<PAGE>
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[ X ] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended August 31, 1998
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from __________ to __________.
Commission file number 0-16964
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CANCER TREATMENT HOLDINGS, INC.
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(Exact name of Small Business Issuer as Specified in Its Charter)
Nevada 87--410907
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(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
c/o Carol O'Donnell, Esq., 540 Joan Drive, Fairfield, CT 06430-2207
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(Address of principal executive offices)
(212) 221-1340
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(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 [ ].
The number of shares outstanding of each of the issuer's classes of
common equity, as of October 7, 1998 was 3,336,476.
Transitional Small Business Disclosure Format
(Check One): Yes [ ] No [ X ]
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CANCER TREATMENT HOLDINGS, INC.
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets as of August 31,
1998 and May 31, 1998 2
Consolidated Statements of Operations for the
Three Months Ended August 31, 1998 and 1997 3
Consolidated Statements of Cash Flows for the
Three Months Ended August 31, 1998 and 1997 4
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Consolidated
Financial Condition and Results of Operations 6
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 8
SIGNATURES 8
1
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CANCER TREATMENT HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
August 31, May 31,
1998 1998
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(Unaudited)
ASSETS
Cash and cash equivalents $ 2,020,710 $ 150,516
Receivable from Greenstar Holdings, Inc. - 2,160,000
Assets held for sale, net 35,553 36,104
Other current assets 7,600 -
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Total current assets 2,063,863 2,346,620
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Property and equipment, net 189,177 190,290
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Total assets $ 2,253,040 $ 2,536,910
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LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $ 69,137 $ 260,000
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Total liabilities 69,137 260,000
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Stockholders' equity:
Common stock, $.003 par value, 50,000,000
shares authorized, 3,495,760 shares issued 10,487 10,487
Capital in excess of par value 5,163,105 5,163,105
Accumulated deficit (2,709,608) (2,616,601)
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2,463,984 2,556,991
Treasury stock: 159,284 shares, at cost (280,081) (280,081)
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Total stockholders' equity 2,183,903 2,276,910
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Total liabilities and stockholders' equity $ 2,253,040 $ 2,536,910
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See accompanying notes to financial statements.
2
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CANCER TREATMENT HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF DISCONTINUED OPERATIONS
FOR THE THREE MONTHS ENDED AUGUST 31, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
August 31, August 31,
1998 1997
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<S> <C> <C>
Net patient service revenues $ - $ 4,371,913
Other revenues 75,390 382,038
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Total revenues 75,390 4,753,951
Operating expenses:
Direct cost of patient services - 2,006,612
(primarily payroll and contracted medical services)
General and administrative 154,876 2,575,174
Depreciation and amortization 1,113 109,020
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Total operating expenses 155,989 4,690,806
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Operating (loss) income (80,599) 63,145
Interest expense - 84,067
Equity in loss of partnerships (12,408) (66,658)
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Loss before income (93,007) (87,580)
Provision for income taxes - -
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Net loss $ (93,007) $ (87,580)
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Per share data:
Net loss per share $ (0.03) $ (0.03)
=========== ===========
Weighted average number of shares outstanding 3,336,476 3,336,476
=========== ===========
</TABLE>
See accompanying notes to financial statements.
3
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CANCER TREATMENT HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED AUGUST 31, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
August 31, August 31,
1998 1997
---------- ----------
<S> <C> <C>
Cash flows from operating entities
Net loss $ (93,007) $ (87,580)
Adjustments to reconcile net loss to cash provided by
(used in) operating activities:
Accretion of discount on notes receivable - (8,068)
Depreciation and amortization 1,113 109,020
Equity in loss of unconsolidated partnerships 12,408 66,658
Change in operating assets and liabilities:
Accounts receivable 2,160,000 (808,210)
Other current and non-current assets (7,600) (87,544)
Accounts payable, accrued payroll and related benefits (190,863) 487,068
----------- -----------
Net cash provided (used) by operating entities 1,882,051 (328,656)
Cash flows from investing activities:
Collection of notes receivable - 100,151
Investments in and advances to partnerships and ventures (11,857) (303,883)
Acquisition of property and equipment - (30,115)
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Net cash used in investing activities (11,857) (233,847)
Cash flows from financing activities:
Repayments of long-term debt, including revolving
credit agreements - (1,960,804)
Borrowings for long-term debt, including revolving
credit agreements - 1,907,062
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Net cash used in financing activities - (53,742)
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Net increase (decrease) in cash and cash equivalents 1,870,194 (616,245)
Cash and cash equivalents at beginning of year 150,516 1,324,745
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Cash and cash equivalents at end of period $ 2,020,710 $ 708,500
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</TABLE>
See accompanying notes to financial statements.
