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 quarterly period ended March 31, 1997
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)
75 South Church Street Pittsfield, Massachusetts 01201
(Address of principal executive offices) (Zip Code)
(413) 448-2111
(Registrant's telephones number, including area code)
424 Madison Ave, NY, NY 10017
(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
Indicate the number of shares outstanding of each of the
issuer's classes of common equity, as of the latest practical
date.
Common Stock, $.001 Par Value - 7,241,664 shares as of May 13,
1997.
METROVISION OF NORTH AMERICA, INC.
INDEX
PAGE
Part I. Financial Information
Item 1. Condensed Consolidated Financial Statements (Unaudited)
Condensed consolidated balance sheets - December 31, 1996
and March 31, 1997 1
Condensed consolidated statements of operations -
Three months ended March 31, 1996 and 1997 2
Condensed consolidated statements of cash flows -
Three months ended March 31, 1996 and 1997 3
Notes to condensed consolidated financial statements
- March 31, 1997 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
PART I - FINANCIAL INFORMATION
METROVISION OF NORTH AMERICA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, March 31,
1996 1997
(Note) (Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $0 $0
Accounts receivable, net of allowances 283,454 225,482
Prepaid expenses 6,328 11,576
TOTAL CURRENT ASSETS 289,782 237,058
OPERATING EQUIPMENT
Installations and equipment 2,510,093 2,510,093
Equipment and fixtures 195,278 195,278
2,705,371 2,705,371
Less: accumulated depreciation (2,305,371) (2,335,371)
400,000 370,000
OTHER ASSETS 4,134 4,134
$693,916 $611,192
LIABILITIES and STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable-trade $129,206 $314,320
Accrued salaries and commissions 178,909 187,952
Deferred income 251,295 165,652
Accrued expenses 67,586 89,909
Current portion of notes payable to stockholders 129,256 51,000
TOTAL CURRENT LIABILITIES 756,252 808,833
PREFERRED STOCK, 5% SERIES A 649 649
COMMON STOCKHOLDERS' EQUITY
Common stock, Class A 7,241 7,241
Capital in excess of par value 13,436,519 13,436,519
Retained deficit (13,506,745) (13,642,050)
TOTAL COMMON STOCKHOLDERS' EQUITY (62,985) (198,290)
$693,916 $611,192
Note: See notes to condensed consolidated financial statements.
METROVISION OF NORTH AMERICA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31
1996 1997
GROSS REVENUES $212,253 $183,136
Less: agency commissions (2,737) (2,178)
NET REVENUES 209,516 180,958
OPERATING COSTS AND EXPENSES
Cost of sales 101,819 73,128
Selling, general, and administrative 235,210 210,559
337,029 283,687
OPERATING LOSS BEFORE DEPRECIATION
AND AMORTIZATION (127,513) (102,729)
Depreciation and amortization 161,500 30,000
LOSS FROM OPERATIONS (289,013) (132,729)
Interest income 49 37
Interest expense (1,877) (2,614)
NET LOSS (290,841) (135,306)
Less: Preferred stock dividend requirements 45,041 45,041
NET LOSS APPLICABLE TO COMMON STOCK $(335,882) $(180,347)
NET LOSS PER COMMON SHARE $(0.06) $(0.02)
WEIGHTED AVERAGE NUMBER OF SHARES 6,059,633 7,241,664
See notes to condensed consolidated financial statements.
METROVISION OF NORTH AMERICA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31
1996 1997
OPERATING ACTIVITIES
Net loss $(290,841) $(135,306)
Adjustments to reconcile net loss to net cash
used in operating activities:
Provision for depreciation and amortization 161,500 30,000
Loss on sale of equipment 611 0
Changes in operating assets and liabilities:
Decrease in accounts receivable (net) 237,612 57,972
(Increase) in prepaid expenses and other assets (15,572) (5,248)
Increase (Decrease) in accounts payable and
other accrued expenses (103,458) 130,838
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (10,148) 78,256
INVESTING ACTIVITIES
Capital expenditures for operating equipment (7,286) 0
Proceeds from sale of equipment 2,500 0
NET CASH USED IN INVESTING ACTIVITIES (4,786) 0
FINANCING ACTIVITIES
Principal payments on notes to former stockholders (20,000) (78,256)
NET CASH USED IN FINANCING ACTIVITIES (20,000) (78,256)
(34,934) 0
Cash and cash equivalents at beginning of period 97,125 0
CASH AND CASH EQUIVALENTS AT END OF PERIOD $62,191 $0
See notes to condensed consolidated financial statements.
METROVISION OF NORTH AMERICA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
March 31, 1997
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, 1997 are not necessarily indicative of the
results that may be expected for the year ended December 31,
1997. For further information, refer to the consolidated
financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-KSB for the year ending
December 31, 1996.
