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 AND EXCHANGE ACT OF 1934
For the Quarter Ended March 31,1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE COMMISSION ACT OF 1934
For the transaction period from ______ to ______
Commission file number: 0-23184
UNITED VISION GROUP, INC.
(Exact Name of the Registrant as Specified in its Charter)
Delaware 65-0257498
State or other jurisdiction of (I.R.S Employer
incorporation or organization Identification No.)
2424 N. Federal Highway, Suite 362, Boca Raton, Florida 33431
(Address of Principle Executive Office) (Zip Code)
(407) 395-5402
(Registrant's telephone number including area code)
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 [ ]
The number of shares of the registrant's Common Stock, $.001 par
value, issued as of May 13, 1996 was 22,614,793.
<PAGE>
UNITED VISION GROUP, INC.
INDEX Page
Number
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet - March 31, 1996 1
and December 31, 1995
Consolidated Statement of Operations - Three Months Ended 2
March 31, 1996 and 1995
Consolidated Statement of Cash Flows - Three Months Ended 3
March 31, 1996 and 1995
Notes on Consolidated Financial Statements 4 - 7
Item 2. Management's Discussion and Analysis of Financial 8 - 11
Condition and Results from Operations
Liquidity and Capital Resources 11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURE 16
<PAGE>
<TABLE>
PART I. - FINANCIAL STATEMENTS
UNITED VISION GROUP, INC.
CONSOLIDATED BALANCE SHEETS
<CAPTION>
March 31, December 31,
1996 1995
(Unaudited) (Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Restricted cash 50,000 50,000
Marketable securities 12,000 12,000
Accounts receivable 531,617 280,640
Due from employees 5,566 5,568
Inventory 448,285 401,894
Other current assets 138,431 74,985
Total current assets 1,185,899 825,087
Property and equipment, net 3,841,227 3,682,472
Intangible assets, net 715,435 764,381
Other assets 92,429 85,896
Total assets $5,834,990 $5,357,836
LIABILITIES AND EQUITY
Current liabilities:
Cash overdraft $ 125,026 $ 3,528
Current portion of
long-term debt 39,605 38,718
Current portion of capital
lease obligations 185,048 185,048
Accounts payable 606,380 951,445
Accrued liabilities 2,140,808 2,218,772
Deferred revenue 73,961 73,961
Total current liabilities 3,170,828 3,471,472
Notes payable to shareholder 2,450,000 800,000
Long-term debt, net of
current portion 125,923 132,137
Capital lease obligations,
net of current 274,368 324,226
Total liabilities 6,021,119 4,727,835
Equity:
Preferred stock 1,666
Common stock 22,615 5,957
Additional paid-in capital 5,788,519 5,803,511
Accumulated deficit and
fund balance (5,997,263) (5,181,133)
Total equity (186,129) 630,001
Total liabilities
and equity $5,834,990 $5,357,836
<FN>
The accompanying notes are an integral part of these financial
statements.
</TABLE>
<PAGE>
<TABLE>
UNITED VISION GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended (Unaudited)
<CAPTION> March 31, March 31,
1996 1995
<S> <C> <C>
Revenue:
Premium $ 989,957 $ 0
Practice 1,432,982 106,722
Other 88,124 79,362
Total revenue 2,511,063 186,084
Operating costs and expenses:
Cost of goods and
services sold 649,234 15,188
Depreciation and amortization 211,664 101,846
Selling general and
administrative expenses 2,401,254 1,126,257
Total operating costs
and expenses 3,262,152 1,243,291
Loss from operations 751,089 1,057,207
Other income (expenses):
Other income 6,927
Interest, net (65,041) 12,095
Other income (expense),net (65,041) 19,022
Loss before provision
for taxes (816,130) (1,038,185)
Provision for income taxes 0 0
Net loss $ (816,130) $(1,038,185)
Net loss per share $ (.07)
Weighted average number of
shares used in computing
per share amount 10,899,305
<FN>
The accompanying notes are an integral part of these financial
statements
</TABLE>
<PAGE>
<TABLE>
UNITED VISION GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended (Unaudited)
<CAPTION>
March 31, March 31,
1996 1995
<S> <C> <C>
Cash flow from operating
activities:
Net loss $ (816,130) $ (1,038,185)
Adjustments to reconcile
net loss to net cash
used in operating
activities:
Depreciation and amortization 211,664 101,846
Changes in operating asset
and liabilities exclusive
of net assets acquired:
Accounts receivable (250,977) (24,032)
Inventory (46,391) (53,784)
Other current assets (63,444) 7,269
Accounts payable and
accrued liabilities (423,029) 331,153
Deferred revenue 0 714
Net cash used in
operating activities (1,388,307) (675,019)
Cash flows from investing
activities:
Purchase of Property
and Equipment (321,473) (779,524)
Proceeds from maturity
(purchases) of marketable
securities 0 736,365
Increase in intangibles 0 (10,104)
Disposal (acquisition) of
other assets (6,533) (10,201)
Net cash used in
investing activities (328,006) (63,464)
Cash flows from financing
activities:
Cash overdraft 121,498 0
Payments on long-term debt
and capital lease
obligations (55,185) (34,214)
Proceeds from capital
contributions 0 510,293
Proceeds from notes
payable to shareholder 1,650,000 316,606
Net cash provided by
financing activites: 1,716,313 792,685
Net increase (decrease)
in cash 0 54,202
Cash, beginning of period 0 5,037
Cash, end of period $ 0 $ 59,239
<FN>
The accompanying notes are an integral part of these financial
statements.
