SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER 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 EXCHANGE ACT OF 1934
For the transition period from _________________ to ___________________
Commission File Number: 0-20594
COMPSCRIPT, INC.
(Exact name of Registrant as specified in its Charter)
FLORIDA 65-0506539
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1225 BROKEN SOUND PARKWAY, N.W., SUITE A, BOCA RATON, FL 33487
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (407) 994-8585
Former Name, Former Address and Former Fiscal Year, if changed since last
Report.
Check whether the registrant (1) filed all reports required to be filed
by Section 13 or 15 (d) of the Securities Exchange Act of 1934, as amended
("Exchange Act") 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. Yes [X] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. 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: 10,525,832 Common
Stock, par value $.0001 as of August 8, 1996.
<PAGE>
COMPSCRIPT, INC. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
PAGE
----
PART I. FINANCIAL INFORMATION
ITEM. 1 Financial Statements (Unaudited)
Consolidated Condensed Balance Sheets as
of June 30, 1996 and December 31, 1995 2
Consolidated Condensed Statements of
Operations for the Six Months Ended June
30, 1996 and 1995 3
Consolidated Condensed Statement of
Shareholders Equity for the Six Months
Ended June 30, 1996 4
Consolidated Condensed Statements of Cash
Flows for the Six Months Ended June 30,
1996 and 1995 5
Notes to Consolidated Condensed Financial
Statements 6-10
ITEM. 2 Management's Discussion and Analysis or
Plan of Operation 11-13
PART II. OTHER INFORMATION
ITEM. 6 Exhibits & Reports on Form 8-K
SIGNATURES
<PAGE>
COMPSCRIPT, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
JUNE 30, DECEMBER 31,
ASSETS 1996 1995
----------- -----------
CURRENT ASSETS:
Cash and cash equivalents $ 1,291,037 $ 264,591
Accounts receivable (net of
allowances of $34,155 and
$79,888 at June 30, 1996 and
December 31, 1995, respectively) 2,256,090 2,070,371
Inventory 654,339 549,914
Prepaid and other receivables 88,963 61,650
Marketable securities, available for sale 1,125,000 --
----------- -----------
Total Current Assets 5,415,429 2,946,526
----------- -----------
Property and equipment, net 965,247 1,046,293
Other assets 255,475 232,222
----------- -----------
Total Assets $ 6,636,151 $ 4,225,041
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 724,350 $ 681,142
Accrued salaries and benefits 126,013 151,540
Accrued expenses 41,973 210,228
Accrued pharmaceuticals dispensed by
third parties 52,146 63,701
Leases payable 60,710 69,340
Line of credit 200,000 204,747
Notes payable 39,857 20,351
----------- -----------
Total Current Liabilities 1,245,049 1,401,049
----------- -----------
Long-term debt:
Leases payable 32,449 49,198
Notes payable 86,856 14,661
----------- -----------
Total long-term debt 119,305 63,859
----------- -----------
Total liabilities 1,364,354 1,464,908
----------- -----------
MINORITY INTEREST IN CONSOLIDATED
SUBSIDIARY 218,064 --
----------- -----------
SHAREHOLDERS' EQUITY:
Common Stock, $.0001 par value in
1996, no par value in 1995,
50,000,000 and 10,000,000 shares
authorized; 10,367,082 and 2,706,190
shares issued and outstanding in
1996 and 1995, respectively 1,037 5,499,220
Additional Paid in Capital 7,396,064 27,433
Accumulated Deficit (2,343,368) (2,766,520)
----------- -----------
Total Shareholders' Equity 5,053,733 2,760,133
----------- -----------
Total Liabilities and
Shareholders' Equity $ 6,636,151 $ 4,225,041
=========== ===========
See Accompanying Notes
2
<PAGE>
<TABLE>
<CAPTION>
COMPSCRIPT, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- --------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
SALES $ 3,954,802 $ 2,856,169 $ 7,636,645 $ 6,132,272
COST OF SALES 1,953,622 1,434,765 3,819,348 3,158,054
----------- ----------- ----------- -----------
GROSS PROFIT 2,001,180 1,421,404 3,817,297 2,974,218
----------- ----------- ----------- -----------
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 1,599,908 1,332,490 3,390,465 2,901,063
----------- ----------- ----------- -----------
OPERATING INCOME 401,272 88,914 426,832 73,155
OTHER:
Interest and other income 2,648 3,429 18,848 10,246
Interest expense (27,226) (13,766) (37,931) (33,833)
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES
