U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
COMMISSION FILE NO. 0-27236
MEDICAL ASSET MANAGEMENT, INC.
A Delaware Corporation EIN: 33--0359976
4447 E. Broadway, Suite 102
Mesa, Arizona 85206
Telephone: 602-830-7414
Securities registered under Section 12(g) of the Exchange Act:
Common Shares
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The registrant has filed all reports required to be filed by Section 13
or 15(d) of the Exchange Act during the past 12 months or such shorter period
for which such reports were required.
The Company's Form 10KSB for the fiscal year ended December 31, 1995
was filed late.
The number of common shares issued and outstanding as of May 1, 1996
was
10,773,848.
This report form is not filed as a transitional format.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
The Company's unaudited financial statements for the first quarter of
1996 at the end of this report. The financial information as of March 31, 1995
and for three months ended March 31, 1996 have been restated to reflect the
pooling of interests required by the acquisition of Healthcare Professional
Management, Inc. completed December 31, 1995. Certain March 31, 1995 financial
information published in the Company's press release dated May 7, 1996 and filed
in Form 8-K are in error, because they did not reflect the restatement of March
31, 1995 numbers required by the acquisition.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION.
RESULTS OF OPERATIONS
During the first quarter of 1996 the Company experienced positive
changes in several of its financial results as follows:
Increase (Decrease) 12/31/95 to 1st Q 95/ 1st Q 96
3/31/96
Revenue n/a 114%
Assets 15% 52%
Liabilities 13% (1%)
Shareholders Equity 16% 129%
Net Income n/a 70%
Earnings Per Share n/a 67%
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The results of operations for the first quarter of 1996 show the
continuance of the growth trend that the Company has experienced over the last
five quarters. This growth is based in part on the implementation of the
Company's business plan relating to medical asset acquisitions and execution of
additional management agreements. The Company has been active in providing its
services in new geographical areas as well as contributing to the increase of
business of existing managed medical practices.
An analysis of changes to specific indicators of the financial
condition of the Company follows:
ASSETS:
Cash Although cash remained relatively constant from
March 31, 1995 to March 31, 1996 there is a
continuing need to raise capital to fund the
daily operations and expansion activity of the
Company.
Accounts An increase of 17% from 12/31/1995 to 3/31/1996
Receivable Receivable reflects the results of additional
asset purchases and additional management
agreements. This compares to the 25% increase
between March 31, 1995 and March 31, 1996. Five
additional asset acquisitions were made in the
first quarter accounting for approximately 14%
of the 17% increase in receivables since year
end. A management agreement executed in
December, 1995 with first quarter 1996 revenues
of approximately $ 1.3 million allowed for the
accounts receivable to be purchased in the
second quarter of 1996. The effects of this
transaction being included in the average
accounts receivable turn ratio would reflect an
average turn of 144 days as of 12/31/95 as
compared to 125 days as of 3/31/96. The turn
ratio was 174 days as of March 31, 1995.
Management Fee An increase of 20% between year end and the end
of the first quarter was tied to an increase
during the quarter of the overall revenue of the
Company. Management fees receivable during the
March 31, 1995 quarter were 345% lower than for
the first quarter of 1996. A trend toward
execution of management agreements with four
person or larger practices is emerging which
shows the larger practices transition more
slowly than smaller practices, thereby deferring
receipt of management fees. This trend
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may continue through the expansion period of the
Company. There is a strong possibility that
managed fee receivables will continue to
increase proportionately to revenue growth.
LIABILITIES
Notes Payable An increases of 17% since year end reflects the
acquisition of accounts receivable for notes
during the first quarter. The March 31, 1996
level was 51% lower than at March 31, 1995.
Accrued Income Increases both from year end and first quarter
1995 to first quarter 1996 are a result of
higher earnings from more assets. Earnings are
recognized on an accrual basis while taxes are
paid on a cash basis. This trend will continue
as the Company's expansion continues.
SHAREHOLDER'S EQUITY
Additional Paid Increases of 11% since December 31, 1995 and
In Capital 149% since March 31, 1995 are the result of the
most recent acquisitions in which fixed assets
were acquired in exchanged for common stock in
the Company. The value of the fixed assets
acquired in excess of the par value of the stock
increases paid in capital. This item will
continue to increase as long as the Company's
growth strategy proceeds.
Retained Earnings Retained earnings were $ 2,280,182.00 as of
March 31, 1996, up 28% from year end and up 97%
from March 31, 1995. As profits continue to
increase and the Company continues to reinvest
its earnings in growth of the Company this
amount will continue to rise.
PROFIT AND LOSS
Management Fees For the quarter ended March 31, 1996 the
management fee revenue increased by
approximately 85% from the same period of 1995.
This was due to fee generating transactions
during the 12 month period.
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Salaries, Consulting At the present time these expenses are related
Fee and Other to the the growth of the Company and acquisition
Expense of assets. The Company has be able to recognize
some economies of scale as its business has
expanded and expects to reduce expense rations
where possible in the future.
