<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 February 28, 1999
/_/ Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from _________ to __________.
Commission file number 0-16964
CANCER TREATMENT HOLDINGS, INC.
(Exact name of Small Business Issuer as Specified in Its Charter)
Nevada 87-0410907
(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
(Address of principal executive offices)
(212) 221-1340
(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 April 12, 1999 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 February 28,
1999 and May 31, 1998 2
Consolidated Statements of Discontinued Operations for the
Nine Months Ended February 28, 1999 and 1998 3
Consolidated Statements of Cash Flows for the
Nine Months Ended February 28, 1999 and 1998 4
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Consolidated
Financial Condition and Results of Discontinued Operations 6
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 8
Item 5. Other Information 8
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
February 28, May 31,
1999 1998
----------- -----------
(Unaudited)
ASSETS
Cash and cash equivalents $ 2,092,396 $ 150,516
Receivable from Greenstar Holdings, Inc. -- 2,160,000
Other receivables 37,500 --
Prepaid amounts 22,276 --
Assets held for sale 21,825 36,104
----------- -----------
Total current assets 2,173,997 2,346,620
Property and equipment, net 186,950 190,290
----------- -----------
Total assets $ 2,360,947 $ 2,536,910
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $ 95,177 $ 260,000
Payroll and income taxes payable 1,069 --
----------- -----------
Total liabilities 96,246 260,000
----------- -----------
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 (2,628,810) (2,616,601)
----------- -----------
2,554,782 2,556,991
Treasury stock: 159,284 shares, at cost (280,081) (280,081)
----------- -----------
Total stockholders' equity 2,264,701 2,276,910
----------- -----------
Total liabilities and stockholders' equity $ 2,360,947 $ 2,536,910
=========== ===========
See accompanying notes to consolidated financial statements.
2
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CANCER TREATMENT HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF DISCONTINUED OPERATIONS
FOR THE NINE MONTHS ENDED FEBRUARY 28, 1999 AND 1998
(UNAUDITED)
February 28, February 28,
1999 1998
------------ ------------
Net patient service revenues $ -- $ 10,217,806
Other revenues 198,990 1,102,884
------------ ------------
Total revenues 198,990 11,320,690
------------ ------------
Operating expenses:
Direct cost of patient services
(primarily payroll and contracted medical
services) -- 5,306,846
General and administrative 426,329 6,867,926
Depreciation and amortization 3,340 1,070,690
------------ ------------
Total operating expenses 429,669 13,245,462
------------ ------------
Operating loss (230,679) (1,924,772)
Interest expense -- 229,404
Equity in loss of partnerships (31,530) (415,179)
Loss from operations of discontinued pharmacy
and private home health divisions -- (379,015)
Loss on disposal of pharmacy and private home
health divisions -- (363,577)
Gain on sale of assets 250,000 --
------------ ------------
Loss before income taxes (12,209) (3,311,947)
Provision for income taxes -- --
------------ ------------
Net loss $ (12,209) $ (3,311,947)
=========== ============
Basic and diluted per share data:
Net loss per share $ 0.00 (0.99)
=========== ============
Weighted average number of shares
outstanding 3,336,476 3,336,476
=========== ============
See accompanying notes to financial statements.
3
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CANCER TREATMENT HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED FEBRUARY 28, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
February 28, February 28,
1999 1998
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (12,209) $(3,311,947)
Adjustments to reconcile net loss to cash
used in operating activities:
Accretion of discount on notes receivable -- (21,444)
Depreciation and amortization 3,340 1,368,717
Gain on sale of assets (250,000) --
Noncash charges related to partnership advances -- 200,000
Equity in loss of unconsolidated partnerships 31,529 415,179
Change in operating assets and liabilities:
Accounts receivable (37,500) (148,394)
Income taxes receivable -- 227,369
Other current and non-current assets (22,276) (17,232)
Accounts payable, accrued expenses, accrued
payroll and related benefits (163,754) 558,719
------------ ------------
Net cash used by operating entities (450,870) (729,033)
------------ ------------
Cash flows from investing activities:
Collections of notes receivable -- 540,231
Cash received from sale of business 2,410,000 --
Investments in and advances to partnerships and ventures (17,250) (423,674)
Acquisition of property and equipment -- (46,558)
------------ ------------
Net cash provided by investing activities 2,392,750 69,999
------------ ------------
Cash flows from financing activities:
Repayments of long-term debt, including revolving
credit agreements -- (6,743,538)
Borrowings for long-term debt, including revolving
credit agreements -- 6,531,460
------------ ------------
Net cash used in financing activities -- (212,078)
------------ ------------
Net increase (decrease) in cash and cash equivalents 1,941,880 (871,112)
Cash and cash equivalents at beginning of period 150,516 1,324,745
------------ ------------
Cash and cash equivalents at end of period $ 2,092,396 $ 453,633
=========== ============
Supplemental disclosures:
Interest paid $ -- $ 229,966
=========== ============
Taxes paid $ -- $ --
=========== ============
</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
nine months ended February 28, 1999 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 May 31, 1999 shall be an amount not to exceed
$1,500,000. In connection with this contingent liability, the Company
is required to retain assets in the amount of $1.5 million, of which
$375,000 shall be in cash and cash equivalents until May 31, 1999. The
Company is not aware of any claims that may be asserted in connection
with its representations, warranties and indemnities and covenants.
