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 September 30, 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)
(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 - 7,241,664 shares as of November
11, 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
September 30, 1996 1
Condensed consolidated statements of operations -
Three months ended September 30, 1995 and 1996;
Nine months ended September 30, 1995 and 1996 2
Condensed consolidated statements of cash flows -
Nine months ended September 30, 1995 and 1996 3
Notes to condensed consolidated financial statements -
September 30, 1996 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results
of Operations 5
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 9
Signatures 11<PAGE>
PART I - FINANCIAL INFORMATION
METROVISION OF NORTH AMERICA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, September 30,
1995 1996
(Note) (Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $97,125 $0
Accounts receivable, net of allowances 441,955 167,088
Prepaid expenses 45,415 4,303
TOTAL CURRENT ASSETS 584,495 171,391
OPERATING EQUIPMENT
Installations and equipment 3,550,257 3,259,467
Installations-in-process 221,416 46,416
Equipment and fixtures 195,378 197,953
3,967,051 3,503,836
Less: accumulated depreciation (2,223,742) (2,469,353)
1,743,309 1,034,483
OTHER ASSETS 10,846 13,600
PREPAID SOFTWARE LICENSE 36,000 9,000
CONTRACT RIGHTS 257,761 0
$2,632,411 $1,228,474
LIABILITIES and STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable-trade $182,545 $137,027
Accrued salaries and commissions 133,284 149,154
Deferred Income 286,547 132,807
Accrued expenses 66,905 40,698
Current portion of notes payable to stockholders 96,000
76,000
Loans to Officers and Directors 0 59,506
TOTAL CURRENT LIABILITIES 765,281 595,192
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) (12,760,333)
TOTAL COMMON STOCKHOLDERS' EQUITY 1,866,481 632,633
$2,632,411 $1,228,474
<PAGE>
METROVISION OF NORTH AMERICA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Ended Nine Months Ended ths Ended
September 30 ber 30 September 30 ber 30
1995 1996 1995 1996
GROSS REVENUES $242,111 $172,591 $1,119,985 $703,194
Less: agency commissions (19,685) (6,163) (57,184)
(19,037)
NET REVENUES 222,426 166,428 1,062,801 684,157
OPERATING COSTS AND EXPENSES
Cost of sales 75,307 62,356 485,610 285,744
Selling, general, and administrative 252,461 187,723
773,768 617,041
327,768 250,079 1,259,378 902,785
OPERATING LOSS BEFORE DEPRECIATION
AND AMORTIZATION (105,342) (83,651) (196,577) (218,628)
Depreciation and amortization 161,500 75,000 484,500
398,000
Write Down of Contract Rights and Installation
Assets Assets Asse 0 607,761 0 607,761
LOSS FROM OPERATIONS (266,842) (766,412) (681,077)
(1,224,389)
Interest income 935 222 5,909 514
Interest expense (1,981) (6,235) (6,018) (9,973)
NET LOSS (267,888) (772,425) (681,186) (1,233,848)
Less: Preferred stock dividend requirements 45,793 45,041
137,379 135,123
NET LOSS APPLICABLE TO COMMON STOCK $(313,681) $(817,466)
$(818,565) $(1,368,971)
NET LOSS PER COMMON SHARE $(0.05) $(0.13) $(0.14)
$(0.22)
WEIGHTED AVERAGE NUMBER OF SHARES 6,073,829 6,194,965
5,964,440 6,299,083
<PAGE>
METROVISION OF NORTH AMERICA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)
Nine Months Ended
September 30,
1995 1996
OPERATING ACTIVITIES
Net loss $(681,186) $(1,233,848)
Adjustments to reconcile net loss to net cash used in
operating activities:
Provision for depreciation and amortization 484,500 398,000
Write down of contract rights and installation assets 0
607,761
Loss on sale of equipment 0 611
Changes in operating assets and liabilities:
(Increase)/decrease in accounts receivable (net) (300,124)
274,867
Decrease in prepaid expenses and other assets 7,604 38,358
Increase/(decrease) in accounts payable and other accrued
expenses 210,714 (209,595)
NET CASH USED IN OPERATING ACTIVITIES (278,492) (123,846)
INVESTING ACTIVITIES
Capital expenditures for operating equipment (84,640)
(15,285)
Proceeds from sale of equipment 0 2,500
NET CASH USED IN INVESTING ACTIVITIES (84,640) (12,785)
FINANCING ACTIVITIES
Payments of Dividends (7,803) 0
Proceeds from loans to officers and directors 70,000
Principal payments on loans to officers and directors 0
