<PAGE> 1
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: DECEMBER 31, 1996
OR
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number:0-21910
CONTINUCARE CORPORATION
(Exact name of registrant as specified in its charter)
FLORIDA 59-2716063
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 SOUTHEAST SECOND STREET
36TH FLOOR
MIAMI, FLORIDA 33131
(Address of principal executive offices)
(Zip Code)
(305) 350-7515
(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 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
--- ---
At February 5, 1997, the Registrant had 12,148,993 shares of $0.0001
par value common stock outstanding.
1
<PAGE> 2
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONTINUCARE CORPORATION
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1996 1996
==============================
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $13,323,009 $ 819,066
Accounts receivable, net of allowance for doubtful
accounts of $616,032 and $146,692, respectively 4,832,299 1,967,978
Note receivable 152,000
Prepaid expenses and other current assets 17,260 800
------------------------------
Total current assets 18,324,568 2,787,844
Property and equipment, net 603,895 4,806
Intangible assets, net 217,420 1,499
Other assets, net 69,717 70,747
------------------------------
Total assets $19,215,600 $ 2,864,896
==============================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 99,910 $ 270,374
Accrued expenses 694,294 44,210
Accrued interest payable 31,073 23,161
Unearned revenue 84,301 18,301
Current portion of capital lease obligation 20,491
Income and other taxes payable 1,152,117 412,686
------------------------------
Total current liabilities 2,082,186 768,732
Notes payable 641,500 655,000
Obligation under capital lease 225,606
------------------------------
Total liabilities 2,949,292 1,423,732
------------------------------
Minority interest 32,686
------------------------------
Commitments and contingencies
Shareholders' equity
Common stock; $0.0001 par value; 100,000,000 shares
authorized, 12,144,993 issued and outstanding 1,214 100
Additional paid-in capital 14,811,854 763,769
Retained earnings 1,453,240 644,609
------------------------------
Total shareholders' equity 16,266,308 1,408,478
------------------------------
Total liabilities and shareholders' equity $19,215,600 $ 2,864,896
==============================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
2
<PAGE> 3
CONTINUCARE CORPORATION
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED DECEMBER 31, 1996
=======================
(UNAUDITED)
<S> <C>
Revenues $ 3,083,528
Expenses
Payroll and employee benefits 1,391,548
Provision for bad debt 243,129
Professional fees 277,711
General and administrative 187,501
Depreciation and amortization 33,310
-----------
Total expenses 2,133,199
-----------
Income from operations 950,329
-----------
Other income (expenses)
Interest income 48,218
Minority interest (83,186)
Loss on purchase of minority interest (9,081)
-----------
Other expenses (44,049)
Income before taxes 906,280
Provision for income taxes 367,157
-----------
Net income $ 539,123
===========
Earnings per common share and common equivalent share $ 0.04
===========
Earnings per common share and common equivalent share
assuming full dilution $ 0.04
===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE> 4
CONTINUCARE CORPORATION
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED DECEMBER 31, 1996
=======================
(UNAUDITED)
<S> <C>
Revenues $ 6,006,974
Expenses
Payroll and employee benefits 2,759,458
Provision for bad debt 469,340
Professional fees 467,451
General and administrative 232,056
Depreciation and amortization 40,470
-----------
Total expenses 3,968,775
-----------
Income from operations 2,038,199
-----------
Other income (expenses)
Interest income 65,370
Minority interest (162,233)
Loss on purchase of minority interest (9,081)
-----------
Other expenses (105,944)
Income before taxes 1,932,255
Provision for income taxes 748,874
-----------
Net income $ 1,183,381
===========
Earnings per common share and common equivalent share $ 0.12
===========
Earnings per common share and common equivalent share
assuming full dilution $ 0.12
===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE> 5
CONTINUCARE CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOW
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED DECEMBER 31, 1996
