SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Period Ended March 31, 1996
--------------
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the Transition Period from to
----- ------
Commission File Number 1-10966
-------
HEALTH PROFESSIONALS, INC.
--------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 11-3076108
--------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
515 East Las Olas Boulevard, Suite 1600, Fort Lauderdale, Fl 33301
--------------------------------------------------------------------------------
(Address of principal executive offices)
305-766-2552
--------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
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 .
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at April 30, 1996
------------------------------ -----------------------------
Common Stock, $.02 par value 21,890,000
1
<PAGE>
HEALTH PROFESSIONALS, INC.
AND SUBSIDIARIES
I N D E X
---------
Page No.
PART I - Financial Information --------
Condensed Consolidated Balance Sheets,
March 31, 1996 and September 30, 1994 3 - 4
Condensed Consolidated Statements of Operations,
Three and Six Months Ended March 31, 1996 and 1994 5
Condensed Consolidated Statements of Cash Flows,
Six Months Ended March 31, 1996 and 1994 6
Notes to Condensed Consolidated Financial Statements 7 - 9
Management's Discussion and Analysis of Financial
Condition and Results of Operations 10 -15
PART II - Other Information 16
2
<PAGE>
HEALTH PROFESSIONALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, September 30,
--------- -------------
Assets 1996 1995
------ ---- ----
Current assets:
Cash $ 77,000 $ 20,000
Accounts receivable, net 1,950,000 1,947,000
Accounts receivable, related
parties,net 1,972,000 2,119,000
Inventory 109,000 106,000
Note receivable held for sale
- Premier Medical Services, Inc.,
current portion 304,000 330,000
Prepaid expenses 65,000 15,000
---------- ----------
Total current assets 4,477,000 4,537,000
Note receivable - Premier Medical
Services, less current portion 225,000 375,000
Equipment, furniture & fixtures
and leasehold improvements, net 1,348,000 1,459,000
Costs in excess of net assets
of business acquired, net 2,922,000 2,995,000
Other assets 322,000 268,000
---------- ----------
Total $9,294,000 $9,634,000
========== ==========
See notes to condensed consolidated financial statements.
3
<PAGE>
HEALTH PROFESSIONALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, September 30,
--------- -------------
Liabilities and Stockholders 1996 1995
----------------------------- ---- ----
Equity
------
Current liabilities:
Accounts payable and accrued
expenses $ 3,510,000 $ 2,866,000
Accrued salaries and payroll taxes 122,000 228,000
Factoring line of credit 918,000 718,000
Current portion of long term debt 510,000 427,000
------------ ------------
Total current liabilities 5,060,000 4,239,000
------------ ------------
Long term debt, less current portion 1,455,000 4,365,000
------------ ------------
Stockholders' equity:
Serial preferred stock, $1 par value;
Authorized 100,000 shares; issued - none
Common Stock - $.02 par value; authorized
25,000,000 shares; issued and
outstanding 21,890,000 and
21,890,000 respectively 440,000 440,000
Additional paid-in capital 37,494,000 35,694,000
Less: 40,000 shares of Treasury
Stock at cost (42,000) (42,000)
Accumulated deficit (35,113,000) (35,062,000)
------------ ------------
Total stockholders' equity 2,779,000 1,030,000
------------ ------------
$ 9,294,000 $ 9,634,000
============ ============
See notes to condensed consolidated financial statements.
