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 July 31, 1997 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, 1997
INDEX
MEDICAL ADVISORY SYSTEMS, INC.
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Unaudited)
Balance Sheet - July 31, 1997 and October 31, 1996
Statement of Operations - Nine months ended July 31, 1997 and 1996
Statement of Cash Flow - Nine months ended July 31, 1997 and 1996
Notes of Condensed Financial Statements: July 31, 1997
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
July 31 October 31
1997 1996
UNAUDITED
(NOTE-A)
ASSETS
CURRENT ASSETS
Cash $ 624,861 $ 717,678
Receivables, net 1,031,705 842,439
Inventory - Pharmaceuticals 22,506 20,133
Prepaid expenses and other 24,450 544
Current deferred tax asset 24,861 24,862
TOTAL CURRENT ASSETS 1,728,383 1,605,656
PROPERTY AND EQUIPMENT, NET 977,045 781,829
OTHER ASSETS
Investments 364,969 364,969
Deferred assets 306,166 306,167
TOTAL OTHER ASSETS 671,135 671,136
TOTAL ASSETS $ 3,376,563 $ 3,058,621
The accompanying notes are an integral part of these statements.
MEDICAL ADVISORY SYSTEMS, INC.
CONSOLIDATED BALANCE SHEET - CONTINUED
July 31 October 31
1997 1996
UNAUDITED
(NOTE-A)
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES
Current Maturities LT Debt $ 501,872 $ 25,392
Accounts payable & accrued expenses 551,062 607,728
Deferred income 348,518 241,797
TOTAL CURRENT LIABILITIES 1,401,452 874,917
Long-term liabilities to Banks and Others 132,131 616,149
TOTAL LIABILITIES $ 1,533,583 $ 1,491,066
JOINT VENTURER'S INTEREST 102,718 24,508
SHAREHOLDER'S EQUITY
Common Stock, $0.005 pqr value -
Authorized: 10,000,000 shares
Issued: 3,869,938 shares 19,415 19,415
Convertible Preferred Stock, $1.75 par value
Authorized: 1,000,000 shares
Issued: none
Additional capital 3,824,778 3,824,778
Accumulated deficit (2,171,433) (2,257,563)
Treasury Stock at Cost - 65,940 (43,583) (43,583)
NET SHAREHOLDERS EQUITY $ 1,740,262 $ 1,543,047
TOTAL LIABILITIES AND EQUITY $ 3,376,563 $ 3,058,621
The accompanying notes are an integral part of these statements
MEDICAL ADVISORY SYSTEMS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
Three Months Nine Months
Ended July 31 Ended July 31
1997 1996 1997 1996
Revenues:
Maritime Program Services $ 188,652 $ 182,736 $ 540,934 $ 561,277
Assistance Services 287,064 182,219 799,430 568,335
Pharmaceutical Sales 145,839 101,068 339,211 321,277
Training Services 48,300 27,309 130,752 136,319
Clinic Program 7,925 9,820 27,660 46,679
Interest Revenue 11,562 8,924 33,214 25,651
Total Revenue 689,342 512,076 1,871,201 1,659,538
Cost and Expenses:
Pharmaceutical Cost of Goods $ 78,177 $ 50,624 $ 171,190 $ 166,242
Medical Professional Services 73,849 73,024 235,349 232,508
Cost of Clinic Services 4,601 5,689 17,722 26,243
Cost of Training Services 11,322 7,461 27,145 28,112
Salaries and Wages 181,393 155,398 568,594 425,787
Other selling, general and
Administrative expenses 171,511 148,812 508,111 447,114
Depreciation and Amortization 16,294 9,069 44,340 27,257
Interest expense 10,204 4,292 22,904 13,901
Total costs and expenses 547,351 454,369 1,595,355 1,367,164
Profit (loss) before joint
venturer's interest 141,991 57,707 275,846 292,374
Joint venturer's interest (30,903) (16,108) (78,210) (95,062)
Net Profit $ 111,088 $ 41,599 $ 197,636 $ 197,312
Earnings per share $0.03 $0.01 $0.05 $0.05
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)
Nine Months Ended July 31
1997 1996
Cash flows from operating activities:
Net earnings from period $ 197,636 $ 197,312
Adjustment to reconcile net earnings
to net cash provided by operating activities:
Depreciation and amortization 44,340 27,257
Equity interest in joint venture income (losses) 78,210 95,062
(Increase) decrease in :
Accounts Receivable (189,266) (138,567)
Inventory - Pharmaceuticals (2,373) 11,799
Prepaid expenses and other (23,906) (1,358)
Increase (decrease) in :
Accounts payable and accrued expenses (72,604) (43,180)
Deferred income 106,721 157,633
Net cash provided by (used for) operating activities $ 138,758 $ 305,958
Cash flows from investing activities:
Purchase of Invesment Securities
Capital Expenditures (224,037) (158,914)
Net cash provided by (used in) investing activities (224,037) (158,914)
Cash Flows from financing activities
Repayment of loans to banks and related parties (7,538) (32,545)
Net cash provided by (used in) financing activities (7,538) (32,545)
Net increase (decrease) in cash (92,817) 114,499
Cash at beginning of period 717,678 402,768
Cash at end of the period
$ 624,861 $ 517,267
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 July 31, 1997
are not necessarily indicative of the results that may be
expected for the year ended October 31, 1997. 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, 1996.
