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 June 30, 1997
[ ] Transition Report Under Section 12 or 15(d) of
the Exchange Act
For the transition period from _________ to __________.
Commission file number 0-20594
COMPSCRIPT, INC.
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(Exact Name or Small Business Issuer as Specified in Its Charter)
Florida 65-0506539
(State of Other Jurisdiction of I.R.S. Employer
Incorporation or Organization) Identification No.)
1225 Broken Sound Parkway, N.W., Suite A
Boca Raton, FL 33487
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(Address of Principal Executive Office)
(561) 994-8585
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(Issuer's Telephone Number, Including Area Code)
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 [X] No [ ]
The number of shares outstanding of the issuer's common stock, par value $.0001
per share as of July 31, 1997 was 13,857,063.
Transitional Small Business Disclosure Format:
Yes [ ] No [X]
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COMPSCRIPT, INC. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
PAGE
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PART I. FINANCIAL INFORMATION
ITEM. 1 Financial Statements
Consolidated Condensed Balance Sheets as of
June 30, 1997 (Unaudited) and December 31, 1996 2
Consolidated Condensed Statements of Operations
for the Six Months Ended June 30, 1997 and 1996
(Unaudited) 3
Consolidated Condensed Statements of Cash Flows
for the Three Months Ended June 30, 1997 and 1996
(Unaudited) 4
Notes to Consolidated Condensed Financial Statements (Unaudited) 5
ITEM. 2 Management's Discussion and Analysis
or Plan of Operations 10-13
PART II. OTHER INFORMATION
SIGNATURES
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CompScript, Inc. and Subsidiaries
Consolidated Condensed Balance Sheets
DECEMBER 31, JUNE 30,
1996 1997
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(Unaudited)
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ASSETS
Current assets:
Cash and cash equivalents $ 857,740 $ 379,363
Accounts receivable, net 6,369,720 9,936,914
Inventory 2,467,639 2,845,066
Marketable securities - 325,000
Note receivable 1,150,788 -
Income tax refund receivable 218,512 306,999
Deferred tax asset 80,201 80,201
Prepaid and other receivables 112,487 496,933
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Total current assets 11,257,087 14,370,476
Property and equipment, net 2,231,495 3,133,798
Other assets:
Costs in excess of net assets acquired, less accumulated amortization 143,171 122,717
Other 854,222 667,666
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Total other assets 997,393 790,383
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Total assets $ 14,485,975 $ 18,294,657
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,502,436 $ 3,911,214
Accrued salaries and benefits 762,405 428,773
Accrued expenses 761,721 688,173
Accrued pharmaceuticals dispensed by third parties 164,935 185,942
Distributions payable 53,560 -
Line of credit 674,693 4,770,447
Notes payable to shareholders 843,737 371,900
Current portion of notes payable 134,581 889,992
Current portion of capital lease obligations 166,527 64,351
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Total current liabilities 7,064,595 11,310,792
Deferred tax liabilities 35,100 35,100
Long-term debt:
Notes payable to shareholders 500,000 -
Notes payable 1,304,058 486,525
Capital lease obligations 74,530 174,355
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Total long-term debt 1,878,588 660,880
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Total liabilities 8,978,283 12,006,772
Minority interest 222,628 222,628
Shareholders' equity:
Common stock, $.0001 par value--50,000,000 shares authorized,
13,533,132 and 13,857,063 shares issued and outstanding at
December 31,1996 and June 30, 1997 1,354 1,386
Additional paid-in capital 9,328,990 11,060,546
Accumulated deficit (4,045,280) (4,996,675)
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Total shareholders' equity 5,285,064 6,065,257
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Total liabilities and shareholders' equity $ 14,485,975 $ 18,294,657
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SEE ACCOMPANYING NOTES.