4
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CANCER TREATMENT HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Item 1. FINANCIAL STATEMENTS
1. Preparation of Financial Statements
The accompanying unaudited consolidated financial statements for Cancer
Treatment Holdings, Inc. and its subsidiaries (the "Company") have been
prepared in accordance with the instructions of SEC Form 10-QSB and
therefore do not include all information and footnotes necessary for a
fair presentation of financial position, results of discontinued
operations, and cash flows in conformity with generally accepted
accounting principles. The financial statements should be read in
conjunction with the financial statements and notes thereto included in
the Company's latest SEC Form 10-KSB for the year ended May 31, 1998.
In the opinion of management, the unaudited consolidated financial
statements contain all adjustments which are of a normal, recurring
nature for a fair statement of the results of discontinued operations
for such interim periods presented. The results of operations for the
three months ended August 31, 1998 are not necessarily indicative of
the results which may be expected for the entire fiscal year. The May
31, 1998 consolidated balance sheet was derived from audited financial
statements but does not include all disclosures required by generally
accepted accounting principles.
2. Contingencies
On May 20, 1998, the Company entered into a purchase agreement (the
"Agreement") with Greenstar Holdings, Inc. and Homecare Holdings, Inc.
(together, the "Buyers") to sell most of the Company's assets and
liabilities to the Buyer or its assignee. Under the Agreement, the
Company has a contingent liability to the Buyer for a period of one
year from May 31, 1998 (the date of closing) for certain
representations, warranties and indemnities and covenants, as defined
in the Agreement. The Company's aggregate liability for the period from
the date of closing until November 30, 1998 shall not exceed $1.5
million and for the period from December 1, 1998 to May 31, 1999 shall
decrease to an amount not to exceed $750,000. In connection with this
contingent liability, the Company is required, pursuant to the
Agreement, to retain assets in the amount of $1.5 million, of which
$500,000 shall be in cash and cash equivalents, for the period from May
31, 1998 to November 30, 1998, and assets in the amount of $750,000, of
which $375,000 shall be in cash and cash equivalents, for the period
from December 1, 1998 to May 31, 1999.
5
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3. Contingencies (continued):
As a general partner, the Company has guaranteed a share of certain
liabilities of Logan amounting to $543,380 as of August 31, 1998.
The Company is involved in several legal proceedings arising from
disputes between the Company, its former subsidiaries and other
parties. In the opinion of management, the amount of ultimate liability
with respect to these actions will not materially affect the financial
position, results of discontinued operations or cash flows of the
Company.
4. Subsequent Events
Pursuant to the Agreement dated May 20, 1998 between the Company and
Greenstar Holdings, Inc., the Company agreed to sell, subject to
regulatory approval, its ownership interests in two radiation therapy
centers under development in Martinsburg and Logan, West Virginia for
an aggregate purchase price of $500,000, or $250,000 per center. The
aggregate amount was placed in escrow on June 3, 1998. On September 28,
1998, the parties agreed to an extension for the closing of the
purchase of the Martinsburg center to a date no later than November 30,
1998 while regulatory approval continues to be sought. Greenstar
Holdings, Inc. was released of its obligation to buy and the Company
was released of its obligation to sell the Logan center, and the
corresponding $250,000 deposit was released from escrow to Greenstar
Holdings, Inc. The Company is continuing its efforts to sell its
interest in the Logan center.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED
FINANCIAL CONDITION AND RESULTS OF DISCONTINUED
OPERATIONS
1. Results of Operations
As a result of the sale of most of the Company's assets and liabilities
which were not subject to regulatory approval on May 29, 1998, the Company
consists of a corporate shell with four assets:
1. Approximately $2 million in cash.
2. Two radiation therapy centers under development located in
Martinsburg and Logan, West Virginia.
