U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
/x/ QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
/ / TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE EXCHANGE ACT
For the transition period from ___________ to ___________
COMMISSION FILE NO. 0-27236
MEDICAL ASSET MANAGEMENT, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 33-0359976
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
25241 Paseo de Alicia, Suite 230
Laguna Hills, CA 92653
Telephone: (714) 829-8333
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 No x
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 15,799,129 shares of Common
Stock were outstanding as of September 25, 1997 (15,258,260 shares of Common
Stock were outstanding as of March 31, 1997).
Transitional Small Business Disclosure Format (check one):
Yes / / No /x/
<PAGE>
MEDICAL ASSET MANAGEMENT, INC.
INDEX
Page
No.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets
March 31, 1997 and December 31, 1996 2
Consolidated Statements of Operations
Three Months Ended March 31, 1997 and 1996 4
Consolidated Statements of Cash Flows
Three Months Ended March 31, 1997 and 1996 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Part II. Other Information
Item 1. Legal Proceedings 16
Item 2. Recent Sales of Unregistered Securities 16
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 17
1
<PAGE>
PART I
Item 1. Financial Statements.
<TABLE>
<CAPTION>
Medical Asset Management, Inc. and Subsidiary
Consolidated Balance Sheets
March 31, December 31,
1997 1996
-----------------------------
<S> <C> <C>
Assets (Unaudited)
Current assets:
Cash and cash equivalents $2,214,000 $3,400,000
Restricted cash 2,463,000 1,264,000
Accounts receivable, less $3,744,000 at
March 31, 1997 and $3,586,000
at December 31, 1996 4,975,000 4,480,000
Physicians receivables, less $150,000 of
allowance for doubtful accounts 2,788,000 2,660,000
Other current assets 244,000 269,000
-----------------------------
Total current assets 12,684,000 12,073,000
Property and equipment:
Land 195,000 -
Buildings 1,510,000 680,000
Furniture and equipment 1,985,000 1,668,000
-----------------------------
3,690,000 2,348,000
Less accumulated depreciation 564,000 507,000
-----------------------------
Total property and equipment, net 3,126,000 1,841,000
Intangible assets and other:
Acquired management contracts 14,197,000 12,202,000
Excess of cost of acquired assets over
fair value 5,431,000 5,431,000
Computer software license agreement 1,238,000 1,238,000
Other assets 20,000 20,000
-----------------------------
20,886,000 18,891,000
Less accumulated amortization 1,033,000 885,000
-----------------------------
Total intangible assets and other, net 19,853,000 18,006,000
-----------------------------
Total assets $35,663,000 $31,920,000
=============================
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Medical Asset Management, Inc. and Subsidiary
Consolidated Balance Sheets
(continued)
March 31, December 31,
1997 1996
-----------------------------
<S> <C> <C>
Liabilities and stockholders' equity (Unaudited)
Current liabilities:
Line of credit and notes payable $2,906,000 $1,707,000
Current portion of long-term liabilities 1,737,000 1,393,000
Accrued litigation settlements 1,573,000 1,573,000
Accounts payable 900,000 705,000
Accrued payroll 232,000 268,000
Accrued professional fees 785,000 945,000
Accrued expenses 304,000 379,000
-----------------------------
Total current liabilities 8,437,000 6,970,000
Notes payable and capital lease obligations 3,716,000 2,301,000
Convertible subordinated debt 125,000 126,000
Deferred tax liability 3,274,000 3,274,000
-----------------------------
Total liabilities 15,552,000 12,671,000
Stockholders' equity:
Convertible preferred stock - $.001 par
value 10,000,000 shares authorized;
Class A - 2,250,000
issued and outstanding at March 31,
1997 and December 31, 1996 2,000 2,000
Common Stock - $.001 par value-50,000,000
shares authorized, 15,258,000 shares
issued and outstanding at March 31,
1997 and 14,945,000 shares issued and
outstanding at December 31, 1996 15,000 15,000
Additional paid-in capital 19,617,000 18,382,000
Common stock to be issued, 2,040,000 at
March 31,1997 and 1,988,000 shares at
December 31, 1996 9,611,000 9,574,000
Unearned remuneration (1,494,000) (1,494,0000)
Deficit (7,640,000) (7,231,000)
-----------------------------
Total stockholders' equity 20,111,000 19,249,000
-----------------------------
Total liabilities and stockholders' equity $35,663,000 $31,920,000
