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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number 0-16286
MEDPLUS CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 95-4082020
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(State or other jurisdiction of (IRS Employer
incorporation or organization) identification number)
8 S. NEVADA AVE., SUITE 500, COLORADO SPRINGS, CO 80903
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(Address of principle executive offices) (Zip Code)
(719) 575-0044
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(Registrant's telephone number, including area code)
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(Former name, former address and former
fiscal year, if changed since last report)
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 twelve months (or for 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
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APPLICABLE ONLY TO ISSUERS INVOLVED
IN BANKRUPTCY PROCEEDINGS DURING
THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by section 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution requirements under a plan
confirmed by a court Yes No
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APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each classes of common stock, as
of the latest practicable date.
CLASS OUTSTANDING AT OCTOBER 7, 1996
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Common Stock, Par-Value 9,529,740
$0.001 per share
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MEDPLUS CORPORATION
REPORT ON FORM 10-Q
TABLE OF CONTENTS
PART I PAGE NUMBER
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ITEM 1. - FINANCIAL INFORMATION
Balance Sheets at June 30, 1996 and March 31, 1996... 3
Statements of Operations for the Three Months
Ended June 30, 1996 and June 30, 1995.............. 5
Statements of Cash Flows for the Three Months Ended
June 30, 1996 and June 30, 1995.................... 6
Notes to Financial Statements........................ 7
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL
CONDITION AND RESULTS OF OPERATIONS................ 9
PART II
Other Information.................................... 11
Signature Page....................................... 13
2
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PART I
ITEM 1. FINANCIAL INFORMATION
MEDPLUS CORPORATION
CONSOLIDATED BALANCE SHEETS
ASSETS JUNE 30, 1996 MARCH 31, 1996
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(UNAUDITED)
CURRENT ASSETS:
Cash and cash equivalents $18,682 $ 7,778
Accounts Receivable 25,517 23,639
Prepaid expenses and other
current assets 5,572 515
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Total current assets 49,771 31,932
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PROPERTY:
Office equipment 16,966 16,966
Furniture and fixtures 7,983 3,033
Leasehold improvements 1,358 0
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Total 26,307 19,999
Less accumulated depreciation 11,322 10,072
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Net property 14,985 9,927
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OTHER (Note 2) 3,958 4,375
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TOTAL ASSETS $68,714 $46,234
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See accompanying notes to financial statements
3
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MEDPLUS CORPORATION
CONSOLIDATED BALANCE SHEETS CONTINUED
LIABILITIES AND SHAREHOLDERS' EQUITY JUNE 30, 1996 MARCH 31, 1996
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(UNAUDITED)
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 307,767 $ 313,620
Deferred salaries 3,224 8,073
Current portion of notes payable to
related parties 222,470 205,470
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Total current liabilities 533,461 527,163
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Long-term liabilities 0 0
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Total liabilities 533,461 527,163
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SHAREHOLDERS' EQUITY:
Preferred stock, $.001 par value;
authorized 2,000,000 shares;
no shares outstanding
Common stock, $.001 par value;
authorized 30,000,000 shares;
issued and outstanding, 9,529,740
and 8,895,278 shares at June 30, 1996
and March 31, 1996, respectively. 23,138 22,789
Additional paid in capital 7,055,192 6,851,145
Accumulated deficit (7,543,077) (7,355,430)
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Total shareholders' equity (464,747) (480,929)
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TOTAL LIABILITIES & SHAREHOLDERS'
EQUITY $ 68,714 $ 52,804
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See accompanying notes to financial statements
4
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MEDPLUS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTH PERIOD ENDED
JUNE 30,
------------------------
1996 1995
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REVENUES: $ 46,444 $ 13,403
EXPENSES:
General & Administrative 166,339 30,318
Sales and Marketing 67,752 45,928
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Total expense 234,091 76,246
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Operating loss (187,647) (62,483)
Net loss (187,647) (62,483)
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Net loss per share (0.03) (0.02)
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Weighted average number of common
