FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
{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
OR
{ } Transition Report Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
For the transition period from ______________________________
Commission file number 0-17120
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MEDNET, MPC CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Nevada 88-0215949
- ------------------------------- -------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification
Number
871-C Grier Drive, Las Vegas, Nevada 89119
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(Address of principal executive offices Zip Code
(702) 361-3119
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Registrant's telephone number, including area code)
________________________________________________________________________________
(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 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. [x] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class of Stock Amount Outstanding
- ---------------------------------------- ---------------------------------------
$.001 par value Common Shares 35,581,566 Shares at November 11, 1996
$20.00 par value Preferred
Shares-Series A 267,500 Shares at September 30, 1996
$20.00 par value Preferred
Shares-Series D 2,500 Shares at November 11, 1996
$20.00 par value Preferred
Shares-Series E 125,000 Shares at September 30, 1996
<PAGE>
MEDNET, MPC CORPORATION
TABLE OF CONTENTS
Page No.
Part I - Financial Information
Item 1. Consolidated Financial Statements
Balance Sheets
Statements of Operations
Statements of Cash Flows
Notes to Financial Statements
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations
Part II - Other Information
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote
of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
Mednet, MPC Corporation
Consolidated Balance Sheets
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<TABLE>
September 30, December 31,
1996 1995
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<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents ................................... $ 705,000 $ 42,000
Accounts receivable, less allowance for doubtful accounts of
$1,077,000 at September 30, 1996 and ...................... 23,231,000 17,798,000
$1,375,000 at December 31, 1995
Inventories ................................................. 1,422,000 2,849,000
Other current assets ........................................ 1,804,000 243,000
------------ ------------
Total current assets ................................... 26,672,000 20,932,000
Property, plant and equipment .................................. 1,422,000 1,532,000
Intangible assets .............................................. 17,060,000 18,582,000
Other assets ................................................... 1,005,000 857,000
------------ ------------
$ 46,159,000 $ 41,903,000
============ ============
Liabilities and Stockholders' Equity
Current Liabilities:
Revolving line of credit .................................... $ 4,956,000 $ 3,709,000
Accounts payable ............................................ 16,410,000 17,483,000
Accrued expenses ............................................ 1,340,000 2,139,000
Current portion of long-term debt ........................... 469,000 2,739,000
------------ ------------
23,175,000 26,070,000
Long term debt ................................................. - - 1,422,000
Redeemable convertible preferred stock: $20 par value, (Series A
267,500 shares outstanding at September 30, 1996) ............ 5,350,000 5,350,000
Convertible preferred stock: $20.00 par value, ( Series D
20,000 shares outstanding at September 30, 1996) ............. 400,000 - -
Convertible preferred stock: $20.00 par value, ( Series E
85,000 shares outstanding at September 30, 1996) ............. 1,700,000 - -
Convertible preferred stock: $20.00 par value, ( Series F
125,000 shares outstanding at September 30, 1996) ............ 2,500,000 - -
Common stock: $.001 par value, (42,000,000 shares authorized,
33,414,484 at September 30, 1996 and 29,149,118 at
December 31, 1995, issued and outstanding .................... 33,000 29,000
Additional paid-in capital ..................................... 47,400,000 42,778,000
Accumulated deficit ............................................ (34,399,000) (33,746,000)
------------ ------------
Stockholders' equity ........................................... 17,634,000 9,061,000
------------ ------------
Total liabilities and stockholders' equity ............. $ 46,159,000 $ 41,903,000
============ ============
</TABLE>
<PAGE>
Mednet, MPC Corporation
Consolidated Statements of Operations
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<TABLE>
For the Three Months Ended
September 30,
----------------------------
1996 1995
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<S> <C> <C>
Sales ....................................................... $ 24,814,000 $ 27,449,000
Less: cost of sales ......................................... 20,454,000 23,390,000
------------ ------------
Gross profit ................................................ 4,360,000 4,059,000
------------ ------------
Selling, general and administrative expenses ................ 3,300,000 3,770,000
------------ ------------
Operating income before depreciation and amortization 1,060,000 289,000