3. A subsidiary called CTI Management Corp. formed to provide
billing and management services.
4. A small office condominium located in Hollywood, Florida. The
property is currently rented and it is listed for sale at
$190,000.
6
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The transfer of the two West Virginia properties is subject to
regulatory approvals. The Company agreed to an extension of the buyer's
obligation to buy the Martinsburg property to no later than November 30, 1998
while regulatory approval continues to be sought. The Company will receive
$250,000 upon sale of the Martinsburg property. The Company is continuing its
attempts to sell the Logan property.
The Company's Board of Directors intends to consider proposals
presented to the Company regarding the proceeds received pursuant to the
Agreement. Such proposals may include future operations, liquidation and
distribution of such amounts received, subject to the contingent liability under
the Agreement described below, and other proposals that may come before it
regarding the use of proceeds of the sale.
The Company owns a 3,500 square foot commercial condominium in
Hollywood, Florida. The condominium is rented to a third party on a month to
month basis, and the Company currently generates net rental income in the amount
of $3,800 per month. The Company may sell the condominium, which it values to be
worth approximately $190,000.
The Company, through a wholly-owned subsidiary, provides consulting
services rendered by its President for which it expects to receive $150,000
annually in fees over the subsequent seven years.
Liquidity and Capital Resources
As of August 31, 1998, the Company had cash of $2,020,710. The
Company's cash has been invested in the Nations Prime Money Market Fund
maintained at Nations Bank.
In order to protect the buyers of our business operations against
unknown or undisclosed liabilities, the Company agreed to collateralize its
representations and warranties by holding back (ie.-not distributing to
shareholders) $1.5 million of assets through November 30, 1998 (of which
$500,000 shall be in cash and cash equivalents). If no material claims are
raised, half of the $1.5 million will be released from this contractual
encumbrance on November 30, 1998 and the other half will be released on May 31,
1999. Management does not know of any material claims to date.
Except for those items discussed above and in the Company's latest Form
10-KSB for the year ended May 31, 1998, there are no existing material sources
of liquidity available to the Company or material commitments for capital
expenditures. There are no material trends, favorable or unfavorable, demands,
commitments, events or uncertainties that will result in or that are reasonably
likely to result in the Company's liquidity increasing or decreasing in any
material way.
7
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PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: 27. Financial Data Schedule (appears on page 9)
(b) The Company filed a Current Report on Form 8-K dated June 11,
1998 to report (under Item 2) the sale of most of its assets and liabilities to
Greenstar Holdings, Inc. and Homecare Holdings, Inc. as of May 31, 1998.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CANCER TREATMENT HOLDINGS, INC.
October 14, 1998 By: /s/ Ullrich Klamm, Ph.D.
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Ullrich Klamm, Ph.D.,
Chairman and Chief Executive Officer
By: /s/ Carol Befanis O'Donnell
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Carol Befanis O'Donnell
Secretary
8
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1999
<PERIOD-END> AUG-31-1998
<CASH> 2,020,710
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,063,863
<PP&E> 189,177
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,253,040
<CURRENT-LIABILITIES> 69,137
<BONDS> 0
0
0
<COMMON> 10,487
<OTHER-SE> 2,173,416
<TOTAL-LIABILITY-AND-EQUITY> 2,253,040
<SALES> 0
<TOTAL-REVENUES> 75,390
<CGS> 0
<TOTAL-COSTS> 155,989
<OTHER-EXPENSES> 12,408
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (93,007)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (93,007)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