shares outstanding 6,913,021 3,953,268
See accompanying notes to financial statements
5
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MEDPLUS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTH PERIOD ENDED
JUNE 30,
------------------------
1996 1995
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CASH FLOWS (USED BY) OPERATING ACTIVITIES:
Net loss $(187,647) $(62,843)
Adjustments to reconcile net income (loss) to
net cash from (used) by operating activities:
Depreciation and amortization 1,667 1,072
(Increase) decrease in assets:
Accounts receivable (1,878) 0
Prepaid expenses and other current assets (5,057) 0
Increase (decrease) in liabilities:
Accounts payable and accrued expenses (5,853) 10,100
Deferred salaries (4,849) 0
Total cash provided (used) by operating activities (203,617) (51,323)
CASH FLOWS FROM (USED) BY INVESTING ACTIVITIES:
Investment in property, plant and equipment (6,308) 0
Proceeds from sale of equipment 0 5,000
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Total cash provided (used) by investing activities (6,308) 5,000
CASH FLOWS FROM (USED) BY FINANCING ACTIVITIES:
Proceeds from purchase of short-term debt 44,000 0
Payment on short-term debt (27,000) 0
Payment on long-term debt 0 (6,000)
Proceeds from issuance of common stock 203,829 39,500
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Total cash from (used) by financing activities 220,829 33,500
Increase (decrease) in cash and cash equivalents 10,904 (13,171)
Cash and cash equivalents at beginning of period 7,778 14,212
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Cash and cash equivalents at end of period $ 18,682 $ 1,041
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See accompanying notes to financial statements
6
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MEDPLUS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. GOING CONCERN
The accompanying unaudited consolidated financial statements have been
prepared on a going concern basis, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of
business. As reflected in the Company's most recent 10-K for the fiscal
year ended March 31, 1996, the Company has incurred significant losses from
operations during the years ended March 31, 1996, 1995 and 1994 and at
March 31, 1996, 1995 and 1994 have negative working capital and negative
shareholders' equity. The consolidated financial statements do not include
any adjustments relating to the recoverability and classification of
recorded asset amounts or the amounts and classification of liabilities
that might be necessary should the Company be unable to continue as a going
concern. The Company's continuation as a going concern is dependent upon
its ability to generate sufficient cash to meet its obligations on a timely
basis, to obtain financing as may be required, and ultimately to attain
successful operations. Management is continuing its efforts to obtain
additional funds need for the successful operation of the Company.
2. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of MEDPLUS
CORPORATION contain all adjustments (consisting of only normal recurring
adjustments) which, in the opinion of management are necessary to present
fairly the financial position of the Company as of the periods ended June
30, 1996 and March 31, 1996, and the results of operations and its cash
flows for the three month periods ended June 30, 1996 and June 30, 1995.
Certain information and footnote disclosures normally included in financial
statements have been condensed or omitted pursuant to rules and regulations
of the Securities and Exchange Commission, although the registrant believes
that the disclosures in the consolidated financial statements are adequate
to make the information presented not misleading.
INCOME TAXES - As of June 30, 1996 the Company has net operating loss
carry forwards of approximately $2,051,000 which can be utilized in future
periods to offset future taxable income. The net operating loss carry
forwards begin expiring in the year 2000. Due to the Company's net
operating loss position and carry forwards the adoption of SFAS 109 has no
material impact.
The unaudited consolidated financial statements included herein should be
read in conjunction with the consolidated financial statements of the
Company for the year ended March 31, 1996, included in the Company's Annual
Report on Form 10-K.
3. COMPUTATION OF NET LOSS PER SHARE
Net loss per share is computed by dividing net loss by the weighted average
number of shares of common stock outstanding. Options and warrants are not
included because their effect would be antidilutive.
7
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4. NOTES PAYABLE TO RELATED PARTIES
Notes payable at June 30, 1996 and March 31, 1996 consists of the
following:
JUNE 30, 1996 MARCH 31, 1996
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(UNAUDITED)
Unsecured note payable to Company
director bearing interest at 10%
per annum, $10,000 together with
accrued interest and $15,000 together
with accrued interest, is payable upon
the Company obtaining $100,000 and
$500,000 in equity financing,
respectively. $ 25,000 $ 25,000
Unsecured note payable to the former
President and director of the Company
bearing interest at 18% per annum. The
note is past due and is currently under
dispute. 40,500 40,500
Unsecured note payable to a former
shareholder and officer of the Company.