AND MINORITY INTEREST 376,694 78,577 407,749 49,568
PROVISION FOR INCOME TAXES 55,086 105,607 90,848 66,619
MINORITY INTEREST IN
NET LOSS OF SUBSIDIARY 4,564 -- 4,564 --
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 326,172 $ (27,030) $ 321,465 $ (17,051)
=========== =========== =========== ===========
NET INCOME (LOSS) PER SHARE $ .04 $ (.01) $ .06 $ (.01)
=========== =========== =========== ===========
WEIGHTED AVERAGE COMMON AND
COMMON EQUIVALENT SHARES
USED IN COMPUTATION OF
PER SHARE DATA 8,052,165 2,210,770 5,758,759 2,210,770
=========== =========== =========== ===========
PRO FORMA DATA:
Historical income before
income taxes $ 376,694 $ 78,577 $ 407,749 $ 49,568
Pro-forma income tax
expense 141,260 47,977 152,906 55,610
Minority interest 4,564 -- 4,564 --
----------- ----------- ----------- -----------
Pro-forma net income $ 239,998 $ 30,600 $ 259,407 $ (6,042)
=========== =========== =========== ===========
Pro-forma net income per
share $ .03 $ .01 $ .05 $ (.00)
=========== =========== =========== ===========
Pro-forma weighted average
shares outstanding 8,052,165 2,210,770 5,758,759 2,210,770
=========== =========== =========== ===========
</TABLE>
See Accompanying Notes
3
<PAGE>
<TABLE>
<CAPTION>
COMPSCRIPT, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED)
COMMON STOCK ADDITIONAL
------------------------ PAID IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
--------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balances, December 31, 1995 2,706,190 $ 5,499,220 $ 27,433 $(2,766,520) $ 2,760,133
Capital Brands Transaction:
Acquisition of existing
common shares net of
costs of $891,836 1,806,750 181 1,589,233 -- 1,589,414
Issuance of Common stock 7,394,982 739 5,498,414 -- 5,499,153
Receipt of CompScript-Boca
Common stock (2,039,840) (5,499,153) (222,628) -- (5,721,781)
Transfer of Delta Pharmacy
Services, Inc. deficit
to additional paid in
capital upon conversion
from an S corporation to
a C corporation -- -- (101,687) 101,687 --
Shares issued upon exercise
of warrants 24,000 2 130,347 -- 130,349
Shares issued upon
exercise of stock options 475,000 48 474,952 -- 475,000
Net income for the period 321,465 321,465
----------- ----------- ----------- ----------- -----------
Balances, June 30, 1996 10,367,082 $ 1,037 $ 7,396,064 $(2,343,368) $ 5,053,733
=========== =========== =========== =========== ===========
</TABLE>
See Accompanying Notes
4
<PAGE>
<TABLE>
<CAPTION>
COMPSCRIPT, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
1996 1995
---------- ----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ 321,465 $ (17,051)
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation and amortization 135,862 206,875
Provision for doubtful accounts 122,275 121,949
Minority Interest (4,564) --
Changes in assets and liabilities,
net of business acquisition:
Accounts receivable (307,994) 5,297
Inventory (104,425) (26,096)
Prepaid and other receivables (2,313) (107,640)
Other assets (26,482) 20,264
Accounts payable and accrued expenses (162,129) 110,765
----------- ---------
Net cash provided by (used in) operating
activities (28,305) 314,363
----------- ---------
INVESTING ACTIVITIES:
Purchases of property and equipment (51,587) (96,797)
Net cash acquired in business acquisition 439,414 --
----------- ---------
Net cash provided by (used in) investing activities 387,827 (96,797)
----------- ---------
FINANCING ACTIVITIES:
Proceeds from lines of credit 400,000 --
Repayment of lines of credit (294,021) (71,428)
Proceeds from exercise of stock options
and warrants 605,349 --
Repayment of notes and leases payable (44,404) (115,838)
----------- ---------
Net cash (used) provided by financing
activities 666,924 (187,266)
----------- ---------
Net increase in cash and cash equivalents 1,026,446 30,300
Cash and cash equivalents at beginning
of period 264,591 385,357
----------- ---------
Cash and cash equivalents at end of period $ 1,291,037 $ 415,657
=========== =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for income taxes $ 52,991 $ 183,404
=========== =========
Cash paid for interest $ 27,645 $ 28,504
=========== =========
</TABLE>
See Accompanying Notes
5
<PAGE>
COMPSCRIPT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
1. THE COMPANY
As a result of the completion of the transactions described in the
following paragraphs, the Company is now principally engaged in the business of
providing comprehensive pharmacy management services.