Depreciation and amortization ............................... 759,000 649,000
Operating income (loss) ............................. 301,000 (360,000)
Other income (expense):
Interest and dividend income ............................. - - 11,000
Interest expense ......................................... (247,000) (200,000)
Less: Subsidiaries net income for period not owned ...... - - (180,000)
Other, net ............................................... - - (41,000)
------------ ------------
Total other income (expense) ............................. (247,000) (410,000)
------------ ------------
Net income (loss) ........................................ $ 54,000 ($ 770,000)
============ ============
Net income (loss) per common share ....................... $ 0.00 ($ 0.03)
============ ============
Weighted average equivalent number of shares ............. 31,192,303 24,338,791
============ ============
</TABLE>
<PAGE>
Mednet, MPC Corporation
Consolidated Statements of Operations
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<TABLE>
For the Nine Months Ended
September 30,
----------------------------
1996 1995
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<S> <C> <C>
Sales ................................................ $ 75,676,000 $ 83,693,000
Less: cost of sales .................................. 62,955,000 71,262,000
------------ ------------
Gross profit ......................................... 12,721,000 12,431,000
------------ ------------
Selling, general and administrative expenses ......... 9,595,000 11,137,000
------------ ------------
Operating income before depreciation and ..... 3,126,000 1,294,000
amortization
Depreciation and amortization ........................ 2,252,000 1,854,000
Operating income (loss) ...................... 874,000 (560,000)
Other income (expense):
Interest and dividend income ...................... 15,000 31,000
Interest expense .................................. (1,207,000) (627,000)
Less: Subsidiaries net income for period not owned - - (982,000)
Other, net ........................................ 66,000 (134,000)
------------ ------------
Total other income (expense) ...................... (1,126,000) (1,712,000)
------------ ------------
Net (loss) ........................................ ($ 252,000) ($ 2,272,000)
============ ============
Net (loss) per common share ....................... ($ 0.01) ($ 0.09)
============ ============
Weighted average equivalent number of shares ...... 29,775,555 24,041,758
============ ============
</TABLE>
<PAGE>
Mednet, MPC Corporation
Consolidated Statements of Cash Flows
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<TABLE>
For the Nine Months Ended
September 30,
----------------------------
1996 1995
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<S> <C> <C>
Cash flows from (used in) operating activities:
Cash received from customers ........................................... $ 70,243,000 $ 79,055,000
Cash paid to suppliers and employees ................................... (74,214,000) (80,707,000)
Net interest paid ...................................................... (1,192,000) (596,000)
Other net .............................................................. 66,000 (134,000)
------------ ------------
Net cash (used in) operating activities ........................... (5,097,000) (2,382,000)
------------ ------------
Cash flows from (used in) investing activities:
Purchase of property and equipment ..................................... (620,000) (774,000)
Purchase of intangible assets .......................................... - - (11,458,000)
------------ ------------
Net cash (used in) investing activities ........................... (620,000) (12,232,000)
------------ ------------
Cash flows from financing activities
Proceeds from borrowings on revolving line of credit, net .............. 1,247,000 - -
Proceeds from borrowings of long term debt ............................. 42,000 3,500,000
Repayment of borrowings ................................................ (7,460,000) (1,152,000)
Net proceeds from issuance of common stock ............................. - - 4,889,000
Net proceeds from issuance of preferred stock .......................... 12,940,000 7,300,000
Dividends paid ......................................................... (389,000) - -
------------ ------------
Net cash from financing activities ................................ 6,380,000 14,537,000
------------ ------------
Net increase (decrease) in cash ........................................... 663,000 (77,000)
Cash balance, beginning ................................................... 42,000 1,711,000
------------ ------------
Cash balance, ending ...................................................... $ 705,000 $ 1,634,000
============ ============
Reconciliation of net loss to net cash used for operating activities:
Net (loss) ............................................................. ($ 252,000) ($ 2,272,000)
Net income of subsidiary for period not owned .......................... - - 982,000
Adjustments to reconcile net loss to cash used for operating activities:
Depreciation and amortization ..................................... 2,252,000 1,854,000
Provision for doubtful accounts ................................... (298,000) 98,000
Change in assets and liabilities
(Increase) decrease in accounts receivable ........................ (5,135,000) (4,736,000)
