<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended
March 31, 1997 Commission File No.1-10418
UNITED MEDICORP, INC.
(Exact name of registrant as specified in charter)
Delaware 75-2217002
- -------- ----------
(State or other jurisdiction of (IRS employer identification no.)
incorporation or organization)
10210 N. Central Expressway, #400
Dallas, Texas 75231
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(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code:
214/691-2140
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
As of April 1, 1997, there were outstanding 26,310,217 shares of Common Stock,
$.01 par value.
<PAGE>
UNITED MEDICORP, INC.
March 31, 1997
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 1997
and December 31, 1996......................................................3
Consolidated Statements of Revenues and Expenses
for the Three Months Ended March 31, 1997 and 1996.........................4
Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 1997 and 1996 ................................5
Notes to Consolidated Financial Statements.................................6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................................8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings ...............................................15
Item 2. Changes in Securities ...........................................15
Item 3. Default Upon Senior Securities ..................................15
Item 4. Submission of Matters to a Vote of Security Holders .............15
Item 5. Other Information................................................15
Item 6. Exhibits and Reports on Form 8-K ................................15
SIGNATURES ...................................................................16
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<PAGE>
UNITED MEDICORP, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited) (Audited)
March 31, December 31,
1997 1996
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 157,040 $ 188,868
Restricted Cash 197,181 8,143
Funded Claims 20,072 0
Accounts receivable, less allowance for
doubtful accounts of $12,765 and $18,177,
respectively 204,795 171,273
Prepaid expenses and other 18,943 19,920
------------ ------------
Total current assets 598,031 388,204
PROPERTY AND EQUIPMENT (net) 108,633 120,142
OTHER ASSETS 10,783 15,301
------------ ------------
TOTAL ASSETS $ 717,447 $ 523,647
============ ============
CURRENT LIABILITIES:
Payable to customers $ 125,233 $ 8,143
Payable to funding sources 77,417 0
Trade accounts payable 58,141 46,077
Accrued expenses 180,760 181,136
Current portion of capital lease obligations 37,137 36,862
------------ ------------
Total current liabilities 478,688 272,218
LONG TERM LEASE OBLIGATION 90,724 100,344
DEFERRED CREDITS 20,118 23,891
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, $.01 par value; 50,000,000
authorized, 26,415,764 shares issued and
outstanding at 3/31/97 and 12/31/96 264,157 264,157
Less: 105,547 shares of treasury stock, at cost (221,881) (221,881)
Additional paid-in capital 18,552,343 18,552,341
Retained deficit (18,466,702) (18,467,423)
------------ ------------
Total stockholders' equity 127,917 127,194
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 717,447 $ 523,647
============ ============
The accompanying notes are an integral part of these financial statements.
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UNITED MEDICORP, INC.
CONSOLIDATED STATEMENTS OF REVENUES AND EXPENSES
(Unaudited)
Three Months Three Months
Ended Ended
March 31, 1997 March 31, 1996
-------------- --------------
REVENUES:
Fee income $ 448,377 $ 470,365
Interest income 2,102 0
Other income 1,910 0
------------ ------------
Total revenues 452,390 470,365
EXPENSES:
Salaries and benefits 321,200 305,075
Selling, general and administrative 69,475 105,960
Professional fees 15,898 14,489
Office and equipment rental 19,583 28,303
Depreciation and amortization 22,544 26,034
Interest 3,246 4,568
Other (278) 0
------------ ------------
Total expenses 451,668 484,429
------------ ------------
NET INCOME (LOSS) $ 721 ($ 14,064)
============ ============
NET INCOME (LOSS) PER SHARE $ 0.00 ($ 0.00)
============ ============
WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING 26,310,217 26,310,217
============ ============
The accompanying notes are an integral part of these financial statements.