-----------------------
(UNAUDITED)
<S> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income $ 1,183,381
Adjustments to reconcile net income to cash provided by
operating activities:
Depreciation and amortization 40,470
Bad debt expense 469,340
Loss on purchase of minority interest 9,081
Income applicable to minority interest 162,233
Changes in assets and liabilities, excluding
the effect of acquisitions:
Increase in accounts receivable (3,333,661)
Increase in prepaid expenses and other current assets (168,460)
Increase in intangible assets (217,780)
Decrease in other assets 1,030
Increase in accounts payable and accrued expenses 718,831
Increase in accrued interest payable 7,912
Increase in unearned revenue 66,000
Increase in income and other taxes payable 739,431
------------
Net cash used in operating activities (322,192)
------------
CASH FLOW FROM INVESTING ACTIVITIES
Property and equipment additions (637,700)
------------
Net cash used in investing activities (637,700)
------------
CASH FLOW FROM FINANCING ACTIVITIES
Beechwood Repurchase (375,000)
Principal repayments under capital lease obligation (6,614)
Proceeds received from Private Placement 6,600,000
Proceeds from acceleration of Series A Warrants 5,412,060
Costs incurred associated with Private Placement & Merger (225,000)
Proceeds from issuance of common stock 2,058,389
------------
Net cash provided by financing activities 13,463,835
------------
Net increase in cash and cash equivalents 12,503,943
Cash and cash equivalents at beginning of period 819,066
------------
Cash and cash equivalents at end of period $ 13,323,009
============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE> 6
CONTINUCARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND JUNE 30, 1996
(UNAUDITED)
NOTE 1 - UNAUDITED INTERIM INFORMATION
The accompanying interim consolidated financial data for Continucare Corporation
("Continucare" or the "Company") are unaudited; however, in the opinion of
management, the interim data include all adjustments necessary for a fair
presentation of the results for the interim period. 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 at the date of the financial statements and the reported
amounts of revenue and expenses during the reporting period. Actual results
could differ from those estimates.
The results of operations for the three months and six months ended December 31,
1996 are not necessarily indicative of the results to be expected for the year
ending June 30, 1997.
The interim unaudited consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and notes thereto
for the period from February 12, 1996 (inception) to June 30, 1996 as set forth
in the Company's Form 10-KSB/A.
NOTE 2 - MERGER
On August 9, 1996, the Company signed a definitive Agreement and Plan of Merger
(the "Merger Agreement") with Zanart Subsidiary, Inc. ("ZSI"), a wholly-owned
subsidiary of the Company, and Continucare Acquisition Corp. (formerly known as
Continucare Corporation), a Florida corporation ("CAC"). The Merger Agreement
provided for the merger (the "Merger") of ZSI with and into CAC. Upon
consummation of the Merger, which occurred on September 11, 1996 (the "Closing
Date"), the separate existence of ZSI terminated, CAC became a wholly-owned
subsidiary of the Company, the Company agreed to sell or otherwise dispose of
its assets (other than cash) and discharge all liabilities relating to its
existing licensing business prior to December 11, 1996 and the Company's Board
of Directors and management became comprised of designees of CAC. On October 8,
1996, the Company changed its corporate name to Continucare Corporation. Prior
to the Merger, CAC was a development stage company established for the purpose
of managing mental and physical rehabilitation health care programs.
NOTE 3 - NOTE RECEIVABLE
Pursuant to the Merger, the operations of the licensing business of pre-merger
Zanart Entertainment, Inc. ("Zanart") terminated on December 11, 1996. In
connection with the winddown of pre-Merger Zanart operations, in November 1996,
certain assets and related liabilities of Zanart were sold to a third party for
$250,000 of which $152,000 is evidenced by a note receivable and $98,000 by the
assumption of liabilities. The note receivable is due in equal monthly
installments over one year and is a component of current assets in the
accompanying unaudited consolidated balance sheet as of December 31, 1996.