(Increase) decrease in inventories ................................ 1,917,000 (1,532,000
(Increase) decrease in other current assets ....................... (1,561,000) (256,000)
(Increase) decrease in other assets ............................... (148,000) (606,000)
Increase (decrease) in accounts payable ........................... (1,073,000) 4,146,000
Increase (decrease) in accrued expenses ........................... (799,000) (60,000)
------------ ------------
Net cash (used in) operating activities ................................... ($ 5,097,000) ($ 2,382,000)
============ ============
Non-cash investing and financial activity:
Issuance of notes payable to settle FPA shortfall ...................... $ - - $ 892,000
Converted accounts payable to note payable ............................. $ - - $ 1,300,000
Conversion of note payable to common stock ............................. $ 1,125,000 $ - -
Conversion of preferred stock to common stock .......................... $ 8,500,000 $ - -
Escrowed common stock returned for notes payable ....................... $ 4,833,000 $ - -
</TABLE>
<PAGE>
MEDNET, MPC CORPORATION
Notes to Consolidated Financial Statements
September 30, 1996
Note 1. Basis of Presentation
The consolidated financial statements included herein include the accounts of
Mednet, MPC Corporation and its subsidiaries (the "Company"), Medi-Mail, Inc.,
Medi-Phar, Inc., and Medi-Claim, Inc., and Family Pharmaceuticals of America,
Inc. In the opinion of Management, all adjustments considered necessary for fair
presentation have been reflected in the consolidated financial statements. These
adjustments are of a normal, recurring nature. Operating results for the quarter
ended September 30, 1996 are not necessarily indicative of those expected for
the full year. The Statements of Operations for the three months and nine months
ended September 30, 1995 and the Statements of Cash Flows for the nine months
ended September 30 ,1995, have been restated to reflect the Home Pharmacy
acquisition.
The accompanying unaudited interim consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and the rules and
regulations of the Securities and Exchange Commission. These financial
statements have been prepared under the presumption that users of the interim
financial information have either read or have access to the Company's audited
financial statements for the year ended December 31, 1995. Accordingly, footnote
disclosures which would substantially duplicate the disclosures contained in the
Company's December 31, 1995 audited financial statements have been omitted from
these interim financial statements. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
instruction, rules and regulations. Although the Company believes that the
disclosures are adequate to make the information presented not misleading, it is
suggested that these unaudited interim consolidated financial statements be read
in conjunction with the audited annual consolidated financial statements and the
notes thereto included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1995.
Note 2. Stock Transactions
Stock transactions that occurred during the quarter ended September 30, 1996
were:
Issuance of 125,000 shares of its Series E Preferred Stock convertible
to common stock at the option of the holder and under certain
conditions, the Company.
Issuance of 125,000 shares of its Series F Preferred Stock convertible
to common stock at the option of the holder and under certain
conditions, the Company.
Convertible note payable converted
to common stock 348,424 shares
125,000 shares of Series D Preferred Stock
converted to common stock 1,726,021 shares
40,000 shares of Series E Preferred Stock
converted to common stock 667,949 shares
<PAGE>
Note 3. Subsequent Events
In October 1996, 20,000 shares of the Company's Series D Preferred Stock were
converted into 350,090 shares of common stock.
In October 1996, 72,500 shares of the Company's Series E Preferred Stock were
converted into 1,528,774 shares of common stock.
In November 1996, 10,000 shares of the Company's Series E Preferred Stock were
converted into 288,218 shares of common stock
Note 4. Commitments and Contingencies
Except as set forth in Part II of this Form 10-Q and in the Notes to the
Financial Statements included in the Company's Form 10-K for the period ended
December 31, 1995, the Company is not a party to any legal proceeding which, in
its belief, could have a material adverse effect on the Company.
The Company is exploring financing options which are available to it, including
refinancing its current financial obligations. However, there can be no
assurance that the Company will be able to obtain alternative financing, or that
such financing will be on similar or more favorable terms. In the event the
financing agreement with the Company's current lender is terminated before its
maturity, certain deferred charges could be charged to the income statement.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
September 30, 1996
Results of Operations
The following table sets forth certain financial data as a percentage of
consolidated net operating revenues of the Company for the periods presented. It
should be noted, however, that the operating results for the quarter and nine
months ended September 30, 1996 are not necessarily indicative of those expected
for the full year.