2
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CompScript, Inc. and Subsidiaries
Consolidated Condensed Statements
of Operations (Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
1996 1997 1996 1997
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Sales $10,594,130 $12,847,823 $20,954,541 $24,346,442
Cost of sales 6,214,154 7,755,066 12,330,284 14,549,784
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Gross profit 4,379,976 5,092,757 8,624,257 9,796,658
Selling, general and administrative expenses 3,592,450 4,624,001 7,646,372 9,441,999
Merger costs 265,368 75,249 265,368 688,706
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Total operating expenses 3,857,818 4,699,250 7,911,740 10,130,705
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Operating income (loss) 522,158 393,507 712,517 (334,047)
Other income (expense):
Interest and other income (expense) 21,284 (1,089) 46,555 9,926
Interest expense (112,429) (148,118) (218,857) (247,681)
Loss on realization of note receivable - - - (800,000)
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(91,145) (149,207) (172,302) (1,037,755)
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Income (loss) before provision for income taxes 431,013 244,300 540,215 (1,371,802)
Income tax provision 38,380 - 55,919 -
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Net income (loss) $ 392,633 $ 244,300 $ 484,296 $(1,371,802)
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Net income (loss) per share $ .03 $ .02 $ .04 $ (.10)
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Weighted average shares outstanding 12,408,550 13,775,841 11,925,159 13,669,869
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SEE ACCOMPANYING NOTES.
3
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CompScript, Inc. and Subsidiaries
Consolidated Condensed Statements
of Cash Flows (Unaudited)
SIX MONTHS ENDED JUNE 30
1996 1997
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OPERATING ACTIVITIES
Net income (loss) $ 484,296 $(1,371,802)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Depreciation and amortization of leasehold improvements 259,398 298,078
Amortization of goodwill 20,454 20,454
Noncash merger costs - 420,000
Loss on realization of note receivable - 800,000
Changes in operating assets and liabilities:
Accounts receivable (171,678) (3,567,194)
Inventory (124,168) (377,427)
Note receivable - 25,788
Income tax refund receivable 182,118 (88,487)
Prepaid and other receivables 51,201 (122,446)
Other assets (293,467) 186,556
Accounts payable and accrued expenses (125,614) (30,956)
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Net cash provided by (used in) operating activities 282,540 (3,807,436)
INVESTING ACTIVITY
Purchase of property and equipment (255,646) (1,077,805)
Acquisition, net of cash acquired 403,808 -
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Net cash provided by (used in) investing activity 148,162 (1,077,805)
FINANCING ACTIVITIES
Issuance of common stock and exercise of options and warrants 605,349 1,469,996
Net proceeds from line of credit (4,747) 4,095,754
Net repayments on notes payable 258,691 (662,755)
Net repayments on notes payable shareholders - (471,837)
Repayments of leases payable (57,379) (24,294)
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Net cash provided by financing activities 801,914 4,406,864
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Net increase (decrease) in cash and cash equivalents 1,232,616 (478,377)
Cash and cash equivalents at beginning of period 549,548 857,740
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Cash and cash equivalents at end of period $ 1,782,164 $ 379,363
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for income taxes $ 51,500 $ 87,500
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Cash paid for interest $ 218,857 $ 247,681
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SEE ACCOMPANYING NOTES.
4
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COMPSCRIPT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1997
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying consolidated condensed financial statements include
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, 1997 and for the six months ended June 30, 1997 and 1996 are unaudited. All
periods presented have been restated to reflect the January 10, 1997, February
28, 1997, and March 26, 1997 acquisitions of Medical Services Consortium, Inc.
("MSC"), Campo Medical Pharmacy, Inc. ("Campo"), and Hytree Pharmacy, Inc.
("Hytree"), which were accounted for as poolings of interests (see Note 2).
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 include only normal recurring
adjustments) necessary to state fairly the financial position and results of
operations as of and for the periods presented. Results for the six-month period
ended June 30, 1997 are not necessarily indicative of the results to be achieved
for the year ending December 31, 1997.