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<PAGE>
UNITED MEDICORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Three Months
Ending Ending
March 31, 1997 March 31, 1996
-------------- --------------
OPERATING ACTIVITIES:
Net income (loss) $ 721 ($ 14,064)
(Gain) on disposal of assets (278) 0
Adjustments to reconcile net income (loss)
to cash used in operating activities:
Depreciation and amortization 22,544 26,034
(Increase) in restricted cash (189,038) 0
(Increase) in funded claims (20,072) 0
(Increase) in accounts receivable (33,522) (41,515)
Decrease in prepaid expenses and other 977 3,038
Decrease in deposits and other 4,518 0
Increase in payable to customers 117,090 41,040
Increase in payable to funding sources 77,417 0
Increase in accounts payable 12,064 22,671
(Decrease) in accrued expenses (376) (3,822)
(Decrease) in deferred revenue 0 (7,979)
Increase (Decrease) in deferred credits (3,773) 5,562
--------- ---------
Net cash provided by (used in)
operating activities (11,727) 30,965
--------- ---------
INVESTING ACTIVITIES:
(Additions) of property and equipment, net (10,756) (4,427)
--------- ---------
Net cash (used in) investing activities (10,756) (4,427)
--------- ---------
FINANCING ACTIVITIES:
(Decrease) in capital lease obligations (9,345) (14,590)
--------- ---------
Net cash (used in) financing activities (9,345) (14,590)
--------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (31,828) 11,948
CASH AND CASH EQUIVALENTS, beginning of period 188,868 58,078
--------- ---------
CASH AND CASH EQUIVALENTS, end of period $ 157,040 $ 70,026
========= =========
Cash paid for interest $ 2,327 $ 4,568
Cash received from receivables funding sources $ 127,327 $ 0
The accompanying notes are an integral part of these financial statements.
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<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
United Medicorp, Inc. (the "Company" or "UMC") is a publicly held company traded
on the over the counter market under the symbol UMCI. UMC was founded in March,
1989 to provide medical insurance claims management services to healthcare
providers throughout the United States.
The accompanying consolidated financial statements as of March 31, 1997 and for
the three month periods ended March 31, 1997 and 1996 are unaudited. However, in
the opinion of management, all adjustments consisting of normal recurring
adjustments necessary for the fair presentation of financial position, results
of operations, and cash flows for the periods shown have been made, except the
consolidated financial statements do not include any adjustments that might
result from the uncertainty described in Note 2 below. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been omitted
pursuant to the rules and regulations of the Securities and Exchange Commission,
although management believes that the disclosures contained herein are adequate
to make the information presented not misleading. These financial statements
should be read in conjunction with the financial statements and the notes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1996.
2. CAPITAL INFUSION AND GOING CONCERN
At March 31, 1997, the Company had $157,040 in cash and cash equivalents on
hand. These funds along with forecasted revenues are projected by management to
be adequate to fund operations through 1997. The Company continues to pursue new
business primarily through direct contacts with prospective customers in an
effort to generate additional revenues. There is no assurance that revenues
generated from existing customers will continue as forecasted or that the
Company will be successful in securing new customers or sources of revenue
before the Company's remaining capital is depleted. In the event such new
customers or sources of revenue are not secured, management projects that cash
flow from operations may not be sufficient to provide for the Company's working
capital needs beyond 1997, in which case the Company will be required to raise
additional capital in order to continue operating in its present form. Due to
the Company's history of operating losses there can be no assurance that
additional investment capital can be raised in the event the Company is not
successful in securing new customers or new sources of revenue.
3. FUNDED CLAIMS
Funded claims represents the total anticipated payment to be received from third
party payors on claims advance funded using UMC's capital (see Note 6 below).
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4. ACCOUNTS RECEIVABLE
Accounts receivable represents fees which have been billed to and are due from
customers. Included in the $204,795 of accounts receivable at March 31, 1997 are
$12,073 related to services rendered to Healthcare Advisory Service of Puerto
Rico, Inc. ("HAS"). As of the date of this report, HAS has paid $2,073 of this
receivable and agreed to sign a note whereby the remaining balance of $10,000
will be paid in monthly installments of $2,000, plus interest of 1% per month on
the unpaid balance. HAS cash reserves are zero. The ability of HAS to pay UMC
for services is contingent upon receipt by HAS of payment from its customers for
services rendered. There can be no assurance that such payment will be received,
or if it will be received within the timeframe anticipated by HAS and UMC
management. The Company has not established any reserve for bad debts related to
its receivable due from HAS.
5. PAYABLE TO CUSTOMERS
Payable to customers includes claim payments collected from insurance carriers
or individual debtors on behalf of UMC customers. These funds held in trust
totalled $119,763 at March 31, 1997, and are remitted to customers by UMC on a
weekly, semi-monthly, or monthly interval. Also included in this item at March
31, 1997 is $5,470 representing the balance payable to a customer on claims
funded with UMC's capital (see Note 6 below).