The note is non-interest bearing, due in
equal monthly installments of $2,000 from
May 1995 through April 1997 in addition
to a balloon payment of $123,868 payable
in May 1997. This note has been
discounted $24,868 and $46,256 at June 30,
1996 and March 30, 1996, respectively, to
reflect an effective interest rate of 18%.
Payments on this note are currently in
default. 137,970 139,970
Unsecured note payable to a employee of the
Company bearing interest at 11% and is
due and payable in October, 1996. 19,000 0
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Total $222,470 $205,470
Less current portion 222,470 205,470
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Long-term portion $ -- $ --
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As of June 30, 1996, all notes are considered current.
8
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1996, the Company had working capital of ($483,690) compared to
working capital of ($495,231) at March 31, 1996. The increase in working
capital is due primarily to the increase in revenues during the period ended
June 30, 1996. The Company's current liabilities are higher than its assets
due primarily to borrowings in the form of promissory notes from related
parties along with accrued payables and expenses.
The Company's liquidity position is severely strained. Liquidity needs are
currently being met from revenues and short-term borrowing in the form of
promissory notes. Because the Company has not achieved positive cash flow
from its operating activities, the Company's ability to continue operations
is dependent upon its ability to raise additional equity and/or debt
financing. This and other factors raise substantial doubt as to the Company's
ability to continue as a going concern. Management believes the Company needs
approximately $750,000 to $1,000,000 in equity or debt financing in order to
sustain operations for the next twelve months following the period ended June
30, 1996. As of June 30, 1996, the Company was anticipating a capital
infusion of $10 million to be received from Starboard Holding Co.
("Starboard") in connection with its planned purchase of 28,125,000 shares of
MEDPLUS common stock, pursuant to a previously executed letter of intent.
However, Starboard was unable to perform under the terms of the letter of
intent and management therefore is considering alternative sources of
capital. Management is continuing its efforts to raise equity financing in
order to meet its long-term and short-term liquidity needs. Although the
Company is actively engaged in activities with intent to raise equity and/or
debt financing in order to meet its long-term liquidity needs, there can be
no assurance that the Company will be able to consummate the transaction
and/or raise the additional financing necessary for continuing operations. As
of June 30, 1996 there were no known demands, commitments or uncertainties
affecting cash flows other than normal accounts payable demands.
RESULTS OF OPERATIONS
Revenue derived from the sale of the Company's services increased 247% from
$13,403 during the three month period ended June 30, 1995 to $46,444 during
the three month period ended June 30, 1996. The Company's increase in
revenues for the three month period ended June 30, 1996 is due to increased
loan approval rates and loan volume generation. In November, 1995, the
Company signed an agreement with CareCard Northwest-TM- ("CareCard") to
provide CareCard's two health care credit cards, CareCard Northwest-TM- and
CareLine Northwest-TM- to health care, dental care, death care and veterinary
care providers across the nation. The CareCard programs are financed under an
agreement between CareCard and United States Bank of Oregon, a U.S. Bancorp
Company, Member FDIC. It is expected that this relationship with CareCard
will significantly improve the Company's approval rates to its health care
providers across the nation.
Also, in November, 1995, the Company acquired Surgical Funding Group ("SFG")
located in Irvine, California. SFG is a provider of health care financing to
plastic surgeons nationwide. Revenues generated by SFG since its acquisition
in November total $77,964.
In April, 1996, the Company acquired Yes Charge located in Ventura,
California. Yes Charge is a provider of health care financing to the dental
care community nationwide. Revenues generated by Yes Charge since its
acquisition in April total $7,161. Without the acquisition of SFG and Yes
Charge, revenues for the period ended June 30, 1996 would have totaled $6,383.