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 revenue and expenses during the reporting
period. Actual results could differ from these estimates.
Net income (loss) per share for the six-month periods ended June 30,
1997 and 1996, have been calculated based upon the weighted average number of
common shares outstanding after giving effect to outstanding options and
warrants during the periods in which their inclusion was dilutive
5
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COMPSCRIPT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1997
(UNAUDITED)
1. BASIS OF PRESENTATION (CONT'D)
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, EARNINGS PER SHARE, which is required to be adopted on
December 31, 1997. 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 for calculating primary earnings per share,
the dilutive effect of stock options will be excluded. The impact is expected to
result in an increase in primary earnings per share during profitable periods.
There was no impact on earnings per share relating to Statement 128 for the
quarters ended June 30, 1997 and 1996.
2. ACQUISITIONS
During the first quarter of 1997, the Company completed three
acquisitions which were accounted for as poolings of interests. A summary of
each transaction follows:
On January 10, 1997, the Company acquired MSC. In connection with the
transaction, the Company exchanged 1.4 million shares of the Company's Common
Stock for all of the outstanding common stock of MSC. MSC is in the business of
supplying prescription pharmaceuticals, consulting services and enteral and
parental therapies to long-term and alternate care providers in South Florida.
On February 28, 1997, the Company acquired Campo. In connection with
the transaction, the Company exchanged 375,000 shares of the Company's Common
Stock for all of the outstanding common stock of Campo. Campo is in the business
of supplying prescription pharmaceuticals and consulting services to long-term
and alternate care providers in Louisiana.
On March 26, 1997, the Company acquired Hytree. In connection with the
transaction, the Company exchanged 850,000 shares of the Company's Common Stock
for all of the outstanding common stock of Hytree. Hytree is in the business of
supplying prescription pharmaceuticals, respiratory and consulting services to
long-term and alternate care providers, along with home care and sales and
rentals of durable medical equipment and supplies within the Ohio market.
6
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COMPSCRIPT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1997
(UNAUDITED)
2. ACQUISITIONS (CONT'D)
The accompanying consolidated condensed financial statements for all
periods presented have been restated to reflect the acquisitions. The following
unaudited pro forma summary presents the separate results of operations for
CompScript and the pooled entities for the three and six months ended June 30,
1997, respectively. The pro forma financial information does not purport to be
indicative of the results of operations that would have occurred had the
transactions taken place at the beginning of the periods presented or of future
results of operations.
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COMPSCRIPT MSC CAMPO HYTREE CONSOLIDATED
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THREE MONTHS ENDED
JUNE 30, 1997
Total sales $ 5,862,105 $2,828,410 $ 859,357 $3,297,951 $12,847,823
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Net (loss) income $ (91,364) $ 146,715 $ 80,191 $ 108,758 $ 244,300
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THREE MONTHS ENDED
JUNE 30, 1996
Total sales $ 5,271,999 $2,021,185 $ 787,752 $2,513,194 $10,594,130
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Net income $ 27,995 $ 202,523 $ 107,874 $ 54,241 $ 392,633
================ ================= ================ ================= ==================
SIX MONTHS ENDED
JUNE 30, 1997
Total sales $ 10,901,636 $5,521,927 $ 1,628,127 $6,294,752 $24,346,442
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Net (loss) income $ (2,272,715) $ 511,891 $ 238,640 $ 150,382 $(1,371,802)
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SIX MONTHS ENDED
JUNE 30, 1996
Total sales $ 10,312,408 $3,931,572 $ 1,594,739 $5,115,822 $20,954,541
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Net (loss) income $ (32,080) $ 408,479 $ 185,030 $ (77,133) $ 484,296
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7
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COMPSCRIPT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1997
(UNAUDITED)
3. NOTE RECEIVABLE
In connection with the Company's acquisition on April 26, 1996, the
Company acquired marketable equity securities valued at $1,125,000. Subsequent
to the acquisition, on July 26, 1996, the Company sold its 1,125,000 shares of
Common Stock of QPQ Corporation ("QPQ") representing its entire marketable
equity portfolio to a major shareholder of QPQ in exchange for a $1,125,000
non-recourse promissory note payable in full, including interest, on July 4,
1997. On May 16, 1997, the Company and the note holder settled all outstanding
obligations of the note holder to the Company in exchange for the 1,125,000
shares of QPQ which were returned to the Company. During the six months ended
June 30, 1997, the Company recorded an $800,000 charge against the note which
has been classified as "loss on realization of note receivable" in the Statement
of Operations for the six months ended June 30, 1997. The Company deemed it
appropriate to evaluate the collateral underlying the note, as the value of the
QPQ stock declined significantly during 1997.
