UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A#1
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended September 30, 1995
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from to
Commission file number 0-17973
MEDCROSS, INC.
(Exact name of small business issuer as specified in its charter)
FLORIDA 59-2291344
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3227 Bennet Street North, St. Petersburg, Florida 33713
(Address of principal executive offices)
(813) 521-1793
(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 issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.
Class Outstanding at October 31, 1995
Common Stock, par value $0.007 1,751,243
Traditional Small Business Disclosure Format (Check One): Yes No X
<PAGE> 1
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
<TABLE>
<CAPTION>
MEDCROSS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(unaudited)
Assets
September 30
1995
------------
<S> <C>
Current Assets
Cash and cash equivalents $ 78,692
Accounts receivable less allowance of $727,640 878,851
Inventory 798,839
Prepaid expenses 75,378
---------
Total current assets 1,831,760
---------
Property and equipment 3,388,737
Less accumulated depreciation 1,677,603
---------
Net property and equipment 1,711,134
---------
Intangible assets, net of amortization of $223,910 556,445
Other assets 70,945
---------
Total assets $ 4,170,284
=========
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued expenses $ 545,258
Advance deposits received 191,735
Reserve for warranty liability 40,144
Note payable - related party 218,000
Note payable - other 400,000
Current portion of long-term debt 119,434
Current obligations under capital lease 219,007
---------
Total current liabilities 1,733,578
---------
Long-term debt 675,000
Minority equity interest in consolidated subsidiaries 378,843
Commitments and contingencies -
Stockholders' equity
Preferred stock 2,075,000
Common stock 12,244
Other stockholders' deficit ( 704,381)
---------
Total stockholders' equity 1,382,863
---------
Total liabilities and stockholders' equity $ 4,170,284
=========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE> 2
<TABLE>
<CAPTION>
MEDCROSS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
-------------------------- -------------------------
1995 1994 1995 1994
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
Net operating revenue $ 607,014 $ 1,152,859 $ 2,482,866 $ 2,981,139
--------- --------- --------- ---------
Cost of goods sold - equipment sales
and service ( 46,601) 473,460 193,197 473,460
Salaries and benefits 262,787 319,885 903,205 928,937
Repairs and maintenance 78,673 76,800 233,161 238,931
Provision for doubtful accounts 18,444 43,135 342,089 99,507
Depreciation and amortization 113,901 122,722 348,594 368,689
Other operating expenses 341,950 335,921 956,486 939,367
--------- --------- --------- ---------
Operating loss ( 162,140) ( 219,064) ( 493,866) ( 67,752)
Interest expense 44,066 41,880 124,886 128,058
Other income ( 16,493) ( 7,023) ( 39,892) ( 24,540)
Gain on sale of interest in unconsolidated
subsidiary ( 20,500) - ( 20,500) -
Equity in net income of unconsolidated
subsidiary - 1,139 - 14,444
--------- --------- --------- ---------
Loss before minority interest in net income
(loss) of consolidated subsidiaries and
income tax provision ( 169,213) ( 255,060) ( 558,360) ( 185,714)
Minority interest in net income (loss) of
consolidated subsidiaries 4,160 ( 22,394) ( 3,684) 16,123
--------- --------- --------- ---------
Loss before income tax provision ( 173,373) ( 232,666) ( 554,676) ( 201,837)
Income tax provision - ( 73,280) - ( 68,094)
--------- --------- --------- ---------
Net loss $( 173,373) $( 159,386) $( 554,676) $( 133,743)
========= ========= ========= =========
Loss per common and equivalent share
after preferred dividends $( .12) $( .12) $( .37) $( .14)
========= ========= ========= =========
Weighted average common and equivalent
shares outstanding 1,749,841 1,520,683 1,749,389 1,520,436
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE> 3
<TABLE>
<CAPTION>
MEDCROSS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Nine Months Ended
September 30
--------------------------
1995 1994
---------- ------------
<S> <C> <C>
Cash provided (used) by operating activities $ 156,525 $( 414,598)
------- ---------
Cash flows from investing activities
Purchase of property and equipment ( 18,321) ( 41,488)
Proceeds from sale of property and equipment 4,900 425
Proceeds from sale of interest in unconsolidated subsidiary 28,000 -
Investment in unconsolidated subsidiary - ( 3,750)
------- ---------
Net cash provided (used) by investing activities 14,579 ( 44,813)
------- ---------
Cash flows from financing activities
Proceeds of note payable - related party 218,000 -
Proceeds (reduction) of note payable - other (151,000) 200,000
Reduction of long-term debt (280,997) ( 291,858)
Reduction of capital lease obligations (182,589) ( 165,781)
Issuance of common stock - 8
Additional paid-in capital - 263,391
Minority interest distributions ( 54,750) ( 36,267)
------- ---------
Net cash used by financing activities (451,336) ( 30,507)
------- ---------
Effect of foreign currency translation on cash flows ( 2,233) ( 87,306)
------- ---------
Decrease in cash and cash equivalents (282,465) ( 577,224)
Cash and cash equivalents at beginning of period 361,157 1,176,757
------- ---------
Cash and cash equivalents at end of period $ 78,692 $ 599,533
======= =========
<CAPTION>
Supplemental cash flow information
In February 1995 a holder of Class B Preferred Stock converted 9,350 shares into 227,714 shares of Common
Stock.