6
<PAGE> 7
NOTE 4 - INTANGIBLE ASSETS
As a result of the Merger and the listing of shares of the Company's common
stock, $.0001 par value (the "Common Stock"), issued to the former shareholders
of pre-merger Continucare Corporation on the American Stock Exchange, the
Company incurred certain costs which were capitalized as organization costs.
These are being amortized using the straight line method over ten years.
NOTE 5 - LOSS ON PURCHASE OF MINORITY INTEREST
Effective December 31, 1996 (the "Effective Date"), the Company purchased the
25% interest (the "Minority Interest") in a subsidiary, Continucare Medical Care
Network, Inc. ("CMCN") held by a third party owner. The Minority Interest was
purchased in exchange for 40,000 shares of Continucare common stock, $.0001 par,
having a market value of $204,000 on the Effective Date. As a result, the
Minority Interest on Continucare's consolidated financial statements,
approximately $195,000 as of the Effective Date, was eliminated and a loss on
the purchase of minority interest of approximately $9,000 was recorded.
NOTE 6 - STOCK OPTION PLAN
In December 1996, the Company's shareholders approved the Company's Amended and
Restated 1995 Stock Option Plan (the "Stock Option Plan") covering employees of
the Company. The Stock Option Plan authorizes 1,200,000 shares for issuance upon
the exercise of stock options. The Stock Option Plan authorizes (i) the granting
of Incentive or Non-Qualified stock options to purchase Common Stock to
employees of the Company determined to contribute significantly to the
successful performance of the Company, (ii) the provision of loans for the
purpose of financing the exercise of options and the amount of taxes payable in
connection therewith, and (iii) the use of already owned Common Stock as payment
of the exercise price for options granted under the Stock Option Plan.
7
<PAGE> 8
Under the terms of the Stock Option Plan, the exercise price for options granted
is required to be at least the fair market value of the Company's common stock
on the date of grant.
NOTE 7 - EARNINGS PER SHARE
The treasury stock method was used to determine the dilutive effect of the
options and warrants on earnings per share data.
Earnings per share and the weighted average number of shares outstanding used in
the computation are summarized elsewhere herein.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
The Company entered into new employment contracts with two of its executive
officers which became effective in September 1996. The agreements are for terms
of three years (with one agreement providing for one additional year term for
each year of service by such executive). The agreements also provide for payment
of bonuses and one agreement provides for a one-time grant of stock options to
purchase 100,000 shares of Common Stock at $5.00, vesting at a rate of 20% per
year.
As provided for in the management contracts with the Company's providers, the
Company maintains annual claims made policies for general and professional
liability insurance jointly with each of the providers. Coverage under the
policies are $1,000,000 per incident and $3,000,000 aggregate. It is the
Company's intention to renew such coverage on an on-going basis.
The Company has entered into consulting agreements with a company controlled by
Mr. Douglas Miller and a company controlled by Mr. Barry Goldstein
(collectively, the "Consulting Agreements"). Messrs. Miller and Goldstein served
as executive officers of CAC prior to the Merger. Each of the Consulting
Agreements, which are effective as of the date of the Merger, contain the
following terms: (i) three year term, (ii) annual payments, payable
semi-monthly, of approximately $325,000, (iii) ability of the Company to
terminate the agreement without "cause" (as defined) with 30 days' notice,
provided that the consultant will receive a termination payment equal to the
amount otherwise payable under the Consulting Agreement through the end of the
term over the period of the remaining term of the agreement, and (iv) ability of
the Company to terminate the agreement for "cause" at any time with no payment
due to the consultant.
NOTE 9 - RECENT DEVELOPMENTS
On November 12, 1996, the Company entered into an asset purchase agreement (the
"Asset Purchase Agreement") to purchase certain assets of a Medicare certified
comprehensive outpatient rehabilitation facility (the "CORF"). The CORF provides
various physical rehabilitation services to patients in the South Florida area
and bills the Medicare program for the cost of covered CORF services rendered to
Medicare beneficiaries. Under the terms of the Asset Purchase Agreement, the
Company assumed the Medicare Provider Number of the CORF in exchange for $85,000
(the "Purchase Price"). The Purchase Price consisted of cash at closing of
$42,500 and a promissory note (the "Promissory Note") in the amount of $42,500.
