UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
[ ] TRANSACTION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 1999
Commission file number 0-19031
National Quality Care, Inc.
(EXACT NAME OF REGISTRANT)
Delaware 84-1215959
(State of Incorporation) (IRS Employer ID No.)
1835 South La Cienega Boulevard, Suite 235
Los Angeles, CA 90035
(Address of Principal Executive Offices) (Zip Code)
(310) 280-2758
(Telephone Number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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
---- ----
The number of shares of common stock outstanding
as of August 13, 1999 is 9,864,878.
1
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National Quality Care, Inc.
Table of Contents
Page
Part I. Financial Information 3
Item 1. Financial Statements
Consolidated Balance Sheets as of
June 30, 1999 and December 31, 1998 4
Consolidated Statements of Operations
for the Three Months Ended June 30, 1999
and 1998 5
Consolidated Statements of Operations
for the Six Months Ended June 30, 1999
and 1998 6
Consolidated Statements of Stockholders'
Equity for the Six Months Ended June 30, 1999 7
Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 1999 and 1998 8
Notes to Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
2
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PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
--------------------
3
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<TABLE>
<CAPTION>
NATIONAL QUALITY CARE, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
- -------------------------------------------------------------------------------------------------------------------
ASSETS
June 30, December 31,
1999 1998
-------------- --------------
<S> <C> <C>
Current assets
Cash and cash equivalents $ ----- $ 27,754
Accounts receivable, net of allowances for
doubtful accounts of $180,000 and $170,000 791,675 651,354
Supplies inventory 52,713 54,539
Other current assets 122,604 50,521
-------------- --------------
Total current assets 966,992 784,168
Property and equipment, net (note 2) 2,639,166 2,713,800
Deposits and other long-term assets 53,368 64,006
-------------- --------------
Total assets $ 3,659,526 $ 3,561,974
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable 880,873 998,561
Accrued expenses 268,692 266,374
Current portion of long-term debt (note 3) 324,296 202,075
-------------- --------------
Total current liabilities 1,473,861 1,467,010
Long-term debt, net of current portion (note 3) 2,096,184 2,047,779
-------------- --------------
Total liabilities 3,570,045 3,514,789
Stockholders' equity
Preferred stock, $.01 par value: 5,000,000 shares
authorized, no shares issued and outstanding ----- -----
Common stock, $.01 par value: 50,000,000 shares
authorized, 9,864,878 and 9,814,878 shares
issued and outstanding 98,648 98,148
Additional paid-in capital 2,172,907 2,163,407
Notes receivable from stockholder (266,028) (269,025)
Accumulated deficit (1,916,046) (1,945,345)
-------------- --------------
Total stockholders' equity 89,481 47,185
-------------- --------------
Total liabilities and stockholder's equity $ 3,659,526 $ 3,561,974
============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements
4
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<TABLE>
<CAPTION>
NATIONAL QUALITY CARE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30,
- -------------------------------------------------------------------------------------------------------------------
1999 1998
-------------- --------------
<S> <C> <C>
Income
Medical service income $ 1,068,030 $ 898,609
Rental income 68,285 67,925
-------------- --------------
Total income 1,136,315 966,534
-------------- --------------
Operating expenses
Cost of medical services 728,211 663,148
Selling, general, and administrative 288,714 337,929
Depreciation and amortization 31,064 17,040
Rent and other 22,056 21,860
-------------- --------------
Total operating expenses 1,070,045 1,039,977
-------------- --------------
Income (loss) from operations 66,270 (73,443)
Other income (expense)
Interest expense (70,204) (54,606)
Interest income 7,494 2,388
Other income (expense) 7,627 5,719
-------------- --------------
Total other expense (55,083) (46,499)
-------------- --------------
Income (loss) before provision for income taxes 11,187 (119,942)
Provision for income taxes 1,600 1,600
-------------- --------------
Net income (loss) $ 9,587 $ (121,542)
============== ==============
Basic and diluted income (loss) per share $ 0.00 $ (0.01)
============== ==============
Weighted average shares outstanding 9,842,900 9,773,668
============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements
5
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<TABLE>
<CAPTION>
NATIONAL QUALITY CARE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30,
- -------------------------------------------------------------------------------------------------------------------
1999 1998
-------------- --------------
<S> <C> <C>
Income
Medical service income $ 1,992,844 $ 1,691,186
Rental income 135,850 135,850
-------------- --------------
Total income 2,128,694 1,827,036
-------------- --------------