(10,494)
Principal payments on notes to former stockholders 0
(20,000)
NET CASH PROVIDED BY/(USED IN) FINANCING ACTIVITIES (7,803)
39,506
(370,935) (97,125)
Cash and cash equivalents at beginning of period 400,716
97,125
CASH AND CASH EQUIVALENTS AT END OF PERIOD $29,781 $0
<PAGE>
METROVISION OF NORTH AMERICA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
September 30, 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-Q 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 and nine
month periods ended September 30, 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 November 6, 1996, the Company received net proceeds of
approximately $51,000 as a result of the exercise of outstanding
redeemable common stock purchase warrants. In connection with
the exercise of these warrants the company issued a total of
253,965 shares of it's common stock.
On October 23, 1996, an action was filed seeking a judgement
against the company regarding a past due note of approximately
$76,000 plus accrued interest and attorney fees. The Company is
currently attempting to negotiate a settlement with the
noteholder.
NOTE C--RELATED PARTY TRANSACTIONS
On July 10, 1996 certain officers and directors loaned the
Company $25,000 at 10% interest per annum with principal and
accrued interest due no later than November 1, 1996. In
connection with this borrowing the Company issued to the lenders
warrants to purchase 69,000 shares of common stock at an
exercise price of $.15625 per share. As of November 13, 1996,
the Company has not repaid these loans.
In September, 1996, certain officers and directors loaned the
Company $45,000 at 10% interest per annum with principal and
accrued interest due no later than December 1, 1996. In
connection with this borrowing the Company issued to the lenders
warrants to purchase 132,200 shares of common stock at an
exercise price of $.20 per share.
NOTE D--ASSET IMPAIRMENT
In the third quarter of 1996, the Company recorded a charge of
$607,761 to reduce the carrying value of certain purchased
contract rights, and installation equipment for the New York
area airports and The Massachusetts Bay Transit Authority
("MBTA") project to their net realizable value. Pursuant to the
notification by the Port Authority of it's intent to terminate
the New York area airport contract and the Company's decision to
halt construction of the MBTA installation related to litigation
and the inability to generate significant revenues, the Company
has recorded a charge to recognize the impairment in the value
of these long lived assets.
<PAGE>
METROVISION OF NORTH AMERICA, INC.
Nine Months Ended September 30, 1996
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
September 30, 1996 Compared to September 30, 1995
Gross Revenues. For the nine months ended September 30, 1996,
gross revenues decreased $416,791 or 37.2% to $703,194 as
compared to $1,119,985 for the same period in 1995. For the
three months ended September 30, 1996 gross revenues decreased
by $69,520 or 28.7% to $169,622, as compared to $242,111 for the
three month period ended September 30, 1995. The decrease in
the first nine months is attributable to a decrease in system
sales of $187,972 and advertising and news service revenues of
$228,819. The decrease in ad revenues reflects the Company's
increased emphasis on system sales. System sales for the nine
months ended September 30, 1996 were adversely affected by harsh
weather conditions which delayed the installation of the New
Jersey Transit project during the first three months of 1996 and
the lack of additional system installation contracts. System
sales involves the sale of complete, installed video system to
the 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
nine months ended September 30, 1996, agency commissions totaled
$19,037 which is a decrease of $38,147 or 66.7% from agency
commissions for the nine months ended September 30, 1995. For
the three months ended September 30, 1996, agency commissions
totaled $6,163 which is $13,522 or 68.7% less than the agency
commissions for the three months ended September 30, 1995. The
decrease is attributable to the amount of advertising contracts
being obtained through advertising agencies and the decrease in
advertising revenue.
