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, 1998
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
(State of other jurisdiction of incorporation or
organization) 16-1276525
(IRS Employer Identification No)
75 South Church Street Pittsfield, Massachusetts 01201
(Address of principal executive offices) (Zip Code)
(413) 448-2111
(Registrant's telephone 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 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 - 5,574,275 shares as of May
15, 1998.
Transitional Small Business Issuer Format (Check one)
Yes No X
METROVISION OF NORTH AMERICA, INC.
INDEX
Page #
Part I. Financial Information
Item 1.Interim Condensed Consolidated Financial Statements
(Unaudited)
Interim condensed consolidated balance sheets:
December 31, 1997
March 31, 1998 3
Interim condensed consolidated statements of operations:
Three months ended March 31, 1997 and 1998 5
Interim condensed consolidated statements of cash flows:
Three months ended March 31, 1997 and 1998 6
Item 2.Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Part II. Other Information
Item 6. 13
Signatures 14
PART I - FINANCIAL INFORMATION
METROVISION OF NORTH AMERICA, INC.
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS December 31, March 31,
1997 1998
Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 11,956 $15,764
Total current assets 11,956 15,764
OTHER ASSETS:
Investment in York Hannover
Partnership 1,269,195 1,371,654
Total other assets 1,269,195 1,371,654
Total assets $1,281,151 $1,387,418
The accompanying notes to the interim condensed consolidated
financial statements are an integral part of these
consolidated financial statements.
METROVISION OF NORTH AMERICA, INC.
CONSOLIDATED BALANCE SHEETS
(Continued)
LIABILITIES AND STOCKHOLDERS' DEFICIT December 31 March 31
1998 1998
CURRENT LIABILITIES:
Due to related parties $ 596,957 $571,957
Accrued expenses 297,765 388,567
Notes payable 1,950,000 1,950,000
Net liability of discontinued operations 893,231 853,539
Total current liabilities 3,737,953 3,764,063
STOCKHOLDERS' DEFICIT:
Preferred stock, $.001 par value, 1,280,000
shares authorized, no shares outstanding -- --
Cumulative Preferred stock, 5% Series A
$.001 par value, 720,000 shares authorized, $5.56 per share
redemption value and liquidation value, 648,535
shares issued and outstanding -- -
- -
Common stock, Class A 5,574 5,574
Capital (deficit) in excess of par value 1,077,050 1,077,050
Accumulated deficit (3,540,075)(3,459,918)
Total stockholders' deficit (2,456,802)(2,376,645)
Total liabilities and stockholders'
deficit $1,281,151 $1,387,418
The accompanying notes to the interim condensed consolidated
financial statements are an integral part of these
consolidated financial statements.
METROVISION OF NORTH AMERICA, INC.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
March 31, March 31,
1997 1998
(Unaudited)(Unaudited)
REVENUES:
Equity in earnings of York Hannover
Partnership $221,139 $202,459
Net revenues 221,139 202,459
OPERATING COSTS AND EXPENSES:
General and administrative -- 60,000
Management fees 75,000 --
Total operating expenses 75,000 60,000
Operating income 146,139 142,459
OTHER INCOME (EXPENSE):
Interest expense, net (69,677) (62,302)
Amortization of deferred revenue 33,285 --
Realized loss on sale of securities (66,914) --
Total other expense (103,306) (62,302)
NET INCOME BEFORE PREFERRED STOCKHOLDER
DIVIDEND REQUIREMENTS 42,833 80,157
LESS - PREFERRED STOCK DIVIDEND
REQUIREMENTS $-- $(45,041)
NET INCOME APPLICABLE TO COMMON STOCK $42,833 $35,116
NET INCOME PER COMMON SHARE $.01 $.01
WEIGHTED AVERAGE NUMBER OF SHARES 4,000,000 5,574,275
The accompanying notes to the interim condensed
consolidated financial statements are an integral part of
these consolidated financial statements.