Operating expenses
Cost of medical services 1,360,586 1,210,635
Selling, general, and administrative 526,635 625,709
Depreciation and amortization 61,732 39,180
Rent and other 33,212 33,016
-------------- --------------
Total operating expenses 1,982,165 1,908,540
-------------- --------------
Income (loss) from operations 146,529 (81,504)
Other income (expense)
Interest expense (133,199) (103,038)
Interest income 9,942 4,688
Other income (expense) 7,627 7,428
-------------- --------------
Total other expense (115,630) (90,922)
-------------- --------------
Income (loss) before provision for income taxes 30,899 (172,426)
Provision for income taxes 1,600 1,600
-------------- --------------
Net income (loss) $ 29,299 $ (174,026)
============== ==============
Basic and diluted income (loss) per share $ 0.00 $ (0.02)
============== ==============
Weighted average shares outstanding 9,828,966 9,683,661
============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements
6
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<TABLE>
<CAPTION>
NATIONAL QUALITY CARE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1999
- ------------------------------------------------------------------------------------------------------------------------------------
Common Stock Additional Receivable Accumulated Total
Shares Amount Paid-In From Deficit
Capital Stockholder
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1998 9,814,878 $ 98,148 $ 2,163,407 $ (269,025) $ (1,945,345) $ 47,185
Stock options exercised:
For Cash 50,000 500 9,500 10,000
Decrease in receivable from stockholder 2,997 2,997
Net income 29,299 29,299
------------- ------------- ------------- ------------- ------------- -------------
Balance, June 30, 1998 9,864,878 $ 98,648 $ 2,172,907 $ (266,028) $ (1,916,046) $ 89,481
============= ============= ============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements
7
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<TABLE>
<CAPTION>
NATIONAL QUALITY CARE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30,
- -------------------------------------------------------------------------------------------------------------------
1999 1998
-------------- --------------
<S> <C> <C>
Cash flows from operating activities
Net income (loss) $ 29,299 $ (174,026)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities
Depreciation and amortization 80,912 61,492
Interest on receivable from stockholder (3,525) (4,688)
Issuance of common stock and stock options for services ----- 64,479
(Increase) decrease in
Accounts receivable (140,322) (148,494)
Supplies inventory 1,826 (17,841)
Other current assets (62,394) (42,080)
Increase (decrease) in
Accounts payable 94,479 169,719
Accrued expenses 17,691 (4,036)
-------------- --------------
Net cash (used) provided by operating activities 21,491 (90,787)
-------------- --------------
Cash flows from investing activities
Decrease (increase) in deposits 949 (40)
Collection of lease receivable from stockholder 6,522 -----
Purchase of building and equipment (6,277) (17,460)
-------------- --------------
Net cash used in investing activities (2,331) (22,188)
-------------- --------------
Cash flows from financing activities
Repayments of capital lease obligations (52,827) (16,300)
Repayment of debt (79,087) (28,886)
Proceeds from financing 75,000 145,000
Proceeds from exercise of stock options 10,000 15,125
-------------- --------------
Net cash provided (used) by financing activities (46,914) 114,939
-------------- --------------
Net increase (decrease) in cash during period (27,754) 1,964
-------------- --------------
Cash and equivalents, beginning of period 27,754 39,220
-------------- --------------
Cash and equivalents, end of period $ ----- $ 41,184
============== ==============
Supplemental disclosures of cash information:
State income taxes paid 1,600 1,600
Interest paid 124,416 48,432
In February 1999, the Company signed a promissory note with
Priority Healthcare to convert $212,166 of accounts payable
and $15,373 of accrued service charges into a long-term note
payable in 23 monthly installments with interest upon the unpaid
principle balance at the rate of 10% 227,539 -----
Interest receivable from stockholder accrued but not received (3,525) (4,688)
In April 1999, the Company agreed to reduce notes receivable
from an affiliate in exchange for a lease receivable $ 75,000 -----
</TABLE>
The accompanying notes are an integral part of these financial statements
8
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NATIONAL QUALITY CARE
June 30, 1999
(1) BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-QSB. They do not include
all information and footnotes necessary for a fair presentation of financial
position and results of operations and cash flows in conformity with generally
accepted accounting principles. These consolidated financial statements should
be read in conjunction with the consolidated financial statements and related
notes contained in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1998. In the opinion of Management, all adjustments considered
necessary for a fair presentation have been included in the interim period.