Net Revenues. Net revenues are equal to gross revenues after
deducting advertising agency commissions. Net revenues for the
nine months ended September 30, 1996 were $684,157, a decrease
of $378,644 from net revenues of $1,062,801 for the nine months
ended September 30, 1995. Net revenues for the three months
ended September 30, 1996 were $166,428 a decrease of $55,998
from net revenues of $222,426 for the three months ended
September 30, 1995. The decrease is consistent with the
decrease in system sales and advertising 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 nine months ended September
30, 1996 were $285,744, a decrease of $199,866 or 41.2% from
$485,610 for the nine months ended September 30, 1995. Cost of
sales for the three months ended September 30, 1996 were $62,356
a decrease of $12,951 or 17.2% from $75,307 for the three months
ended September 30, 1995. The decrease is consistent with the
decline in system sales revenues related to the installation of
the video cable network in certain New Jersey Transit terminals.
Selling, General and Administrative Expenses. Selling, general
and administrative expenses for the nine months ended September
30, 1996 were $617,041, as compared to $773,768 for the nine
months ended September 30, 1995. Selling, general and
administrative expenses for the three months ended September 30,
1996 were $187,723 a decrease of $64,738 or 25.6% for the three
months ended September 30, 1995. The decrease is primarily
attributable to a decrease in salaries, wages, and related
employee costs resulting from reductions in sales, marketing and
operations employees.
Interest Income. For the nine months ended September 30, 1996,
interest income totaled $514 as compared to $5,909 for the same
period in 1995. For the three months ended September 30, 1996,
interest income totaled $222 as compared to $935 for 1995. The
decrease for both periods is the result of a smaller cash
balance earning interest in 1996.
Depreciation and Amortization. Depreciation and amortization
expense for the nine months ended September 30, 1996 was
$398,000 a decrease of $86,500 or 17.9% from $484,500 for the
nine months ended September 30, 1995. This decrease in
depreciation and amortization expense is directly related to the
write down of certain contract rights and installation assets.
Write Down of Contract Rights and Installation Assets. The
Company recorded a charge of $607,761 to reduce the carrying
value of certain purchased contract rights, and installation
equipment for the New York area airports and The Massachusetts
Bay Transit Authority ("MBTA") to their net realizable value.
Pursuant to the notification by the Port Authority of it's
intent to terminate the contract and the Company's decision to
halt construction of the MBTA installation related to litigation
and the inability to generate significant revenues, the Company
has recorded a charge to recognize the impairment in the value
of long lived assets.
<PAGE>
Liquidity and Sources of Capital
At September 30, 1996, the Company had negative working
capital of $423,801 which is primarily the result of a reduction
in the cash balance, accounts receivable, prepaid expenses and
increases in accrued salaries and loans due to officers and
directors offset by a decrease in accounts payable and deferred
income.
Cash decreased $97,125 from December 31, 1995 to $0. The net
decrease is the result of cash being expended for operating
purposes and the repayment of notes to former stockholders
offset by proceeds of loans from certain officers and directors.
Accounts receivable, net of allowance for doubtful accounts,
decreased $274,867 to $167,088 at September 30, 1996. The
decrease is primarily the result of the collection of account
balances and lower gross revenues. Accrued salaries and
commissions increased $15,870 from $133,284 at December 31, 1995
to $149,154 at September 30, 1996. The increase is the result
of the timing of certain cash payments to sponsors for accrued
commissions. Deferred income decreased $153,740 to $132,807 at
September 30, 1996 from $286,547 at December 31, 1995. The
decrease is primarily the result of recording revenue against
advance billings on system sales to the New Jersey Transit
Authority in accordance with their budgetary and funding
requests. The retained deficit increased $1,233,848 from
$11,526,485 at December 31, 1995 to $12,760,333 at September 30,
1996. The increase is the result of the net loss for the period
ending September 30, 1996.
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 approximately
72.5 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." On November 7, 1996, the
Company filed a preliminary registration statement on Form S-4
to among other things register 4,000,000 shares of Common Stock
in connection with the merger.