4. INCOME TAXES
The income tax provisions for the six-month periods ended June 30, 1997
and 1996, have been calculated by applying the Company's estimated effective tax
rate for the years 1997 and 1996.
For the six-month period ended June 30, 1997, the relationship of the
provision for income taxes to pre-tax income reflects the exclusion of the
Subchapter S earnings of Delta and MSC from the tax provision computation.
Concurrent with the acquisitions of Delta on May 31, 1996 and MSC on January 10,
1997, Delta and MSC converted to C corporation status and their earnings from
those dates forward were included in the tax provision computation. The
consolidated condensed statement of operations for the six months ended June 30,
1996, do not include pro forma adjustments for income tax expense which would
have been recorded had Delta and MSC been taxable corporations as the impact
would not be significant.
5. NOTES PAYABLE
On January 3, 1997, the Company amended its financing agreement with
its primary lender to increase its revolving line-of-credit agreement to allow
for borrowings up to $5 million from the $750,000 previously in effect (the New
Credit Facility). The primary reason for the increase was to provide additional
working capital for operations and fund the Company's acquisition activity.
Through June 30, 1997, the Company borrowed approximately $4.3 million under the
New Credit Facility.
8
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COMPSCRIPT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1997
(UNAUDITED)
5. NOTES PAYABLE (CONT'D)
The New Credit Facility is collateralized by all of the Company's
accounts receivable, inventory, fixed assets and other assets, and consists of a
term loan due on April 30, 1998. Interest, which is paid monthly on the credit
facility, accrues at the lesser of the prime rate or the three-month London
Interbank Offered Rate, plus 250 basis points. The credit facility requires the
Company to maintain at all times, certain net worth, debt coverage and working
capital levels, and restricts acquisitions and dispositions of property and
limits additional borrowings from other lenders.
In connection with the New Credit Facility, on January 3, 1997, the
Company also entered into a $500,000 promissory note with the same lender, the
proceeds of which were used to fund the Company's office and mail order space
expansion, which was completed in the first quarter of 1997. The principle sum
of the promissory note is payable in monthly installments of approximately
$8,333 plus interest at 9.0% for 60 months which began on February 1, 1997.
Collateral and debt covenants are the same as those of the New Credit Facility.
On March 19, 1997, the Company entered into an additional $750,000
promissory note with its existing lender, primarily for working capital
purposes. Such loan matures on July 26, 1997, and bears interest at prime. This
loan is cross collateralized with all other borrowings previously discussed. In
addition to the collateral previously discussed, this note is collateralized by
the $325,000 of marketable securities recorded on the Company's consolidated
balance sheet at June 30, 1997.
6. SHAREHOLDERS' EQUITY
Effective January 10, 1997, MSC's Subchapter S accumulated deficit of
approximately $420,000 was reclassified to additional paid-in capital upon the
conversion of MSC to a taxable corporation concurrent with its acquisition by
the Company.
During the six months ended June 30, 1997, the Company issued 15,000
shares of Common Stock to certain consultants as consideration for services
rendered in connection with the Company's acquisition of Campo. An additional
30,000 shares were issued to such consultants as consideration for services
rendered in connection with the Company's acquisition of Hytree. Costs of
$420,000 associated with the issuance of those 45,000 shares have been included
in merger costs in the six-month period ending June 30, 1997.