Operating results for the six months ended June 30, 1999 are not necessarily
indicative of the results that may be expected for the year ended December 31,
1999.
(2) CAPITAL LEASE
The Company entered into back to back sale and leaseback arrangements
for $75,000 of equipment with an affiliate, financing such equipment through a
third party. The transaction resulted in a capital lease receivable from the
shareholder affiliate replacing a portion of the note receivable from that
affiliate and an identical capital lease liability to the third party.
Minimum payments under the capital lease receivable and payable
are as follows:
Year ending December 31:
1999 27,957
2000 30,498
2001 30,498
2002 30,498
2003 30,498
2004 2,542
---------
152,491
Less amount representing interest 77,492
---------
Present value of minimum lease payments 68,478
Less current portion 7,203
---------
Long-term portion 61,275
=========
(3) EARNINGS PER SHARE
Weighted average shares outstanding for both basic and diluted income
(loss) per share for the three months ended June 30, 1999 and June 30, 1998 were
9,829,000 and 9,684,000, respectively. For the first six months of 1999 and
1998, the shares were 9,775,000 and 9,684,000, respectively. The Company has not
included the effect of assumed conversions and exercises of stock options and
warrants for June 30, 1999 and June 30, 1998 since such an inclusion would have
no effect in 1999 and would be antidilutive due to the Company's net loss in
1998.
Had the Company included the dilutive effect of assumed conversions and
exercises of stock options and warrants on the weighted average shares
outstanding, approximately zero (0) and 225,000 shares would have been included
for the three months ended June 30, 1999 and 1998. The effect would have been
9
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zero (0) 483,000 for the six months ended June 30, 1999 and 1998, respectively.
Excluded from these totals were warrants to purchase 500,000 shares of common
stock at $3.50 that were granted on May 12, 1996. These options and warrants
were not included in the computation because their exercise price was greater
than the average market price of the common shares and, therefore, the effect
would be antidilutive. All options outstanding as of June 30, 1999 had a higher
exercise price than the market price of the stock at that date.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
-----------------------------------------------------------------------
of Operations
-------------
OVERVIEW OF PRESENTATION. Since approximately May 1996, the focus of
the Company's principal business operation has been to provide high-quality
integrated dialysis services for patients suffering from End Stage Renal Disease
("ESRD").
The Company conducts its business through its wholly-owned operating
subsidiary, Los Angeles Community Dialysis, Inc. For purposes of clarity in this
section, the term "Company" reflects the financial condition and results of
operations of Los Angeles Community Dialysis, Inc. and the combined operations
of the parent holding company and Los Angeles Community Dialysis, Inc.
This report, including the disclosures below, contains certain
forward-looking statements that involve substantial risks and/or uncertainties.
When used herein, the terms "anticipates," "expects," "estimates," "believes"
and similar expressions, as they relate to the Company or its management, are
intended to identify such forward-looking statements. The Company's actual
results, performance or achievements may differ materially from those expressed
or implied by such forward-looking statements.