METROVISION OF NORTH AMERICA, INC.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
March 31 March 31,
1997 1998
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $42,833 $80,157
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Realized loss on sale of marketable
securities 66,914 --
Amortization of non-compete
agreement (33,285) --
Equity in earnings in excess of
distributions of York Hannover
Partnership (188,571) (102,459)
Changes in operating assets and
liabilities:
Increase (decrease) in accounts
payable and other accrued expenses (1,648) 90,802
Net cash provided by (used in)
continuing operations (113,757) 68,500
Discontinued Operations:
Change in discontinued net
liabilities -- (39,692)
Net cash (used in)
discontinued operations -- (39,692)
Net cash provided by (used in)
operating activities (113,757) 28,808
CASH FLOWS USED FOR INVESTING ACTIVITIES:
Loans to York Hannover Partnership, net
of payments received 49,221 --
Principal payments on notes to related
parties -- (25,000)
Loans to related parties, net of payments
received (22,728) - -
Proceeds from repayment of loans from
Affiliates 10,002 --
Proceeds from sale of marketable
securities 399,198 --
Net cash provided by (used in)
investing activities 435,693 (25,000)
(Continued)
METROVISION OF NORTH AMERICA, INC.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
March 31, March 31
1997 1998
(Unaudited) (Unaudited)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on Long-Term
Debt Borrowin (94,201) --
Principal repayments of notes payable (275,537) --
Net cash used in financing
activities (369,738) --
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (47,802) 3,808
CASH AND CASH EQUIVALENTS,
beginning of period 58,291 11,956
CASH AND CASH EQUIVALENTS, end of period$10,489 $15,764
Supplemental Disclosures of Cash Flow
Information:
Cash paid during the year for
interest 53,877 --
The accompanying notes to the interim condensed consolidated
financial statements are an integral part of these
consolidated financial statements.
METROVISION OF NORTH AMERICA, INC.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
March 31, 1998
NOTE A - BASIS OF PRESENTATION
On April 1, 1997, MetroVision of North America, Inc.
("MetroVision") consummated a merger with York Hannover
Pharmaceuticals, Inc. ("York Hannover") that has been
accounted for as a reverse acquisition of MetroVision by
York Hannover under the purchase method of accounting as
prescribed by APB Opinion 16. Hereinafter, the "Company"
refers to York Hannover and its acquired business,
MetroVision. Accordingly, the historical financial
statements of the Company prior to the merger have been
changed to reflect the historical financial statements of
York Hannover after giving effect to a recapitalization of
the historical stockholders' equity of York Hannover.
Therefore, the three months ended March 31, 1998 historical
period represents the operations of the Company. The three
months ended March 31, 1997 historical period represents the
operations of York Hannover.
On November 30, 1997, the Company announced its plans to
discontinue its MetroVision media operations, effective
February 28, 1998. The Company has shut down the operations
and will not receive any proceeds related to the shut-down
as the remaining assets have been written off. As a result
of the discontinuance, the related assets, liabilities and
results of operations are segregated in the accompanying
consolidated balance sheets, statements of operations and
cash flows. Net revenues and operating expenses have been
reclassified for amounts associated with discontinued
operations.
The accompanying unaudited interim condensed consolidated
financial statements have been prepared in accordance with
generally accepted accounting principles for interim
financial information and with the instructions to Form
10QSB 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, 1998 are not necessarily
indicative of the results that may be expected for the year
ended December 31, 1998.
NOTE B - INVESTMENT IN YORK HANNOVER PARTNERSHIP
On August 1, 1995, York Hannover and Pharmaceuticals, Inc.
and United Professional Companies, Inc. ("UPC") formed York
Hannover Partnership (the "Partnership") for the purpose of
providing institutional pharmacy services, infusion therapy,
third-party billing, medical equipment and supplies,
respiratory therapy and other services. UPC and the Company
have a 60% and 40% interest in the Partnership,
respectively. The Company's investment in the Partnership
has been accounted for under the equity method of
accounting.
During the three months ended March 31, 1998, the Company
engaged in negotiations to sell its 40% interest in the
Partnership to an affiliate of United Professional
Companies, Inc. There can be no assurance that the proceeds
from the proposed sale will be sufficient to satisfy all of
the outstanding obligations of the Company. It is
anticipated that the closing of the proposed sale will be
conditioned upon the approval of the Company's shareholders.
The proceeds of the proposed sale are anticipated to be
reduced by the revenues of the Partnership allocable to the
Company for the period from January 1, 1998 to the date of
closing. It is anticipated that the proceeds from the sale
will be used first to satisfy the note payable and related
accrued interest to National HealthCare Corporation.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Three months Ended March 31, 1998 Compared to Three months
Ended March 31, 1997
On April 1, 1997, MetroVision of North America, Inc.