</TABLE>
<PAGE>
UNITED VISION GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
March 31, 1996
1. BASIS OF PRESENTATION
The accompanying unaudited 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 Rule 10-01 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 month periods ended
March 31, 1996 and 1995 are not necessarily indicative of the
results that may be expected for United Vision Group, Inc.'s
(the "Company" or "UVG") fiscal year or any other interim
period. 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 ended
December 31, 1995.
On August 7, 1995, Apollo Eye Associates, L.P. and Apollo Eye
Corporation, its general partner (the "Partnership"), were
merged into United Vision Group, Inc.'s (the "Company") wholly
owned subsidiary, Apollo Acquisition Corporation, which was
subsequently renamed Apollo Eye Associates, Inc. ("Apollo"). In
connection with the merger agreement, the former partners of the
Partnership received an aggregate of 166,579.5924 shares of the
Company's newly issued Series B Preferred Stock and options to
acquire 2,412,543 shares of the Company's common stock. Each
share of Series B Preferred Stock is convertible into 100 shares
of the Company's common stock. Prior to the merger, the
Company's previously outstanding Series A Preferred Stock was
converted into 3,060,120 shares of common stock. Also prior to
the merger, two of the Company's four members of the Board of
Directors resigned, and immediately following the merger, four
former partners of the Partnership were elected to the Board.
The series of transactions described above resulted in the
Apollo shareholders controlling the Company's Board of Directors
and having an approximate 75% ownership of the Company upon
conversion of the Series B Preferred Stock and the exercise of
the common stock options. Accordingly, the transactions have
been treated as a reverse acquisition for financial reporting
purposes as if Apollo recapitalized its ownership interest into
166,579.5924 shares of preferred stock and then acquired the
Company under the purchase method of accounting by the issuance
of 5,956,834 shares of common stock. Such stock was valued at
approximately $1,511,000 which represented the estimated market
value of the Company's net assets acquired. The purchase price
was allocated to the net assets acquired and liabilities assumed
based upon their estimated fair values, resulting in an excess
of purchase price over the estimated value of net assets
acquired, which is included in intangible assets in the
accompanying financial statements. The historical results of
the Partnership became the operating results of the Company.
The operations of the Company are included in the results of
operations in the accompanying financial statements from August
1, 1995, which was the effective date of the merger.
<PAGE>
UNITED VISION GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
1. BASIS OF PRESENTATION - continued
On March 4, 1996, the Certificate of Incorporation of the
Company was amended to increase the number of authorized common
shares from 10 million to 30 million. Concurrently, the
166,579.5924 shares of Series B Preferred Stock were converted
to 16,657,959 shares of the Company's Common Stock.
The following unaudited pro forma summary presents the combined
results of operations as if the reverse acquisition had occurred
at the beginning of the period presented and does not purport to
be indicative of what would have occurred had the reverse
acquisition been made as of that date or of results which may
occur in the future.
Period Ended
March 31, 1995
Revenue $ 1,730,901
Net loss $ (1,033,846)
Net loss per share $ (.17)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries and the accounts
of Optiplan based on their related business activities and the
Company's unilateral and perpetual management control. Material
intercompany balances and transactions have been eliminated.