RESULTS OF OPERATIONS FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE
30, 1999 AND JUNE 30, 1998. Total income for the three months ended June 30,
1999 increased approximately 18% to $1,136,315 from $966,534 for the three
months ended June 30, 1998. For the first six months of 1999, total income
increased approximately 17% to $2,128,694 from $1,827,036 for the first six
months of 1998. Medical service revenue for the three months ended June 30, 1999
increased approximately 19% to $1,068,030 from $898,609 for the three months
ended June 30, 1998. For the first six months of 1999 medical service revenue
increased approximately 18% to $1,992,844 from $1,691,186 for the first six
months of 1998. This increase resulted from growth in the inpatient and
outpatient business of the Company.
Total operating expenses during the three months ended June 30, 1999
increased 3% to $1,070,045 from $1,039,977 during the three months ended June
30, 1998. For the first six months of 1999, total operating expenses increased
4% to $1,982,165 from $1,908,540 for the first six months of 1998. Total
operating expenses include (i) Cost of medical services, (ii) Selling, general
and administrative expenses, and (iii) Rental expense, as follows:
Cost of medical services during the three months ended June 30, 1999
increased 10% to $728,211 from $663,148 during the three months ended June 30,
1998. For the first six months of 1999, cost of medical services increased 12%
to $1,360,586 from $1,210,635 for the first six months of 1998. Cost of medical
services primarily consists of two (2) categories: (i) Medical services and
supplies, and (ii) Outside services. Medical services and supplies for the three
months ended June 30, 1999 increased approximately 6% to $609,269 from $575,640
for the three months ended June 30, 1998. For the first six months of 1999,
Medical services and supplies increased 10% to $1,145,662 from $1,045,455 for
the first six months of 1998. The increase was primarily due to rising usage of
medical supplies prescribed, resulting from increased business volume. Outside
services for the three months ended June 30, 1999 increased 36% to $119,242 from
10
<PAGE>
$87,508 for the three months ended June 30, 1998. For the first six months of
1999, outside services increased 30% to $214,925 from $165,180 for the first six
months of 1998. This increase was directly attributable to the increased volume
of inpatient services. The overall percentage increase in costs associated with
inpatient services exceeded the growth in revenues as the Company charged lower
rates for inpatient treatments, which were dictated by the market place.
Selling, general and administrative expenses during the three months
ended June 30, 1999 decreased 15% to $288,714 from $337,929 during the three
months ended June 30, 1998. For the first six months of 1999, selling, general
and administrative expenses decreased 16% to $526,635 from $625,709 for the
first six months of 1998. This decrease is primarily related to two items: (i)
reduced overhead expenses of approximately $45,000; and (ii) a reduction in
professional fees of approximately $46,000.
Depreciation and amortization expenses during the six months ended June
30, 1999 increased to $61,732 from $39,180 during the six months ended June 30,
1998. This increase in expenses is a result of capitalized medical equipment
leases.
Other expenses increased from $46,499 to $55,083 for the three months
ended June 30, 1999 and June 30, 1998. Other expenses increased during the six
months ended June 30, 1999 to $115,630 from $90,922 during the six months ended
June 30, 1998. This is primarily due to an increase in interest expenses
relating to capital lease obligations and notes.
As a result of the foregoing, the Company generated income of $9,587
during the three months ended June 30, 1999, as compared to a net loss of
$121,542 during the three months ended June 30, 1998. For the first six months
of 1999, the Company experienced net income of $29,299, as compared to net loss
of $174,026 for the first six months of 1998. The Company experienced income
from operations during the three months ended June 30, 1999 of $66,270 compared
to a loss from operations of $73,443 during the three months ended June 30,
1998. For the first six months of 1999, the Company experienced income from
operations of $146,529 compared to a loss from operations of $81,504 for the
first six months of 1998. Management believes that income from operations
primarily resulted from an increase in inpatient and outpatient services and
from the streamlining of operations.
As of December 31, 1998, the Company had net operating loss
carryforwards totaling approximately $4,700,000 and $2,000,000 for federal and
state income tax purposes, respectively. Utilization of the Company's net
operating loss may be subject to limitations under certain circumstances.
LIQUIDITY AND CAPITAL RESOURCES. At June 30, 1999, the ratio of current
assets to current liabilities was .66 to 1.00 compared to .53 at December 31,
1998.
