484 139,072
Cost of clinic services 2,439 4,174 20,554 10,325
Cost of training services 14,704 12,606 20,651 23,245
Salaries and wages 126,031 113,831 270,389 229,164
Other selling, general and
administrative expenses 161,087 141,291 307,911 245,426
Depreciation and amortization 9,069 6,352 18,188 19,669
Interest expense (net) (11,887) (1,092) (15,852) (1,251)
--------- --------- --------- ---------
Total costs and expenses 454,127 410,866 896,943 789,752
--------- --------- --------- ---------
Profit (loss) before joint
venturer's interest $ 143,141 $ 64,401 $ 234,667 $ 132,213
Joint venturer's interest (38,574) 1,122 (78,954) 5,983
--------- --------- --------- ---------
Net profit $ 104,567 $ 65,523 $ 155,713 $ 138,195
========= ========= ========= =========
Earnings per share $.03 $.02 $.04 $.04
--------- --------- --------- ---------
Outstanding shares used to
calculate earnings per share 3,882,873 3,882,873 3,882,873 3,882,873
--------- --------- --------- ---------
MEDICAL ADVISORY SYSTEMS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
Six Months Ended April 30
1996 1995
-------------------------
Cash flows from operating activities:
Net earnings for the period $ 155,713 $ 138,195
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Depreciation and amortization 18,188 19,669
Equity interest in joint venture income (losses) 78,954 (5,984)
(Increase) decrease in:
Accounts Receivable (170,497) 68,728
Inventory - Pharmaceuticals (2,492) (15,124)
Prepaid expenses and other (2,173) (2,819)
Increase (decrease) in:
Accounts payable and accrued expenses 97,102 (44,955)
Deferred income (25,862) (67,693)
Net cash provided by (used for) operating activities $ 148,933 $ 90,018
Cash flow from investing activities:
Purchase of Investments Securities - (100,000)
Capital expenditures (64,020) (24,707)
----------- -----------
Net cash provided by (used in) investing activities $ (64,020) $ (124,707)
Cash flows from financing activities
Repayments of loans to banks and related parties (26,069) (27,476)
----------- -----------
Net cash provided by (used in) financing activities $ (26,069) $ (27,476)
Net increase (decrease) in cash 58,844 (62,165)
Cash at beginning of the period 402,768 280,668
----------- -----------
Cash at end of the period $ 461,612 $ 218,503
========== ==========
MEDICAL ADVISORY SYSTEMS, INC.
NOTES OF CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
NOTE A - Summary of Accounting Policies
The accompanying unaudited condensed financial statements have been
prepared in accordance with the instructions to form 10-QSB, and
therefore, do not include all information necessary for a fair
presentation of financial position, results of operations and cash
flows in conformity with generally accepted accounting principles.
In the opinion of management, all adjustments (consisting of only
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 October 31, 1996.
The unaudited condensed consolidated financial statements should be
read in conjunction with the consolidated financial statements and
footnotes thereto included in the Company's annual report on
Form 10-KSB for the year ended October 31, 1995.
MEDICAL ADVISORY SYSTEMS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Total revenues for the Company were $1,131,610 for the first six months
of FY 1996 compared to $921,965 for the same period in FY 1995, an increase
of 22.7%. Growth of the Company's business has resulted in continuing gains
in liquidity and shareholders' equity. The Company has sufficient cash on
hand to meet current operating requirements. Our discussion and analysis of
the Company's various programs is as follows:
Revenues from maritime program services were $378,541 for the first six
months of FY 1996 compared to $449,995 for the same period in FY 1995, a 15.9%
decrease. This decline is due to continuing reductions in the size of the
U.S. merchant marine fleet and increasing competition in the market place.
Additional fleet reductions by U.S. vessel owners are expected as government
subsidies for deep-draft merchant vessels decline. Management is making
efforts to stabilize revenues from this core program by expanding marketing
efforts in other maritime and transportation sectors.
The Company had $386,116 in revenues from sales of assistance services
during the first six months of FY 1996, a 165 % increase compared to $145,507
reported for the same period in FY 1995. The increase is primarily a result
of new contracts obtained by the Company's subsidiary Assistance Services of
America (ASA), Inc. ASA is a joint venture between the Company and the
French company SACNAS International, S.A. The joint venture was formed in
November, 1993 to market specialized travelers' assistance and insurance claims
handling services to companies in North America. Revenues from the sale of
assistance services are expected to continue to increase during FY 1996.
Revenues from pharmaceutical sales were $220,209 for the first half of
FY 1996 compared to revenues of $220,164 for the same period of FY 1995.
Revenues for the second quarter of FY 1996 were $129,239 an increase of 42.1%
over first quarter FY 1996 revenues and a 15.7% increase compared to the second
quarter of FY 1995. The increases primarily reflect adoption of the
Company's pharmaceutical supply and inventory control program by new customers.
Management expects pharmaceutical sales to continue to be strong through
FY 1996.
The Company's training programs provided revenues of $109,010 for the
first half of FY 1996, a 23% increase compared to training revenues of
$ 88,923 in the first half of FY 1995. To strengthen service capability,
the Company is using more in-house personnel and fewer outside contractors to
function as instructors. This has resulted in a shifting of instructors'
costs from "Cost of Training Services" to "Salaries and Wages" on the
Company's Consolidated Statement of Operations.
Clinic services revenues were $36,859 for the first six months of
FY 1996, a 140% increase compared to $15,384 for the same period of 1995.
The increase primarily reflects revenues accrued in the first quarter of
FY 1996 from a large short-term contract. Revenues for the second quarter of
FY 1996 returned to FY1995 levels and this trend is expected to continue for
the remainder of the fiscal year.
MEDICAL ADVISORY SYSTEMS, INC.
PART II - OTHER INFORMATION
Item I. Legal Proceedings
- --------------------------
None.
Item 2. Changes in Securities
- ------------------------------
None.
Item 3. Defaults from Senior Securities
- ----------------------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
Not applicable.
Item 5. Other Information
- --------------------------
None.
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits. None
(b) Reports on Form 8-K. None
MEDICAL ADVISORY SYSTEMS, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, and the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MEDICAL ADVISORY SYSTEMS, INC.
------------------------------
(Registrant)
Date: June 14, 1996 ___________________________________
Thomas M. Hall, M.D.
Chief Executive Officer
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