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 12 or 15(d) of
the Exchange Act
For the transition period from _________ to __________.
Commission file number 0-20594
COMPSCRIPT, INC.
-----------------------------------------------------------------
(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
----------------------------------------
(Address of Principal Executive Office)
(561) 994-8585
------------------------------------------------
(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 May 14, 1997 was 13,757,063.
Transitional Small Business Disclosure Format:
Yes [ ] No [X]
<PAGE>
COMPSCRIPT, INC. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
PAGE
PART I. FINANCIAL INFORMATION
ITEM.1 Financial Statements (Unaudited)
Consolidated Balance Sheets as of
March 31, 1997 and December 31,
1996 2
Consolidated Statements of Operations
for the Three Months Ended March 31,
1997 and 1996 3
Consolidated Statements of Cash Flows
for the Three Months Ended March 31,
1997 and 1996 4
Notes to Consolidated Financial
Statements 5-9
ITEM. 2 Management's Discussion and Analysis
of Plan of Operations 10-13
PART II. OTHER INFORMATION
SIGNATURES
<PAGE>
<TABLE>
<CAPTION>
CompScript, Inc. and Subsidiaries
Consolidated Condensed Balance Sheets (Unaudited)
DECEMBER 31, MARCH 31,
1996 1997
--------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 857,740 $ 807,204
Accounts receivable, net 6,369,720 7,983,422
Inventory 2,467,639 2,779,848
Note receivable 1,150,788 325,000
Income tax refund receivable 267,812 355,657
Prepaid and other receivables 112,487 118,890
--------------------------------
Total current assets 11,226,186 12,370,021
Property and equipment, net 2,231,495 2,654,452
Other assets:
Costs in excess of net assets acquired, less accumulated amortization
143,171 132,944
Other 854,222 803,331
--------------------------------
Total other assets 997,393 936,275
================================
Total assets $14,455,074 $15,960,748
================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,502,436 $ 2,686,913
Accrued salaries and benefits 762,405 693,312
Accrued expenses 850,382 941,317
Accrued pharmaceuticals dispensed by third parties 164,935 142,996
Line of credit 674,693 -
Notes payable to shareholders 843,737 449,750
Current portion of notes payable 197,734 941,867
Current portion of capital lease obligations 84,064 79,769
--------------------------------
Total current liabilities 7,080,386 5,935,924
Long-term debt:
Line of credit - 4,665,466
Notes payable 1,841,538 560,596
Capital lease obligations 56,360 48,078
--------------------------------
Total long-term debt 1,897,898 5,274,140
--------------------------------
Total liabilities 8,978,284 11,210,064
Minority interest 222,628 222,628
Shareholders' equity:
Common stock, $.0001 par value--50,000,000 shares authorized,
13,533,132 and 13,627,063 shares issued and outstanding at
December 31,1996 and March 31, 1997, respectively 1,353 1,364
Additional paid-in capital 8,908,583 9,798,568
Accumulated deficit (3,655,774) (5,271,876)
--------------------------------
Total shareholders' equity 5,254,162 4,528,056
--------------------------------
Total liabilities and shareholders' equity $14,455,074 $15,960,748
================================
</TABLE>
SEE ACCOMPANYING NOTES.
2
<PAGE>
<TABLE>
<CAPTION>
CompScript, Inc. and Subsidiaries
Consolidated Condensed Statements of Operations (Unaudited)
THREE MONTHS ENDED
MARCH 31,
1996 1997
---------------------------------
<S> <C> <C>
Sales $10,360,411 $11,498,619
Cost of sales 6,116,130 6,794,718
---------------------------------
Gross profit 4,244,281 4,703,901
Selling, general and administrative expenses 3,922,458 4,696,093
Provision for doubtful accounts 131,464 121,905
Merger costs - 613,457
---------------------------------
Total operating expenses 4,053,922 5,431,455
---------------------------------
Operating income (loss) 190,359 (727,554)
Other:
Interest and other income 25,271 11,015
Interest expense (106,428) (99,563)
Loss on realization of note receivable - (800,000)
---------------------------------
Income (loss) before provision for income taxes 109,202 (1,616,102)
Income tax provision 17,539 -
---------------------------------
Net income (loss) $ 91,663 $ (1,616,102)
=================================
Net income (loss) per share $ 0.01 $ (0.12)
=================================
Weighted average shares outstanding 11,430,907 13,563,897
=================================
Pro forma data:
Historical income before provision for income taxes $ 109,202
Pro forma tax expense 32,852
-------------
Pro forma net income $ 76,350
=============
Pro forma net income per share $ 0.01
=============
</TABLE>
SEE ACCOMPANYING NOTES.