6. PAYABLE TO FUNDING SOURCES
In order to access capital with which to provide advance funding services to a
new customer, the Company completed an "Assignment And Agency Agreement" on
January 31, 1997 (the "Agreement"). Under the Agreement, UMC assigned certain
rights under a Medical Claims Purchase Contract between UMC and its customer to
two members of its Board of Directors (the "Funding Sources"). The Funding
Sources provided UMC with $127,327 in funds, which UMC in turn used to advance
fund certain eligible receivables of its customer. As of March 31, 1997, the
"Payable To Funding Sources" represents cash held by UMC in its capacity as the
agent of the Funding Sources, which is payable to the Funding Sources to the
extent not invested in eligible receivables. Fees earned attributable to capital
provided by the Funding Sources are credited to the Funding Sources, while UMC
retains all fees attributable to the billing and collection services rendered
and funding provided with UMC's capital. Other than acting as the agent of the
Funding Sources for the purchase of eligible receivables, and assuming custodial
responsibility for cash held as the agent of the Funding Sources pending
investment in funded receivables, UMC has not guaranteed repayment of the funds
advanced by the Funding Sources.
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<PAGE>
Item 2. Management's Discussion And Analysis Of Financial Condition
And Results Of Operations
RESULTS OF OPERATIONS
U.S. Operations:
During the three months ended March 31, 1997, the Company completed a contract
to provide advance funding, billing and collection services to an operator of
Community Mental Health Programs ("OCMHP"). In order to access the capital
necessary to fund receivables for OCMHP, the Company signed an "Assignment And
Agency Agreement" whereby UMC's rights to certain funded receivables were
assigned to two members of the UMC Board of Directors (the "Funding Sources") in
exchange for cash. The Funding Sources provided UMC with $127,327 in capital,
which was then advanced against eligible receivables. UMC also committed $28,125
of UMC's capital to fund receivables for OCMHP. UMC reported fees totalling
$11,018 from OCMHP during the three months ended March 31, 1997. Fees earned
attributable to capital provided by the Funding Sources are credited to the
Funding Sources, while UMC retains all fees attributable to the billing and
collection services rendered and funding provided with UMC's capital. Other than
acting as the agent of the Funding Sources for the purchase of eligible
receivables, and assuming custodial responsibility for cash held as the agent of
the funding sources pending investment in funded receivables, UMC has not
guaranteed repayment of the funds advanced by the Funding Sources. In early
April, 1997, the contract with OCMHP was amended to provide UMC with a flat rate
fee of $6,300 per month for billing and collection services. Funding fees will
be charged over and above the flat rate billing fees based on a percentage of
the amount advanced to OCMHP against eligible receivables in the future.
Late in the fourth quarter, UMC notified a customer that operates wound care
centers ("OWCC") that UMC would no longer provide billing and collection
services at the 5 percent fee established in the contract between UMC and OWCC.
UMC proposed to increase the fee for OWCC to 10 percent of collections. OWCC did
not respond to UMC's proposal, and so on January 30, 1997, UMC provided thirty
days notice of cancellation consistent with the terms of its contract with OWCC.
UMC reported fees totalling $5,045 from OWCC during the three months ended March
31, 1997.
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During March, 1997, the Company reversed an accrual of $9,000 that had been
recorded in 1994 with respect to a disputed billing for long distance telephone
services. UMC management has not received any collection notices or other
contacts from this vendor since early 1995, and therefore decided that reversal
of this accrual is appropriate at this time.
Formation of United MoneyCorp, Inc.:
On November 18, 1996, UMC filed "Articles Of Amendment To The Articles Of
Incorporation Of Sterling Hospital Systems, Inc." with the Secretary of State
for the State of Texas whereby a wholly owned subsidiary of UMC was renamed
"United MoneyCorp, Inc.". United MoneyCorp, Inc. ("UMY") has been designated as
the legal entity under which UMC will operate a collection agency. UMC
management believes that there is a large and growing market for bad debt and
"early out" collection agency services, and that offering these services to
healthcare providers will complement the medical claims processing and billing
services already offered by UMC. In addition, given that United MoneyCorp is a
generic name, this entity will be positioned to offer collection services to
customers outside of the healthcare market.
On January 17, 1997, UMY completed a "Collection Services Agreement" ("CSA")
with a major hospital system in Texas. Under this CSA, UMY will provide bad debt
collection services for primary and second placement accounts. UMC management
estimates that this CSA will generate $15K to $20K in total monthly fees once
full ramp up is attained during the second quarter of 1997.