On April 26, 1996, CompScript, Inc. (formerly Capital Brands) (the
"Company") acquired approximately 93% of the outstanding Common stock of
CompScript-Boca, Inc. (formerly CompScript, Inc.) ("CompScript-Boca"), a
privately-held provider of pharmacy management services by merger of the Company
into CompScript-Boca in exchange for issuance of 7,394,982 shares of the
Company's Common stock. As a result of this transaction, CompScript-Boca
shareholders became the owners of approximately 80% of the Company's then
outstanding Common stock and assumed 100% Control of the Company's Board of
Directors. Accordingly, the acquisition has been treated for financial reporting
purposes as a reverse acquisition. After completion of the transaction, the
Company became the owner of approximately 93% of the outstanding common stock of
CompScript-Boca and accordingly, recorded a minority interest in the acquired
subsidiary of $222,628, representing 7% of the net assets of the acquired
subsidiary on the date of acquisition.
The purchase price of the Company by CompScript-Boca of approximately
$3,041,836 was comprised of the 1,806,750 shares deemed to have been issued and
acquisition costs. The purchase price was allocated to the estimated fair value
of assets acquired of $2,150,000, and the acquisition costs of $891,836 were
charged against paid in capital since the Company had insignificant operations
at the date of the reverse acquisition.
The following unaudited pro-forma summary combines the consolidated
results of operations of the Company and CompScript-Boca as if the reverse
acquisition had occurred at January 1, 1995, after giving effect to such
transaction, the write-off of $3.6 million of CompScript-Boca's goodwill
effective as of December 31, 1995, and the acquisition of Delta Pharmacy
Services, Inc. on May 31, 1996, which was accounted for as a pooling of
interests. The unaudited pro forma summary is not necessarily indicative of
either the results of operations that would have occurred had the consolidation
been made during the periods presented, or of future results of operations of
the consolidated companies.
SIX MONTHS ENDED JUNE 30,
--------------------------------
1996 1995
----------- -----------
(Unaudited) (Unaudited)
Pro forma net sales $ 7,636,645 $ 6,132,272
=========== ===========
Pro forma net income (loss) $ 321,465 $ (17,051)
=========== ===========
Pro forma net income (loss)
per share $ .03 $ (.00)
=========== ===========
6
<PAGE>
COMPSCRIPT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1996 (CONTINUED)
(UNAUDITED)
On May 31, 1996, the Company acquired 100% of the outstanding common
stock of Delta Pharmacy Services, Inc. ("Delta") in exchange for issuance of
666,350 shares of the Company's common stock. The acquisition has been accounted
for as a pooling of interests and the accompanying financial statements, and the
pro-forma summary presented above for all periods presented have been restated
to reflect the combination. Condensed results of the individual companies for
all periods presented are as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------ ------------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Total Revenues:
CompScript $3,240,801 $2,459,723 $6,209,995 $5,173,569
Delta 714,001 396,446 1,426,650 958,703
--------- --------- --------- ---------
Combined $3,954,802 $2,856,169 $7,636,645 $6,132,272
========= ========= ========= =========
Net Income (Loss):
CompScript $ 96,373 $ 163,223 $ 111,918 $ 45,800
Delta 229,799 (136,193) 209,547 (28,749)
--------- --------- --------- ---------
Combined $ 326,172 $ (27,030) $ 321,465 $ (17,051)
========= ========= ========= =========
</TABLE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION
The accompanying consolidated condensed financial statements included
the accounts of the Company and all of its subsidiaries, which are
majority-owned. All significant intercompany transactions and balances have been
eliminated in consolidation.
The accompanying consolidated condensed financial statements as of June
30, 1996 and 1995 are unaudited. The consolidated condensed balance sheet as of
December 31, 1995 was derived from the December 31, 1995 unaudited balance sheet
included in the Company's Form 8-K filed on July 2, 1996, in connection with the
reverse acquisition described in Note 1. Such balance sheet was restated to
reflect the May 31, 1996 acquisition of Delta which was accounted for as a
pooling of interests. These financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the rules and regulations of the Securities and Exchange
Commission (the "SEC"). 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 rules and
regulations. The Company believes it has made sufficient disclosures such that
the information presented is not misleading. In the opinion of management, the
financial statements reflect all adjustments (which
7
<PAGE>
COMPSCRIPT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1996 (CONTINUED)
(UNAUDITED)
include only normal recurring adjustments) necessary to state fairly the
financial position and results of operations as of and for the periods
presented.