4
<PAGE>
HEALTH PROFESSIONALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
March 31, March 31,
--------- ---------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating revenues $ 1,170,000 $ 1,302,000 $ 2,146,000 $ 2,539,000
Operating revenue -
related parties 611,000 912,000 1,585,000 1,910,000
Conversion and Sale
of Securities 166,000 -- 166,000 --
Interest and other income 12,000 84,000 29,000 171,000
------------ ------------ ------------ ------------
1,959,000 2,298,000 3,926,000 4,620,000
Costs and expenses:
Direct service expense 858,000 1,067,000 1,801,000 2,179,000
Selling, general and
administrative expense 1,449,000 1,384,000 2,659,000 2,939,000
Professional Association
Reserves (436,000) -- (895,000) --
Interest 135,000 127,000 290,000 223,000
Research and development 36,000 (30,000) 122,000 6,000
------------ ------------ ------------ ------------
2,042,000 2,548,000 3,977,000 5,347,,000
------------ ------------ ------------ ------------
Net Loss $ (83,000) $ (250,000) $ (51,000) $ (727,000)
============ ============ ============ ============
Net (loss)
per share $ (.00) $ (.01) $ (.00) $ (.03)
============ ============ ============ ============
Weighted average number
of common and common
equivalent shares
outstanding 21,890,000 21,547,000 21,890,000 21,547,000
============ ============ ============ ============
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE>
HEALTH PROFESSIONALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended March
----------------------
1996 1995
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $ (51,000) $ (727,000)
Adjustments to reconcile net
(loss) to net cash used in operating
activities:
Depreciation and amortization 172,000 286,000
Provision for bad debts (935,000) 17,000
Conversion of Debt to Equity 3,000,000 --
Purchase of Chairman's
Physician Association (1,242,000) --
Lease obligations 25,000 65,000
Discount for Notes Payable 42,000 --
Change in assets and liabilities:
Decrease (increase) in
accounts receivable 1,079,000 (673,000)
(Increase) decrease in inventory (3,000) 22,000
(Increase) decrease paid expenses (132,000) 6,000
Decrease in other assets 28,000 4,000
Increase in accounts payable
and accrued expenses 644,000 354,000
(Decrease) increase in accrued
salaries and payroll taxes (106,000) 86,000
NET CASH PROVIDED BY (USED IN) ----------- -----------
OPERATING ACTIVITIES 2,521,000 (560,000)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, net 12,000 (22,000)
Collection of Notes Receivable 176,000 550,000
NET CASH PROVIDED BY (USED IN) ----------- -----------
INVESTING ACTIVITIES 188,000 528,000
CASH FLOWS FROM FINANCING ACTIVITIES: ----------- -----------
Repayments of long term debt and
current maturities (3,511,000) (371,000)
Additions to long-term debt 659,000 67,000
Cash received from Factor 200,000 311,000
NET CASH PROVIDED BY (USED IN) ----------- -----------
FINANCING ACTIVITIES: (2,652,000) 7,000
----------- -----------
NET INCREASE (DECREASE) IN CASH
57,000 (25,000)
CASH AT BEGINNING OF PERIOD 20,000 40,000
----------- -----------
CASH AT END OF PERIOD $ 77,000 $ 15,000
=========== ===========
See notes to condensed consolidated financial statements
6
<PAGE>
HEALTH PROFESSIONALS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
1. General
-------
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not include all
of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments considered necessary for a fair presentation have been included.
Operating results for the six months ended March 31, 1996 are not necessarily
indicative of the results that may be expected for the year ending September 30,
1996. These statements should be read in conjunction with the financial
statements and notes thereto included in the Company's Annual Report on Form
10-K for the fiscal year ended September 30, 1995.
2. Litigation and Other Contingencies
----------------------------------
(a) In 1993, three shareholder class action suits were filed against
the Company and its current offices, certain of whom are also directors, as a
result of the decline in the market value of the common stock. The class
plaintiffs agreed to a dismissal of their suit in exchange for an extension of
the statute of limitations until September 30, 1996.
(b) In 1993, the SEC advised the Company that it had commenced a formal
investigation of potential securities law violations in connection with certain
trading activity in the Company's securities and has requested certain
information from the Company and certain of its officers in connection with that
investigation. The Company, and the officers have complied with these requests.
3. Related Parties
---------------
Related party receivables arise from advances made to medical practices
owned by one of the former CSI shareholders who is also a director of the
Company. The advances were made in order to expand existing practices and
develop new practices to be customers of the Company. The two practices that
were developed by the Chairman on the Company's behalf have been sold and
related-party receivables were paid in full to the Company. One practice was
sold to an unrelated party in August of 1994. The purchaser remained affiliated
with the Company until February 29, 1996. The Company then started a new
practice at this site on March 1, 1996, with both the practice and the site now
owned by the Company. The other practice that was developed by the Chairman on
the Company's behalf was sold directly to CSI, effective January 1, 1996.