In addition to the CSA described above, UMY signed contracts to provide bad debt
collection services for two smaller hospital customers during the first quarter.
Puerto Rican Operations:
Following the termination of the Company's contract with Healthcare Advisory
Service of Puerto Rico, Inc. ("HAS") in mid-1996 and the closure of the
Company's office in Ponce, Puerto Rico late in the fourth quarter of 1996, the
Company has made numerous sales calls on hospitals and governmental authorities
in Puerto Rico in attempts to establish a customer base for its services in that
market. To date no contracts have been signed, and there can be no assurance
that UMC will be successful in obtaining new business or producing profitable
revenues as a result of these sales efforts.
On October 7, 1996, the Company completed an alliance with an established
physician billing firm in Puerto Rico. Numerous joint sales calls on hospitals
and governmental authorities have been made. To date no contracts have been
signed, and there can be no assurance that UMC will be successful in obtaining
new business or producing profitable revenues as a result of this alliance.
During the three months ended March 31, 1997, the Company completed an audit of
its collections and fees billed to HAS. Pursuant to that audit, the Company
billed HAS $1,902. In addition, the Company incurred expenses of $8,720,
primarily for moving expenses, travel, and depreciation on assets stored in
Puerto Rico, offset by a credit of $5,369 for reversal of bad debt expense
previously accrued. The net margin from Puerto Rican operations was a loss of
$1,449.
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Subsequent Events:
1) On May 9, 1997, UMC completed two addenda to its existing Customer Service
Agreement ("CSA") with the Washington Hospital Center ("WHC"). Under the
addenda, UMC will provide the following services to the WHC Physician Billing
Department:
a) Collection follow up, rebilling and collection services with respect to
a backlog of aged claims.
b) Collection follow up, rebilling and collection services with respect to
WHC non-emergency physician claims with balances less than $5,000 beginning
at 31 days from date of service.
c) Initial claims editing, submission, follow up and collection services
with respect to all claims originated by physicians in the WHC Department
of Emergency Medicine.
UMC management estimates that the addenda to the WHC CSA will generate $50K to
$80K in additional ongoing monthly fees once full ramp up is attained. UMC
management believes that additional non-recurring fees will be derived from the
backlog of aged claims, but is unable to provide a specific estimate of these
fees.
2) On May 6, 1997, UMC hired Ms. Linda L. Underwood as Director of Claims
Operations. Ms. Underwood's background includes twelve years of physician
billing experience with the University of Texas Southwestern Medical Center,
Desert Sun Life Insurance Company, and Employee Benefits of America.
3) On May 1, 1997, UMY completed an "Early Out Collection Agreement" ("EOCA")
with the same major hospital system in Texas that had contracted with UMY under
the CSA described above. UMC management estimates that this EOCA will generate
$20K to $30K in total monthly fees once full ramp up is attained.
4) On May 12, 1997, UMY hired Michael J. Pohorilla as Director of Operations.
Mr. Pohorilla's background includes twenty five years of collection agency
experience with GC Services, TRW Receivables Management Services, and National
Revenue Corporation.
Forward Looking Statements:
This report contains statements which constitute "forward-looking statements"
within the meaning of the Securities Act of 1993 and the Securities Exchange Act
of 1934, as amended by the Private Securities Litigation Reform Act of 1995. 15
U.S.C.A. Sections 77z-2 and 78u-5 (Supp. 1996). Those forward-looking statements
include the intent, belief, or current expectations of the Company and members
of its senior management team, as well as the assumptions on which such
statements are based. Prospective investors are cautioned that any such
forward-looking statements are not guarantees of future performance and involve
risks and uncertainties, and that actual results may differ materially from
those contemplated by such forward-looking statements. Important factors
currently known to management that could cause actual results to differ
materially from those in forward-looking statements include, but are not limited
to, the need to successfully start up the Company's collection agency
subsidiary, United MoneyCorp, Inc., the efficiency of the Company's billing and
accounts receivable management services operations, continued availability of
credit on terms and conditions acceptable to the Company, continued service of
existing employees and availability of qualified new hires to staff the
Company's operations, on-going management initiatives designed to reduce costs
and enhance efficiencies, the Company's pending outstanding litigation, and
prospective changes in
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law, regulations or policies affecting the Company's business and/or operations.