Under the Company's current contract with CareCard the Company no longer
charges annual fees to its providers.
9
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General and administrative expenses increased 449% to $166,339 during the
three month period ended June 30, 1996 as compared to $30,318 during the
three month period ended June 30, 1995. The increase of 449% is due primarily
to approximately $80,000 in start-up expense for the Company's Occupational
Health Care Clinic in Colorado Springs, Colorado (See Party II, Item 5 OTHER
INFORMATION).
Sales and marketing expenses increased 48% to $67,752 during the three month
period ended June 30, 1996 as compared to $45,928 during the three month
period ended June 30, 1995. The increase of 48% is due entirely to sales and
marketing expenses associated with the acquisition of SFG and Yes Charge.
10
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is in litigation with a former president of the Company
who alleges failure of the Company to make certain payments under a
promissory note in the purported amount of $70,000 to $90,000. Management is
vigorously contesting this litigation, has denied any failure to pay and has
asserted certain counter claims against the former president. No amounts are
recorded in the financial statements of the Company, other than the $40,500
note payable (and related accrued interest) to the former president, in
anticipation of any losses pursuant to this litigation.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
None
ITEM 5. OTHER INFORMATION
In July, 1996 the Company's wholly owned subsidiary, Patient Plus
Occupational Health Centers Inc. ("Patient Plus"), opened an occupational
health care clinic in Colorado Springs, Colorado. Patient Plus' clinic
intends to focus its marketing efforts primarily toward employers and
employee groups ranging in size from large to small businesses. Employers
have experienced a continuing escalation in Worker's Compensation costs and
the Company expects that employers will seek ways to reduce their Worker's
Compensation costs and to increase their employees productivity and safety.
Along with the delivery of Occupational Health Care to employees injured in
the workplace, Patient Plus clinics will also provide case management,
physical therapy and other services and programs. Patient Plus intends to
develop or acquire other clinics as the Company grows.
In August, 1996 the Company signed a letter of intent and entered
into an Investment Banking Agreement with Wall Street Connections, Inc.,
headquartered in Clearwater, Florida, for an equity financing of $3 million
dollars via a private placement or secondary offering of the Company's common
stock. Under the terms of the Agreement Wall Street Connections will enter
into an Agreement with R.M. Stark & Co., located in Delray Beach, Florida, as
exclusive placement agent for a bridge funding of approximately $750 thousand
dollars, in the form of issuance of convertible bonds, and a subsequent
offering for approximately $3 million dollars via a private placement or
secondary offering of the Company's common stock. The proceeds from this
offering will be utilized to expand the Company's marketing activities and
for acquisitions.
ITEM 6. EXHIBITS AND REPORTS ON FORM 10-Q
(a) The following exhibit is attached hereto:
EXHIBIT
NO. TITLE OF DOCUMENT
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27 Financial Data Schedule
11
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EXHIBIT INDEX
EXHIBIT
NO. TITLE OF DOCUMENT
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27 Financial Data Schedule
12
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MEDPLUS CORPORATION
October 7, 1996 By: /s/ JAMES W. SNYDER
-----------------------------------
James W. Snyder, Chairman and
Chief Executive Officer
October 7, 1996 By: /s/ TIM C. DEHERRERA
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Tim C. DeHerrera, President and
Chief Operating Officer
October 7, 1996 By: /s/ ROBERT T. RYMAN
-----------------------------------
Robert T. Ryman, Chief Financial
Officer and Chief Accounting Officer
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> JUN-30-1996
<CASH> 18,682
<SECURITIES> 0
<RECEIVABLES> 25,517
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 49,771
<PP&E> 26,307
<DEPRECIATION> (11,332)
<TOTAL-ASSETS> 68,714
<CURRENT-LIABILITIES> 533,461
<BONDS> 0
0
0
<COMMON> 23,138
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 68,714
<SALES> 46,444
<TOTAL-REVENUES> 46,444
<CGS> 0
<TOTAL-COSTS> 234,091
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (187,647)
<INCOME-TAX> 0
<INCOME-CONTINUING> (187,647)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (187,647)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