In connection with the reverse acquisition described in Note 1, the
Company has elected to change the year end of the accounting acquiror,
CompScript-Boca to December 31, to conform to the Company's year end. The
Company intends to file a transition report on Form 10-KSB, covering the
transition period.
Results for the six month period ended June 30, 1996 are not
necessarily indicative of the results to be achieved for the year ending
December 31, 1996.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
FASB STATEMENT NO. 123
In October 1995, the FASB issued Statement No. 123, "Accounting for
Stock-Based Compensation." The new standard, which is effective for the
Company's financial statements for its 1996 fiscal year, encourages companies to
use the fair value method of accounting for the issuance of stock options and
other equity instruments. Under the fair value method, compensation cost is
measured at the grant date based on the fair value of the award and is
recognized over the service period, which is usually the vesting period.
Pursuant to FASB Statement No. 123, companies are also permitted to continue to
account for employee stock-based transactions under Accounting Principles Board
(APB) Opinion No. 25, "Accounting for Stock Issued to Employees," but would be
required to disclose in a note to the financial statements pro forma net income
and per share amounts as if the Company had applied the new method of
accounting.
The Company has not yet determined if it will elect to change its
method of accounting for the issuance of stock options and other equity
instruments to the fair value method, nor has it determined the effect the new
standard will have on its operating results and per share results should it
elect to make such a change.
NET INCOME (LOSS) PER SHARE
Net income (loss) per share for three and six month periods ended June
30, 1996 and 1995, have been calculated based upon the weighted average number
of common shares outstanding after giving effect to the dilutive effect of
outstanding options and warrants during the periods.
8
<PAGE>
COMPSCRIPT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1996 (CONTINUED)
(UNAUDITED)
The pro forma net income (loss) per share data has been calculated
after giving effect to the income tax matters discussed more fully in Note 3.
All weighted average shares outstanding have been adjusted to reflect
the 666,350 shares of common stock issued in the acquisition of Delta.
3. INCOME TAXES:
The income tax provisions for the three and six month periods ended
June 30, 1996 and 1995, have been calculated by applying the Company's estimated
effective tax rate for the years 1996 and 1995 after giving effect to the
matters described in the following paragraphs. The effective tax rates were
calculated assuming the use of a calendar year for tax reporting purposes.
For the three and six month periods ended June 30, 1995 the
relationship of the provision for income taxes to pre-tax income reflects the
non-deductibility of goodwill amortization of $49,362 and $98,725, respectively,
and the non-deductibility of Subchapter S losses of Delta of $136,193 and
$28,749, respectively.
For the three and six month periods ended June 30, 1996, the
relationship of the provision for income taxes to pre-tax income reflects the
exclusion of the Subchapter S earnings of Delta from the tax provision
computation from the beginning of the periods to the date of acquisition.
Concurrent with the acquisition of Delta on May 31, 1996, Delta converted to C
corporation status and its earnings from that date until June 30, 1996 were
included in the tax provision computation.
4. SHAREHOLDERS' EQUITY:
At June 30, 1996, the Company had reserved the following shares of
Common Stock for issuance pursuant to outstanding warrants and options:
Class A Warrants, exercisable
at $4.40 per share through
December 31, 1996 37,075
Class B Warrants, exercisable
at $5.43 per share through
December 31, 1996 193,550
Options, exercisable at $1.00
per share through January
12, 1999 150,000
9
<PAGE>
COMPSCRIPT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1996 (CONTINUED)
(UNAUDITED)
Options, exercisable at $6.00
to $10.00 per share through
January 12, 1999 300,000
Stock option plan 900,000
---------
Total 1,580,625
=========
During the quarter ended June 30, 1996, the Company issued 24,000
shares of Common Stock upon the exercise of 12,000 Class B Warrants and received
cash of $130,349. In addition, the Company issued 475,000 shares of Common Stock
upon the exercise of 475,000 options at $1.00 per share, and received cash of
$475,000.
Subsequent to June 30, 1996, the Company issued 8,750 shares of Common
Stock upon the exercise of 4,375 Class B Warrants and received cash of $47,523.
In August 1996, the Company issued 150,000 shares of Common Stock upon
the exercise of 150,000 options and received cash proceeds of $150,000.