=============================
See accompanying notes.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Medical Asset Management, Inc. and Subsidiary
Consolidated Statements of Operations
(Unaudited)
Three months ended March 31,
-----------------------------
1997 1996
(Restated)
-----------------------------
<S> <C> <C>
Net revenue $3,528,000 $1,453,000
Operating expenses:
Clinic salaries, wages, and benefits 1,149,000 547,000
Clinic laboratory and fees 438,000 241,000
Clinic rent 446,000 199,000
Other clinic costs 550,000 195,000
Consulting fees 138,000 10,000
Depreciation and amortization 204,000 138,000
-----------------------------
Total operating expenses 2,925,000 1,330,000
-----------------------------
603,000 123,000
General and administrative expenses 1,009,000 543,000
-----------------------------
(406,000) (420,000)
Other income (expense):
Net loss on litigation settlements and
clinic terminations - (749,000)
Interest income 39,000 16,000
Interest expense (61,000) (35,000)
Other (net) 19,000 (11,000)
-----------------------------
Total other income (expense) (3,000) (779,000)
-----------------------------
Loss before income taxes (409,000) (1,199,000)
Income tax expense - -
-----------------------------
Net loss $(409,000) $(1,199,000)
=============================
Net loss per share $(0.03) $(0.11)
=============================
Weighted average number of common
shares outstanding 15,047,000 11,100,000
See accompanying notes.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Medical Asset Management, Inc. and Subsidiary
Consolidated Statements of Cash Flows
(Unaudited)
Three months ended
March 31,
-----------------------------
1997 1996
(Restated)
-----------------------------
<S> <C> <C>
Cash flows from operating activities
Net loss $ (409,000) $ (1,199,000)
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization 204,000 138,000
Bad debt and contractual allowances 100,000 -
Write-off of franchise fees - 749,000
Common stock issued for services - 375,000
Changes in operating assets and
liabilities, net of effects of
acquisitions:
Accounts and physician receivables (378,000) (435,000)
Other current assets 32,000 -
Accounts payable (95,000) 255,000
Accrued payroll and expenses (273,000) 8,000
-----------------------------
Net cash used in operating activities (819,000) (109,000)
Cash flows from investing activities
Increase in restricted cash (1,199,000) -
Net cash used to fund acquisitions (153,000) (266,000)
Purchases of property and equipment (80,000) (13,000)
----------------------------
Net cash used in investing activities (1,432,000) (279,000)
Cash flows from financing activities
Proceeds from debt issuances 1,199,000 325,000
Repayment of debt (134,000) (125,000)
Net proceeds from issuances of common
stock - 225,000
-----------------------------
Net cash provided by financing
activities 1,065,000 425,000
Net increase (decrease) in cash (1,186,000) 37,000
Cash, beginning of period 3,400,000 132,000
-----------------------------
Cash, end of period $2,214,000 $169,000
=============================
Supplemental disclosure of cash
flow information:
Interest paid $41,000 $35,000
=============================
Assets acquired with stock issuance,
assumption of debt and other liabilities $3,457,000 $2,522,000
=============================
See accompanying notes.
</TABLE>
5
<PAGE>
Medical Asset Management, Inc. and Subsidiary
Notes to Consolidated Statements
1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial reporting and in accordance with Rule 10-01 of Regulation S-X.
In the opinion of management, the unaudited consolidated interim financial
statements contained in this report reflect all adjustments, consisting of only
normal recurring accruals which are necessary for a fair presentation of the
financial position and the results of operations for the interim periods
presented. The results of operations for any interim period are not necessarily
indicative of results for the full year.
These unaudited consolidated financial statements, footnote disclosures and
other information should be read in conjunction with the consolidated financial
statements and the notes thereto included in the Company's Annual Report on Form
10-KSB for the year ended December 31, 1996. The 1996 quarterly financial
statements were restated. See Note 3.
6
<PAGE>
2. Acquisitions
The Company entered into acquisitions and long-term management service
agreements with five and five medical groups during the three months ended March
31, 1997 and 1996, respectively.
