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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Amendment No. 1
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 reflects Receivable 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 149%
In Capital 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. The increase
was due 85% from new management agreements and 15% from
existing management agreements.
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Salaries, Consulting At the present time these expenses are related to the
Fee and Other the growth of the Company and acquisition of assets.
Expense. 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 medial 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 for the above listed transactions at
closing is 236,000. The total number of 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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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
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By:
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John Regan, President and Chief Financial Officer
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