("MetroVision") consummated a merger with York Hannover
Pharmaceuticals, Inc. ("York Hannover") that has been
accounted for as a reverse acquisition of MetroVision by
York Hannover under the purchase method of accounting as
prescribed by APB Opinion 16. Hereinafter, the "Company"
refers to York Hannover and its acquired business,
MetroVision. Accordingly, the historical financial
statements of the Company prior to the merger have been
changed to reflect the historical financial statements of
York Hannover after giving effect to a recapitalization of
the historical stockholders' equity of York Hannover.
Therefore, the three months ended March 31, 1998 historical
period represents the operations of the Company. The three
months ended March 31, 1997 historical period represents the
operations of York Hannover.
The Company is currently negotiating settlement agreements
with various customers due to the Company's decision to
terminate its media operations. In management's opinion,
adequate provision has been made for any material loss
resulting from the fulfillment of these service commitments.
However, events unknown at this time related to the
termination of the media operations may subsequently arise
which could have a material adverse impact on the Company.
Net Revenues. Net Revenues for the three months ended March
31, 1998, were $202,459 a decrease of 8.4% or $18,680 from
net revenues of $221,139 for the three months ended March
31, 1997. This decrease in net revenues for the three
months ended March 31, 1998 was attributable to a decrease
in equity in earnings from York Hannover Partnership.
Selling, General and Administrative Expenses. Selling,
general and administrative expenses for the three months
ended March 31, 1998 were $60,000, as compared to $0 for the
three months ended March 31, 1997. This increase was
primarily attributable to professional fees incurred in
connection with the operation of the Company.
Management Fees. Management fees for the three months ended
March 31, 1998, were $0 as compared to $75,000, for the
three months ended March 31, 1997. This decrease was
attributable to the reduction in management fees as a result
of the merger.
Other Expenses. Other expenses primarily include interest
expense on a note payable to National HealthCare Corporation
partially offset by the amortization of a Non-Compete
Agreement. Other net expenses for the three months ended
March 31, 1998, were $62,302, a decrease of 39.7% or $41,004
from other expenses of $103,306 for the three months ended
March 31, 1997. This decrease was primarily the result of a
loss on the sale of marketable securities in January and
February 1997 of $66,914 offset by a reduction in income
from the amortization of deferred revenue as a result of the
merger.
Liquidity and Sources of Capital
At March 31, 1998, the Company had negative working capital
of $3,748,299 and a ratio of current assets to current
liabilities of (.004). Cash was $15,764 at March 31, 1998
and $11,956 at December 31, 1997. Accumulated deficit
decreased $80,157 from $3,540,075 at December 31, 1997 to
$3,459,918 at March 31, 1998. This decrease was the result
of the net income for the period ended March 31, 1998.
The Company's primary asset is its ownership of a 40%
interest in York Hannover Partnership (the "Partnership
Interest"). For the three months ended March 31, 1998, the
Company's equity in earnings from the Partnership totaled
$202,459. The proceeds of the proposed sale are anticipated
to be reduced by the revenues of the Partnership allocable
to the Company for the period from January 1, 1998 to the
closing date. In January 1998, the Company received
distributions of $100,000. The Company does not have
control over distributions made by York Hannover
Partnership. All Partnership distributions are subject to
the availability of Partnership cash.
The above discussion and the Company's financial statements
have been presented on the basis that it is a going concern,
which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of
business. The Company's independent auditors have included
an explanatory paragraph in their report on the 1997
consolidated financial statements stating that the factors
discussed below raise a substantial doubt about the
Company's ability to continue as a going concern.
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 the proposed sale
of its Partnership Interest that proceeds will be sufficient
to satisfy the Company's contemplated cash requirements for
1998. Such cash requirements primarily relate to the
payment of principal and interest on the outstanding note
payable to National HealthCare Corporation ("NHC") and other
liabilities owed to unrelated third party creditors. There
can be no assurance, however, that the Company will be
successful in its new business endeavors or able to generate
revenues or ever achieve profitable operations. The Company
has outstanding a $1,950,000 promissory note payable to NHC
that became due on December 31, 1997 and is currently in
default and payable on demand. Accrued interest in the
promissory note is $223,642 as of March 31, 1998.