<TABLE>
<CAPTION>
1997 1996
------------- -------------
(unaudited)
<S> <C> <C>
Cash and transaction costs $ - $ 266,000
Notes payable 1,289,000 665,000
Common stock issued and to be issued 1,272,000 1,565,000
Liabilities assumed 292,000 26,000
------------- -------------
Total costs $2,853,000 $2,522,000
============= =============
</TABLE>
The following unaudited pro forma information presents the results of operations
of the Company as of March 31, 1997 as if the 1997 transactions had been
consummated on January 1, 1997, and for the period ended March 31, 1996 as if
the 1997 and 1996 transactions were consummated on January 1, 1996.
The unaudited pro forma information presented below is for illustrative
information only and is not necessarily indicative of results which would have
been achieved or results which may be achieved in the future:
<TABLE>
<CAPTION>
1997 1996
----------------------------
(unaudited) (unaudited)
<S> <C> <C>
Revenue $3,919,000 $3,190,000
Net loss (373,000) (1,069,000)
Net loss per share $(0.02) $(0.10)
==============================
</TABLE>
7
<PAGE>
3. Restatement
During 1996, management restated the 1995 consolidated financial statements for
certain corrections of accounting principles and misapplications of facts that
existed at the time the 1995 financial statements were prepared. The corrections
also required restatement of and adjustments to the previously reported 1996
quarterly financial information as follows (unaudited):
<TABLE>
<CAPTION>
Net Income
Net Income (Loss) Per Stockholders'
(Loss) Share Equity
------------- --------------------------------
<S> <C> <C> <C>
Three months ended
March 31, 1996
As previously reported $373,000 $0.03 $9,097,000
Adjustment (1,572,000) (0.14) 2,293,000
------------- --------------------------------
As restated $(1,199,000) $(0.11) $11,390,000
============= =================================
</TABLE>
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Overview.
General. The Company is a physician practice management company that
develops contractual affiliations with physician practices that provide for
management by the Company and clinical autonomy for the physicians. The Company
also offers a full array of management services as a management service
organization under long term service contracts, to both affiliated physicians
and other independent healthcare entities, directly and through its subsidiary,
Healthcare Professional Management, Inc. ("HPM"). HPM also provides management
services on a consulting basis to over 200 physicians in Pennsylvania, West
Virginia and Ohio.
For the year ended December 31, 1996, the medical groups affiliated with
the Company derived approximately 35% of their medical service revenue from
service provided under Medicare and Medicaid programs and approximately 30% from
contractual fee-for-service arrangements with numerous payors and managed care
programs, respectively, none of which individually aggregated more than 10% of
medical service revenue. The remaining 35% of medical service revenue was
derived from various fee-for-service payors. Changes in the medical group's
payor mix can affect the Company's revenue. Management believes that the payor
mix during the first quarter of 1997 remained approximately the same as for the
year ended December 31, 1996.
Restatement. During 1996 management restated the prior periods' financial
statements for certain corrections of accounting principles and misapplication
of facts that existed at the time the financial statements were prepared. The
aggregate amount of the restatement resulted in a reduction in earnings from the
previously reported net income for the three months ended March 31, 1996 of
$373,000 to a net loss of $1,199,000.
9
<PAGE>
Results of Operations
The following table sets forth the percentages of revenues represented
by certain items reflected in the Company's Statement of Operations:
THREE MONTHS ENDED MARCH 31,
1997 1996
---- ----
Revenue 100.0% 100.0%
Operating expenses:
Clinic expenses 77.1% 82.0%
Depreciation and
amortization
5.8% 9.5%
--- ---
Income from operations 17.1% 8.5%
General and administrative 28.6% 37.4%
Other income (expense) (.1)% (53.6)%
Income tax expense 0% 0%
------ ------
Net loss (11.6)% (82.5)%
Quarter Ended March 31, 1997 Compared to Quarter Ended March 31, 1996
At March 31, 1997, the Company managed 31 practices having a total of
101 physicians in nine states pursuant to its standard equity arrangements as
compared to 24 practices having a total of 35 physicians in seven states at
March 31, 1996. During the quarter ended March 31, 1997, the Company entered
into such arrangements with 5 additional practices as compared to 5 additional
practices in the quarter ended March 31, 1996. No practices were terminated
during such periods. Changes in the results of operations from the quarter ended
March 31, 1997, compared to the quarter ended March 31, 1996 were caused
primarily by affiliations with the additional practices, the continued building
of a corporate infrastructure, write-off of franchise fees and the settlement of
certain litigation, with their corresponding professional fees.