7
<PAGE>
4. Conversion of Debt to Equity
----------------------------
In February 1996, the Company's Board of Directors approved an
agreement to immediately convert, $3,000,000 of the $3,193,000 convertible debt
owed to the former CSI shareholders into 1,200,000 (post-split) shares of the
Company's common stock valued at .25 a share (pre-split). The conversion became
effective upon approval by the Company's Board of Directors. The conversion had
the effect at March 31, 1996 of decreasing long-term debt by $3,000,000 to
$1,455,000 and the debt to equity ratio on the consolidated balance sheet
improved from 868% at December 31, 1995 to 234%. Conversion of this debt also
eliminated interest expense of approximately $70,000 per quarter and released
the security interest that the former CSI shareholders held in CSI, the
Company's only operating subsidiary.
5. Subsequent Events
-----------------
On April 19, 1996, the stockholders approved a one-for-ten reverse
stock split during the Company's Annual Meeting. The effective date for the
stock split was the close of business on Friday, April 26, 1996. The vote in
favor of the proposal was 96.4%, of the 18,970,348 shares voting at the meeting.
On April 26, 1996, the Company entered into a selling agreement with
Societe Financiere du Seujet, Ltd., a foreign investment banking concern
(hereinafter "SFS"), to assist the Company in connection with the sale of
500,000 shares of its post- split stock at $4.00 per share valued at $2,000,000
under Regulation S to a group of foreign investors. In addition, the agreement
provided that the Company issue 120,000 shares (post- split) of its common stock
under Regulation S, to SFS as the Company's selling agent for the offering in
consideration of its services as such agent. This sale was completed on May 3,
1996.
On February 16, 1996, the Company entered into a Consulting Agreement
with Rubin Consultants, Inc., pursuant to which the Company agreed to issue
160,000 Shares (post-split) of Common Stock of the Company in consideration for
consulting services to be provided to the Company over an anticipated three-year
period commencing as of the date of the agreement. The term of the Consulting
Agreement will be three years unless sooner terminated as provided therein and
Rubin will provide full time services until June 15, 1996 and a minimum of 40
hours per month thereafter, for the remaining term of the Consulting Agreement.
Under the terms of the Consulting Agreement, Rubin is to consult with the
Company concerning management, marketing, strategic planning, corporate
organization and structure, expansion of services and shall review and advise
the Company regarding its overall progress, needs and condition. Rubin has
agreed not to transfer, sell or dispose of 10,000 of its shares until August 15,
1996.
8
<PAGE>
On February 16, 1996, the Company entered into a Consulting Agreement
with Logica Overseas, S.A., pursuant to which the Company agreed to issue to
80,000 Shares (post-split), of Common Stock of the Company in consideration for
consulting services to be provided to the Company over an anticipated three-year
period commencing as of the date of the Agreement. The term of the Consulting
Agreement will be three years unless sooner terminated. Logica is to consult
with the Company concerning management, marketing, strategic planning, corporate
organization and structure, financial matters including stockholder relations,
and evaluating and structuring business acquisitions.
On April 22, 1996, through the efforts of Brompton Asset Management,
S.A. (Brompton) the Company entered into a Joint Venture Agreement with
BioCoral, Inc. pursuant to which the Company agreed to perform clinical testing
services necessary to obtain the FDA approval of BioCoral's bone replacement
products at cost or exchange for a 45% equity interest in the joint venture.
BioCoral has agreed to fund the joint venture with $2,000,000 in cash and a
license to commercialize its product in the United Stated. In consideration for
introducing BioCoral and other potential venturers to the Company and for the
assistance of Brompton with respect to identification of such parties assistance
in negotiations, evaluating and structuring strategic alliances and joint
ventures, the Company agreed to issue Brompton 40,000 (post- split) shares of
its Common Stock.
9
<PAGE>
HEALTH PROFESSIONALS, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition and
Results of Operations
BACKGROUND AND BUSINESS PLAN DEVELOPMENT
----------------------------------------
CSI currently owns and operates five medical clinic and research sites
located in Florida (Fort Lauderdale, Miami Beach), California (Irvine, San
Diego) and Illinois (Chicago). Additional physician practices located in
Florida, Illinois, California, Kansas, Oklahoma, Virginia, Texas, Pennsylvania
and New York are affiliated with the CSI network and utilize CSI services to
varying degrees.