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE> 4
MEDCROSS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Financial Statements
In the opinion of management, all adjustments, consisting only of normal
recurring adjustments necessary for a fair statement of (a) the results of
operations for the three-month and nine-month periods ended September 30, 1995
and September 30, 1994, (b) the financial position at September 30, 1995, and
(c) cash flows for the nine-month periods ended September 30, 1995 and September
30, 1994, have been made.
The unaudited consolidated financial statements and notes are presented as
permitted by Form 10-QSB. Accordingly, certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been omitted. The
accompanying consolidated financial statements and notes should be read in
conjunction with the audited financial statements and notes of the Company for
the fiscal year ended December 31, 1994. The results of operations for the
nine-month period ended September 30, 1995 are not necessarily indicative of
those to be expected for the entire year.
Note 2 - Related Party Transactions
The Company received advances from Mortgage Network International. The Company
issued a promissory note bearing interest at one percent over the prime rate at
Southwest Bank of Texas, N.A. with maturity of October 1, 1995. The Company's
Vice Chairman/President has management control over Mortgage Network
International. The principal balance due at September 30 is $218,000. Mortgage
Network International has agreed to extend the term of the note to three years
provided the Company makes monthly principal and interest payments beginning
December 1, 1995.
Note 3 -Earnings Per Common Share
Earnings per common share are based upon the weighted average number of common
shares outstanding and the dilutive effect of common stock equivalents
consisting of stock options and convertible preferred stock. Fully diluted
earnings per share are not presented because it approximates earnings per common
share.
Note 4 - Geographic Segment Information
The Company's operations consist of providing diagnostic and clinical outpatient
health care services domestically and the sale and service of used medical
equipment in the People's Republic of China (PRC). The corporate office
provides management and operational services for domestic outpatient health care
services. The eliminations represent charges for these services to entities
included in the consolidation. Financial information for the different
geographic segments is as follows:
<TABLE>
Nine Months Ended Corporate/
September 30, 1995 Domestic China Management Eliminations Consolidated
- ----------------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenue $ 1,907,911 $ 337,889 $ 340,036 $( 102,970) $ 2,482,866
========= ========= ========= ========= =========
Operating Profit (Loss) $ 258,469 $( 197,230) $( 452,135) $( 102,970) $( 493,866)
========= ========= ========= ========= =========
Identifiable Assets $ 3,106,345 $ 1,043,769 $ 167,384 $( 147,214) $ 4,170,284
========= ========= ========= ========= =========
<PAGE> 5
<CAPTION>
Nine Months Ended Corporate/
September 30, 1994 Domestic China Management Eliminations Consolidated
- ----------------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenue $ 2,118,420 $ 443,600 $ 499,020 $( 79,901) $ 2,981,139
========= ========= ========= ========= =========
Operating Profit (Loss) $ 607,388 $( 255,810) $( 339,429) $( 79,901) $( 67,752)
========= ========= ========= ========= =========
Identifiable Assets $ 3,854,289 $ 1,284,576 $ 488,766 $( 74,979) $ 5,552,652
========= ========= ========= ========= =========
</TABLE>
<PAGE> 6
PART II - OTHER INFORMATION
Item 6(a) - Exhibits
4(a) Series CS Warrant to purchase common shares of Medcross, Inc. 1/
10(a) Consulting Agreement by Medcross, Inc., Kalo Acquisitions, L.L.C.,
and Jason H. Pollak. 2/
10(b) Consulting Agreement, dated as of August 6, 1995, between the
Company and Timothy R. Barnes. 1/
10(c) Medcross, Inc. 1995 Director's Stock Option and Appreciation Rights
Plan. 3/
10(d) Medcross, Inc. 1995 Employee Stock Option and Appreciation Rights
Plan. 3/
11 Statement regarding computation of earnings per common share. PAGE 12
- -------------------------------------------
1/ Incorporated by reference to the Company's registration statement on
Form S-8, filed October 27, 1995 (File Number 33-63751).