Net Revenue increased approximately $2,075,000, or 143%, to $3,528,000
for the quarter ended March 31, 1997 as compared to $1,453,000 for the quarter
ended March 31, 1996. Medical service revenue prior to any provision for
doubtful accounts, contractual adjustments or adjustments for amounts retained
by medical groups increased $4,464,000, or 125%, to $8,036,000 for the quarter
ended March 31, 1997 as compared to $3,572,000 for the first quarter of 1996.
For the same periods, revenue from HPM decreased $33,000, or 1%, from $332,000
to $299,000. The Company's growth in revenue is primarily attributable to the
addition of new management services agreements.
10
<PAGE>
Operating Expenses consist of (i) clinic salaries, wages and benefits,
clinic laboratory and fees, clinic rent, other clinic costs and consulting fees
and (ii) depreciation and amortization. Clinic expenses increased by $1,595,000,
or 120%, to $2,925,000 for the quarter ended March 31, 1997 from $1,330,000 for
the comparable period in 1996 reflecting the addition of new physician
affiliations. Depreciation and amortization expenses for the quarter ended March
31, 1997 increased by $66,000, or 48%, to $204,000 as compared to $138,000 for
the quarter ended March 31, 1996. This increase was primarily the result of the
amortization and depreciation of newly acquired management services agreements
and fixed assets.
Income from Operations increased $480,000, or 390%, to $603,000 for the
quarter ended March 31, 1997 from $123,000 for the comparable period in 1996.
Substantially all of this increase was attributable to the addition of new
affiliated physician practices.
General and Administrative Expenses consist of salaries paid to corporate
staff, administrative, legal and accounting and development costs. General and
administrative costs increased by $466,000, or 86%, to $1,009,000 for the
quarter ended March 31, 1997 from $543,000 for the quarter ended March 31, 1996.
The increase was primarily the result of a build-up in the Company's financial
and operational staffs, additional professional and additional administrative
costs incurred in the first quarter of 1997 as compared to the corresponding
period in 1996.
Other Income (Expense) declined by $776,000 to an expense of $3,000 for
the quarter ended March 31, 1997 from $779,000 expense for the comparable period
in 1996. The decline consists principally of the absence of a net loss on
litigation settlements, clinic terminations and disposal in the first quarter of
1997 as compared to $749,000 in such amounts for the quarter ended March 31,
1996. Interest expense increased by $26,000, to $61,000 for the first quarter of
1997 from $35,000 for the first quarter of 1996, primarily as a result of
increased borrowings under the Company's credit facility. Interest income of
$39,000 for the first quarter of 1997 resulted from investing a portion of funds
received from a private placement that was completed in May 1996.
Income taxes were zero for the quarters ended March 31, 1997 and 1996.
The Company had net operating losses for federal and state income tax purposes
at March 31, 1997 of approximately $7,900,000 which can be carried forward and
used to offset the Company's future taxable income through the year 2009.
Net Loss decreased $790,000, or 66%, to a loss of $409,000 for the
quarter ended March 31, 1997 from a net loss of $1,199,000 for the quarter ended
March 31, 1996. The reduction in the net loss was primarily the result of the
reduction of $776,000 in other expenses in the first quarter of 1997 as compared
to other expenses in the first quarter of 1996.
Net Loss per Share decreased to ($.03) in the first quarter of 1997 as
compared to ($.11) per share for the corresponding period in 1996 as a result of
the decrease in net loss
11
<PAGE>
and an 36% increase in the weighted average number of shares of Common Stock
outstanding.
Liquidity and Capital Resources
Summary. The Company has experienced losses from operations and negative
cash flows from operating activities for the quarter ended March 31, 1997 and
the year ended December 31, 1996. Significant contributing factors to the loss
for the quarter ended March 31, 1997 were the rapid growth of the Company and
the resulting increase in general and administrative expenses. In addition to
these factors, cash used in operations in the first quarter of 1997 was
primarily the result of the Company's decision to defer the timely collection of
management fees to support the growth of practices under management agreements.
The Company has funded the loss from operations and cash flow shortfalls with
third party credit facilities which were secured by $2,463,000 of the Company's
certificates of deposit at March 31, 1997. The Company's decision to reinvest
funds in medical practices that are already owned, and fund acquisitions of
additional medical practices along with cash required to meet debt obligations
and fund operations has significantly reduced the amount of cash available to
the Company. As a result, the Company will be required to seek additional
financing from banks, institutional investors and other sources and to reduce or
contain costs in order to fund operations and meet obligations and future
commitments.