The Promissory Note, which bears interest at 10% per annum, provides for full
payment of all principal and accrued interest on November 12, 1997. Interest
expense and accrued interest for the quarter ended December 31, 1996 was $8,500.
Concurrent with the Asset Purchase Agreement for the CORF, the Company entered
into an equipment lease agreement (the "Equipment Lease") with Aventura
Comprehensive Rehabilitation Center, Inc. whereby the Company leases certain
physical therapy and rehabilitation equipment,
8
<PAGE> 9
furniture, fixtures and other personal property located at the CORF. The
Equipment Lease provides for monthly payments of $5,300. Payments under the
Equipment Lease for the quarter ended December 31, 1996 were approximately
$10,700.
On November 20, 1996, the Company, pursuant to the terms of that certain Series
A Warrant Agreement, dated as of May 11, 1995 (the "Warrant Agreement"), between
the Company and Fidelity Transfer Company (the prior Warrant Agent), accelerated
the exercise period for each of the Company's issued and outstanding Series A
Warrants (the "Warrants"). The exercise period was set to expire on December 20,
1996. As a result of the acceleration of the exercise period, approximately
$5,400,000 was received by the Company during the quarter. The exercise of the
Warrants is reflected in the equity section of the accompanying unaudited
consolidated balance sheet as of December 31, 1996.
NOTE 10 - SUBSEQUENT EVENTS
On February 11, 1997, the Company entered into a management agreement with Bally
Total Fitness whereby the Company will provide outpatient rehabilitation
services at Bally Total Fitness centers. During the next three years, the
Company expects to open outpatient rehabilitation centers at Bally facilities
in Florida, Texas, Illinois and Ohio.
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Pre-Merger Continucare was incorporated on February 12, 1996, in the State of
Florida. Continucare develops and manages mental and physical rehabilitation
health care programs that offer a continuum of mental and physical
rehabilitation health services ranging from partial hospitalization care to day
treatment and outpatient services. Continucare offers a comprehensive mental
health care product line by providing the following types of services to general
acute care and psychiatric hospitals, community mental health centers and
comprehensive outpatient rehabilitative facilities: clinical development,
marketing, financial management, operational oversight, human resources support,
quality assurance and outcome management.
On August 9, 1996, the Company signed the Merger Agreement with ZSI and CAC
(formerly known as Continucare Corporation). The Merger Agreement provided for
the Merger of ZSI with and into CAC. Upon the consummation of the Merger on the
Closing Date, the separate existence of ZSI terminated, CAC became a
wholly-owned subsidiary of the Company, the Company agreed to sell or otherwise
dispose of its assets (other than cash) and discharge all liabilities relating
to it's existing licensing business prior to December 11, 1996 and the Company's
Board of Directors and management became comprised of designees of CAC. On
October 8, 1996, the Company changed its corporate name to Continucare
Corporation.
As previously noted, pre-Merger Continucare commenced operations on February 12,
1996. Accordingly, no comparative data is available for the three and six months
ended December 31, 1996. Further, management does not believe that its results
for the three and six month periods ending December 31, 1996 are indicative of
the Company's future performance. Accordingly, the Company has limited its
discussions with respect to this area.
This Form 10-QSB contains certain statements of a forward-looking nature
relating to future events or the future financial performance of the Company.
Such statements should specifically be considered in light of various factors
identified in this Form 10-QSB, including the matters set forth below, which
could cause actual results to differ materially from those indicated by such
forward-looking statements.
