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 June 30, 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 16-1276525
(State or other (IRS Employer
jurisdiction of Identification
No.)
incorporation or
organization)
75 South Church Street
Pittsfield, Massachusetts 01201
(Address of principal (Zip Code)
executive offices)
(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.
Ye X No
s
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
August 14, 1998.
Transitional Small Business Issuer Format (Check one)
Ye No X
s
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
June 30, 1998
3
Interim condensed consolidated statements of
operations:
Six months ended June 30, 1997 and 1998
5
Interim condensed consolidated statements of cash
flows:
Six months ended June 30, 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
December 31, June 30,
1997 1998
(Unaudited) ASSETS
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $ $
11,956 1,834
TOTAL CURRENT ASSETS
11,956 1,834
OTHER ASSETS:
DEFERRED TAX -
- 84,427
INVESTMENT IN YORK HANNOVER PARTNERSHIP
1,269,195 1,491,069
TOTAL OTHER ASSETS
1,269,195 1,575,496
TOTAL ASSETS
$1,281,151 $1,577,330
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)
December 31, June 30,
1997 1998
LIABILITIES AND STOCKHOLDERS' DEFICIT
(Unaudited
) CURRENT LIABILITIES:
Due to related parties $ 596,957 $ 571,957
Accrued expenses 297,765 368,161
Accrued taxes payable - - 84,427
Notes payable 1,950,000 1,950,000
Net liability of discontinued 893,231
operations 848,519
Total current liabilities 3,737,953 3,823,064
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, 648,535 649 649
shares issued and outstanding
Common stock, Class A 5,574 5,574
Capital (deficit) in excess of par value1,077,050 1,077,050
Accumulated deficit (3,540,075) (3,329,007)
Total stockholders' deficit (2,456,802) (2,245,734)
Total liabilities and stockholders' $1,281,151 $
deficit
1,577,330
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
June 30, June
30, 1997 1998
(Unaudite (Unaudite
d) d)
REVENUES:
Equity in earnings of York
Hannover Partnership $
212,498 $ 310,415
$ 433,637 $ 512,874
OPERATING COSTS AND EXPENSES:
General and administrative 30,098 115,000
- -
175,000
Management fees - -
- - 75,000 - -
Total operating expenses 30,098
115,000 75,000 175,000
Operating income 182,400
195,415 358,637 337,874
OTHER INCOME (EXPENSE):
Interest expense, net (64,499) (64,504) (134,176)
(126,806)
Amortization of deferred - - - - 33,285 - -
revenue
Realized loss on sale of --
securities -- (66,914) --
Total other expense (64,499)
(64,504) (167,805)
(126,806)
NET INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME
TAXES 117,901 130,911 190,832
211,068
INCOME TAX PROVISION (42,058) - - (72,156) - -
NET INCOME FROM CONTINUING
OPERATIONS 75,843
130,911 118,676 211,068
DISCONTINUED OPERATIONS:
Loss from operations of
discontinued operations
(less applicable income tax (75,808)
benefit) - - (75,808) - -
Total loss from discontinued (75,808)
operations - - (75,808) - -
NET INCOME BEFORE PREFERRED
STOCKHOLDER DIVIDEND
REQUIREMENTS 35 130,911 42,868 211,068
LESS - PREFERRED STOCK DIVIDEND
REQUIREMENTS $ 45,041 $ 45,041 $ 45,041 $ 90,082
NET INCOME (LOSS) APPLICABLE TO $ (45,006) $ $ $
COMMON STOCK 85,870 (2,173) 120,986
NET INCOME/(LOSS) PER COMMON SHARE ($0.01) ($0.01) $0.03 $0.02
WEIGHTED AVERAGE NUMBER OF 5,574,275 5,574,275 5,574,2755,574,275
SHARES
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
June 30, June
30, 1997
1998
(Unaudite
(Unaudite d)
d)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 42,867 $
211,068
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Amortization of non-compete (33,285) -
- -
agreement
Equity in earnings in excess of (212,498) (221,874)
distributions of York Hannover )
Partnership
Changes in operating assets and 145,752 -
liabilities:
Increase (decrease) in accounts
payable and other accrued expenses (190,437) 70,396
Net cash provided by (used
in) continuing operations (180,686) 59,590
Discontinued Operations:
Change in discontinued net 34,957
liabilities (44,712)
Net cash (used in) discontinued
operations 34,957
(44,712)
Net cash provided by (used in)
operating activities (145,729)
14,878
CASH FLOWS USED FOR INVESTING ACTIVITIES:
Loans to York Hannover Partnership, net
of payments received 49,221 - -
Principal payments on notes to related
(25,000)
parties
Loans to related parties, net of payments (22,728) -
received
Loans from related parties 79,774 -
- -
Proceeds from repayment of loans from 10,002 -
- -
Affiliates
Proceeds from sale of marketable 399,198
securities --
Net cash provided by (used in)
investing activities 515,467
(25,000)
(Continued)
METROVISION OF NORTH AMERICA, INC.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
June 30, June 30,
1997 1998
(Unaudite (Unaudite
d) d)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on Long-Term Debt (94,201)
- -
- -
Borrowing
Principal repayments of notes payable (275,537)
--
Net cash used in financing
activities (369,738)
- -
NET INCREASE (DECREASE) IN CASH AND CASH - -
(10,122)
EQUIVALENTS
CASH AND CASH EQUIVALENTS, beginning of period - -
11,956
CASH AND CASH EQUIVALENTS, end of period $ - - $
1,834
Supplemental Disclosures of Cash Flow
Information:
Cash paid during the year for interest $ - -
$ 300,000
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)
June 30, 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 six months ended June 30,
1998 historical period represents the operations of the
Company. The six months ended June 30, 1997
historical period includes six months of operations
of York Hannover and three months of operations of
MetroVision.