Working Capital. At March 31, 1997, the Company's net working capital was
$4,247,000, as compared to $5,103,000 at December 31, 1996. The principal
components of the Company's working capital are cash and accounts receivable.
Unrestricted cash decreased by $1,186,000 from $3,400,000 at December 31, 1996
to $2,214,000 primarily as a result of cash used in operations. Accounts
receivable principally represent receivables from patients and third parties for
medical services provided by physician groups. Accounts receivable are a
function of net physician practice revenue rather than net revenue of the
Company. Accounts receivable increased $495,000, or 11%, to $4,975,000 at March
31, 1997 from $4,480,000 at December 31, 1996, reflecting the increase in
practice billings that the Company manages. Physician receivables, less $150,000
of allowance for doubtful accounts, were $2,660,000 at December 31, 1996, as
compared to $2,788,000 at March 31, 1997, reflecting the Company's decision to
reinvest funds in medical practices managed. Total current liabilities at March
31, 1997 increased to $8,437,000 from $6,970,000 on December 31, 1996 primarily
as a result of higher borrowings under the Company's credit line and notes
payable. The ratio of current assets to current liabilities was 1.5 to 1.0 at
March 31, 1997 as compared to 1.73 to 1.00 at December 31, 1996.
Cash Flows. Net cash used in investing activities for the quarter ended
March 31, 1997 was $1,432,000, a $1,153,000 increase over $279,000 used in
investing activities for the comparable period in 1996. The increase was
primarily the result of an increase in restricted cash required by the Company's
credit facility from $1,264,000 to $2,463,000.
12
<PAGE>
Net cash provided by financing activities during the quarter ended March
31, 1997 was $1,065,000, a $640,000 increase over the $425,000 net cash provided
by financing activities during the first quarter of 1996. This increase resulted
primarily from $1,199,000 in draws on the Company's credit facility offset by
debt repayments.
Net cash used in operations for the quarter ended March 31, 1997 was
$819,000, a $710,000 increase over the provided by operations for the quarter
ended March 31, 1996. While the net loss of the first quarter of 1997 declined
to $409,000 from the net loss of $1,199,000 for the corresponding quarter in
1996, the increase in net cash used in operations was primarily the result of
non cash expenditures declining by $1,124,000.
Debt Facilities. The Company's outstanding debt obligations consist of a
line of credit, notes payable, long-term debt, and convertible subordinated
debt.
At March 31, 1997, the Company's long-term debt in aggregate principal
amount of $5,453,000 (including current portion of $1,737,000) consisted of:
(i) Mortgage payable of $1,256,000 to banks, collateralized by
buildings with a net book value of $1,665,000 with interest at 10%;
(ii) Unsecured note payable to a finance company in the amount of
$446,000 with interest at 7.9%;
(iii) Note payable to a computer vendor of $738,000 with interest
at 10%;
(iv) Capital lease obligations in the aggregate amount of $501,000
with varying interest rates not exceeding 26.5%;
(v) Notes payable to various individuals in conjunction with
asset acquisitions, of $2,404,000 at 10% with varying maturity
dates; and
(vi) Other debt in the amount of $108,000.
At March 31, 1997, the Company had $2,500,000 available under a line of
credit with a bank of which $2,463,000 was then outstanding. Upon maturity on
May 30, 1997, this note was extended to May 29, 1998 at 6.72%. Amounts were
available under this line only to the extent the Company has certificates of
deposits to secure the balance. On September 3,1997, all amounts outstanding
under this line were repaid.
Subsequent Developments
On October 16, 1997, the Company entered into a $1,250,000 accounts
receivable factoring line of credit under which approximately $572,000 was
outstanding and fully repaid on November 24, 1997 at which time the line of
credit was terminated. The Company borrowings were limited to a formula equal to
40% of accounts receivable outstanding for less than 90 days at the time of the
borrowing. A factoring commission of
13
<PAGE>
1% for each 30 day period in addition to interest at the published prime rate
plus 2% could be charged on outstanding borrowings. A reserve of 5% of the total
outstanding invoices was also required. This facility was guaranteed by certain
officers of the Company.
