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
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 0-19685
METROVISION OF NORTH AMERICA, INC.
(Exact name of registrant as specified in its charter)
New York 16-1276525
(State or other jurisdiction of (I.R.S. Employer
Identification No.)
incorporation or organization)
424 Madison Avenue, 9th Floor New York, New York 10017
(Address of principal executive offices) (Zip Code)
(212) 759-2850
(Registrant's telephones number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed
since last report)
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 __
Applicable Only to Issuers Involved in Bankruptcy
Proceedings During the Preceding Five Years
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13,
or 15(d) of the Securities Exchange Act of 1934 subsequent to
the distribution of securities under a plan confirmed by the
court. Yes No
Applicable Only to Corporate Issuers
Indicated the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practical
date.
Common Stock, $.001 Par Value - 6,987,880 shares as of May 6,
1996.
METROVISION OF NORTH AMERICA, INC.
INDEX
PAGE
Part I. Financial Information
Item 1. Condensed Consolidated Financial Statements (Unaudited)
Condensed consolidated balance sheets - December 31, 1995 and
March 31, 1996 1
Condensed consolidated statements of operations -
Three months ended March 31, 1995 and 1996 2
Condensed consolidated statements of cash flows -
Three months ended March 31, 1995 and 1996 3
Notes to condensed consolidated financial statements - March
31, 1996 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results
of Operations 5
Part II. Other Information
Item 6. 9
Signatures 10<PAGE>
PART I - FINANCIAL INFORMATION
METROVISION OF NORTH AMERICA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, March 31,
1995 1996
(Note) (Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $97,125 $62,191
Accounts receivable, net of allowance of $10,230 at March 31,
1995 441,955 204,343
Prepaid expenses 45,415 61,846
TOTAL CURRENT ASSETS 584,495 328,380
OPERATING EQUIPMENT
Installations and equipment 3,550,257 3,551,468
Installations-in-process 221,416 208,916
Equipment and fixtures 195,378 197,953
3,967,051 3,958,337
Less: accumulated depreciation (2,223,742) (2,313,353)
1,743,309 1,644,984
OTHER ASSETS 10,846 9,987
PREPAID SOFTWARE LICENSE 36,000 27,000
CONTRACT RIGHTS 257,761 207,761
$2,632,411 $2,218,112
LIABILITIES and STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable-trade $182,545 $186,638
Accrued salaries and commissions 133,284 131,823
Deferred Income 286,547 208,817
Accrued expenses 66,905 38,545
Current portion of notes payable to stockholders 96,000
76,000
TOTAL CURRENT LIABILITIES 765,281 641,823
PREFERRED STOCK, 5% SERIES A 649 649
COMMON STOCKHOLDERS' EQUITY
Common stock, Class A 6,987 6,987
Capital in excess of par value 13,385,979 13,385,979
Retained deficit (11,526,485) (11,817,326)
TOTAL COMMON STOCKHOLDERS' EQUITY 1,866,481 1,575,640
$2,632,411 $2,218,112
<PAGE>
METROVISION OF NORTH AMERICA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended ths Ended
March 31 ber 30
1995 1996
GROSS REVENUES $435,257 $212,253
Less: agency commissions (17,978) (2,737)
NET REVENUES 417,279 209,516
OPERATING COSTS AND EXPENSES
Cost of sales 245,172 101,819
Selling, general, and administrative 304,930 235,210
550,102 337,029
OPERATING LOSS BEFORE DEPRECIATION
AND AMORTIZATION (132,823) (127,513)
Depreciation and amortization 161,500 161,500
LOSS FROM OPERATIONS (294,323) (289,013)
Interest income 2,497 49
Interest expense (2,147) (1,877)
NET LOSS (293,973) (290,841)
Less: Preferred stock dividend requirements 45,793 45,041
NET LOSS APPLICABLE TO COMMON STOCK $(339,766) $(335,882)
NET LOSS PER COMMON SHARE $(0.05) $(0.06)
WEIGHTED AVERAGE NUMBER OF SHARES 5,975,359 6,059,633
<PAGE>
METROVISION OF NORTH AMERICA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)
Three Months Ended
March 31
1995 1996
OPERATING ACTIVITIES
Net loss $(293,973) $(290,841)