The Company's principal business objective is to extend the full
capabilities of its Information Technologies System (ITS) to all its currently
affiliated sites and to expand the number of owned and affiliated sites. This
will increase its revenue base sufficiently to meet its central operating and
development expenses and will then generate substantial operating profits. The
extension of the ITS to all affiliated sites will allow the Company to provide
more comprehensive services to these sites, thereby increasing the revenue
earned from each. The expansion of owned and affiliated sites will create
further market outlets for the Company's services and allow greater market
capture of the underlying populations requiring those services. The expanded
network will be positioned to capture health services contracts as a national
managed care disease-specific provider, will provide larger economies of scale,
will provide more clinical data for medical and financial analysis and will
allow CSI to conduct larger clinical trials.
The Company continues to focus further on the implementation of its
business plan by entering into independent practice affiliations with
established medical practices, purchases of established practices, obtaining new
clinical trials contracts, contracting for the sale of its historical outcomes
data while also attempting to locate additional sources of cash. The
infrastructure continues to be developed to service a greater number of
facilities. Patient flow at the existing facilities has increased and a number
of new clinical trials contracts have been obtained. On December 31, 1995 and on
February 13, 1996, the Company closed on two loans and securities purchase
agreement from which the Company received net proceeds of $700,000 in loans. The
Company used $100,000 of the proceeds from the loans to acquire a non-exclusive
seven year, unlimited user license for Clinitec International, Inc.'s NextGenTM
electronic medical records software. The remainder of the funds was used in
operations. On April 30, 1996, the Company executed a selling agreement for the
sale of 500,000 shares of its stock from which the Company received net proceeds
10
<PAGE>
of $2,000,000. The Company anticipates using $900,000 of the proceeds for the
opening of new affiliate centers, and $300,000 of the proceeds for the reduction
of existing trade and vendor debt, and $190,000 of the proceeds for the new
Chief Operating Officer who started on May 6, 1996. The Company anticipates
using the remainder of the funds for working capital needs. This represents
management's best estimate of the Company's allocation of the net proceeds of
this offering, based upon its current business operations, its current plans and
current economic and industry conditions. The Company reserves the right to
reallocate the proceeds if such reallocation is deemed necessary or advisable.
The Company is still utilizing cash from operations and will require additional
sources of cash. These sources of cash include the cash received from new
clinical trials contracts, cash from anticipated increase in operating
activities and the additional cash to be received from certain strategic
alliance contracts. No assurance can be made that sufficient additional sources
of cash will be available on terms reasonable acceptable to the Company.
RESULTS OF OPERATIONS
The Company's facilities revenues are derived from practice management
services provided directly or from providing diagnostic laboratory, in-office
infusion care and oral pharmaceuticals to the patients of the medical
professional associations under contract with CSI. Home infusion revenues and
out patient infusion care results from services provided to patients of the
professional medical associations, primarily through sub-contracts with home
infusion companies. In addition, the Company earns revenues from performing
research studies for pharmaceutical and biomedical companies and form the sale
of its historical outcomes data.
Three Months Ended Six Months Ended
------------------ ----------------
March 31, March 31,
--------- ---------
1996 1995 1996 1995
---- ---- ---- ----
Facilities revenues $1,459,000 $1,664,000 $2,878,000 $3,512,000
Home health 245,000 342,000 567,000 634,000
Clinical trials and other 77,000 121,000 286,000 303,000
---------- ---------- ---------- ----------
$1,781,000 $2,127,000 $3,731,000 $4,449,000
========== ========== ========== ==========
Facility revenues decreased by $205,000 and $634,000 for the three and
six months ended March 31, 1996, as compared to the same periods in 1995. The
decrease in facilities revenues is due to facilities whose contracts were not
renewed prior to the start of the current year, which provided revenues of
$435,000 and $1,039,000 during the quarter and six months ended March 31, 1996,
offset by an increase of $228,000 and $405,000 from the existing facilities for
the three and six months ended March 31, 1996. The decrease in Home Health
11
<PAGE>
revenue of $97,000 and $67,000 for the three and six months ended March 31, 1996
is primarily due to the cyclical nature of the services required to care for
these patients in an integrated health care setting. The decrease in clinical
trials and other revenue of $44,000 and $17,000 for the three and six months
ending March 31, 1996 is due to the conclusion of certain contracts prior to the
initiation of new contracts scheduled to begin in the following quarter.