For additional information about long term trends, competition, and liquidity
please see the discussion in the Form 10KSB for the year ended 12/31/95. No
significant change occurred in these categories of information during the first
quarter of 1996.
EXPANSION ACTIVITY
The Company continued during the first quarter of 1996 to acquire
additional medical practice assets and execute additional management agreements
in exchange for consideration consisting of cash, debt and/or common stock. As
with prior transactions the Company is allowed to retain a range of 10% to 30%
of the net practice revenue. The Company by its management agreement is assured
of a minimum cash management fee of 5% of cash collected per month.
During the first quarter of 1996 the Company entered into the following material
transactions. These transactions are due to close by the end of the second
quarter of 1996.
1. Arbor Family Medicine, Denver, Colorado. A management agreement,
real estate purchase agreement and asset purchase agreement were signed on
3/31/96. The parties have agreed to close the asset purchase agreement and real
estate purchase agreement by June 28, 1996. The Company made a non-refundable
deposit of $ 50,000.00 on account of the real estate purchase. This medical
practice has a gross annual revenue of $ 1,400,000.00. Total consideration for
the purchase of all assets is estimated to be $ 630,000.00 including the real
estate.
2. Rocky Mountain Woman's Health Clinic, Denver, Colorado. A management
agreement was signed on 3/31/96 and an asset purchase agreement has been
submitted but not yet signed. The parties have agreed to close the asset
purchase agreement by June 30, 1996. This practice has a gross annual revenue of
$ 1,200,000.00. Total consideration for the assets is estimated to be
$540,000.00.
3. Contemporary Women's Health Care, Seattle, Washington. A
management agreement was signed on 3/31/96 between the Company and
Contemporary. The Company has signed a management agreement and asset
purchase agreement with Manfred Leband, M.D. PS, a Wash. Prof. Service Corp.
as of 3/31/96. The medical practices of Contemporary and Leband are merging. The
combined practice is estimated to have an annual gross revenue of $ 500.000.00.
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Total consideration for the assets is estimated to be $ 90,000.00.
4. Hollister Medical Group, Hollister, California and the Company
agreed in principal to enter into a management agreement and asset purchase
agreement as of 3/31/96 but definitive contracts have not yet been signed. The
management contract is operational as of 3/31/96. This practice is estimated to
have a gross annual revenue of $ 500,000.00. Total consideration for the assets
is estimated to be $ 25,000.00.
5. DeSoto Family Practice, Memphis, Tennessee. A management agreement
was signed on 3/31/96 and an asset purchase agreement and real estate purchase
agreement has been proposed but not yet signed. Drafts of the asset acquisition
contracts are being reviewed. The parties have agreed to close the asset
acquisition phase on or before June 6, 1996. The practice has an estimated gross
annual revenue of $ 900,000.00. Total consideration for the assets including the
real estate is estimated to be $ 405,000.00.
The acquisitions set forth above include the issuance of restricted
common stock at closing and additional restricted common stock over each of the
following four years providing certain income targets are met. The total number
of restricted common shares to be issued over the next four years providing the
target income levels are attained is 619,000.
OTHER ACTIVITY
During the first quarter of 1996 a management agreement with Dr.
Richard Angelo of Seattle, Washington was terminated by mutual agreement. The
practice had an estimated annual revenue of $ 750,000.00.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There has been no material change in legal proceedings from
the matters reported on the Form 10KSB for the year ended December 31, 1995.
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ITEM 2. CHANGES IN SECURITIES
There has been no changes in the rights, preferences or
privileges of any security of the Company during the first quarter of 1996.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
There has been no default on any senior security during the
first quarter of 1996.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters have been submitted to a vote of security holders
during the first quarter of 1996.
ITEM 5. OTHER INFORMATION
The Company is advised that the Securities and Exchange
Commission is conducting an investigation of persons the Company may have done
business with in the past. The status of the investigation is unknown.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
During the first quarter of 1996 the Company filed one report on Form
8-K on February 6, 1996.
Financial Statements.
The Company's unaudited financial statements for the first quarter of
1996 follow.
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MEDICAL ASSET MANAGEMENT, INC.
A Delaware Corporation
4447 E. Broadway, Suite 102
Mesa, Arizona 85206
Unaudited Financial Statements
For The First Three Months Ended March 31, 1996
and March 31, 1995
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MEDICAL ASSET MANAGEMENT, INC.
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996
AND MARCH 31, 1995 (UNAUDITED)
March 31, 1996 March 31, 1995
(unaudited) (unaudited)
---------------- ----------------
REVENUE
Management fee income $ 5,450,123 2,549,340
-------------- -------------
EXPENSES
Salaries 981,022 479,452
Consulting fees 1,798,540 955,279
Legal and accounting 0 0
Depreciation and amortization 69,499 38,132
Debenture interest 0 0
Bank charges 0 0
Telephone 0 0
General and administrative 1,742,247 589,576
Travel 0 0
Interest, other 76,560 0
------------- -------------
4,649,868 2,062,439
NET INCOME BEFORE TAXES
EXTRAORDINARY ITEM 800,255 486,091
PROVISION FOR INCOME TAXES (303,657) (194,956)
------------- -------------
NET INCOME BEFORE EXTRAORDINARY ITEM 496,598 291,945
EXTRAORDINARY ITEM, UTILIZATION OF NET
OPERATING LOSS CARRYFORWARDS 0 0
------------ -------------
NET INCOME $ 496,598 291,945
WEIGHTED - AVERAGE NUMBER OF
SHARES OUTSTANDING 10,692,491 10,701,514
EARNINGS PER SHARE (COMMON ONLY) $ 0.05 0.03
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MEDICAL ASSET MANAGEMENT, INC.