During the period ended June 30, 1997, holders of options exercised
278,898 options resulting in the issuance of 278,898 shares of Common Stock and
net proceeds to the Company of approximately $1,470,000. Subsequent to June 30,
1997, the Company received net proceeds of $500,000 as a result of option
holders exercising 100,000 options.
9
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Item 2. Management's Discussion and Analysis or Plan of Operation
GENERAL
Except for the historical information contained herein, the matters set
forth in this Form 10-QSB are forward-looking and involve a number of risks and
uncertainties that could cause actual results to differ materially from these
statements and trends. Such factors include, but are not limited to: the effect
of changes in governmental regulation, reimbursement policies and federal and
state healthcare funding; the continued availability of suitable acquisition
candidates; significant changes to general economic conditions; strengthened
competition in the Company's geographic markets; the failure of the Company to
obtain or maintain required regulatory licenses and approvals or the loss of key
personnel.
CompScript, Inc. (CompScript or the company, f/k/a Capital Brands,
Inc.) is a comprehensive provider of pharmacy management services including
institutional pharmacy, infusion therapy, mail order and consultant pharmacist
services as well as pharmacy benefit claim administration to managed care
networks, long-term and subacute care facilities, home health patients and
recipients of managed care. The Company is the successor to CompScript-Boca,
Inc. (Boca, f/k/a CompScript, Inc. which was f/k/a Aldencare, Inc.), which was
incorporated under the laws of the State of Florida on October 3, 1991.
On April 26, 1996, shareholders who previously owned approximately 93%
of Boca exchanged their shares of Boca's Common Stock for 7,394,982 common
shares (representing an 80% interest) of Capital Brands, Inc. (Capital), a
publicly-held company (the Acquisition). This exchange was structured as a
tax-free reorganization. The Acquisition was accounted for as a reverse
acquisition of Capital by Boca pursuant to which Boca was recapitalized to
include the assets and liabilities of Capital revalued to reflect the market
value of Capital's net tangible assets at the date of the Acquisition consisting
of cash and marketable equity securities. Effective July 5, 1996, Capital
changed its name to CompScript, Inc. The remaining 7% of Boca is accounted for
as a minority interest in a consolidated subsidiary on the Company's March 31,
1997 balance sheet.
In connection with the Company's continued expansion of its business,
the Company completed three acquisitions during the quarter ended March 31,
1997. On January 10, 1997, February 28, 1997, and March 26, 1997, the Company
acquired 100% of the outstanding Common Stock of Medical Services Consortium,
Inc. ("MSC"), Campo Medical Pharmacy, Inc. ("Campo"), and Hytree Pharmacy, Inc.
("Hytree"). The acquisitions have been accounted for as poolings of interests
(see Note 2). All data included in the following discussions has been restated
to reflect the combination of MSC, Campo and Hytree for all periods presented.
10
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Results of Operations:
Sales for the three and six-month periods ended June 30, 1997 were
$12,847,823 and $24,346,442, respectively, compared to $10,594,130 and
$20,954,541, respectively, for the three and six months ended June 30, 1996,
respectively. The $2,253,693 and $3,391,901, or 21% and 16% increase,
respectively, was primarily attributed to the Company's successful and continued
acquisition strategy and its ability to assimilate its acquired companies into
its systems and infrastructure in order to create internal growth.
Gross profit increased $712,781 to $5,092,757 for the three months
ended June 30, 1997 from $4,379,976 in the three months ended June 30, 1996 as a
result of the increased revenue. For the six months ended June 30, 1997, gross
profit increased $ 1,172,401 to $9,796,658 from $8,624,257 in the six months
ended June 30, 1996 also due to the increase in revenue for those periods. Gross
profit margins decreased from 41% to 40% in the three- and six-month periods
ended June 30, 1996 to the three- and six-month periods ended June 30, 1997 due
to price increases of certain pharmaceuticals.