Revenues
Total revenues were approximately $3,084,000 and $6,007,000 for the three and
six months ended December 31, 1996, respectively. Revenues from the employee
leasing operations and the billing service, for which certain assets, contracts
and liabilities were acquired effective May 1, 1996, represent $813,000 and
$1,907,000 of total revenues for the three and six month periods ended December
31, 1996, respectively. In addition, total revenues for the quarter ended
December 31, 1996 includes approximately $173,000 related to the operation of a
CORF acquired by the Company during the current quarter. Prior to acquiring the
CORF, the Company had entered into a management agreement with the CORF under
which the Company received a monthly management fee. Total revenues related to
the CORF for the six months ended December 31, 1996 were approximately $207,000.
Expenses
Payroll and employee benefits were approximately $1,392,000 and $2,759,000 for
the three and six months ended December 31, 1996, respectively, which
represented 45.1% and 45.9% of total revenues, respectively. Of total
consolidated payroll and employee benefits for the quarter ended December 31,
1996, approximately $666,000 or 47.8% was payroll and benefits paid to employees
of the employee leasing operation. Payroll and benefits for employees of the
employee leasing operation for the six months ended December 31, 1996 were
$1,638,000 or 59.4% of total payroll and employee benefits for that period.
10
<PAGE> 11
Continucare's provision for bad debt was approximately $243,000 and $469,000 for
the three and six months ended December 31, 1996, respectively, which
represented 7.9% and 7.8% of total revenues, respectively.
Professional fees were approximately $278,000 for the quarter ended December 31,
1996 and $467,000 for the six months ended December 31, 1996. Professional fees
represented 9.0% and 7.8% of total revenues for the three and six months ended
December 31, 1996, respectively. Total professional fees for the three and six
months ended December 31, 1996 include $105,000 and $210,000, respectively,
under a subcontract agreement with a third-party.
General and administrative expenses ("SG&A") were approximately $188,000 and
$232,000 for the three and six months ended December 31, 1996, respectively. As
a percentage of total revenues, SG&A was approximately 6.1% and 3.9% for the
three and six months ended December 31, 1996, respectively, and was comprised of
expenses such as rent, utilities and supplies.
Interest
Net interest income was approximately $48,000 and $65,000 for the three and six
months ended December 31, 1996, respectively and is primarily attributable to
interest earned on the $6,600,000 raised by the Company as a result of the
Private Placement that took place in August 1996 and the $5,400,000 raised by
the Company as a result of the acceleration of the exercise period of the
Company's Series A Warrants which was announced on November 20, 1996 and expired
on December 20, 1996.
Minority Interest
Minority interest was approximately $83,000 and $162,000 for the three and six
months ended December 31, 1996, respectively, and represents a 25% interest
held by a third party in the net income of a subsidiary of Continucare.
Effective December 31, 1996, the Company purchased the 25% interest in a
subsidiary, Continucare Medical Care Network, Inc. held by a third party owner.
As a result, the Minority Interest on Continucare's consolidated financial
statements as of December 31, 1996 of approximately $195,000 was eliminated
and a loss on the purchase of minority interest of approximately $9,000 was
recorded.
Provision for Income Taxes
The provision for income taxes was $367,000 and $749,000 for the three and six
months ended December 31, 1996, respectively, as a result of income before taxes
of approximately $906,000 for the three months ended December 31, 1996 and
$1,932,000 for the six months ended December 31, 1996. The provision for income
taxes was calculated at a rate of approximately 40% which estimates the blended
statutory federal and state income tax rates.
Net Income
Continucare had net income of approximately $539,000 and $1,183,000 for the
three and six months ended December 31, 1996, respectively. As a percentage of
total revenues, net income was 17.5% for the three months ended December 31,
1996 and 19.7% of total revenues for the six months ended December 31, 1996.
11
<PAGE> 12
Earnings Before Interest, Taxes, Depreciation and Amortization
EBITDA is not presented as an alternative to operating results or cash flow from
operations as determined by generally accepted accounting principles ("GAAP"),
but rather to provide additional information related to the ability of
Continucare to meet current trade obligations and debt service requirements.