Adjustments to reconcile net loss to net cash used in
operating activities:
Provision for depreciation and amortization 161,500 161,500
Loss in sale of equipment 0 611
Changes in operating assets and liabilities:
Decrease in accounts receivable (net) 35,873 237,612
(Increase) in prepaid expenses and other assets (16,392)
(15,572)
Increase (Decrease) in accounts payable and other accrued
expenses 100,894 (103,458)
NET CASH USED IN OPERATING ACTIVITIES (12,098) (10,148)
INVESTING ACTIVITIES
Capital expenditures for operating equipment (12,122)
(7,286)
Proceeds from sale of equipment 0 2,500
NET CASH USED BY INVESTING ACTIVITIES (12,122) (4,786)
FINANCING ACTIVITIES
Principal payments on notes to former stockholders 0
(20,000)
NET CASH PROVIDED BY FINANCING ACTIVITIES 0 (20,000)
(24,220) (34,934)
Cash and cash equivalents at beginning of period 400,716
97,125
CASH AND CASH EQUIVALENTS AT END OF PERIOD $376,496 $62,191
<PAGE>
METROVISION OF NORTH AMERICA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
March 31, 1996
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial information
and with the instructions to Form 10-QSB and Article 10 of
Regulation S-X. Accordingly, they 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 (consisting of normal
recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the three months
ended March 31, 1996 are not necessarily indicative of the
results that may be expected for the year ended December 31,
1996. For further information, refer to the consolidated
financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended December
31, 1995.
NOTE B--SUBSEQUENT EVENTS
On May 10, 1996, the Company, York Hannover Pharmaceuticals,
Inc. ("York Hannover") and Stockbridge Investment Partners Inc.
("Stockbridge") entered into an Agreement and Plan of Merger
(the "Merger Agreement") for the merger of York Hannover, a
wholly owned subsidiary of Stockbridge, with and into the
Company. Under the Merger Agreement, MetroVision would issue
shares of its common stock to Stockbridge equal to 63.3 percent
of its total shares outstanding on a post merger basis, after
giving effect to a 4.6 for 1 reverse split of MetroVision common
stock. The Company's name would be changed to "York Hannover
Health Care, Inc."
MetroVision contemplates holding a regular shareholder meeting
for the purpose of soliciting shareholder approval of the
proposed York Hannover merger, change of name and reverse stock
split. In addition, the shareholders will be asked to approve
an increase in authorized shares of common stock and the
amendment of the Company's 1991 Stock Option Plan and 1993
Non-Employee Directors' Stock Option Plan. Although, not
subject to shareholder approval, the Company intends to offer
the holders of its 648,535 shares of Series A 5% Preferred Stock
an aggregate of 800,000 shares of common stock (after giving
effect to the aforementioned reverse split) in exchange for such
Series A 5% Preferred Stock and forgiveness of all accrued
dividends on the Preferred Stock (approximately $600,000).<PAGE>
METROVISION OF NORTH
AMERICA, INC.
Three Months Ended March 31, 1996
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
March 31, 1996 Compared to March 31, 1995
Gross Revenues. For the three months ended March 31, 1996,
gross revenues decreased by $223,004 to $212,253 as compared to
$435,257 for the three months ended March 31, 1995. The
decrease is primarily attributable to a decrease in advertising
of $52,220 and a decrease in system sales of $170,784. The
decrease in advertising revenues reflects the Company's
increased emphasis on higher margins system sales. System sales
for the period were adversely affected during the period by
harsh weather conditions. System sales involves the sale of
complete, installed video systems to the secondary transit
market.
Agency Commissions. Agency commissions consist of the fees
charged by advertising agencies against the value of the
advertising contracts billed to their clients by the Company.