Selling general and administrative expenses ("SG&A") were $4,624,001
and $9,441,999, respectively, for the three- and six-month periods ended June
30, 1997, compared to $3,592,450 and $7,646,372, respectively, for the three-
and six-month periods ended June 30, 1996. The increases of $1,031,551 and
$1,795,627, respectively, were partially attributable to the increases in
revenues. During the three and six months ended June 30, 1997, the Company also
incurred additional SG&A expenses associated with payroll costs from the
addition of new executives necessary for the Company's operations as a public
company and for continued development of its acquisition strategy. The Company
believes its acquisition strategy will enable it to continue to reduce SG&A
expenses as a percentage of revenues in the future, as the Company believes it
has developed the executive management infrastructure necessary to absorb
additional acquisitions without corresponding percentage increases in selling,
general and administrative expenses. Ramp-up costs relating to the opening of
two new branch locations in Jackson, Mississippi and Tampa, Florida in February
and March, 1997, respectively, also contributed to increased SG&A in the six
months ended June 30, 1997.
In connection with the Company's reverse acquisition of Capital Brands,
Inc. on April 26, 1996, the Company acquired marketable equity securities valued
at $1,125,000. Subsequent to the acquisition, on July 26, 1996, the Company sold
its 1,125,000 shares of Common Stock of QPQ Corporation ("QPQ") representing its
entire marketable equity portfolio to a major shareholder of QPQ in exchange for
a $1,125,000 non-recourse promissory note payable in full, including interest,
on July 4, 1997. On May 16, 1997, the Company and the note holder settled all
outstanding obligations of the note holder to the Company in exchange for the
1,125,000 shares of QPQ which were returned to the Company. During the six
months ended June 30, 1997, the Company recorded an $800,000 charge against the
note which has been classified as "loss on realization of note receivable" in
the Statement of Operations. The Company deemed it appropriate to evaluate the
collateral underlying the note, as the value of the QPQ stock declined
significantly during the six months ended June 30, 1997.
11
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The three- and six-month periods ended June 30, 1997 included $75,249
and $688,706, respectively, of one-time charges related to merger and
acquisition costs associated with the three acquisitions completed during the
three- and six-month periods ended June 30, 1997. There were $265,368 in similar
costs in the statement of operations associated with the three- and six-month
periods ended June 30, 1996. Net interest costs and other income remained
constant during the three and six month periods ended June 30, 1997, as compared
to the three- and six-month periods ended June 30, 1996.
As a result of the events previously discussed, the Company reported a
net income of $244,300, or $.02 per share for the three months ended June 30,
1997 compared to net income of $392,633, or $.03 per share, during the three
months ended June 30, 1996, and a net loss of $1,371,802 or $.10 per share for
the six months ended June 30,1997 compare to net income of $484,296 or $.04
during the six months ended June 30, 1996. Exclusive of the one-time charges
related to merger costs and the provision related to the note receivable
previously discussed, the Company's net income for the six months ended June 30,
1997 would have been $72,480 (including a tax provision of $44,424, assuming a
statutory tax rate of 38%), or $.01 per share.
Liquidity and Capital Resources:
The Company has funded its operating requirements to date primarily
through operations, the private sale of equity securities (prior to the reverse
acquisition on April 26, 1996), and borrowings under its existing line of credit
agreement. As of June 30, 1997, the Company had cash and cash equivalents of
$379,363, accounts receivable of $9,936,914, working capital of $3,059,684 and a
current ratio of 1.27 to 1.00.
Net cash used in operating activities for the six months ended June 30,
1997 was $3,807,436 compared to cash provided of $284,540 during the six months
ended June 30, 1996. The increase in cash used in operating activities was
primarily attributable to the operating loss incurred during the six months
ended June 30, 1997, along with increases in accounts receivable and inventory
to support the 16% increase in revenues.