NOTE B--SUBSEQUENT EVENTS
On April 1, 1997, the Company consummated a merger (the
"Merger") as a result of which York Hannover Pharmaceuticals,
Inc., a Florida corporation , merged with and into the Company,
with the Company as the surviving corporation, pursuant to an
Agreement and Plan of Merger dated as of May 10, 1996 among the
Company and York Hannover Pharmaceuticals, Inc. (the "Merger
Agreement"). Pursuant to the Merger Agreement, among other
things: (i) the Company changed its corporate name to York
Hannover Health Care Inc. (subject to receipt of all necessary
regulatory consents which are still pending); and (ii) each
share of York Hannover Pharmaceuticals, Inc. Common Stock
outstanding on April 1, 1997 was converted into 4,000 shares of
the Company's Common Stock, or an aggregate of 4,000,000 shares
of Common Stock, constituting approximately 71.8% of the shares
of Common Stock outstanding giving effect to the Merger.
The Merger was consummated upon receipt of approval of the
Merger Agreement and the Merger by the Company's shareholders at
a Special Meeting of Shareholders held on April 1, 1997. At the
Special Meeting, the Company's shareholders also elected Thomas
M. Clarke, Lawrence B. Cummings, Robert F. Hussey, Courtlandt G.
Miller and Peter Doelger directors to serve until the next
annual meeting of shareholders and until their successors are
duly elected and qualified. Messrs. Clarke and Cummings, who
also have been appointed as Chairman and Chief Executive
Officer, respectively, of the Company, are principal
stockholders of Stockbridge Investment Partners, Inc.
("Stockbridge"), the sole stockholder of York Hannover
Pharmaceuticals, which became the majority stockholder of the
Company as a result of the Merger. Robert F. Hussey is the
former Chairman of the Board, President and Chief Executive
Officer of the Company.
In addition to the shares of Common Stock issued to Stockbridge
in the Merger, each of Messrs. Clarke and Cummings were issued
warrants to purchase 750,000 shares of the Company's Common
Stock, exercisable in three cumulative equal annual
installments, at exercise prices ranging from $.63 to $.945 per
share. If all of such warrants were exercised (and assuming no
other increases in the Company's capital stock), Messrs. Clarke
and Cummings would beneficially own, directly and through
Stockbridge, approximately 78.7% of the outstanding Common
Stock.
On April 1, 1997, pursuant to shareholder approval at the
Special Meeting of Shareholders on April 1, 1997, the Company
filed an amendment to its Restated Certificate of Incorporation
to effect a 1 for 4.6 reverse stock split of the Common Stock
effective April 1, 1997.
NOTE C--NEW PRONOUNCEMENTS
Statement of Financial Accounting Standards No. 128, "Earnings
per Share" ("SFAS 128"), has been issued effective for fiscal
periods ending after December 15, 1997. SFAS No. 128
establishes standards for computing and presenting earnings per
share. The Company is required to adopt the provisions of SFAS
No. 128 in the fourth quarter of 1997. Under the standards
established by SFAS 128, basic earnings per share is computed by
dividing net income by the weighted average number of common
shares outstanding during the year. Due to the Company's option
and warrant prices versus the respective market value of those
instruments, the effects of SFAS No. 128 have no impact to the
Company's reported earnings per share amounts.
METROVISION OF NORTH AMERICA, INC.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Three Months Ended March 31, 1997 Compared to Three Months Ended
March 31, 1996
Gross Revenues. For the three months ended March 31, 1997,
gross revenues decreased by $29,117 to $183,136 as compared to
$212,253 for the three months ended March 31, 1996. This
decrease is primarily attributable to a decrease in advertising
and news provider revenues of $44,781 offset by an increase in
system sales revenues of $15,665. System sales involves the
sale of complete, installed video systems 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
three months ended March 31, 1997, agency commissions totaled
$2,178 which is $559 less than the agency commission for the
three months ended March 31, 1996. This decrease was primarily
the result of the decrease in gross advertising revenue.
Net Revenues. Net revenues are equal to gross revenues after
deducting advertising agency commissions. Net revenues for the
three months ended March 31, 1997 were $180,958, a decrease of
14% or $28,558 from net revenues of $209,516 for the three
months ended March 31, 1996. This decrease in net revenues was
associated with the decrease in 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 three months ended March 31,
1997 were $73,128, a decrease of $28,691 or 28% from $101,819
for the three months ended March 31, 1996. This decrease was
primarily the result of a decrease in software licensing fees.
Selling, General and Administrative Expenses. Selling, general
and administrative expenses for the three months ended March 31,
1997 were $210,559, a decrease of $24,651 or 10% from $235,210
for the three months ended March 31, 1996. This decrease was
primarily attributable to a decrease in salaries, wages and
related employee cost resulting from reductions in sales,
marketing and operations employees offset by costs incurred in
connection with the merger of the Company with York Hannover
Pharmaceuticals, Inc. which was consummated on April 2, 1997.
Interest Income. For the three months ended March 31, 1997,
interest income totaled $37 as compared to $49 for the same
period in 1996. This decrease in interest income is the result
of a smaller cash balance earning interest for the three month
period ended March 31, 1997.
