SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended
June 30, 1996
Commission File Number
0-14757
MEDMASTER SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State of incorporation)
No. 87-0400472
(I.R.S. Employer Identification Number)
2072 North Main
Logan Utah
(Address of principal executive offices)
84341
(Zip Code)
801-753-4101
Registrant's telephone number, including area code
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
requirementsfor the past 90 days:
Yes X No
As of June 30, 1996, outstanding shares of common stock were
10,844,117.
MEDMASTER SYSTEMS, INC. AND SUBSIDIARIES
INDEX
Part I. Financial Information:
Consolidated Condensed Balance Sheets - June 30, 1996
and March 31,
1996
Consolidated Condensed Statements of Operations - Three
Months
Ended June 30, 1996 and 1995
Consolidated Condensed Statements of Cash Flows - Three
Months
Ended June 30, 1996 and 1995
Notes to Consolidated Condensed Financial Statements
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 Upon Senior Securities
Item 4. Submission Of Matters To A Vote Of Security
Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8 - K
Signatures
MEDMASTER SYSTEMS, INC. AND SUBSIDIARIES
<TABLE>
Consolidated Condensed Balance Sheets
(Unaudited)
<CAPTION>
Assets
June 30, 1996 March 31, 1996
(Unaudited)
<S> <C> <C>
Current Assets
Cash $229,583 $216,463
Accounts Receivable (net of bad debt allowance of
$37,833 and $40,000):
Trade $174,610 $303,121
Other $1,976 $0
Prepaid Expenses $21,902
$20,821
Note Receivable - Related Party $43,733
$46,767
Total Current Assets $471,804 $587,172
Property & Equipment net of
accumulated depreciation of
$212,050 and $207,068 $31,809
$19,597
Other Assets $67,768 $63,867
TOTAL ASSETS $571,381 $670,636
Liabilities & Shareholders' Equity
Current Liabilities
Current Maturities of
Long-Term Debt $0 $0
Accounts Payable $93,682
$54,659
Funds Due To Providers $410,579 $482,761
Accrued Expenses $418,325 $405,010
Total Current Liabilities $922,586
$942,430
Long-Term Debt less
current maturities - -
Shareholders' Equity
Common Stock - $.01 par value;
authorized - 30,000,000 shares;
issued - 10,844,117 shares.
Preferred Stock - $.01 par value;
authorized - 500,000 shares;
none issued and outstanding. $108,441 $108,441
Additional Paid-in Capital $3,140,825
$3,140,825
Retained (deficit) ($3,600,471)
($3,521,060)
Sub-Total ($351,205) ($271,794)
Less: Treasury Stock - -
Stockholders' Equity ($351,205)
($271,794)
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $571,381 $670,636
See accompanying notes to consolidated condensed financial
statements.
</TABLE>
MEDMASTER SYSTEMS, INC. AND SUBSIDIARIES
<TABLE>
Consolidated Condensed Statements of Operations
<CAPTION>
(Unaudited)
Three Months Ended
June 30,
1996 1995
<S> <C> <C>
Net Revenues:
Factoring Commissions & Fee $75,807 $107,076
Computer Software $2,239 $2,381
Printing $4,122 $2,798
Travel $26,412 $16,713
$108,580 $128,968
General and Administrative Expenses:
Related Parties $13,305 $13,305
Bad Debt $0 $0
Other $166,224 $187,670
$179,529 $200,975
Income (Loss)
from Operations ($70,949) ($72,007)
Other Income (Expenses):
Interest Income -
Related Party $0 $0
Interest Income -
Other $1,745 $5,521
Dividends $0 $0
Interest Expense ($10,206) ($63,797)
($79,410) ($130,283)
Income (Loss) Before Provision
for Income Taxes ($79,410) ($130,283)
Income Tax
Expense (Benefit) - -
Net Income (Loss) ($79,410) ($130,283)
Per Share
Earnings (Loss) ($0.01) ($0.01)
Weighted Average
Number of Common Shares
Outstanding 10,844,117 10,844,117
See accompanying notes to consolidated condensed financial
statements.
</TABLE>
MEDMASTER SYSTEMS, INC. AND SUBSIDIARIES
<TABLE>
Consolidated Condensed Statements of Cash Flows
<CAPTION>
(Unaudited)
Three Months Ended June 30,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net Gain (Loss) ($79,410)
($130,283)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization $4,982
$5,286
Provision for losses on
accounts receivable $0 ($2,632)
Changes in assets and liabilities:
Decrease(increase) in
marketable securities $0 $0
Decrease in accounts receivable $122,633
$78,978
Decrease(increase) in
prepaid expenses ($1,081)
$5,257
Increase(decrease) in current
maturities of long term debt $0 $0
Increase(decrease) in
accounts payable $39,023
($25,319)
Increase(decrease) in
funds due to providers ($72,182)
$168,240
Increase(decrease) in
accrued expenses $13,315
$69,600
Total adjustments $106,690
$299,410
Net cash (used) provided by
operating activities $27,280
$169,127
Cash flows from investing activities:
Capital expenditures ($17,194) $0
Payments received on
note receivable, related party $3,034
$8,032
Net cash provided by (used in)
investing activities ($14,160)
$8,032
Cash flows from financing activities:
Principal payments on long term debt $0
$0
Net cash used in financing activities $0
$0
Net increase(decrease) in cash $13,120
$177,159
Cash at beginning of period $216,463
$27,026
Cash at end of period $229,583
$204,185
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $10,206
$9,027
See notes to consolidated financial statements.