The increased revenue from the conversion and sale of securities for
the quarter ending March 31, 1996 of $166,000 is due the Company exercising
warrants previously issued to the Company to purchase 50,000 shares of stock in
a former subsidiary of the Company and the exchange of the shares to shares of
unregistered stock in a publicly traded company. The Company sold its interest
in 8,705 shares of the publicly traded company to an unrelated party for
$145,000. The Company still holds additional shares of the publicly traded
company, which it has valued at $21,000.
Interest and other income decreased by $ 72,000 and $142,000 for the
three and six months ended March 31, 1996, as compared to the three and six
months ended March 31, 1995. The decrease due to a decrease in the note
receivable from the sale of the discontinued operations.
Direct service expense as a percentage of operating revenues was 48%
and 48% for the three and six months ended March 31, 1996, as compared to 48%
and 49% for the three and six months ended March 31, 1995. This decrease for the
six months ending March 31, 1996 is primarily due to facilities no longer
dispensing oral pharmaceutical as the expense was greater than the resulting
revenues, expenses incurred by facilities in 1995, whose contracts were not
renewed in 1995, offset by a decrease in facilities revenue, since the costs
associated with those revenues are relatively fixed.
Selling, general and administrative expenses increased by $65,000
(4.5%) and decreased by $280,0000 (15.5%) for the three and six months ended
March 31, 1996 as compared to the three and six months ended March 31, 1995. The
increase for the quarter ending March 31, 1996 relates primarily to an increase
in the use of consulting and professional fees with a smaller decrease in wages.
The decrease for the six months ending March 31, 1996 is due to a reduction in
corporate wages and consulting fees of $208,000 and other selling, general and
administrative expenses of $72,000.
The decrease in PA reserves of $436,000 and $895,000 for the three and
six months ending March 31, 1996 principally resulted from an increase in
collateralization of the receivables provided by one of the former CSI
shareholders who is now a director of the Company. The remaining reduction was
due to the repayment of a portion of the advance made by the Company to the
12
<PAGE>
Professional Corporation owned by the former CSI shareholder and to the full
repayment of the advance made by the Company to the Professional Association
previously owned by the Chairman of the Company. The reserve balance is reviewed
by the Company on a quarterly basis. Any increases or decreases to such balances
by the Company could materially impact reporting results.
Interest and factoring fees increased by $8,000 and $67,000 for the
three and six months ended March 31, 1996, as compared to the three and six
months ended March 31, 1995. The increase was primarily due to the interest
related to the obligation due the former CSI shareholders. Interest to the
shareholders terminated on February 21, 1996, due to the conversion of the
obligation due the former CSI shareholders to stock.
The Company incurred Research and Development expenses of $36,000 and
$122,000 for the three and six months ended March 31, 1996, primarily in
connection with its Immune Reconstitution Cell- Transfer Therapy for late stage
AIDS patients.
Based upon the above reasons, the Company reported losses from
continuing operations of $83,000 and $51,000 for the three and six months ended
March 31, 1996, respectively compared to losses of $727,000 and $1,457,000 for
the three and six months ended March 31, 1995, respectively.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
As of March 31, 1996, the Company had stockholders' equity of
$2,779,000 and working capital deficit of $583,000 as compared to stockholders'
equity of $1,317,000 and working capital deficit of $913,000 at March 31, 1995.
The Company provided for cash in its operating activities of $2,521,000
and used cash of $560,000 for the six months ended March 31, 1996 and 1995. Cash
was provided in 1996 primarily from the Company converting debt to equity. The
was offset by the decrease in the provision for bad debts, which relates to the
receivables due from the physician associations. The decrease in accounts
receivable relates to the sale of the Chairmen's physician association. The
increase in accounts payable results from the Company being unable to pay for
goods and services in the normal course operations offset by the Company
receiving the proceeds of $659,000 in loans, discussed below. Investing
activities provided cash in 1996 as a results of payments on notes receivable.
The Company anticipates that cash will continue to be used in its operating
activities during the remainder of fiscal 1996, a portion of which will be
funded by the collection of the notes receivable due from the sale of the
discontinued operations.