EBITDA should not be considered in isolation from, or construed as having
greater importance than, GAAP operating income or cash flows from operations as
a measure of an entity's performance.
EBITDA was approximately $900,000 and $1,916,000 for the three and six months
ended December 31, 1996, respectively.
Liquidity and Capital Resources
For the six month period ended December 31, 1996, net cash used in operating
activities was approximately $322,000 primarily as a result of the increase in
accounts receivable of approximately $3,334,000 during the period. During this
time, the Company had been in the process of obtaining Medicare certification
for five of the programs it manages which would facilitate the collection of the
related accounts receivable. The Company obtained such certification for four of
the five programs in January 1997 and is actively pursuing the final
certification. The Company anticipates that its receivables position will
improve by the end of the current fiscal year as collections are enhanced by the
certification discussed above. For the six month period ended December 31, 1996,
net cash used in investing activities was approximately $638,000 and net cash
provided by financing activities was approximately $13,464,000.
The Company's working capital was approximately $16,242,000, with a current
ratio of 8.8 to 1, at December 31, 1996. The Company's working capital and
current ratio at June 30, 1996 were $2,019,000 and 3.6 to 1, respectively.
The improvement in working capital and the current ratio are due to cash
generated by the Company from the Private Placement of 3,300,000 shares at $2.00
per share in August 1996, the cash received from pre-Merger Zanart as a result
of the Merger in September 1996, and the cash received from acceleration of the
exercise period of the Series A Warrants.
The Company anticipates that the funds raised through the Private Placement, the
cash received from pre-Merger Zanart as a result of the Merger, and the cash
received from the acceleration of the exercise period of the Series A Warrants
together with cash flow generated by operations, will be used to make strategic
acquisitions in order to grow its operations and pursue its business strategy.
Based upon current expectations, the Company believes that cash flow from
operations will be sufficient to meet its working capital requirements through
the end of the current fiscal year, although there can be no assurance that it
will be able to do so.
12
<PAGE> 13
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's Annual Meeting of Shareholders held on December 2, 1996, the
shareholders of the Company voted to elect Charles M. Fernandez, Dr. Phillip
Frost, Richard B. Frost, Arthur M. Goldberg, Mark J. Hanna, and Dr. Michael C.
Piercey as Directors of the Company.
The number of votes cast for or withheld, and the number of broker non-votes,
with respect to each of the nominees were as follows:
<TABLE>
<CAPTION>
Nominee For Against Withhold Authority Abstentions Broker Non-Votes
- -------------------- --------- ------- ------------------ ----------- ----------------
<S> <C> <C> <C> <C> <C>
Charles M. Fernandez 8,230,608 - - - 2,972,375
Dr. Phillip Frost 8,230,608 - - - 2,972,375
Richard B. Frost 8,230,608 - - - 2,972,375
Arthur M. Goldberg 8,230,608 - - - 2,972,375
Mark J. Hanna 8,230,608 - - - 2,972,375
Dr. Michael C. Piercey 8,230,608 - - - 2,972,375
</TABLE>
During the shareholders' meeting, the candidacy of Dr. Elias Ghanem as a
Director was raised. Dr. Ghanem received 7,639,933 votes in favor of his
appointment to the Board of Directors.
In addition, the shareholders of the Company voted to adopt the Company's
Amended and Restated 1995 Stock Option Plan (the "Stock Option Plan") which
authorizes 1,200,000 shares of Common Stock for issuance upon exercise of stock
options. The shareholders cast 8,230,508 votes in favor of the Stock Option
Plan, -0- votes against, -0- shareholders withheld authority, 100 shareholders
abstained, and there were 2,972,475 broker non-votes.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
11 Statement re: computation of per share earnings
27 Financial Data Schedule
(b) Reports on Form 8-K:
The Company filed two Form 8-Ks dated November 15, 1996 and November
20, 1996, respectively, during the Company's second quarter of fiscal
1997. The report dated November 15, 1996 reported under Item 4 of Form
8-K the dismissal by the Company of Arthur Andersen LLP, Zanart's
independent accountants, and the appointment of Deloitte & Touche LLP
as the Company's independent accountants for fiscal year 1997. The
report dated November 20, 1996 reported under Item 5 of Form 8-K the
acceleration of the Company's Series A Warrants.