</TABLE>
MEDMASTER SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Note 1 - In the opinion of the Company, the accompanying
unaudited
consolidated condensed financial statements contain all
adjustments
(consisting of only normal recurring accruals) necessary
to present
fairly the financial position as of June 30, 1996 and the
results
of operations for the three months ended June 30, 1996 and
1995 and changes in cash flows for the three months ended
June 30, 1996 and 1995. The consolidated condensed
financial
statements should be read in conjunction with the Company's
audited
consolidated financial statements for the year ending March
31, 1996.
Note 2 - The results of operations for the three months
ended June 30, 1996 are not necessarily indicative of the
results to
be expected for the full year.
MEDMASTER SYSTEMS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Company management has worked on improving the Company's
financial condition and future by providing more services
for fees; less factoring & financing; and considered areas
of focus other than Health Care given that industry's
uncertain future. Management is reviewing all options and
sources of revenue available to the Company at this time and
believes that a re-direction of the Company focus is
imperative to provide a viable future for the Company. There
is no plan to discontinue all of the services the Company
has provided in the past. However, some services which
require substantial upfront capital, such as factoring, will
be discontinued. Services, such as providing credit reports,
collection letters and collection services will be pursued
on a fee for service basis. In addition, the Company is
considering the opportunities that are available for its'
printing and travel services. There can be no assurance that
the Company will be successful in these efforts.
Gross transactions (the total amount of sales, including
billings submitted by Health Care Providers during the
period, as well as a portion of income from other
operations) decreased $250,483 or 39% for the three months
ended June 30, 1996 as compared to the same period in 1995
from $641,107 to $390,624. Net revenues decreased $20,388
or 16% for the three months ended June 30, 1996 as compared
to the same period in 1995 from $128,968 to $108,580. These
decreases are a result of the Company discontinuing to
provide some of the services that have been provided in the
past and redirecting the efforts of the company to generate
revenues by focusing on "fee for services". These services
do not require the Company to provide upfront cash to its
clients but, instead, will operate in a fee for service
situation. Consequently, the Company has become a TRW
authorized reseller of credit reports and is providing
credit reports, billing services and pre-collection &
collection services to clients. Although this direction will
initially result in a decrease in revenues, management has
determined that it is in the best interest of the Company.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses decreased $21,446 or 11%
for the three months ended June 30, 1996 as compared to the
same period in 1995 from $200,975 to $179,529, respectively.
Management will continue to focus on controlling expenses
and increasing revenues in an effort to become profitable.
FACTORING COMMISSIONS AND FEES
Factoring commissions and fees decreased $31,269 or 29% for
the three months ended June 30, 1996 compared to the same
period in 1995 from 107,076 to $75,807. The decrease in
factoring commissions and fees is due primarily to a
redirection of the Company's focus. In an effort to improve
its financial condition, the Company has determined that it
will provide more services for fees and less factoring and
financing services, as the factoring and financing require
significant amounts of up-front capital with a relatively
small rate of return.
PRINTING AND TRAVEL
Printing and travel fee revenues have increased $52,975 or
28% to $240,895 for the three months ended June 30, 1996
from $187,920 for the same period in 1995. As discussed
above, the increase is related to the Company's plans to
provide more services for fees. Both the printing and
travel services were initially organized for the Company's
own needs. Subsequently, the Company began providing
outside services and has implemented a plan to expand these
services and become more profitable. The cost of printing
and travel fees increased $40,812 or 24% to $210,361 for the
three months ended June 30, 1996 from $168,409 for the same
period in 1995. This increase is directly related to the
increase in printing and travel fee revenues.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital deficit for the three months ended
June 30, 1996 of a negative $(450,782) increased $95,524 from the
March 31, 1996 balance of a negative $(355,258). The change is
primarily due to the reduction in revenues and the operating loss that
resulted during the three month period.
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
NONE. There are no pending legal proceedings outside of the
normal course of business to which the Company is a party or
of which any of its property is the subject.
Item 2. CHANGES IN SECURITIES
NONE.
Item 3. DEFAULTS UPON SENIOR SECURITIES
NONE.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE.
Item 5. OTHER INFORMATION
NONE.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
NONE.
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities
Exchange Act of 1934, the registrant has duly caused this
Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
MEDMASTER SYSTEMS, INC. AND SUBSIDIARIES
Date: August 19, 1996 BY____[ SIGNED]____________
David C. Marx
President and
Chief Executive Officer