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 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 six months ended June 30, 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 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 six months ended June 30, 1998, the
Company engaged in negotiations to sell its 40%
interest in the Partnership to an affiliate of
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.
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
Six months ended June 30, 1998 Compared to Six months
ended June 30, 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 six months ended June 30, 1998
historical period represents the operations of the
Company. The six months ended June 30, 1997
historical period includes six months of operations
of York Hannover and three months of operations of
MetroVision.
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 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 six months ended
June 30, 1998, were $512,874 an increase of 18.3% or
$79,237 from net revenues of $433,637 for the six
months ended June 30, 1997. Net Revenues for the three
months ended June 30, 1998, were $512,874 an increase
of 18.3% or $79,237 from net revenues of $433,637
for the three months ended June 30, 1997. This
increase in net revenues for the three and six months
ended June 30, 1998 were attributable to an increase in
equity in earnings from York Hannover Partnership.
Selling, General and Administrative Expenses.
Selling, general and administrative expenses for the six
months ended June 30, 1998 were $175,000, as compared
to $0 for the six months ended June 30, 1997.
Selling, general and
administrative expenses for the three months ended June
30, 1998 were $115,000, as compared to $0 for the three
months ended June 30, 1997. These increases were
primarily attributable to professional fees incurred
in connection with the operation of the Company and
preparation of a Proxy Statement.
Management Fees. Management fees for the six months
ended June 30, 1998, were $0 as compared to $75,000,
for the six months ended June 30, 1997. Management
fees for the three months ended June 30, 1997 and 1998
were $0 The decrease in the six months ended June 30,
1998 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 six months ended June 30, 1998, were
$126,806, a decrease of 24.4% or $40,999 from other
expenses of $167,805 for the six months ended June 30,
1997. 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 June 30, 1998, were $64,504, an increase
of $5 from other expenses of $64,499 for the three
months ended June 30, 1997. The
decrease in other expenses for the six months ended June
30, 1998 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 June 30, 1998, the Company had negative working
capital of $3,646,778 and a ratio of current assets
to current liabilities of (.004). Cash was $1,834 at
June 30, 1998 and $11,956 at December 31, 1997.
Accumulated deficit decreased $211,068 from $3,540,075
at December 31, 1997 to $3,239,007 at June 30, 1998.
This decrease was the result of the net income for the
period ended June 30, 1998.
The Company's primary asset is its ownership of a
40% interest in York Hannover Partnership (the
"Partnership Interest"). For the six months ended June
30, 1998, the Company's equity in earnings from the
Partnership totaled $512,874. 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. During 1998, the Company received
distributions of $300,000. 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 on the promissory note is
$88,936 as of June 30, 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 six months ended June 30, 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 six months ended June 30, 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 June 30, 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 six
months ended June 30, 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: August 14, /s/Thomas M. Clarke
1998
Thomas M. Clarke,
President (Duly
authorized Officer)
Date: August 14, /s/ David M. Fancher
1998
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: August 14,
1998
Thomas M. Clarke, President
(Duly Authorized Officer)
Date: August 14,
1998
David M. Fancher
Chief Financial
Officer
(Principal Financial &
Accounting
Officer)