Liquidity and Sources of Capital
At March 31, 1997, the Company had negative working capital of
$571,775 and a ratio of current assets to current liabilities of
(.31) as compared to (.28) at December 31, 1996. Cash was $0 at
December 31, 1996 and March 31, 1997. Accounts receivable,
net allowance for doubtful accounts, decreased $57,972 to
$225,482 at March 31, 1997. This decrease is the result of the
collection of account balances. Accounts payable increased
$185,114 from $129,206 at December 31, 1996 to $314,320 at March
31, 1997. This increase was the result of the timing of certain
operating expenses. Accrued salaries and commissions increased
$9,043 from $178,909 at December 31, 1996 to $187,952 at March
31, 1997. This increase was the result of the timing of certain
cash payments to sponsors for accrued commissions. Deferred
income decreased $77,730 to $165,652 at March 31, 1997 from
$251,295 at December 31, 1996. This decrease was 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 $135,565 from
$13,506,485 at December 31, 1996 to $13,642,050 at March 31,
1997. This increase is the result of the net loss for the
period ending March 31, 1997.
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 March 10, 1997, the Company entered into an agreement
wherein it issued an option to purchase the operating and fixed
assets of MetroVision for an aggregate of $400,000 in cash and
debentures. The option will automatically expire September 1,
1997. On March 11, 1997 the Company received proceeds totaling
$25,000 in consideration of the option.
On March 14, 1997, the Massachusetts Bay Transit Authority
("MBTA") notified the Company that it was terminating its
contract with MetroVision effective immediately. Citing default
for failure to make certain payments, the MBTA has stated it
would exercise its rights pursuant to certain provisions
contained in the agreement and liquidate MetroVision's system
assets currently located on MBTA property.
On March 21, 1997, the Company entered into a promissory note
with the Company's former President (who is also a director of
the Company) for a total of $14,750. The note requires the
repayment of one half ($7,375) of the note balance upon the
Company's receipt of certain outstanding receivables with the
remaining note balance and unpaid interest due no later than
April 15, 1997. In consideration of the promissory note, the
company issued 40,710 common stock purchase warrants at $.125
per share. The exercise price represents the fair market value
of the Company's common stock on the date of grant. The
warrants expire in March 2002. As of March 31, 1997 this
promissory note was repaid in full.
The Company has entered into an agreement wherein it has
received purchase orders amounting to approximately $1.3 million
with New Jersey Transit to install and maintain approximately 21
transit stations of which $1,028,000 has been received to date.
On April 1, 1997, the Company consummated a merger (the
"Merger") as a result of which York Hannover Pharmaceuticals,
Inc., a Florida corporation , merged with and into the Company,
with the Company as the surviving corporation, pursuant to an
agreement and Plan of Merger dated as of May 10, 1996 among the
Company and York Hannover Pharmaceuticals, Inc. (the "Merger
Agreement"). Pursuant to the Merger Agreement, among other
things: (i) the Company changed its corporate name to York
Hannover Health Care Inc. (subject to receipt of all necessary
regulatory consents which are still pending); and (ii) each
share of York Hannover Pharmaceuticals, Inc. Common Stock
outstanding on April 1, 1997 was converted into 4,000 hares of
the Company's Common Stock, or an aggregate of 4,000,000 shares
of Common Stock, constituting approximately 71.8% of the shares
of Common Stock outstanding giving effect to the Merger. As a
result of the merger, the Company has shifted its primary
business to that conducted by York Hannover, the provision of
prescription and non prescription medications and pharmacy
related services to nursing homes and similar facilities.
The Company's independent auditors have included an explanatory
paragraph in their report on the 1996 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), the Company anticipates that losses will continue
until the Company generates sufficient revenues to offset its
operating costs. The Company is not currently generating
sufficient cash flow to fund its operations and is dependent on
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 merger with York Hannover Pharmaceuticals,
Inc., together with projected cash flow from operations, will be
sufficient to satisfy the Company's contemplated cash
requirements for 1997. The Company believes that generation of
that level of revenues is substantially dependent upon the
success of the business opportunities of the Company from the
recently completed merger with York Hannover. There can be no
assurance, however, that the Company will be successful in its
new business endeavors or able to generate significantly
increased revenues or ever achieve profitable operations.
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. 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.
PART II - OTHER INFORMATION
METROVISION OF NORTH AMERICA, INC.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(b) On March 6, 1997, the Company filed a Current Report on
Form 8K regarding a change in the Company's independent
auditors.
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 by the undersigned thereunto duly authorized.
METROVISION OF NORTH AMERICA, INC.
(Registrant)
Date: May 13, 1997 /s/Thomas M. Clarke
Thomas M. Clarke, President
(Duly authorized officer)
Date: May 13, 1997 /s/ David M. Fancher
David M. Fancher
Chief Financial Officer
(Principal Financial &
Accounting Officer)
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 by the undersigned thereunto duly authorized.
METROVISION OF NORTH AMERICA, INC.
(Registrant)
Date: May 13, 1997
Thomas M. Clarke, President
(Duly authorized officer)
Date: May 13, 1997
David M. Fancher
Chief Financial Officer
(Principal Financial &
Accounting Officer)
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<PERIOD-END> MAR-31-1997
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