5. SUBSEQUENT EVENTS:
On July 26, 1996, the Company agreed to sell its 1,125,000 shares of
Common Stock of QPQ Corporation("QPQ") to a major shareholder of QPQ in exchange
for a non-recourse promissory note in the original principal amount of
$1,125,000, payable in full, including accrued interest on July 26, 1997. The
note may be paid in whole or part at any time during its term without penalty.
The 1,125,000 shares will serve as collateral for the note subject to release
upon payment of the principal amount or portions thereof.
The Company is presently involved in negotiations with the shareholders
of SECURx, Inc. to acquire 100% of the outstanding Common stock of SECURx.
SECURx, is in the business of selling and distributing prescription drugs to the
general public through corporate sponsored benefit plans of employers located in
the northeastern U.S.
10
<PAGE>
ITEM 2 MANAGEMENTS DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION
GENERAL
As a result of the Company's (formerly Capital Brands, Inc.) recent
share exchange agreement with CompScript-Boca (formerly CompScript, Inc.) which
closed on April 26, 1996 where shareholders of CompScript-Boca exchanged
approximately 93% of the outstanding Common stock of CompScript-Boca for
approximately 80% of the outstanding Common shares of the Company, the Company
is now principally engaged in the business of providing comprehensive pharmacy
management services as more fully described below. In connection with the share
exchange agreement, the Company divested itself of its 100% equity interest in
Family Chicken, Inc., International Fast Food Corporation and International
Hotel Corporation. As of June 30, 1996, the Company maintained ownership of
1,125,000 shares of Common stock of QPQ Corporation which constituted 15.6% of
QPQ's outstanding shares on such date.
In connection with the expansion of its pharmacy management business on
May 31, 1996, the Company acquired 100% of the Common stock of Delta Pharmacy
Services, Inc. ("Delta") in exchange for issuance of 666,350 shares of the
Company's Common stock. The acquisition has been accounted for as a pooling of
interests and all data included in the following discussions has been restated
to reflect the combination of Delta for all periods presented.
As a result of the completion of the transactions described above the
Company is a comprehensive provider of pharmacy management services equipped to
both lower costs and improve the quality of care. The company offers a broad
range of pharmacy, infusion therapy, consulting services, mail order, and
pharmacy benefit claim administration to managed care networks, long-term and
sub-acute care facilities, home health patients, and recipients of managed care.
The Company's proprietary pharmacy management capabilities combine sophisticated
clinical tools with the latest technologies in data bases and drug profiles. The
Company's network of participating retail pharmacies, along with its electronic
on-line adjudication system and a mail service dispensing facility, allow the
Company to offer a fully integrated pharmacy benefit management program.
On July 26, 1996, the Company agreed to sell its 1,125,000 shares of
Common Stock of QPQ Corporation ("QPQ") to a major shareholder of QPQ in
exchange for a non-recourse promissory note in the original principal amount of
$1,125,000, payable in full, including interest on July 26, 1997. The note may
be paid in whole or in part at any time during its term without penalty. The
1,125,000 shares will serve as collateral for the note subject to release upon
payment of the principal amount or portions thereof.
The Company is presently involved in negotiations with the shareholders
of SECURx, Inc. to acquire 100% of the outstanding Common stock of SECURx.
SECURx, is in the business of selling and distributing prescription drugs to the
general public through corporate sponsored benefit plans of employers located in
the northeastern U.S.
11
<PAGE>
SIX MONTHS ENDED JUNE 30, 1996 VS. JUNE 30, 1995
RESULTS OF OPERATIONS:
During the three and six month periods ended June 30, 1996 and 1995,
the Company reported net income (loss) of $326,172, $321,465, $(27,030) and
$(17,051) and reported net income (loss) per share of $.04, $.06, $(.01) and
$(.01), respectively.
Revenues for the three months ended June 30, 1996 increased 38.5% to
$3,954,802, from $2,856,169 for the three months ended June 30, 1995. For the
six months ended June 30, 1996 and 1995, revenues increased 24.5% to $7,636,645
from $6,132,272.
The increase in quarter and year to date revenues over comparable prior
year periods is primarily attributed to the Company's steady internal growth
resulting primarily from marketing efforts to new and existing clients.
The Company's operations continued to produce internal growth through
marketing efforts to new and existing clients, and the growth and integration of
new and existing products and services.
Cost of sales for the three months ended June 30,1996 increased 36.2%
to $1,953,622 from $1,434,675. For the six months ended June 30, 1996, cost of
sales increased 20.9% to $3,819,348 from $3,158,054.
