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
December 31, 1995
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 December 31, 1995, outstanding shares of common stock were 10,844,117.
MEDMASTER SYSTEMS, INC. AND SUBSIDIARIES
INDEX
Part I. Financial Information:
Consolidated Condensed Balance Sheets - December 31, 1995 and March 31,
1995
Consolidated Condensed Statements of Operations - Three Months and Nine
Months
Ended December 31, 1995 and 1994
Consolidated Condensed Statements of Cash Flows - Three Months and Nine
Months
Ended December 31, 1995 and 1994
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
Dec. 30, 1995 March 31, 1995
(Unaudited)
<S> <C> <C>
Current Assets
Cash $61,945 $27,026
Accounts Receivable (net of bad debt allowance of $69,413 and $75,000):
Trade $412,139 $512,627
Other $8,400 $0
Prepaid Expenses $17,166 $20,138
Total Current Assets $499,650 $559,791
Property & Equipment net of
accumulated depreciation of
$266,152 and $257,950 $24,268 $35,720
Note Receivable - Related Party $85,741 $331,689
Other Assets - -
TOTAL ASSETS $609,659 $927,200
Liabilities & Shareholders' Equity
Current Liabilities
Current Maturities of
Long-Term Debt $0 $1,362,087
Accounts Payable $22,949 $208,353
Demand Reserve Account $413,855 $244,946
Accrued Expenses $453,539 $1,911,901
Total Current Liabilities $890,343 $3,727,287
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) ($3,529,950) ($6,049,353)
Sub-Total ($280,684) ($2,800,087)
Less: Treasury Stock - -
Stockholders' Equity ($280,684) ($2,800,087)
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $609,659 $927,200
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 Nine Months Ended
December 31, December 31,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net Revenues:
Healthcare $94,648 $102,910 $306,809 $354,649
Computer Software $1,653 $3,117 $6,143
$8,070
Printing $2,189 $1,416 $7,813
$3,019
Travel $12,489 $9,180 $40,063
$34,533
$110,979 $116,623 $360,828 $400,271
General and Administrative Expenses:
Related Parties $13,305 $13,305 $39,915
$39,915
Bad Debt $0 $3,000 $0 $6,000
Other $177,241 $202,080 $528,798 $597,915
$190,546 $218,385 $568,713 $643,830
Income (Loss)
from Operations ($79,567) ($101,762) ($207,885) ($243,559)
Other Income (Expenses):
Interest Income -
Related Party $0 $0 $0 $0
Interest Income -
Other $4,665 $213 $17,564
$688
Dividends $0 $0 $0 $0
Interest Expense ($11,678) $66,168 ($140,410)
($196,245)
Gain <Loss> On
Sale Of Securities ($70,045) $0 ($70,045) $0
($77,058) ($65,955) ($192,891) ($195,557)
Income (Loss) Before Provision
for Income Taxes &
Extraordinary Item ($156,625) ($167,717) ($400,776) ($439,116)
Income Tax
Expense (Benefit) - - - -
Income (Loss) Before
Extraordinary Item ($156,625) ($167,717) ($400,776) ($439,116)
Extraordinary Item -
Gain on Settlement - - $2,924,875 -
Net Income (Loss) ($156,625) ($167,717) $2,524,099 ($439,116)
Per Share
Earnings (Loss) ($0.01) ($0.02) $0.25
($0.04)
Weighted Average
Number of Common Shares
Outstanding 10,844,117 10,844,117 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)
Nine Months Ended December 31,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net Gain (Loss) $2,524,099 ($439,116)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation and amortization $15,858 $16,663
Provision for losses on
accounts receivable $0 $6,000
Changes in assets and liabilities:
Decrease(increase) in
marketable securities $70,045 $0
Decrease in accounts receivable $171,977 $738,347
Decrease(increase) in
prepaid expenses $2,972 $1,674
Increase(decrease) in current
maturities of long term debt ($1,362,087) $0
Increase(decrease) in
accounts payable ($185,404) ($190,145)
Increase(decrease) in
demand reserve deposits $168,909 $111,927
Increase(decrease) in
accrued expenses ($1,544,103) ($189,697)
Total adjustments ($2,661,833) $478,106
Net cash (used) provided by
operating activities ($137,734) $38,990
Cash flows from investing activities:
Capital expenditures ($3,250) ($20,141)
Payments received on
note receivable, related party $175,903 $0
Net cash provided by (used in)
investing activities $172,653 ($20,141)
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 $34,919
$18,849
Cash at beginning of period $27,026 $40,278
Cash at end of period $61,945 $59,127
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $17,941
$24,464
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 December 31, 1995 and the results
of operations for the three months and nine months ended December 31,
1995 and 1994 and changes in cash flows for the nine months ended
December 31, 1995 and 1994. The consolidated condensed financial
statements should be read in conjunction with the Company's audited
consolidated financial statements for the year ending March 31, 1995.