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
1996 1995 1996 1995
-------------------------------------
Sales .................................. 100.00 100.00 100.00 100.00
Cost of sales .......................... 82.43 85.21 83.19 85.16
------ ------ ------ ------
Gross Margin ........................... 17.57 14.79 16.81 14.84
Selling, general and administrative
expenses ............................. 13.30 13.74 12.68 13.30
------ ------ ------ ------
Operating income before
depreciation and amortization ........ 4.27 1.05 4.13 1.54
Depreciation and amortization .......... 3.06 2.36 2.98 2.21
------ ------ ------ ------
Operating income/(loss) ................ 1.21 (1.31) 1.15 (0.67)
Other income (expense):
Interest and dividend income ......... -- .04 .02 .04
Interest expense ..................... (0.99) (0.73) (1.59) (.75)
Subsidiary operations for
period not owned .................. -- (0.66) -- (1.17)
Other, net ........................... -- (0.14) .09 (0.16)
------ ------ ------ -------
Total other expense .................... (0.99) (1.49) (1.48) (2.04)
Net income/(loss) ...................... 0.22 (2.80) (.33) (2.71)
====== ====== ====== =======
Consolidated net sales for the quarter ended September 30, 1996 decreased 9.6%
($2,635,000) to $24,814,000 from $27,449,000 for the quarter ended September 30,
1995. Year to date net sales also decreased by 9.6% from $83,693,000 to
75,676,000. Consolidated net sales for the quarter ended September 30, 1996
decreased 1.30% ($327,000) from the quarter ended June 30, 1996.
The decrease in sales is primarily attributable to a decrease in the mail order
operations. The decrease in such sales for the quarter and year to date were
21.1% ($3,470,000) and 19.7% (9,777,000), respectively. Several former Home
Pharmacy customers did not continue after the acquisition in September of 1995.
This was in part because of the Company's determination not to seek renewal of
contracts with very low profit margins. The majority of these contracts ended
December 31, 1995. During the first nine months of 1996, in the normal course of
business, the Company has acquired and lost customers without significant
variation in sales. During the quarter ended September 30, 1996, there were no
significant acquisitions or losses. Effective December 31, 1996, FMC, a major
mail-order client, did not accept the Company's bid to renew its contract. FMC
sales on an annualized basis is $5,000,000. Also during the fourth quarter, the
Company signed a letter of intent with the Union Labor Life Insurance Company.
Under the terms of the agreement, the Union Labor Life Insurance Company and
Zenith Administrators, Inc., both subsidiaries within the ULLICO Inc. holding
group (ULLICO), will utilize the Company's integrated retail and mail service
prescription drug management services for marketing to potential and existing
clients with an additional goal of increasing the number of prescription drug
benefit clients. The potential market to the Company is 2 million lives, which
includes the 230,000 lives and $50 million of existing prescription benefit
management business being serviced by the Company's predecessor. Implementation
of sales to existing and potential ULLICO clients is expected to begin in the
first quarter of 1997.
<PAGE>
Revenues from claims processing increased during the quarter by 17.7%
($1,967,000) and year to date by 14.3% ($4,819,000). This increase was caused by
an increase in the customer base over 1995. As in the mail order business,
during the nine months ended September 30, 1996 the Company acquired and lost
customers, however, there were no significant acquisitions or losses. Effective
October 1, 1996, NIS, a major claims processing client, decided to change its
service provider. NIS accounted for approximately $10,000,000 in annual sales.
As mentioned in the preceding paragraph, 1997 revenues for claims processing is
expected to offset the NIS revenue losses through the implementation of the
ULLICO contract.
Sales from retail pharmacies decreased significantly as poor performing stores
were disposed of or closed, in accordance with the terms and provisions
implemented at December 31, 1995. Costs associated with the disposition or
closing of the stores as provided for in the December 31, 1995 financial
statements. The decrease in retail sales for the quarter and year to date was
57.3%, ($979,000), and 55.9%, ($2,935,000).
Consolidated cost of sales decreased as a percentage of sales and in total
dollars for both the quarter and year to date reflecting improved overall
margins achieved primarily by non-renewal of certain low margin contracts.
Margins were also improved from 1995 with the second quarter 1996 change in the
Company's principle supplier.
Sales, general, and administrative expenses decreased in total dollars and as a
percentage of sales for the quarter and year to date ended September 30, 1996,
compared to the comparable periods from last year. The decrease in expenses as a
percentage of sales is attributable to the 1995 acquisition of Home Pharmacy.