As a principal of Logan Radiation Therapy, Inc. ("LRT"), a partner of
the Southern West Virginia Cancer Treatment Center ("Logan"), the
Company has
5
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2. Contingencies (continued):
guaranteed certain Copelco Capital, Inc. ("Copelco") lease liabilities
of Logan amounting to $577,936 as of February 28, 1999. Logan General
Hospital, Inc. (the "Hospital"), LRT's partner in the Logan venture,
has sought relief under Chapter 11 of the U.S. Bankruptcy laws and has
ceased making required capital contributions to Logan. Accordingly,
Logan's lease payments to Copelco are in default, but Copelco has
waived Logan's obligations to make all lease payments for an indefinite
period of time.
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
on May 29, 1998 and November 20, 1998, the Company consists of a corporate shell
with four assets:
1. Approximately $2 million in cash.
2. A 50.5% interest in Logan Radiation Therapy, Inc. ("LRT"), which
has a 51% partnership interest in a radiation therapy center
under development located in 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.
The Logan General Hospital, Inc. (the "Hospital"), LRT's partner in the
Logan venture, has sought relief under Chapter 11 of the U.S. Bankruptcy laws.
As a result of the bankruptcy, the Hospital is required to reaffirm its
contractual obligations, in which event the partners will proceed with the
development of Logan. If the Hospital does not reaffirm its obligations, LRT
intends to exercise its option to acquire the Hospital's interest in the
venture, which LRT may do on favorable terms. In either event, the Company will
continue its attempts to sell its interest in the Logan, West Virginia 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
6
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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 commercial condominium in Hollywood, Florida. The
condominium is rented to a third party on a month to month basis, and the
Company currently generates gross rental income in the amount of $3,800 per
month. The Company may sell the condominium, which it values to be worth
approximately $200,000 to $300,000.
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 six years.
Liquidity and Capital Resources
As of February 28, 1999, the Company had cash of $2,092,396. 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 (i.e. not distributing to
shareholders) $1.5 million of assets through May 31, 1999 (of which $375,000
shall be in cash and cash equivalents). If no material claims are raised, the
funds will be released from this contractual encumbrance on May 31, 1999.
The Company does not expect year 2000 issues to materially affect the
Company's business, results of operations or financial condition. None of the
Company's operations, which are minimal at this time, require the use of
computers. The Company's service providers have given assurances to the Company
that year 2000 issues will not materially affect the services provided by them
to the Company.
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 1. LEGAL PROCEEDINGS
An action involving a claim for a declaratory decree filed by the
Company and a counterclaim filed by Thomas MacCormack in State Court in Broward
County, Florida was terminated in April 1999 with a judgment in favor of the
Company. Mr. MacCormack had claimed that he was entitled to a percentage of the
ownership and management fees of the facility in New Jersey that was operated by
a former subsidiary of the Company.
Item 5. OTHER INFORMATION
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: 27. Financial Data Schedule (appears on page 9)
(b) No reports on Form 8-K were filed by the Company during the three
months ended February 28, 1999.
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.
April 13, 1999 By: /s/ Ullrich Klamm, Ph.D.
-----------------------------------
Ullrich Klamm, Ph.D.,
Chairman and Chief Executive
Officer
By: /s/ Carol Befanis O'Donnell
-----------------------------------
Carol Befanis O'Donnell
Secretary
8
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-31-1999
<PERIOD-START> JUN-01-1998
<PERIOD-END> FEB-28-1999
<CASH> 2,092,396
<SECURITIES> 0
<RECEIVABLES> 37,500
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,173,997
<PP&E> 186,950
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,360,947
<CURRENT-LIABILITIES> 96,246
<BONDS> 0
0
0
<COMMON> 10,487
<OTHER-SE> 2,264,701
<TOTAL-LIABILITY-AND-EQUITY> 2,360,947
<SALES> 0
<TOTAL-REVENUES> 198,990
<CGS> 0
<TOTAL-COSTS> 429,669
<OTHER-EXPENSES> 31,530
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (12,209)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12,209)
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