Additional factors that could cause actual results to differ materially from
those contemplated by the forward-looking statements in this report may be found
in the Company's previous public filings with the Securities & Exchange
Commission, which are incorporated by reference herein. The Company undertakes
no obligation to update or revise forward-looking statements to reflect changed
assumptions, the occurrence of unanticipated events or changes to future
operating results over time.
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The following table sets forth for each period indicated the volume and gross
dollar amount of insurance claims received and fees recognized for each of the
Company's two principal services. In general, collections on most healthcare
providers' new claims ("Ongoing") tend to average about 25 to 80 percent of the
gross claim amount. Backlog collection ratios range from 0 to about 40 percent
of the aggregate gross claim amount because many backlog claims have already
been paid or denied by the insurance carriers prior to submission of the claims
to UMC. For these previously paid claims, UMC often charges an administrative
fee which is less than a collection fee.
PROCESSING VOLUME AND FEES
<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
Second Third Fourth First Second Third Fourth First
Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Number of Claims
Accepted for
Processing
Ongoing 46,021 43,161 47,249 48,280 46,860 40,179 37,127 29,907
Backlog 0 0 3,455 41 1 1 0 0
------ ------ ------ ------ ------ ------ ------ ------
Total 46,021 43,161 50,704 48,321 46,861 40,180 37,127 29,907
Gross Amount of
Claims Accepted for
Processing ($000)
Ongoing 19,999 18,791 21,660 19,923 21,055 18,068 18,325 20,557
Backlog 0 0 1,269 17 0 0 0 0
------ ------ ------ ------ ------ ------ ------ ------
Total 19,999 18,791 22,929 19,940 21,055 18,068 18,325 20,557
Collections ($000)
Ongoing 9,883 9,613 8,694 9,019 8,257 7,533 7,063 7,203
Backlog 159 28 60 70 6 0 0 0
------ ------ ------ ------ ------ ------ ------ ------
Total 10,042 9,641 8,754 9,089 8,263 7,533 7,063 7,203
Fees Earned ($000)
Ongoing 482 449 447 408 386 379 376 365
Backlog 15 2 3 3 0 0 0 0
------ ------ ------ ------ ------ ------ ------ ------
Total 497 451 450 411 386 379 376 365
</TABLE>
For Ongoing claims, there is typically a time lag of approximately 15 to 45 days
from contract execution to computer hardware installation and training of
customer personnel. During this period, Company personnel survey the customer's
existing operations and prepare for installation. Following installation and
training of the customer's personnel, the customer begins entering claims and
transmitting them to the Company. There is usually a time lag of 30 to 90 days
between transmission of a claim to a third party payor and collection of a claim
from that payor, except in Puerto Rico, where commercial payors often delay
payment on claims for up to two years.
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<PAGE>
Quarterly Information: Fee income decreased $21,988 or 5 percent, from $470,365
for the three months ended March 31, 1996 to $448,377 for the three months ended
March 31, 1997. This decrease is primarily due to the loss of the Company's
second largest customer, Mimbres Memorial Hospital (MMH), which accepted an
offer to be acquired by a hospital chain in March, 1996. MMH contributed $90,700
in fees during the three months ended March 31, 1996.
For domestic operations, fee income from "Ongoing" claims processing, management
and collection services decreased by 10 percent from $382,267 for the three
months ended March 31, 1996 to $342,378 for the three months ended March 31,
1997 due to the loss of Mimbres Memorial Hospital ("MMH"). Backlog collection
fees decreased from $3,804 for the three months ended March 31, 1996, to $0 for
the three months ended March 31, 1997, also the result of losing MMH as a
customer. Fees from UMC's UMClaimPros interim staffing service increased by 134
percent from $26,566 for the three months ended March 31, 1996 to $62,159 for
the three months ended March 31, 1997 due to staffing services provided to a
major hospital in the Dallas area. Patient billing fees increased by 182 percent
from $7,522 for the three months ended March 31, 1996 to $21,224 for the three
months ended March 31, 1997 due to the signing of a new contract to perform
patient balance collections for the Company's largest customer, the Washington
Hospital Center ("WHC"). Repricing fees decreased from $4,257 for the three
months ended March 31, 1996 to $2,935 for the three months ended March 31, 1997.
Fees generated by Puerto Rican operations decreased from $32,955 for the three
months ended March 31, 1996 to $1,902 for the three months ended March 31, 1997
due to the termination of contracts between the Company and H.A.S. of Puerto
Rico, Inc. during the third quarter of 1996.