The Company currently does not have the financial
resources necessary to meet its payment obligation other
than from Partnership distributions or proceeds from the
anticipated sale of the 40% interest in York Hannover
Partnership. In the event the Company is unable to
meet its payment obligation and the promissory note is
not re-negotiated, NHC, as a secured creditor, has the
right to take possession of or otherwise sell the interest
in the Partnership in satisfaction of the indebtedness
and may seek recourse against the Company's other
assets, if necessary. The Company also has outstanding a
$571,957 working capital note payable to Lenox
Healthcare, Inc. (an affiliate of the Company) that
becomes due in May of 1998.
During the three months ended March 31, 1998, the Company
engaged in negotiations to sell its 40% interest in the
Partnership to an affiliate of United Professional
Companies, Inc. ("UPC"). There can be no assurance that the
proceeds from the proposed sale will be sufficient to
satisfy all of the outstanding obligations of the Company.
UPC currently has a 60% interest in the Partnership. It is
anticipated that the closing of the proposed sale will be
conditioned upon the approval of the Company's shareholders.
The proceeds of the proposed sale are anticipated to be
reduced by the revenues of the Partnership allocable to the
Company for the period from January 1, 1998 to the closing
date. It is anticipated that the proceeds from the sale
will be used first to satisfy the note payable and related
accrued interest to NHC.
Additionally, during the three months ended March 31, 1998,
the majority holders of the 5% Series A Preferred Stock have
asserted certain claims against the Company which could have
a material adverse impact on the Company's financial
position. Although management does not believe these
assertions represent obligations of the Company as of March
31, 1998, management is currently discussing these
assertions with the preferred shareholders in conjunction
with the structuring of the proposed sale of the
Partnership. Management believes that these assertions will
be resolved during 1998 through ongoing discussions with the
preferred shareholders but is unable to determine the
ultimate outcome of the ongoing discussions.
Subsequent to the anticipated sale of the Partnership and
subject to shareholder approval, management intends to seek
business combination opportunities with other entities in
1998. However, no such opportunities are currently known
and there can be no assurance that the Company will be able
to locate such an opportunity in 1998.
The Company has not identified any potential sources of debt
or equity financing and there can be no assurance that the
Company will be able to obtain additional financing if and
when needed or that, if available, financing will be on
terms acceptable to the Company. Furthermore, the results
of these matters cannot be predicted and there is no
assurance that the Company will continue in existence.
In the event the Company's plans change or its assumptions
change or prove inaccurate or proceeds of the sale of the
Partnership Interest prove to be insufficient to payoff the
Company's debt and operating liabilities, the Company may be
required to seek additional financing. The Company has no
current arrangements with respect to or sources of
additional financing other than the current working capital
line of credit or the sale of its Partnership Interest, 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 cease its operations.
Year 2000 Compliance
The Company is currently in the process of evaluating its
information technology infrastructure for Year 2000
Compliance. The Company does not expect that the cost to
modify its information technology infrastructure to be Year
2000 compliant will be material to its financial condition
or results of operations. The Company does not anticipate
any material disruption in its operations as a result of any
failure to be in compliance. However, the Company currently
does not have any information concerning the Year 2000
Compliance status of York Hannover Partnership's customers,
suppliers and third party payors. In the event that any of
York Hannover Partnership's significant suppliers, customers
or third party payors do not successfully and timely achieve
Year 2000 Compliance, the Company's business and operations
could be adversely affected.
Item 3. QUALITATIVE AND QUANTITATIVE INFORMATION
ABOUT MARKET RISK
Not applicable.
METROVISION OF NORTH AMERICA, INC.
PART II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. None.
(b) No Reports on Form 8-K were filed during the three
months ended March 31, 1998.
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 15, 1998 /s/Thomas M. Clarke
Thomas M. Clarke, President
(Duly authorized Officer)
Date: May 15, 1998 /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 15, 1998
Thomas M. Clarke, President
(Duly authorized Officer)
Date: May 15, 1998
David M. Fancher
Chief Financial Officer
(Principal Financial & Accounting Officer)
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