3
<PAGE>
<TABLE>
<CAPTION>
CompScript, Inc. and Subsidiaries
Consolidated Condensed Statements of Cash Flows (Unaudited)
THREE MONTHS ENDED
MARCH 31,
1996 1997
---------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 91,663 $(1,616,102)
Adjustments to reconcile net income (loss) to net cash used
in operating activities:
Depreciation and amortization of leasehold improvements 141,112 129,959
Amortization of goodwill 10,227 10,227
Noncash merger costs - 420,000
Provision for doubtful accounts 131,464 121,905
Loss on note receivable - 800,000
Changes in operating assets and liabilities:
Accounts receivable (345,334) (1,709,819)
Inventory 28,137 (312,209)
Income tax refund receivable 65,671 (87,845)
Prepaid and other receivables 82,805 (6,403)
Other assets (63,714) 50,891
Accounts payable and accrued expenses (247,710) (815,620)
---------------------------------
Net cash used in operating activities (105,679) (3,015,016)
INVESTING ACTIVITY
Purchase of property and equipment (232,295) (552,916)
---------------------------------
Net cash used in investing activity (232,295) (552,916)
FINANCING ACTIVITIES
Exercise of options and warrants - 469,996
Net proceeds from lines of credit 212,597 3,990,773
Net repayments on notes payable 176,758 (536,809)
Net repayments of notes payable shareholders - (393,987)
Repayment of leases payable (38,108) (12,577)
---------------------------------
Net cash provided by financing activities 351,247 3,517,396
---------------------------------
Net increase (decrease) in cash and cash equivalents 13,273 (50,536)
Cash and cash equivalents at beginning of period 549,548 857,740
---------------------------------
Cash and cash equivalents at end of period $ 562,821 $ 807,204
=================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for income taxes $ 19,583 $ 87,500
=================================
Cash paid for interest $ 106,428 $ 99,563
=================================
</TABLE>
SEE ACCOMPANYING NOTES.
4
<PAGE>
COMPSCRIPT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 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
March 31, 1997 and for the three months ended March 31, 1997 and 1996 are
unaudited. The consolidated condensed balance sheet as of December 31, 1996 was
derived from the December 31, 1996 audited balance sheet. Such balance sheet was
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 three month period ended March 31, 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 revenues and expenses during the
reporting period. Actual results could differ from these estimates.
Net income (loss) per share for three month period ended March 31, 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.
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.
5
<PAGE>
COMPSCRIPT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
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 March 31,
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 prescriptions 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.
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 months ended March 31, 1996 and
1997. 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.
6
<PAGE>
<TABLE>
<CAPTION>
COMPSCRIPT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
CompScript MSC Campo Hytree Consolidated
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Three months
Ended March 31, 1997
Total sales $ 5,039,531 $ 2,693,517 $768,770 $2,996,801 $11,498,619
=========== =========== ======== ========== ===========
Net (loss) income $(2,042,542) $ 253,834 $130,982 $ 41,624 $(1,616,102)
=========== =========== ======== ========== ===========
Three months
Ended March 31, 1996
Total sales $ 5,040,410 $ 1,910,387 $806,987 $2,602,627 $10,360,411
=========== =========== ======== ========== ===========
Net (loss) income $ (60,075) $ 205,956 $ 77,156 $ (131,374) $ 91,663
=========== =========== ======== ========== ===========
</TABLE>
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 QDQ back to the Company. During the 1997 Quarter, the Company recorded
an $800,000 charge against the note which has been classified as "loss on
realization of note receivable" in the 1997 Quarter 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 1997 Quarter. Such
collateral will be reevaluated in future periods based on the market value of
the QPQ stock.
7
<PAGE>
COMPSCRIPT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
4. INCOME TAXES
The income tax provisions for the three month period ended March 31,
1997 and 1996, have been calculated by applying the Company's estimated
effective tax rate for the years 1997 and 1996 after giving effect to the
matters described in the following paragraph.
For the three month period ended March 31, 1996, 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. Accordingly,
the consolidated condensed statement of operations for the three months ended
March 31, 1996, include pro forma adjustments for income tax expense which would
have been recorded had Delta and MSC been taxable corporations and had the
Company been able to file a consolidated income tax return with the pooled
entities based on the tax laws in effect during the periods presented.
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 March 31, 1997, the Company borrowed approximately $4.7 million under
the New Credit Facility.
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 lessor 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 lendors.
8
<PAGE>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
In connection with the New Credit Facility, on January 3, 1997, the
Company also entered into a $500,000 promissory note with the same lendor, 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 note receivable recorded on the Company's consolidated balance
sheet at March 31, 1997 and the collateral underlying the note receivable
consisting of marketable equity securities.
6. SHAREHOLDERS' EQUITY
During the three months ended March 31, 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. Subsequent to
March 31, 1997, 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 three month period ending March 31,
1997.
During the period ended March 31, 1997, holders of options exercised
78,898 options resulting in the issuance of 78,898 shares of Common Stock and
net proceeds to the Company of approximately $470,000.
Subsequent to March 31, 1997, the Company received net proceeds of
$1,000,000 as a result of option holders exercising 200,000 options.
9
<PAGE>
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 involved in the development of consumer-based businesses
in the Republic of Poland (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
<PAGE>
Results of Operations:
Sales for the three months ended March 31, 1997 (the "1997 Quarter")
were $11,498,619 compared to $10,360,411 for the three months ended March 31,
1996 (the "1996 Quarter"). The $1,138,208 or 11.0% increase was primarily
attributed to the Company's successful and continued acquisition strategy.