Salaries and benefits for the first quarter of 1997 increased $16,125, or 5
percent, from $305,075 for the three months ended March 31, 1996 to $321,200 for
the three months ended March 31, 1997. Total headcount increased from 40 at
March 31, 1996 to 42 at March 31, 1997, including the Company's permanent
part-time employees.
Selling, general and administrative expenses decreased $36,485, or 34 percent,
from $105,960 for the three months ended March 31, 1996 to $69,475 for the three
months ended March 31, 1997, due primarily to decreased dealer commissions and
the reversal of accruals expensed during 1994 for disputed billings for long
distance telephone services that were never paid.
Professional fees increased by $1,409, or 10 percent, from $14,489 in the first
quarter of 1996 to $15,898 in the first quarter of 1997, due to increased legal
fees.
Rental expense decreased $8,720, or 31 percent, from $28,303 in the first
quarter of 1996 to $19,583 in the first quarter of 1997, due to the closing of
the office located in Ponce, Puerto Rico on January 3, 1997.
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<PAGE>
Depreciation and amortization decreased $3,489, or 13 percent, from $26,034 in
the first quarter of 1996 to $22,544 in the first quarter of 1997, due primarily
to fixed assets becoming fully depreciated.
Interest expense decreased by $1,323, or 29 percent, from $4,568 in the first
quarter of 1996 to $3,246 in the first quarter of 1997, due to the reduction of
the Company's capital lease obligation.
LIQUIDITY AND CAPITAL RESOURCES
Sources of Capital: Operating funds through March 31, 1995 have been derived
primarily from the issuance of Common Stock ($18.8 million).
Capital Expenditures: During the first quarter of 1997, the Company made capital
expenditures totalling $10,756 primarily for leasehold improvements to the
Company's office facilities to accommodate future hiring.
Liquidity Outlook: At March 31, 1997, the Company had $157,040 in unrestricted
cash and cash equivalents and $204,795 in net accounts receivable. The Company
generated negative cash flow of $31,828 during the first quarter of 1997
compared to positive cash flow of $11,948 during the first quarter of 1996.
There can be no assurance that the Company's invoices to HAS for claims
processing services rendered in Puerto Rico will be paid as expected. These
invoices total $12,073 at March 31, 1997. The Company has not established any
reserve for bad debts related to receivables due from HAS. On May 7, 1997, UMC
received a payment of $2,073 from HAS, and agreed to convert the balance of
$10,000 due from HAS into a Note Receivable. HAS agreed to remit payments at the
rate of $2,000 per month beginning on June 1, 1997, plus interest of 1 percent
per month on the unpaid balance.
Given that the Company generated negative cash flow during the first quarter of
1997, there are considerable risks, including primarily the need for additional
sustainable revenues, that additional capital will be needed. There can be no
assurance that such capital will be available, or of the terms upon which such
capital might be made available. Additionally, UMC has incurred cumulative
losses of $18,466,702 since inception. These factors raise substantial doubt as
to the Company's ability to continue as a going concern.
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<PAGE>
UNITED MEDICORP, INC.
Part II. Other Information
Item 1. Legal Proceedings
The Company is the defendant in a lawsuit filed on March 2, 1995 by a former
employee of the Company. The lawsuit charges the Company with wrongful
discharge. The former employee seeks unspecified past and future economic loss,
damages, exemplary damages, reinstatement, attorney's fees and interest. The
plaintiff has requested a trial by jury. Management believes this lawsuit to be
without merit and intends to vigorously defend against the claim.
Item 2. Changes in Securities
Not applicable.
Item 3. Default Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
Not applicable.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Quarterly Report to be signed on its behalf by
the undersigned, thereunto duly authorized.
UNITED MEDICORP, INC.
(Registrant)
By: /s/ Peter W. Seaman Date: May 15, 1997
-------------------------------------------- ------------
Peter W. Seaman, Chairman and
Chief Executive Officer
(Principal Accounting Officer)
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 354,221
<SECURITIES> 0
<RECEIVABLES> 204,795
<ALLOWANCES> 12,765
<INVENTORY> 0
<CURRENT-ASSETS> 598,031
<PP&E> 108,633
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0
0
<COMMON> 264,157
<OTHER-SE> (136,240)
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<CGS> 0
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<EXTRAORDINARY> 0
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</TABLE>