The Company's earnings before interest, taxes, depreciation and amortization
(EBITDA) for the quarter ended September 30, 1996 increased by 266.8%
($771,000). There was also a significant increase in EBITDA as a percentage of
sales, to 4.27% from last year's 1.05%. Year to date, EBITDA increased by
$1,832,000 (141.6%) compared to the first nine months of 1995. EBITDA increased
to 4.13% from 1.54% as a percentage of net sales compared to last year.
Depreciation and amortization expense increased both in dollars and as a
percentage of sales for both the quarter and nine months ended September 30,
1996 compared to the same periods last year. This increase is attributable to
the Home Pharmacy acquisition on September 15, 1995. This increase was partially
offset by the write down of intangible assets in late 1995 primarily for the
closure of the South Carolina and Baltimore facilities.
Operating income for the quarter and year to date ending September 30, 1996 was
$301,000 and $874,000, respectively. This compares to an operating loss for the
quarter and year to date ending September 30, 1995 of ($360,000) and ($560,000),
respectively. This improvement is attributable to the items listed above.
Interest expense increased for the quarter and nine months ended September 30,
1996 compared to the same periods last year by 23.5% ($47,000) and 92.5%
($580,000), respectively. The increase reflects the interest on the Company's
revolving credit line initiated in December, 1995. Other income is also impacted
by the adjustment for subsidiary operations for the period not owned reflecting
the purchase of Home Pharmacy.
Liquidity and Capital Resources
Liquidity and cash flow remain a concern to management. Significant contingent
liabilities discussed below could further impact cash flow if they materialize.
As of September 30, 1996, there was working capital of $3,497,000 compared to
deficit working capital of $5,138,000 at December 31, 1995. The working capital
position improved primarily due to $4,650,000 current notes payable to
ArcVentures being paid from the proceeds of the Series E Preferred Stock
($2,500,000) and Series F Preferred Stock ($2,500,000) and cash flow from
operating activities of $1,295,000 generated during the third quarter. Operating
activities used $5,097,000 of cash flows during the first nine months of the
year. This is primarily attributable to an increase in accounts receivable
($5,433,000), mostly from state and governmental agencies and the pay down of
accounts payable ($1,872,000). Such operating cash needs were funded by the
gross proceeds from the sales of Series C Preferred Stock ($2,100,000), Series D
Preferred Stock, ($6,000,000).
During September 1996, demand was made by certain preferred shareholders for
conversion of shares of Series A Preferred Stock to a note payable. The Board of
Directors of the Company is considering the Company's response.
<PAGE>
Effective September 30, 1996, the Company and Bergen Brunswig Drug Company
entered into a non-binding letter of intent to settle the lawsuits each party
filed against the other in June, 1996. The proposed settlement is subject to
various conditions, including among other things the completion of due
diligence, execution of mutually acceptable definitive documentation and
agreements with respect to certain open issues. The proposed settlement would
resolve a disputed $7.1 million trade payable to Bergen and claims asserted
against Bergen by Mednet in the pending lawsuits. The potential settlement with
Bergen Brunswig will not increase Mednet's liabilities and will not decrease its
cash position.
Pursuant to the May 19, 1995 Purchase of Senior Convertible Note Agreement and
their addendum's, demand has been made for the difference between the sales
proceeds from the sale of the stock and the guaranteed sales price of the
Agreement. The demand made In November 1996 requested funds of less than
$285,000.
The Company is exploring financing options which are available to it, including
refinancing its current financial obligations. However, there can be no
assurance that the Company will be able to obtain alternative financing, or that
such financing will be on similar or more favorable terms. In the event the
financing agreement with the Company's current lender is terminated before its
maturity, certain deferred charges could be charged to the income statement.
Statements regarding the Company's expectations as to sales and certain other
information presented in this Form 10-Q constitute forward looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
Although the Company believes that its expectations are based on reasonable
assumptions within the bounds of its business and operations, there can be no
assurance that actual results will not differ materially from its expectations.