The consolidated financial statements for 1995 include the
accounts of the Partnership and Medricon, Inc. (Medricon), a
Connecticut corporation which provides reimbursement and
practice administration consulting services to ophthalmologists
and ophthalmic group practices nationwide. The Partnership's
acquisition of Medricon was accounted for under the purchase
method of accounting. The purchase price was allocated to the
net assets acquired and liabilities assumed based upon their
estimated fair values, resulting in an excess of purchase price
over the estimated value of net assets acquired, which is
included in intangible assets in the accompanying financial
statements. Material intercompany balances and transactions
have been eliminated.
REVENUE RECOGNITION
Revenue from professional services is recognized when the
service is performed. Revenue from optical sales is recognized
upon order by the customer. Consulting subscriptions are
deferred and
<PAGE>
UNITED VISION GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
REVENUE RECOGNITION - continued
recognized when the service is delivered. Revenue from managed
care plans is recognized ratably over the life of the related
contract.
INVENTORIES
Inventories, consisting primarily of eyeglass frames, contact
lenses, lens blanks and accessories are stated at the lower of
cost or market. Cost is determined using the FIFO (first-in,
first-out) method.
CASH AND CASH EQUIVALENTS
The Company considers all short-term investments with an
original maturity of three months or less to be cash equivalents.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. The cost of
equipment held under capital lease is equal to the lower of the
net present value of the minimum lease payments or the fair
value of the leased equipment at the inception of the lease.
Additions and improvements are capitalized while maintenance and
repairs are expensed when incurred. Asset and accumulated
depreciation accounts are relieved for dispositions with
resulting gains or losses recorded in the statement of
operations. Depreciation and amortization are computed on a
straight-line basis over the estimated useful lives of the
property and equipment or over the lesser of the lease term or
the asset's useful life for leasehold improvements.
INTANGIBLES
Goodwill related to the reverse acquisition of the Company is
amortized on the straight-line method over four years. Goodwill
related to the acquisition of Medricon is amortized on the
straight-line method over 15 years. The Company periodically
evaluates the carrying value of goodwill to measure and
recognize the possible impairment of this asset. Other
intangibles resulting from the acquisition of Medricon
consisting of research materials, subscription lists, and
customer lists are amortized on the straight-line method over
their estimated useful lives of 5 to 7 years. Other intangible
assets, consisting of computer software costs, licenses and
organization costs are recorded at cost and amortized on the
straight-line method over five years.
RESTRICTED CASH
Under Florida Statutory Law, the Company is required to maintain
a $50,000 certificate of deposit with the Treasurer and
Insurance Commissioner.
<PAGE>
UNITED VISION GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
INCOME TAXES
Prior to the merger date, the Partnership was not subject to
Federal and State income taxes; instead, the Partnership's
operations were the responsibility of the partners. Effective
on the merger date, the Partnership was terminated. Medricon
filed a separate return and utilized the liability method of
accounting for deferred income taxes.
Prior to the merger date, the Company filed a consolidated
return.
For the year ended December 31, 1995, the Company will file
consolidated Federal and State income tax returns which includes
all of the members of the group except Optiplan, which is a
non-profit entity required to file a separate return.
The Company utilizes the liability method for accounting for
deferred income taxes. Under this method, deferred tax assets
and liabilities are established based on the differences between
financial statement and tax bases of assets and liabilities
using the rates in effect for the year in which the differences
are expected to reverse.
PER SHARE DATA
Per share data is based on the weighted average number of shares
of common stock outstanding during the period. Per share
amounts for 1995 are not reflected as the business operated as a
partnership.
3. CONTINGENCIES
The Company is a party to various lawsuits arising in the
ordinary course of business. During the year ended December 31,
1995, estimated litigation settlements of $351,000 were charged
to operations based on review of such litigation with legal
counsel.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL
CONDITION AND RESULTS FROM OPERATIONS
The following discussion and analysis presents the significant
changes in the financial condition and results of operations of
the Company for the quarter ended March 31, 1996. Consistent
with the reverse acquisition accounting treatment, the
historical financial statements of the Company used for this
discussion are the consolidated financial statements of Apollo
Eye Associates, L.P. for the period ended March 31, 1995, which
differ from the consolidated financial statements of United
Vision Group, Inc. which were previously reported. The
discussion and analysis for the quarter ended March 31, 1996
includes the three months of operations of Apollo Eye
Associates, L.P. and its successor Apollo Eye Associates, Inc.,
along with the three months of operations for United Vision
Group, Inc.. Prior information may not be comparable to the
Company's current operations due to the reverse acquisition
accounting. This discussion should be read in conjunction with
the financial statements and related notes thereto of the
Company and the Partnership.