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND
MARCH 31, 1995 (UNAUDITED)
March 31, 1996 March 31, 1995
(unaudited) (unaudited)
Net Income $ 496,598 291,945
Adjustments to reconcile net income to
net cash provided by operating
activities, depreciation and amortization 69,499 38,132
(Increase) Decrease in:
Accounts Receivable (867,518) (233,155)
Management Fee Receivable (180,522) (21,690)
Other assets (96,431) (3,942)
(Increase) Decrease in:
Capital Leases (4,737) 0
Accounts Payable (14,143) (100,099)
Accrued Liabilities 303,657 171,163
Loans Payable 209,783 40,434
---------- ---------
NET CASE PROVIDED BY (USED IN)
OPERATING ACTIVITIES (83,814) 192,788
CASH FLOWS FROM INVESTING ACTIVITIES
Property and Equipment Additions (336,500) 14,966
---------- ---------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES (336,500) 14,966
CASH FLOWS FROM FINANCING ACTIVITIES
Reduction in Long Term Debt 0 (230,125)
Sale of Common Stock 457,931 63,737
NET CASE PROVIDED BY (USED IN)
FINANCING ACTIVITIES 457,931 (166,388)
NET INCREASE (DECREASE) IN CASH 37,617 41,366
CASH AT THE BEGINNING OF THE YEAR 131,873 46,422
--------- ---------
CASH AT THE END OF THE YEAR 169,490 87,808
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MEDICAL ASSET MANAGEMENT, INC.
BALANCE SHEET
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND
MARCH 31, 1995 (UNAUDITED)
March 31, 1996 March 31, 1995
(unaudited) (unaudited)
ASSETS
CURRENT ASSETS
Cash $ 169,490 87,808
Accounts receivable 6,081,321 4,877,379
Management fee receivable 1,094,350 253,260
Note receivable, shareholder 99,841 0
Security deposit 15,842 12,075
----------- ----------
7,460,844 5,230.522
FURNITURE AND EQUIPMENT, NET 795,410 434,946
FRANCHISE FEES, NET 889,900 938,300
GOODWILL, NET 2,101,762 801,184
----------- ----------
3,787,072 2,174,430
----------- ----------
TOTAL ASSETS 11,247,916 7,404,952
=========== ==========
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<TABLE>
<CAPTION>
March 31, 1996 March 31, 1995
(unaudited) (unaudited)
<S> <C> <C>
LIABILITIES
CURRENT LIABILITIES
Capital lease obligations $ 84,100 22,132
Note payable, shareholders 186,910 174,370
Payroll taxes payable 92,012 65,000
Notes payable - accounts receivable 1,629,911 3,306,634
Accrued liabilities 314,219 175,000
Accrued income taxes payable 1,270,545 649,051
Convertible subordinate debt 773,524 0
------------ ------------
TOTAL LIABILITIES 4,355,221 4,392,187
------------ ------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred stock $0.001 par value, 10,000,000
shares authorized;
Class A - 3,000,000 shares issued and
outstanding 3,000 3,000
Common stock $0.0001 par value, 50,000,000
shares authorized, 10,962,491
issued and outstanding 10,962 9,520
Additional paid-in capital 4,598,551 1,843,642
Accumulated surplus 2,280,182 1,156,603
------------ ------------
TOTAL SHAREHOLDERS'S EQUITY 6,892,695 3,012,76/5
TOTAL LIABILITIES AND SHAREHOLDERS'S EQUITY $ 11,247,916 7,404,952
============== ============
</TABLE>
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SIGNATURE
In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, this registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MEDICAL ASSET MANAGEMENT, INC.
Dated: MAY 20, 1996
By:/s/ John Regan
-------------------------------------------------
John Regan, President and Chief Financial Officer
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CORPORATIONS FORM 10-QSB FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996, AND IS
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 169,460
<SECURITIES> 0
<RECEIVABLES> 6,081,321
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7,460,844
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 11,247,916
<CURRENT-LIABILITIES> 4,355,221
<BONDS> 0
0
3,000
<COMMON> 10,962
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 11,247,916
<SALES> 5,450,123
<TOTAL-REVENUES> 5,450,123
<CGS> 0
<TOTAL-COSTS> 4,649,868
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 76,560
<INCOME-PRETAX> 800,255
<INCOME-TAX> 303,657
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<NET-INCOME> 496,598
<EPS-PRIMARY> .05
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</TABLE>