These commissions generally are 15% of gross revenues. For the
three months ended March 31, 1996, agency commissions totaled
$2,737 which is $15,241 less than the agency commission for the
three months ended March 31, 1995. The decrease is primarily
the result of the decrease in gross advertising revenue.
Net Revenues. Net revenues are equal to gross revenues after
deducting advertising agency commission. Net revenues for the
three months ended March 31, 1996 were $209,516, a decrease of
50% or $207,763 from net revenues of $417,279 for the three
months ended March 31, 1995. The decrease in net revenues is
associated with the decrease in advertising and system sales
revenues.
Cost of Sales. Cost of sales consists primarily of commissions
paid to installed transit systems, the cost of system
installations, maintenance costs, and software licensing fees.
Commissions to installed transit systems are based on a
percentage of revenues. Maintenance costs are directly related
to increases in the number of installed television monitors and
computers. Cost of sales, for the three months ended March 31,
1996 were $101,819, a decrease of $143,353 or 58% from $245,172
for the three months ended March 31, 1995. The decrease is
primarily the result of the decrease in system sales revenues.
Selling, General and Administrative Expenses. Selling, general
and administrative expenses for the three months ended March 31,
1996 were $235,210, a decrease of $69,720 or 23% from $304,930
for the three months ended March 31, 1995. The decrease is
primarily attributable to a decrease in salaries, wages and
related employee cost resulting from reductions in sales,
marketing and operations employees.
Interest Income. For the three months ended March 31, 1996,
interest income totaled $49 as compared to $2,497 for the same
period in 1995. The decrease in interest income is the result
of a smaller cash balance earning interest for the three month
period ended March 31, 1996. <PAGE>
Liquidity and Sources of Capital
At March 31, 1996, the Company had negative working capital of
$313,443 which is primarily the result of a decrease in trade
Accounts Receivable.
Cash decreased $34,934 from December 31, 1995 to $62,191 at
March 31, 1996. The net decrease is primarily the result of
cash being expended for operating purposes and the repayment of
amounts due to a former stockholder. Accounts receivable, net
allowance for doubtful accounts, decreased $237,612 to $204,343
at March 31, 1996. The decrease is the result of the collection
of account balances. Accounts payable increased $4,093 from
$182,545 at December 31, 1995 to $186,638 at March 31, 1996. The
increase is the result of the timing of certain operating
expenses. Accrued salaries and commissions decreased $1,461
from $133,284 at December 31, 1995 to $131,823 at March 31,
1996. The decrease is the result of the timing of certain cash
payments to sponsors for accrued commissions. Deferred income
decreased $77,730 to $208,817 at March 31, 1996 from $286,547 at
December 31, 1995. The decrease is the result of recording
revenue against advance billings on system sales to transit
authorities in accordance with their budgetary and funding
requests. The retained deficit increased $290,841 from
$11,526,485 at December 31, 1995 to $11,817,326 at March 31,
1996. The increase is the result of the net loss for the period
ending March 31, 1996.
The Company is continuously engaged in discussions regarding
the sale of new installations. The Company has entered into an
agreement amounting to approximately $2.9 million with New
Jersey Transit to install and maintain approximately 50 transit
stations of which $848,000 has been received to date.
The Company's independent auditors have included an explanatory
paragraph in their report on the 1995 consolidated financial
statements stating that recurring losses, resulting in negative
cash flows, raise substantial doubt about the Company's ability
to continue as a going concern. In as much as the Company will
continue to have a high level of operating expenses (including
the salaries and benefits of executive, marketing, and other
personnel), and will be required to make significant upfront
capital expenditures in connection with its currently proposed
installations, the Company anticipates that losses will continue
until the Company generates sufficient advertising and system
sale revenues to offset its operating costs. The Company
believes that generation of that level of revenues is dependent
upon, among other things (i), expanding its network through
sales of complete systems to transit authorities and airports
seeking to comply with the ADA, (ii) the Company's ability to
contract with select alternative/transit media sales
organizations in order to significantly increase the sale of
advertising on its network and (iii) the Company's on going
exploration of strategic corporate and marketing alliances.