The Company has historically financed its operations through the use of
working capital and loans to the Company. The Company's cash flow needs for the
six months ended June 30, 1999 were primarily provided from operations and
existing cash. The Company had a working capital deficit of approximately
$506,900 at June 30, 1999. The working capital deficit at December 31, 1998 was
approximately $682,800.
Cash and cash equivalents were zero as of June 30, 1999, as compared to
$27,754 as of December 31, 1998. During the first six months of 1999, the
Company generated $21,491 from operations, secured $75,000 in long-term
financing and received $10,000 of equity through the exercise of stock options.
The primary use of funds was to repay $131,914 in long-term debt.
11
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As of June 30, 1999, the Company had long-term borrowings in the
aggregate amount of $2,420,480, the current portion of which was $324,296. As of
December 31, 1998, the Company had aggregate long-term borrowings of $2,249,854.
During February 1999, the Company converted certain accounts payable into a note
with monthly payments of $10,000 plus interest, to be paid in 22 installments.
As of June 30, 1999, the Company had a note receivable including
accrued interest in the amount of $54,760 from Medipace Medical Group, Inc., an
affiliate of two of the Company's four (4) directors and largest stockholders,
bearing interest at the rate of 8% PER ANNUM, and a lease receivable of $68,478
from the same group.
In the second quarter of 1999, a lease receivable from an affiliate was
entered into which reduced an existing note from the affiliate for a like
amount. The Company received $75,000 in consideration for a lease payable for
the same amount. Both leases are identical in terms. These leases are classified
as capital leases in accordance with Statement of Financial Accounting Standards
No. 13, "Accounting for Leases." For accounting purposes, the Company has
treated this transaction as a financing arrangement. Payments are due in
installments through March 2004.
During 1996, the Company sold certain assets for no gain or loss to
former affiliates for $71,219 of cash, net of encumbrances paid on those assets
of $78,781 and promissory notes totaling $865,202 that bore 8% interest and were
due September, 1996. The notes were collateralized by approximately 648,000
shares of the Company's Common Stock and were in default at December 31, 1996.
Subsequently, the notes were assumed by a third party, who purchased, from the
affiliate, approximately 630,000 shares of Common Stock. The third party
executed an additional $135,000 non-interest bearing note to the Company, which
is fully reserved. Both notes are due February, 2000 and are secured by
approximately 570,000 shares. During 1997, 60,000 shares of Common Stock were
sold and the proceeds were applied to reduce principal and accrued interest by
$3,412 and $73,388, respectively. The Company has provided for a valuation
allowance of $719,000 on the $861,790 of notes to reserve for the difference
between the approximate fair value of the collateral and the book value of the
notes.
The Company's current business plan includes a strategy to expand as a
provider of dialysis services through the development of new dialysis facilities
and the acquisition of additional facilities and other strategically related
health care services in selected markets. The market for such acquisition
prospects is highly competitive and management expects that certain potential
acquirers will have significantly greater capital than the Company. The Company
currently experiences negative cash flow from operations. Management believes
this situation is temporary and expects to continue expansion of the Company and
to achieve profitable operations in the future, however, there can be no
assurances to that effect.
12
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RECENT ACCOUNTING PRONOUNCEMENTS
FASB recently issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which is required to be adopted as of
December 31, 2000. SFAS No. 133 establishes standards for reporting financial
and descriptive information regarding derivatives and hedging activity. Since
the Company does not have any derivative instruments, this standard will have no
impact on the Company's financial position or results of operations.
The American Institute of Certified Public Accountants ("AICPA")
recently issued Statement of Position 98-1, "Accounting for the Cost of Computer
Software Developed or Obtained for Internal Use," which provides guidance
concerning recognition and measurement of costs associated with developing or
acquiring software for internal use. In 1998, the AICPA also issued Statement of
Position 98-5, "Reporting on the Costs of Start-Up Activities," which provides
guidance concerning the costs of start-up activities. For accounting purposes,
start-up activities are defined as one-time activities related to opening a new
facility, introducing a new product or service, conducting business in a new
territory or with a new class of customer, initiating a new process in an
existing facility, or commencing some new operation. Both pronouncements were
effective for financial statements of years beginning after December 15, 1998.