QUARTER ENDED MARCH 31, 1996
General
On August 7, 1995, pursuant to a Merger Agreement dated August
4, 1995, the Company acquired Apollo Eye Associates, L.P., a
Delaware limited partnership, and Apollo Eye Corporation, its
General Partner (together, the "Partnership"). The Partnership
was merged into a wholly owned subsidiary of United Vision Group
Inc., Apollo Acquisition Corporation, which was renamed Apollo
Eye Associates, Inc. ("Apollo"). The Mergers were accounted for
as a "reverse acquisition" whereby Apollo was deemed to have
acquired United Vision Group, Inc. for financial reporting
purposes. United Vision Group, Inc. remains the continuing
legal entity and registrant for Securities and Exchange
Commission filing purposes. Under the terms of the acquisition,
the former holders of the Partnership received preferred stock
and common stock options which were collectively convertible
into 75% of the total outstanding common stock of the Company on
a fully diluted basis.
RESULTS OF OPERATIONS
In accordance with accounting for the transaction as a reverse
acquisition, financial reports reflect the Partnership's
operations during the quarter ended March 31, 1995 and the
Company's operations for the quarter ended March 31, 1996. The
Partnership was formed on July 1, 1994. As a part of the
startup, the Partnership acquired Medricon Inc., a health care
consulting firm specializing in ophthalmic consulting, on July
1, 1994. Medricon was not deemed to be a predecessor since (i)
its holders acquired less than 5% of the ownership of the
Partnership and (ii) it was operated as a wholly owned
subsidiary. During 1994 and 1995, the Partnership was in a
startup phase and was in the process of building and completing
five ophthalmology practices with expenditures being related to
initial marketing and facility opening, and accordingly during
the period the Partnership had limited revenue. The Partnership
commenced providing medical services with the opening of its
first ophthalmology practice in Boca Raton in October 1994 with
<PAGE>
a second practice opening in Boynton Beach in December 1994.
During the First Quarter of 1995, the Partnership opened three
additional practice locations; Coral Springs in January 1995,
Lake Worth in February 1995 and Pompano Beach in April 1995,
and promoted the services of these newly opened practices along
with incurring the associated expenses with the openings.
Gross revenues for the period ending March 31, 1996 increased
to $2,511,063 versus $186,084 in the period ending March 31,
1995. This increase was due to the limited operations of the
Partnership in 1995 as compared with the Company's operations in
1996. Revenue from premiums (Capitation Payments) increased to
$989,957 in 1996 from $0 in 1995 representing the inclusion of
UVG's capitated revenue. Premium revenue increased throughout
the period due to increased HMO membership. Practice revenue
increased to $1,432,982 from $106,722 for the period ending
March 31, 1995. The increases in practice revenue were
attributable to an increase in professional services, increased
optical sales due to the Merger, a full quarters operations and
growth in the Apollo Eye Associates practices. Other revenue,
composed primarily of consulting provided by the Company's
Medricon subsidiary increased to $88,124 from $79,362 due to
expansion of its seminar related activities.
Management anticipates continued revenue growth, but it expects
that the practice revenue trends will moderate over the next
quarter. Management also believes that increased benefit levels
in two of its major plans resulted in increased utilization and
increased practice revenue.
During the Merger it was noted that the Apollo Eye Associates
practice locations were in direct competition with certain
Optiplan participating outside provider (third party providers
not associated with the Company) locations. Consistent with
reducing the reliance on providers and increasing internal
revenue, the Company focused on eliminating providers in close
proximity to its practice locations. In January 1996 management
reduced the number of outside Participating Providers by 17%
based on proximity to the Apollo practice locations and a
variety of other factors. These reductions resulted in reduced
outside provider payouts and increased utilization of the
Apollo practices resulting in increased service and optical
sales. The utilization of services by members during the
beginning of the plan year increased the optical revenue in the
quarter, but the overall effect and trend is unclear and
management will monitor the situation during coming periods.
Costs of Goods and Services Sold (COGS) is computed as
including the costs of eyewear, including eyeglass frames,
lenses and contact lenses, along with the fees paid for services
to outside providers. The cost of services provided by internal
providers (employed or contracted by the Company) are reported
as part of Selling, General and Administrative (SG&A) expenses.