There can be no assurance, however, that the Company will be
able to generate significantly increased revenues or ever
achieve profitable operations.
The Company is not currently generating sufficient cash flow to
fund its operations and is dependent on the contract with New
Jersey Transit or other financing in order to sustain its
operations. Although there can be no assurance, the Company
believes that, based on currently proposed plans and assumptions
relating to its operations, the contract with New Jersey
Transit together with projected cash flow from operations, will
be sufficient to satisfy the Company's contemplated cash
requirements for 1996. In the event the Company's plans change
or its assumptions change or prove inaccurate or projected cash
flow prove to be insufficient to fund operations, the Company
would be required to seek additional financing sooner than
anticipated. Furthermore, the completion of the MBTA and NY
Area Airports installations and any implementation of expansion
programs will require resources substantially in excess of funds
otherwise currently available to the Company. The Company has
no current arrangements with respect to or sources of additional
financing, and there can be no assurance that financing will be
available to the Company on commercially reasonable terms, if at
all. Any inability to obtain additional financing could have a
material adverse effect on the Company, including possibly
requiring the Company to significantly curtail or cease its
operations.
SUBSEQUENT EVENTS
On May 10, 1996, the Company, York Hannover Pharmaceuticals,
Inc. ("York Hannover") and Stockbridge Investment Partners Inc.
("Stockbridge") entered into an Agreement and Plan of Merger
(the "Merger Agreement") for the merger of York Hannover, a
wholly owned subsidiary of Stockbridge, with and into the
Company. Under the Merger Agreement, MetroVision would issue
shares of its common stock to Stockbridge equal to 63.3 percent
of its total shares outstanding on a post merger basis, after
giving effect to a 4.6 for 1 reverse split of MetroVision common
stock. The Company's name would be changed to "York Hannover
Health Care, Inc."
MetroVision contemplates holding a regular shareholder meeting
for the purpose of soliciting shareholder approval of the
proposed York Hannover merger, change of name and reverse stock
split. In addition, the shareholders will be asked to approve
an increase in authorized shares of common stock and the
amendment of the Company's 1991 Stock Option Plan and 1993
Non-Employee Directors' Stock Option Plan. Although, not
subject to shareholder approval, the Company intends to offer
the holders of its 648,535 shares of Series A 5% Preferred Stock
an aggregate of 800,000 shares of common stock (after giving
effect to the aforementioned reverse split) in exchange for such
Series A 5% Preferred Stock and forgiveness of all accrued
dividends on the Preferred Stock (approximately $600,000).<PAGE>
PART II - OTHER
INFORMATION
METROVISION OF NORTH AMERICA, INC.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.33 Agreement and Plan of Merger, dated May 10, 1996, by and
among the Company, Stockbridge Investment Partners, Inc. and
York Hannover Pharmaceuticals, Inc.
(b) No reports on Form 8-K were filed during the three months
ended March 31, 1996.<PAGE>
METROVISION OF NORTH AMERICA, INC.
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 of the undersigned thereunto duly authorized.
METROVISION OF NORTH AMERICA, INC.
(Registrant)
Date: May 13, 1996 /s/ Robert F. Hussey
Robert F. Hussey, President
(Duly authorized officer)
Date: May 13, 1996 /s/ David M. Fancher
David M. Fancher
Chief Financial Officer
(Principal Financial & Accounting Officer)
<PAGE>
METROVISION OF NORTH AMERICA, INC.
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 of the undersigned thereunto duly authorized.
METROVISION OF NORTH AMERICA, INC.
(Registrant)
Date: May 13, 1996
Robert F. Hussey, President
(Duly authorized officer)
Date: May 13, 1996
David M. Fancher
Chief Financial Officer
(Principal Financial & Accounting Officer)
See notes to condensed consilidate financial statements.
See notes to condensed consilidate financial statements.
Note: The balance sheet at December 31, 1995 has been derived
from the audited financial statements at that date but does not
include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. See notes to condensed consolidated financial
statements.
See notes to condensed consolidated financial statements.
See notes to condensed consolidated financial statements.