The adoption of these pronouncements did not have a material impact on the
financial statements.
YEAR 2000
The Company has developed plans to address issues related to the impact
on its computer systems for the Year 2000. The Company has established a task
force with representatives from its operating units and financial management.
Financial and operational systems have been assessed and plans have been
developed to address systems modification requirements.
The accounting systems will require only minor changes, which have
already been identified and assessed. The major suppliers of the Company's
operations hardware and software equipment have provided information that the
systems and embedded technology are Year 2000 compliant. The financial impact of
making the required systems changes is not expected to be material to the
Company's consolidated financial position, liquidity and results of operations.
The Company is currently in the process of assessing the systems of its other
vendors. Assessment of alternative plans for its vendors that will not appear to
be Year 2000 compliant are expected to be completed in the third quarter of
1999.
The Company's business relies heavily upon its ability to obtain
reimbursement from third party payors, including Medicare, Medicaid and private
insurers. The Health Care Financing Administration ("HCFA") has testified to a
committee of the U.S. House of Representatives that it is far behind in
remedying Year 2000 problems. The failure of HCFA, Medicare intermediaries,
Medicaid payors or any of the Company's other significant third party payors to
remedy Year 2000 related problems could result in a delay in the Company's
receipt of payments for services, which could have a material adverse impact on
the Company's earnings, financial condition and business. Furthermore, a delay
in receiving supplies from certain vendors could hinder the Company's ability to
provide services to patients, which could have a material adverse impact on the
Company's earnings, financial condition and business. Presently, the Company
cannot assess whether these governmental agencies will be prepared for the Year
2000. This may result in a material impact to the Company. The Company is in the
process of assessing the capabilities of its non-governmental customers and
expects to complete its assessment in the third quarter of 1999.
13
<PAGE>
The Company is aware that its dialysis and other medical systems may
include imbedded chips that process dates and date-sensitive material. These
imbedded chips are both difficult to identify in all instances and difficult to
repair. Often, total replacement of the chips is necessary. The manufacturer of
the majority of this equipment has certified it to be Year 2000 compliant. If
such systems should fail, there could be a material adverse impact on the
Company's earnings, financial condition and business.
The Company continues to develop contingency plans to address issues
Year 2000 issues that arise including third party Year 2000 issues. Issues being
addressed include (i) making certain that back-up power generators at certain
locations, (ii) ensuring that alternative sources are available to supply the
Company with key medical supplies, or making appropriate alternative
arrangements, and (iii) the Company will arrange for alternative payment methods
with any principal payor who might be adversely affected by Year 2000 issues.
14
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Reports on Form 8-K
-------------------
The Company filed no report on a Form 8-K during the Quarterly Period
ended June 30, 1999.
(b) Exhibit
27. Financial Data Schedule
15
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Company has duly caused this report to be
signed on its behalf by the undersigned thereunto duly authorized on the dates
indicated.
Dated: August 13, 1999 NATIONAL QUALITY CARE, INC.
By: /s/ Ron Berkowitz
---------------------------
Ron Berkowitz
Chief Financial Officer
16
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 791,675
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 966,992
<PP&E> 2,639,166
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,659,526
<CURRENT-LIABILITIES> 1,473,861
<BONDS> 0
0
0
<COMMON> 98,648
<OTHER-SE> (9,167)
<TOTAL-LIABILITY-AND-EQUITY> 3,659,526
<SALES> 1,068,030
<TOTAL-REVENUES> 1,136,315
<CGS> 728,211
<TOTAL-COSTS> 1,070,045
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 70,204
<INCOME-PRETAX> 11,187
<INCOME-TAX> 1,600
<INCOME-CONTINUING> 9,587
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,587
<EPS-BASIC> 0.00
<EPS-DILUTED> 0.00
</TABLE>