The Costs of Goods and Services Sold increased to $649,234
during the quarter ended March 31, 1996 versus $15,188 during
the 1995 period. This significant increase is due to the
reporting of a full quarter of COGS, the increased optical
component with its associated costs in lenses and eyeglass
frames and HMO contracts with Sponsors creating the need for
external provider payments.
<PAGE>
Management has focused its efforts in the eyewear product
area on inventory management including automating inventory
systems, consolidating purchasing and quarterly inventory
reviews to decrease obsolescence. The inventory results are
reported from a physical inventory at the quarter ended March
31, 1996. Inventory increased from $401,894 on December 31,
1995 to $448,285 at March 31, 1996, representing a change in the
mix of frames and an increase in contact lens inventories. The
Company is currently implementing inventory control processes to
maximize turnover. The Company expects to improve inventory
utilization with the planned consolidation of its laboratory
operations into a single location.
During the period ended March 31 1995, SG&A expenses increased
from $1,126,257 to $2,401,254 for the quarter ended March 31,
1996, representing the period expenses for both the Partnership
and UVG. The increases in SG&A were primarily related to the
costs of operating the combined businesses of twelve practices
of UVG and Apollo in the quarter ended March 31, 1996 compared
to the March 31, 1995 costs of Apollo while still in start up.
Contributing to the cost increases are payroll including
professional medical staff, increased rental expenses due to the
expanded number of facilities and accounting and legal costs.
Depreciation and amortization expenses increased from $101,846
to $211,664 as compared with the 1995 startup period. The
expense includes depreciation on the increased capital base. The
increase includes medical equipment, optical manufacturing
equipment, computers and communications equipment. The Company's
Property and Equipment increased from $3,682,472 on December 31,
1995 to $3,841,227 on March 31, 1996 and intangible assets
related to the merger decreased from $764,381 to $715,435.
NET LOSS
The Company's losses decreased from $1,038,185 for the quarter
ended March 31, 1995 to $816,130 ($0.07 per share) for the
quarter ended March 31, 1996. Per share data is based on the
Company's weighted average of shares outstanding in the period.
The conversion of the preferred B shares resulted in a weighted
average of outstanding share of 10,899,305, with the total
shares outstanding at the end of the period being 22,614,793.
Per share amounts for 1995 are not reflected as the business
operated as a partnership.
BALANCE SHEET DATED MARCH 31, 1996
The Company's cash decreased from an overdraft of $3,258 at
December 31, 1995 to an overdraft of $125,026 at March 31, 1996.
The Company's Accounts Receivable increased from $280,640 at
December 31, 1995 to $531,617 at March 31, 1996. This increase
is due to the increased revenue of the Company. The total
current assets of the Company increased from $825,087 on
December 31, 1995, to $1,185,899 at March 31, 1996.
<PAGE>
The Company's Property and Equipment (net of accumulated
depreciation) increased from $3,682,472 at December 31, 1995 to
$3,841,227 at March 31, 1996. The growth reflects the increased
capital including medical equipment, computers and
communications and office equipment. The total assets of the
Company expanded from $5,357,836 at December 31, 1995 to
$5,834,990 at March 31, 1996 due to the continued investment in
computers, communications, and medical equipment.
The Company's Notes Payable and Capital Lease obligations
decreased by $55,185 from December 31, 1995 to March 31, 1996.
These decreases are associated with repayment of borrowing.
Accounts Payable and Accrued Liabilities decreased significantly
from $3,170,217 to $2,747,188.
Notes Payable to the major shareholder, James R. Cook, M.D.,
increased to $2,450,000 at March 31, 1996 as a result of
additional loans of $1,650,000 in the first quarter of 1996.
The Company's equity decreased in the period from $630,001 at
December 31, 1995 to a deficit of $186,129 at March 31, 1996.
This decrease is directly related to operating losses in the
period. The Company intends to restore equity through
conversion of its Notes Payable to Shareholder, along with
additional equity. (See Liquidity and Capital Resources.)
CASH FLOW STATEMENT FOR PERIOD ENDING MARCH 31, 1996
Net Cash Flows used in Operating Activities increased from
$675,019 for the period ending March 31, 1995 to $1,388,307 for
the quarter ending March 31, 1996. The increased cash use was
due to operating losses and accounts receivable and inventory
expansion based on increased revenues and by decreased accounts
payables and accrued liabilities.