The increase in the quarter and year to date cost of sales over
comparable prior year periods is attributed to the additional costs associated
with the increase in sales described above.
Selling general and administrative expenses as a percentage of sales
for the three month periods ended June 30, 1996 and 1995 were 40.5% and 46.7%
and for the six month periods ended June 30, 1996 and 1995 were 44.4% and 47.3%.
The percentage decreases in the comparative three and six month periods are
primarily attributable to the increase in sales for such periods as well as the
continued efforts to leverage corporate overhead over a larger revenue base.
Selling, general and administrative expenses for the three and six month periods
ended June 30, 1996 and 1995, include $299,264, $611,525, $71,559 and $313,222,
respectively relating to the operations of the Company's pharmacy benefits
management division.
Interest and other income in all periods presented consists of interest
earned on temporary cash investments and has fluctuated from period to period
depending upon the amount of excess cash available for investment.
Interest expense in the three and six month periods ended June 30, 1996
and 1995 increased by $13,500 and $4,098, respectively due to higher levels of
borrowings during 1996 as compared to 1995.
12
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES:
At June 30, 1996, the Company had working capital of $4,170,380 and
cash and cash equivalents of $1,291,037.
Net cash used in operating activities for the six months ended June 30,
1996 was $28,305 compared to net cash provided by operating activities in the
six months ended June 30, 1995 of $314,363. The increase in cash used in
operating activities in the 1996 period of $342,668 results primarily from
larger levels of accounts receivable and inventory relating to increased sales
along with reductions in trade liabilities relating to the timing of payment of
vendor payables.
Net cash provided by investment activities for the period ended June
30, 1996 consisted of $439,414 of net cash acquired in connection with the
reverse merger, net of purchases of property and equipment of $51,587, which
decreased by $45,210 when compared with the six months ended June 30, 1995.
Net cash provided by financing activities for the six months ended June
30, 1996 was $666,924 as compared to net cash used in financing activities of
$187,266. During the six months ended June 30, 1996, the Company received
proceeds from borrowings under its line of credit of $400,000 and received
proceeds from the exercise of outstanding options and warrants of $605,459.
Repayments of outstanding credit obligations for the six months ended June 30,
1996 were $338,425 as compared to $187,266 for the six month period ended June
30, 1995. The increase during the June 30, 1996 period is attributable to higher
repayment levels on the line of credit due to higher levels of short term
borrowings in 1996 compared to 1995. Repayments of leases and other indebtedness
decreased due to final payment in late 1995 and early 1996 of certain
obligations.
The Company believes that its cash and available sources of capital
through exercise of outstanding options and warrants as well as the availability
of borrowings under its line of credit are sufficient to meet its normal
operating requirements through June 30, 1997.
13
<PAGE>
PART II. OTHER INFORMATION
(a) Not applicable.
(b) 8-K's,
(i) 8-K dated May 10, 1996 concerning execution of Share
Exchange Agreement and eight for one reverse stock split.
(ii) 8-K dated June 14, 1996 concerning execution of Share
Exchange Agreement and changes in the Company's accountant.
(iii)8-K/A dated June 24, 1996 concerning Exhibit C (Share
Exchange Agreement) and Exhibit D (Accountant's Consent).
<PAGE>
SIGNATURE
In accordance with requirements of the Exchange Act, the Issuer caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CompScript, Inc.
By: /S/ BRIAN A. KAHAN
-------------------------------------
Brian A. Kahan, Chief Executive
Officer
By: /S/ GARY SPLAIN
-------------------------------------
Gary Splain, Controller, Principal
Financial Officer
DATED: August 16, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,291,037
<SECURITIES> 1,125,000
<RECEIVABLES> 2,290,245
<ALLOWANCES> (34,155)
<INVENTORY> 654,339
<CURRENT-ASSETS> 5,415,429
<PP&E> 965,247
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,636,151
<CURRENT-LIABILITIES> 1,245,049
<BONDS> 0
0
0
<COMMON> 1,037
<OTHER-SE> 5,052,696
<TOTAL-LIABILITY-AND-EQUITY> 6,636,151
<SALES> 7,636,645
<TOTAL-REVENUES> 7,636,645
<CGS> 3,819,348
<TOTAL-COSTS> 3,819,348
<OTHER-EXPENSES> 3,390,465
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 37,931
<INCOME-PRETAX> 407,749
<INCOME-TAX> 90,848
<INCOME-CONTINUING> 321,465
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 321,465
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
</TABLE>