13
<PAGE>
CSI and certain medical professional associations under contract with
subsidiaries of CSI are a party to a $2,500,000 factoring agreement. The
agreements provide for factoring of eligible receivables of which approximately
$1,280,000 was available for borrowing at March 31, 1995, and $1,109,000 had
been drawn at March 31, 1995. Fees charged by the factor for factoring are
initially 1% of the receivables sold, after which funds are advanced by the
factor at 2% over prime. Management believes that available cash, including
available borrowings from the factoring agreement, and normal collections of the
notes receivable due from the sale of the discontinued operations will be
sufficient to satisfy the Company's working capital requirements for fiscal
1996. On December 28, 1995 and February 13, 1996, the Company closed on two
loans and securities purchase agreements with SunDance Venture Partners, Ltd.
(SunDance), from which the Company received net proceeds of $700,000 in loans.
Both notes provide for payment of interest at 12% per annum for the first
twenty-four months followed by payment of interest at 13% for the next twelve
months. Commencing April 1999, the principal for both loans will be paid in
eight equal quarterly payments which will include interest at the rate of 15%
per annum, with payment in full made on or before December 2000. In connection
with the loans, the Company also issued SunDance a Common Stock Purchase Warrant
for the purchase of 1,400,000 shares of the Company's common stock for each of
the two loans at an exercise price of $0.25 per share, which post-split converts
to 140,000 warrants at an exercise price of $2.50 per share. HPI common stock
was trading at $.31 when the first loan terms were concluded and at $.28 when
the second loan terms were concluded. The warrants will expire if not exercised
on or before January 1, 2001 and is callable by the Company after thirty months
if HPI's common stock trades above $10.00 for twenty consecutive trading days.
If exercised, the consideration paid to the Company for the shares will in
itself repay their outstanding principal amount of the two loans. The funds are
being utilized for working capital.
On December 29, 1995, the Company closed on the acquisition of a
non-exclusive seven year unlimited user license for Clinitec International,
Inc.'s NextGenTM electronic medial records software. This software was selected
as the clinical user interface for the Company's integrated health care delivery
system and will facilitate the expansion of the Company's Center for Special
Immunology, Inc. (CSI) clinical network. The consideration paid for the license
was $250,000 of which $100,000 was paid at closing with the balance to be paid
over the next three years.
In order to continue as a going concern in 1996, the Company must, (1)
generate cash flow from operations; (2) consider changing the informal
arrangement with the Company's Factor which in connection therewith the Chairman
has agreed to provide the Factor with his personal guarantee; (3) produce
additional revenues from the completed contracts with certain strategic
14
<PAGE>
partners; or, (4) generate revenues from several new contracts with new medical
facilities, which will result in increased revenues. While these opportunities
are being pursued, the Company intends to continue reducing costs, working with
vendors to obtain extended credit terms and increasing revenues at existing
facilities. No assurances can be made that the Company can obtain additional
sources of cash or that operation can produce positive cash flow.
Other
-----
The Company does not anticipate making any material expenditures in
connection with environmental or occupational safety regulation compliance.
Although the Company anticipates opening additional facilities in the future, it
has not made any material capital expenditure commitments as of this date in
connection with those potential facilities.
15
<PAGE>
HEALTH PROFESSIONALS, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 4. NONE.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibit
(27)* Financial Data Schedule
(b) Reports on Form 8-K
NONE
* Electronic filing only
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HEALTH PROFESSIONALS, INC.
--------------------------
Registrant
May 20, 1996 /s/ William M. Reiter, M.D.
----------------------------
William M. Reiter, M.D.
President and Chief
Executive officer
May 20, 1996 /s/ W. Douglas Kahn
--------------------
W. Douglas Kahn
Chief Financial Officer
16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF HEALTH PROFESSIONALS, INC., FOR THE QUARTERLY PERIOD
ENDED MARCH 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 77
<SECURITIES> 0
<RECEIVABLES> 4,689
<ALLOWANCES> 767
<INVENTORY> 109
<CURRENT-ASSETS> 4,477
<PP&E> 1,447
<DEPRECIATION> 99
<TOTAL-ASSETS> 9,294
<CURRENT-LIABILITIES> 5,060
<BONDS> 0
<COMMON> 440
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 9,294
<SALES> 3,731
<TOTAL-REVENUES> 3,926
<CGS> 1,801
<TOTAL-COSTS> 1,801
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