13
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Company has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
CONTINUCARE CORPORATION
Dated: February 14, 1997 By: /s/ CHARLES M. FERNANDEZ
--------------------------
Charles M. Fernandez, Chairman,
Chief Executive
Officer and President
Dated: February 14, 1997 By: /s/ MARIA T. SOSA
--------------------
Maria T. Sosa, Principal
Accounting Officer
14
<PAGE> 1
EXHIBIT 11
CONTINUCARE CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE
MONTHS ENDED
DECEMBER 31, 1996
-----------------
<S> <C>
Net income $ 539,123
===========
PRIMARY EARNINGS PER SHARE
Number of shares:
Weighted average common shares outstanding (1) 12,108,667
Add: Net additional shares issuable (2) 29,138
-----------
Weighted average shares used in the per share computation 12,137,805
===========
Earnings per common and common equivalent share $ 0.04
===========
FULLY DILUTED EARNINGS PER SHARE
Number of shares:
Weighted average common shares outstanding (1) 12,108,666
Add: Net additional shares issuable (2) 18,824
-----------
Weighted average shares used in the per share computation 12,127,490
===========
Earnings per common and common equivalent share $ $0.04
===========
</TABLE>
(1) Includes warrants exercised during the period as of the beginning of the
period.
(2) Assumes exercise of outstanding common stock equivalents (options) at the
beginning of the period.
<PAGE> 2
EXHIBIT 11
CONTINUCARE CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
DECEMBER 31, 1996
-----------------
<S> <C>
Net income $ 1,183,381
===========
PRIMARY EARNINGS PER SHARE
Number of shares:
Weighted average common shares outstanding (1) 10,053,999
Add: Net additional shares issuable (2) 10,000
-----------
Weighted average shares used in the per share computation 10,063,999
===========
Earnings per common and common equivalent share $ 0.12
===========
FULLY DILUTED EARNINGS PER SHARE
Number of shares:
Weighted average common shares outstanding (1) 10,053,998
Add: Net additional shares issuable (2) 18,824
-----------
Weighted average shares used in the per share computation 10,072,822
===========
Earnings per common and common equivalent share $ 0.12
===========
</TABLE>
(1) Includes warrants exercised during the period as of the beginning of the
period.
(2) Assumes exercise of outstanding common stock equivalents (options) at the
beginning of the period.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 13,323,009
<SECURITIES> 0
<RECEIVABLES> 5,448,331
<ALLOWANCES> 616,032
<INVENTORY> 0
<CURRENT-ASSETS> 18,324,568
<PP&E> 642,788
<DEPRECIATION> 38,893
<TOTAL-ASSETS> 19,215,600
<CURRENT-LIABILITIES> 2,082,186
<BONDS> 887,597
0
0
<COMMON> 1,214
<OTHER-SE> 16,265,094
<TOTAL-LIABILITY-AND-EQUITY> 19,215,600
<SALES> 0
<TOTAL-REVENUES> 3,083,528
<CGS> 0
<TOTAL-COSTS> 1,391,548
<OTHER-EXPENSES> 498,522
<LOSS-PROVISION> 243,129
<INTEREST-EXPENSE> 32,309
<INCOME-PRETAX> 906,280
<INCOME-TAX> 367,157
<INCOME-CONTINUING> 539,123
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 539,123
<EPS-PRIMARY> 0.04
<EPS-DILUTED> 0.04
</TABLE>