On May 22, 1996, the Company's Common Stock was de-listed from
the NASDAQ Small Cap Market for failure to comply with certain
listing requirements.
On July 10, 1996 certain officers and directors loaned
MetroVision $25,000 at 10% interest per annum with principal and
accrued interest due no later than November 1, 1996. In
connection with this borrowing MetroVision issued to the lenders
warrants to purchase 69,000 shares of common stock at an
exercise price of $.15625 per share. As of November 13, 1996
the Company has not repaid these loans.
In September, 1996, certain officers and directors loaned
MetroVision an additional $45,000 at 10% interest per annum with
principal and interest due no later than December 1, 1996. In
connection with this loan, MetroVision issued to the lenders
warrants to purchase 133,200 shares of common stock at an
exercise price of $.20 per share.
On October 23, 1996, an action was filed seeking a judgement
against the company regarding a past due note of approximately
$76,000 plus accrued interest and attorney fees. The Company is
currently attempting to negotiate a settlement with the
noteholder.
On November 6, 1996, the Company received net proceeds of
approximately $51,000 as a result of the exercise of outstanding
redeemable common stock purchase warrants.
The Company is continuously engaged in discussions regarding
the sale of new installations. The Company has an agreement
amounting to approximately $2.9 million with New Jersey Transit
to install and maintain approximately 50 transit stations of
which $954,000 has been received to date.
MetroVision'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 MetroVision's ability
to continue as a going concern. MetroVision anticipates that
losses will continue until MetroVision generates sufficient
advertising, system sale or other revenues to offset its
operating costs. MetroVision 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 seeking to comply with the ADA, (ii)
MetroVision's ability to contract and select alternative/transit
media sales organizations in order to significantly increase the
sale of advertising on its network and (iii) the completion of
MetroVision's proposed merger with York Hannover or alternative
strategic corporate and marketing alliances. There can be no
assurance, however, that MetroVision will be able to generate
significantly increased revenues or ever achieve profitable
operations.
MetroVision 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, MetroVision
believes that, based on currently proposed plans and assumptions
relating to its operations, the contract with New Jersey
Transit, the rescent receipt of approximately $51,000 from the
exercise of common stock purchase warrants together with
projected cash flow from operations, will be sufficient to
satisfy MetroVision's contemplated cash requirements for 1996.
In the event MetroVision's plans change or its assumptions
change or prove inaccurate or projected cash flows prove to be
insufficient to fund operations, MetroVision would be required
to seek additional financing. Except for the loans from certain
officers and directors discussed above, MetroVision has no
current arrangements with respect to or sources of additional
financing, and there can be no assurance that financing will be
available to MetroVision on commercially reasonable terms, if at
all. Any inability to obtain additional financing could have a
material adverse effect on MetroVision, including possibly
requiring MetroVision to significantly curtail or cease its
operations.
<PAGE>
PART II - OTHER INFORMATION
METROVISION OF NORTH AMERICA, INC.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) No reports on Form 8-K were filed during the three months
ended September 30, 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: November 11, 1996 /s/ Robert F. Hussey
Robert F. Hussey, President
(Duly authorized officer)
Date: November 11, 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: November 11, 1996
Robert F. Hussey, President
(Duly authorized officer)
Date: November 11, 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.
<TABLE> <S> <C>
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<RESTATED>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 175,595
<ALLOWANCES> 8,507
<INVENTORY> 0
<CURRENT-ASSETS> 171,391
<PP&E> 3,503,836
<DEPRECIATION> 2,469,353
<TOTAL-ASSETS> 1,228,474
<CURRENT-LIABILITIES> 595,192
<BONDS> 0
0
649
<COMMON> 6,987
<OTHER-SE> 625,646
<TOTAL-LIABILITY-AND-EQUITY> 1,228,474
<SALES> 703,194
<TOTAL-REVENUES> 684,157
<CGS> 285,744
<TOTAL-COSTS> 902,785
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<INTEREST-EXPENSE> 9,973
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<NET-INCOME> (1,233,848)
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