Note 2 - The results of operations for the three months and nine months
ended December 31, 1995 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
RESULTS OF OPERATIONS
Gross transactions (the total amount of billings submitted by Health
Care Providers during the period, as well as a portion of income from
other operations) decreased $14,725 or 2% and $372,366 or 17% for
the three months and nine months ended December 31, 1995 as
compared to the same periods in 1994 from $621,892 to $607,167
and from $2,222,407 to $1,850,041, respectively. Net revenues
decreased $5,644 or 5% and $39,443 or 10% for the three months
and nine months ended December 31, 1995 as compared to the same
periods in 1994 from $116,623 to $110,979 and from $400,271 to
$360,828, respectively. These decreases are a result of the Company
lacking working capital which would allow for an increase in the volume
of healthcare services financed by the Company for patients of
participating healthcare providers. The Company is now focusing on
providing office management services to healthcare providers and other
small businesses. 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 decreased $27,839 or 13% and
$75,117 or 12% for the three months and nine months periods ended
December 31, 1995 as compared to the same periods in 1994 from
$218,385 to $190,546 and from $643,830 to $568,713, respectively.
Management will continue to focus on controlling expenses in an
effort to become profitable.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital for the nine months ended December 31,
1995 of a negative $(304,952) decreased $2,862,544 from the March 31,
1995 balance of a negative $(3,167,496). The change is primarily due to
settlement reached with County Savings Bank, Resolution Trust
Corporation, Bartlett Schlumberger Capital Corporation and other parties.
Funds for the settlement, as well as, additional cash needed by the Company
was provided by Daro Group, a related party, in the form of marketable
securities. Through the liquidation of these securities the Company incurred
a loss of $70,045. The settlement agreement provided that the terms and
conditions of the settlement remain confidential. As a result of the
settlement, the Company realized one time extraordinary revenue related
to the forgiveness of debt of $2,924,875.
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: February 7, 1995 BY____[ SIGNED]____________
David C. Marx
President and
Chief Executive Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> DEC-31-1995
<CASH> 61,945
<SECURITIES> 0
<RECEIVABLES> 481,552
<ALLOWANCES> 69,413
<INVENTORY> 0
<CURRENT-ASSETS> 499,650
<PP&E> 290,420
<DEPRECIATION> 266,152
<TOTAL-ASSETS> 609,659
<CURRENT-LIABILITIES> 890,343
<BONDS> 0
<COMMON> 108,441
0
0
<OTHER-SE> (388,125)
<TOTAL-LIABILITY-AND-EQUITY> 609,659
<SALES> 360,828
<TOTAL-REVENUES> 360,828
<CGS> 0
<TOTAL-COSTS> 568,713
<OTHER-EXPENSES> 17,564
<LOSS-PROVISION> 70,045
<INTEREST-EXPENSE> 140,410
<INCOME-PRETAX> (400,776)
<INCOME-TAX> 0
<INCOME-CONTINUING> (400,776)
<DISCONTINUED> 0
<EXTRAORDINARY> 2,924,875
<CHANGES> 0
<NET-INCOME> 2,524,099
<EPS-PRIMARY> .25
<EPS-DILUTED> .25
</TABLE>