The Company entered into a new accounts receivable credit facility
effective as of November 12, 1997, under which 80% of the net collectible value
of the Company's accounts receivable could be advanced up to $2,500,000. The
Company initially borrowed approximately $1,600,000 on November 24, 1997, the
proceeds of which were used to repay the outstanding borrowings under the
existing factoring accounts receivable line described above and to fund working
capital needs.
Management recognizes that the Company must generate additional
financial resources and reduce operating expenses. To address future cash
requirements, in the fourth quarter of 1997, management developed a business
plan that includes, among other things:
o Securing additional financing to cover anticipated cash
requirements, such as the new accounts receivable credit facility.
o Reducing advances to physicians.
o Reducing compensation expense included in general and
administrative expense by headcount and salary reductions.
o Reducing executive compensation by 30% effective November 1, 1997
and deferral of 1998 senior management compensation, if necessary.
o Completing refinancings of Company-owned medical buildings and
equipment.
o Curtailing acquisition activity until cash resources are available
and reducing associated travel and entertainment expenditures.
There can be no assurance that the additional financing, other sources of funds,
or other cost reductions as described above will be achieved. If these
financings, other sources of funds or other reductions are not achieved within
acceptable ranges, the Company's liquidity would be materially adversely
affected.
Impact of Recently Issued Accounting Standards
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128 (SFAS No. 128), "Earnings
per Share," which is Required to be adopted by the Company for the year ended
December 31, 1997.The provisions of SFAS No. 128 will be adopted in the 1997
consolidated financial statements. At that time, the Company will be required to
change the method currently used to compute earnings per share and to restate
all prior periods. Under the new requirements
14
<PAGE>
for calculating earnings per share, the dilutive effect of convertible preferred
stock will be excluded for "basic earnings per share" and only included in
"diluted" earnings per share. Further, contingently issuable shares will be
included in basic earnings per share only if all the necessary conditions have
been satisfied by the end of
the period and it is only a matter of time before they are issued. The impact of
SFAS No. 128 on the calculation of earnings per share for the year ending
December 31, 1997 has not been determined.
* * *
This report includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements other than
statements of historical facts included in this report may constitute
forward-looking statements. Although the Company believe that the expectations
reflected in such forward-looking statements are reasonable, it can give no
assurance that such expectations will prove to have been correct.
15
<PAGE>
PART II
Item 1. Legal Proceedings.
The Company is presently engaged in various proceedings occurring in the
course of its business of entering its affiliations with physician practices and
medical related entities. However, except as described in the Company's Form
10-KSB, management believes that the ultimate outcome of these proceedings is
not expected to be material to operations or the Company's financial position.
Item 2. Recent Sales of Unregistered Securities
There have been no changes in the rights, preferences or privileges of
any security of the Company during the quarter ended March 31, 1997. During the
quarter ended March 31, 1997, the Company issued an aggregate of 313,000 shares
pursuant to asset purchase agreements with physicians, of which 191,000 shares
were issued pursuant to commitments entered into prior to January 1, 1997.
During the quarter ended March 31, 1997, the Company agreed to issue, pursuant
to new equity affiliation agreements with physicians, a total of 243,000
additional shares during the period 1998 to 2001. The Company issued these
shares in transactions in reliance upon the exemption provided under Section
4(2) of the Securities Act of 1933.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Sequential
Exhibit No. Description Location No.
- ----------- ----------- ------------
27 Financial Data Schedule Filed herewith
(b) During the quarter ended March 31, 1997, the Company filed no report on
Form 8-K.
16
<PAGE>
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.
MEDICAL ASSET MANAGEMENT, INC.
By: ________________________________
Clarke Underwood
Vice President and Chief Financial
Officer and Director (Chief
Accounting Officer)
Date: December 11, 1997
17
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 4,677,000
<SECURITIES> 0
<RECEIVABLES> 11,657,000
<ALLOWANCES> 3,894,000
<INVENTORY> 0
<CURRENT-ASSETS> 12,684,000
<PP&E> 3,690,000
<DEPRECIATION> 564,000
<TOTAL-ASSETS> 35,663,000
<CURRENT-LIABILITIES> 8,437,000
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0
2,000
<COMMON> 9,626,000
<OTHER-SE> 10,483,000
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<SALES> 0
<TOTAL-REVENUES> 3,528,000
<CGS> 0
<TOTAL-COSTS> 2,925,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 4,807,000
<INTEREST-EXPENSE> 61,000
<INCOME-PRETAX> (409,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (409,000)
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (409,000)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