2/ Incorporated by reference to the Company's registration statement on
Form S-8, filed on October 27, 1995 (File Number 33-63749).
3/ Incorporated by reference to the Company's Proxy Statement filed on
September 25, 1995 (File Number 0-17973).
Item 6(b) - Reports on Form 8-K
None.
<PAGE> 10
SIGNATURES
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 thereunder duly authorized.
MEDCROSS, INC.
(Registrant)
Date: November 14, 1995 By: /s/ HENRY TOH
Henry Toh
President
(Acting Principal Financial Officer &
Acting Principal Accounting Officer)
<TABLE>
<CAPTION>
EXHIBIT 11
COMPUTATION OF EARNINGS PER COMMON SHARE
Three Months Ended Nine Months Ended
September 30 September 30
-------------------------- --------------------------
1995 1994 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Earnings per common and common equivalent share
Net income (loss) available to common
and equivalent shares $( 206,060) $( 189,709) $( 650,658) $( 216,482)
========= ========= ========= =========
Weighted average common shares
outstanding 1,749,163 1,514,213 1,710,593 1,506,941
Adjustments
Assumed conversion of Class B Variable Rate
Cumulative Convertible Preferred Stock - 6,470 - 13,495
--------- --------- --------- ---------
Total common and equivalent shares 1,749,841 1,520,683 1,749,389 1,520,436
========= ========= ========= =========
Loss per common and equivalent share
after preferred dividends $( .12) $( .12) $( .37) $( .14)
========= ========= ========= =========
Fully diluted earnings per common and common equivalent share
Net income (loss) available to common
and equivalent shares $( 206,060) $( 189,709) $( 650,658) $( 216,482)
========= ========= ========= =========
Weighted average common shares
outstanding 1,749,163 1,514,213 1,710,593 1,506,941
Adjustments
Assumed conversion of Class B Variable Rate
Cumulative Convertible Preferred Stock - 6,470 - 13,495
--------- --------- --------- ---------
Total common and equivalent shares 1,749,841 1,520,683 1,749,389 1,520,436
========= ========= ========= =========
Loss per common and equivalent share
after preferred dividends $( .12) $( .12) $( .37) $( .14)
========= ========= ========= =========
</TABLE>
<PAGE> 12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS DOCUMENT CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
MEDCROSS, INC. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN
THE COMPANY'S FORM 10-QSB FOR THE NINE MONTHS ENDED AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 78692
<SECURITIES> 0
<RECEIVABLES> 1606491
<ALLOWANCES> 727640
<INVENTORY> 798839
<CURRENT-ASSETS> 75378
<PP&E> 3388737
<DEPRECIATION> 1677603
<TOTAL-ASSETS> 4170284
<CURRENT-LIABILITIES> 1733578
<BONDS> 0
<COMMON> 12244
0
2075000
<OTHER-SE> (704381)
<TOTAL-LIABILITY-AND-EQUITY> 4170284
<SALES> 337889
<TOTAL-REVENUES> 2482866
<CGS> 193197
<TOTAL-COSTS> 193197
<OTHER-EXPENSES> 2441446
<LOSS-PROVISION> 342089
<INTEREST-EXPENSE> 124886
<INCOME-PRETAX> (554676)
<INCOME-TAX> 0
<INCOME-CONTINUING> (554676)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (554676)
<EPS-PRIMARY> (.37)
<EPS-DILUTED> (.37)
</TABLE>