Net cash used in investing activities was $1,077,805 for the six months
ended June 30, 1997, which was a direct result of net purchases of property and
equipment related to the Company's expansion of its Boca Raton office and new
mail order facility which was completed in February 1997. The Company also made
expenditures for equipment and leasehold improvements pertaining to the new
office and institutional pharmacy location that MSC move into during June of
1997. This new facility was necessary to accommodate the increased revenues at
MSC, along with its continuing emphasis on infusion therapy services. During the
six months ended June 30, 1997, the Company opened two new branch locations in
Jackson, Mississippi and Tampa, Florida which began operations in February and
March 1997, respectively. Net cash provided by investing activities was $148,162
for the six months ended June 30,1996, primarily due to net cash received from
the reverse acquisition of Capital Brands, Inc.
12
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Financing activities provided $4,406,864 in cash in the six months
ended June 30, 1997, compared to $801,914 in the six months ended June 30, 1996,
primarily as a result of proceeds from the exercise of options and net advances
under the Company's credit line and new borrowings. Subsequent to June 30, 1997,
the Company received net proceeds of $500,000 elated to the exercise of 100,000
stock options.
The Company's future capital requirements for operations include
financing the growth of working capital items such as accounts receivable and
inventory, purchasing equipment and upgrading management information and
inventory control systems. Based upon the continuation of the Company's business
development, the Company believes the cash flow from operations and borrowings
under an expanded credit facility will provide sufficient cash to fund its
operations and meet current obligations for the year ending December 31, 1997.
The Company is attempting to improve cash flows from operations and maintain
flexibility in financing both interim and long-term working capital requirements
by reducing inventory levels, as a result of the utilization of its inventory
control system which will improve the scheduling and timing of purchases. In the
event the Company dramatically expands its operations or makes acquisitions that
would require funds in addition to its existing liquid assets and cash flows, it
would have to seek additional debt or equity financing. There can be no
assurance that the Company could obtain such financing or that such financing
would be available on terms acceptable to the Company.
13
<PAGE>
PART II. OTHER INFORMATION
(a) Not applicable
(b) Reports on Form 8-K
(i) 8-K/A dated June 9, 1997 concerning the
filing of the Financial Statements and Pro Form Financial Information of Hytree
Pharmacy, Inc.
14
<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.
Date: August 12, 1997 By: /s/ BRIAN A. KAHAN
-----------------------------
Brian A. Kahan, Chief Executive
Officer (Principal Executive Officer)
Date: August 12, 1997 By: /s/ JUAN C. COCUY
-----------------------------
Juan C. Cocuy, Chief Financial Officer
(Principal Financing and Accounting
Officer)
15
<PAGE>
EXHIBIT INDEX
EXHIBIT
- -------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 379,363
<SECURITIES> 325,000
<RECEIVABLES> 10,927,901
<ALLOWANCES> (990,987)
<INVENTORY> 2,845,066
<CURRENT-ASSETS> 14,370,476
<PP&E> 5,412,186
<DEPRECIATION> (2,278,388)
<TOTAL-ASSETS> 18,294,657
<CURRENT-LIABILITIES> 11,310,792
<BONDS> 0
0
0
<COMMON> 1,386
<OTHER-SE> 6,063,871
<TOTAL-LIABILITY-AND-EQUITY> 18,294,657
<SALES> 24,346,442
<TOTAL-REVENUES> 24,346,442
<CGS> 14,549,784
<TOTAL-COSTS> 14,549,784
<OTHER-EXPENSES> 10,528,319
<LOSS-PROVISION> 392,460
<INTEREST-EXPENSE> 247,681
<INCOME-PRETAX> (1,371,802)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,371,802)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,371,802)
<EPS-PRIMARY> (0.10)
<EPS-DILUTED> (0.10)
</TABLE>