MEDICAL ADVISORY SYSTEMS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Total revenues for the Company were $1,871,201 for the first
nine months of FY 1997 compared to $1,659,538 for the same
period in FY 1996, an increase of 12.7%. Total General and
Administrative expenses increased from $914,059 for the first six
months of FY 1996 to $1,143,949 for the same period in 1997. The
company moved into its new building at the Corporate headquarters
location in Owings, MD in February of 1997. Increased demand for
the Company's services has required an increase in personnel and
related resources. These increases coupled with extraordinary, non-
recurring moving related costs, an increased local demand for skilled
labor, and the accrual of Joint Venture related expenses previously
accounted for at year-end has resulted in the increase in General and
Administrative costs.
Growth of the Company's business has resulted in continually
increasing 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:
The Company had $799,430 in revenues from sales of
assistance services during the first nine months of FY 1997, a 40.7 %
increase compared to $568,335 reported for the same period in FY
1996. The increase is primarily a result of the growth of existing
contracts held by the Company's subsidiary Assistance Services of
America (ASA), Inc. Revenues from the sale of assistance services
are expected to continue to increase during FY 1997.
Revenues from maritime program services were $540,934 for
the first nine months of FY 1997 compared to $561,277 for the
same period in FY 1996, a 3.6% decrease. This decline is due to
increased competition in the market place. Successful marketing
efforts have recently increased the company's client base resulting in
a 3.2 % increase in FY 1997 third quarter revenues compared to the
same period of the previous year. This growth in sales is expected to
continued.
Revenues from pharmaceutical sales were $339,211 for the
nine months of FY 1997 compared to revenues of $321,277 for the
same period of FY 1996 an increase of 5.6%. This increase is a
direct result of increased marketing efforts. These efforts coupled
with strategic purchasing and cost control programs resulted in an
8.4% increase in gross profits for the period.
The Company's training programs provided revenues of
$130,752 for the first nine months of FY 1997, compared to training
revenues of $136,319 for the same period of FY 1996. A major
client for this program purchases training services on a biannual
basis, and the slight decrease in revenues this year reflects this
impact.
Clinic services revenues were $27,660 for the first six
months of FY 1997, in comparison to $46,679 and $26,525 for the
same periods of 1996 and 1995. Fiscal year 1996 results included
revenues accrued in the first quarter of FY 1996 from a large short-
term contract. Diversification of this program to include the
coordination and review of employee drug-testing coupled with
continued marketing of these services has resulted in modest growth
of sales to core clients.
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: September 12, 1997
____________/s/_______________
Thomas M. Hall, M.D.
Chief Executive Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Oct-31-1997
<PERIOD-START> Nov-01-1996
<PERIOD-END> Jul-31-1997
<CASH> 624861
<SECURITIES> 364969
<RECEIVABLES> 1031705
<ALLOWANCES> 0
<INVENTORY> 22506
<CURRENT-ASSETS> 1728383
<PP&E> 1494295
<DEPRECIATION> 517251
<TOTAL-ASSETS> 3376563
<CURRENT-LIABILITIES> 1401452
<BONDS> 0
<COMMON> 19415
0
0
<OTHER-SE> 1720847
<TOTAL-LIABILITY-AND-EQUITY> 3376563
<SALES> 1837987
<TOTAL-REVENUES> 1871201
<CGS> 757378
<TOTAL-COSTS> 757378
<OTHER-EXPENSES> 815073
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22904
<INCOME-PRETAX> 197636
<INCOME-TAX> 0
<INCOME-CONTINUING> 197636
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 197636
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