Gross profits increased $459,620 to $4,703,901 during the 1997 Quarter
from $4,244,281 in the 1996 Quarter, as a result of the increased revenue. Gross
profit margins remained constant at approximately 41% during both periods.
Selling general and administrative expenses ("SG&A") were $4,696,093 in
the 1997 Quarter compared to $3,922,458 in the 1996 Quarter, an increase of
$773,635 partially attributable to the 11% increase in revenues. During the 1997
Quarter, 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 related
to the expansion of the Company's mail order operation that continued to take
place in the 1997 Quarter, along with start-up costs incurred 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 1997 Quarter.
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 QDQ back to the Company. During the 1997 Quarter, the Company recorded
an $800,000 charge against the note which has been classified as "loss on
realization of note receivable" in the 1997 Quarter 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 1997 Quarter. Such
collateral will be reevaluated in future periods based on the market value of
the QPQ stock.
The 1997 Quarter included $613,457 of one-time charges related to
merger and acquisition costs associated with the three acquisitions completed
during the 1997 Quarter. There were no similar costs included in the statement
of operations associated with the 1996 Quarter. Net interest costs and other
income remained constant during the 1997 Quarter as compared to the 1996
Quarter.
11
<PAGE>
As a result of the events previously discussed, the Company reported a
net loss of $1,616,102, or .12 per share, for the 1997 Quarter compared to net
income of $91,663, or .01 per share, during the 1996 Quarter. Exclusive of the
one-time charges related to merger costs and the provision related to the note
receivable previously discussed, the Company's loss from operations for the 1997
Quarter would have been reduced to $202,645 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), exercise of options and warrants and borrowings
under its existing line of credit agreement. As of March 31, 1997, the Company
had cash and cash equivalents of $807,204, accounts receivable of $7,983,422,
working capital of $6,434,097, and a current ratio of 2.08 to 1.00.
Net cash used in operating activities for the 1997 Quarter was
$3,015,016 compared to a use of $105,679 during the 1996 Quarter. The increase
in cash used in operating activities was primarily attributable to the operating
loss incurred during the 1997 Quarter, along with increases in accounts
receivable and inventory to support the 11% increase in revenues at a greater
rate than the corresponding increase in accounts payable.
Investing activities increased $320,621 to $552,916 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 will be moving into during June of 1997. This new facility is necessary
to accommodate the increased revenues at MSC, along with its continuing emphasis
on infusion therapy services. During the 1997 Quarter, the Company opened two
new branch locations in Jackson, Mississippi and Tampa, Florida which began
operations in February and March, 1997, respectively.
Financing activities provided $3,517,396 in cash in the 1997 Quarter
compared to $351,247 in the 1996 Quarter primarily as a result of proceeds of
$469,996 relating to the exercise of options and net advances under the
Company's credit line and new borrowings. Subsequent to March 31, 1997, the
Company received net proceeds of $1,000,000 related to the exercise of 200,000
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, the exercise of
stock options (which is subject to market conditions) and borrowings under its
credit facility will provide sufficient cash to fund its operations and meet
current obligations for the year ending December 31, 1997. The
12
<PAGE>
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 dated January 24, 1997 in connection with the Stock
Purchase Agreement entered into between the Company and Medical Services
Consortium, Inc.
(ii) 8-K dated February 7, 1997 in connection with the
entering into of Letters of Intent for the purchase of all of the outstanding
stock of both Hytree Pharmacy, Inc. and Campo Medical Pharmacy, Inc.
(iii) 8-K/A dated March 26, 1997 concerning the filing of the
Financial Statements and Pro Form Financial information of Medical Services
Consortium, 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: May 20, 1997 By: /s/ Brian A. Kahan
------------------------------------
Brian A. Kahan, Chief Executive
Officer (Principal Executive Officer)
Date: May 20, 1997 By: /s/ John Chiste
------------------------------------
John Chiste, Chief Financial Officer
(Principal Financial and Accounting
Officer)
15
<PAGE>
EXHIBIT EXHIBIT INDEX
- -------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 807,204
<SECURITIES> 0
<RECEIVABLES> 8,558,422
<ALLOWANCES> (575,000)
<INVENTORY> 2,779,848
<CURRENT-ASSETS> 12,370,021
<PP&E> 4,498,315
<DEPRECIATION> (1,843,863)
<TOTAL-ASSETS> 15,960,748
<CURRENT-LIABILITIES> 5,935,924
<BONDS> 0
0
0
<COMMON> 1,364
<OTHER-SE> 4,526,692
<TOTAL-LIABILITY-AND-EQUITY> 15,960,748
<SALES> 11,498,619
<TOTAL-REVENUES> 11,498,619
<CGS> 6,794,718
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<NET-INCOME> (1,616,102)
<EPS-PRIMARY> (.12)
<EPS-DILUTED> (.12)
</TABLE>