In addition to matters affecting the economy and the Company's industry
generally, factors which could cause actual results to differ from expectations
include, but are not limited to, the following: (i) the Company's ability to
obtain alternative debt financing may be adversely affected by its past
technical defaults on its current debt financing and its uncertainty of future
profitability; (ii) failure of revenue on new contracts to develop as estimated;
(iii) unexpected loss of existing contracts; and (iv) materialization of the
contingent liabilities would impact the future profitability and cash flow of
the Company.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company and its Chief Executive Officer previously entered into a
settlement agreement in connection with a class action brought against
them by plaintiff Mark Christiansen on January 12, 1995 in the United
States District Court for the Southern District of California. A
settlement class was certified, consisting of all persons (excluding
the defendants and their affiliates) who purchased common stock of
Medi-Mail, Inc. between July 1, 1993 and March 31, 1994. Pursuant to
the settlement agreement, the Company and its insurance carrier paid
$800,000 into a settlement escrow account in May, 1996. Notice of the
proposed settlement was given to the settlement class, and the Court
held a hearing on approval of the proposed settlement on September 9,
1996. No class member objected to the proposed settlement. On October
28, 1996, the Court entered a Final Judgment and Order of Dismissal
with Prejudice, approving the settlement, and terminating the
litigation. The period for filing any appeal of the October 28, 1996
Order expires on November 27, 1996. All claims of settlement class
members with respect to the purchase of Medi-Mail stock between July 1,
1993 and March 31, 1994 are barred by the settlement, except for those
settlement class members who requested exclusion from the class. All
amounts which the Company was responsible for were fully accrued in the
December 31, 1995 financial statements
On July 22, 1996, the Company received a "Statement of Respondents"
from the Nevada State Board of Pharmacy regarding alleged prescription
processing issues. A hearing date was originally scheduled for August
21, 1996 for Medi-Mail, Inc. and staff pharmacists. Legal counsel for
the Company requested and received a continuance of four months to
November 13, 1996. There has not yet been resolution in this matter.
The Executive Secretary of the Nevada State Board of Pharmacy is
seeking from the Board appropriate disciplinary action. The Company has
not been informed what such sanctions might be. Legal counsel for the
Company is of the opinion that the Board's contentions are unsupported
under Nevada law. Management intends to contest this administrative
proceeding.
The Company and Bergen Brunswig Drug previously filed lawsuits against
each other in June 1996. The parties agreed to not require responsive
pleading to be filed in either action while settlement negotiations are
proceeding. Effective September 30, 1996, the parties agreed to a
non-binding letter of intent to settle the lawsuits. The proposed
settlement is subject to various conditions, including among other
things the completion of due diligence, execution of mutually
acceptable definitive documentation and agreements with respect to
certain open issues. The proposed settlement would resolve a disputed
$7.1 million trade payable to Bergen and claims asserted against Bergen
by Mednet in the pending lawsuits. The potential settlement with Bergen
Brunswig will not increase Mednet's liabilities and will not decrease
its cash position.
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULTS ON SENIOR SECURITES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. ) Those exhibits previously filed with the Securities and Exchange
Commission as required by Item 601 of Regulation S-K, are incorporated
by reference in accordance with the provision of Rule 12b-32. a. ) b)
Reports on Form 8-K during the quarter. None.
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: November 13, 1996
MEDNET, MPC CORPORATION
By: /s/ Michael B. Merryman
-------------------------------------
Michael B. Merryman
President and Chief Executive Officer
By: /s/ Thomas C. Warren
--------------------------------------
Thomas C. Warren
Chief Financial Officer
By: /s/ Thomas C. Warren
----------------------------
Kyle L. Tingle
Controller
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
SEPTEMBER 30, 1996 10-Q FOR MEDNET, MPC CORPORATION AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 705
<SECURITIES> 0
<RECEIVABLES> 24,308
<ALLOWANCES> 1,077
<INVENTORY> 1,422
<CURRENT-ASSETS> 26,672
<PP&E> 1,422
<DEPRECIATION> 0
<TOTAL-ASSETS> 46,159
<CURRENT-LIABILITIES> 23,175
<BONDS> 0
5,350
4,600
<COMMON> 33
<OTHER-SE> 13,001
<TOTAL-LIABILITY-AND-EQUITY> 46,159
<SALES> 75,676
<TOTAL-REVENUES> 75,676
<CGS> 62,955
<TOTAL-COSTS> 62,955
<OTHER-EXPENSES> 9,595
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,207
<INCOME-PRETAX> (252)
<INCOME-TAX> 0
<INCOME-CONTINUING> (252)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (252)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