The Company continued to expand its capital base in the first
quarter of 1996 with the purchase of significant Property and
Equipment using $321,473 of cash which was raised through
loans from its principal shareholder. The net cash used in
investing activities totaled $328,006. In the period ended
March 31, 1995, the Company purchased $779,524 of Property and
Equipment with proceeds of $736,365 of maturing marketable
securities.
The Net Cash provided by Financing Activities totaled
$1,716,313 for the period ending March 31,1996. The cash was
primarily provided through $1,650,000 of shareholder loans.
(See Liquidity and Capital Resources.)
LIQUIDITY AND CAPITAL RESOURCES
Apollo Eye Associates, L.P. was a start-up company established
in July 1994. The Partnership had revenue of only $186,084 with
a net loss of $1,038,185 for the quarter ended March 31, 1995.
During 1995, the Partnership consumed $675,019 of cash for
operating activities and used $63,464 in investing activities.
<PAGE>
For the quarter ended March 31, 1996, the Company's net
revenues were $2,511,063 with a loss of $816,130. Net cash of
$1,388,307 was consumed by operating activities with $328,006
used by investing activities. With a total of $1,716,313 cash
provided by financing activities, the net decrease in cash for
the quarter was $121,498.
During the latter half of 1995, James R. Cook, M.D., the major
shareholder of the Company, provided short term loans in the
amount of $800,000 in an effort to improve liquidity. These
shareholder loans carried an interest rate of prime plus one and
one-half percent; a total of $13,437 of interest on these
shareholder loans was accrued during 1995.
Through March 28, 1996, the total shareholder loans provided by
Dr. Cook stood at $2,450,000 with $1,650,000 provided during the
first quarter of 1996 on the same basis as the 1995 loans with
an additional $45,402 of interest accrued during the first
quarter. Additional capital of $650,000 has been contributed in
the second quarter for a total of $3,100,000.
While the Company's operations improved during the first
quarter of 1996, the Company remains a net consumer of cash. It
is unclear exactly what magnitude of external cash will yet be
required to fund continuing operations. Additionally, close to
$2,000,000 of investment may be required to carry out leasehold
improvements and capital equipment purchases to remodel and
expand the former Family EyeCare Center practices. This may
allow the Company to capitalize on its opportunities to provide
medical and surgical eye care in addition to the routine
examinations traditionally provided in the Family EyeCare Center
locations. Additional practice location development or
acquisition will require cash. For the Company to pursue
business opportunities afforded it, management expects that an
additional $2 - 3 million dollars will be required for the
activities during 1996. To greatly accelerate growth into
additional markets, additional financing in the $10 - 20 million
range would be necessary. The Company is exploring the raising
of additional cash through a possible registered offering or a
private placement. If this additional funding is not available,
the Company's growth plans will be reduced.
In order to restore the equity base eroded in the Company's
start-up phase and by the large restructuring charge taken
during 1995, the Board of Directors believes that an immediate
infusion of cash and equity is needed by the Company. Dr. Cook,
the principal shareholder of the Company, has agreed and the
Board of Directors has approved, subject to the appropriate
amendments to the Company's Certificate of Incorporation and
either the receipt of a fairness opinion from a qualified,
independent third party or approval by vote of the Company's
disinterested shareholders, that Dr. Cook would make a
$4,000,000 equity investment in the Company including the
conversion of the $2,450,000 in short-term loans to equity.
Subject to the approvals outlined above, Dr. Cook has agreed to
convert up to $4,000,000 of shareholder loans to purchase
6,779,661 shares of the Company's Common Stock at $0.59 per
share. These shares would be newly issued unregistered
securities subject to the usual holding periods for such
securities. This purchase price was established by calculating
the average trading price of the shares of United Vision Group,
Inc. stock in over-the-counter trading for the twenty (20)
business days prior to March 27, 1996, then discounting the
average trading price of $0.7385 per share by 20%, owing to the
fact that the investment is sizable and that the shares are to
be unregistered and,
<PAGE>
as such, illiquid. (See Item 12, Certain Relationships and
Related Transactions in the Company's 1995 10-KSB.)
The Board of Directors has also approved a five to one (5:1)
reverse split of the Common Stock outstanding and an amendment
to the Company's certificate of incorporation to provide for
twelve million (12,000,000) authorized shares of Common Stock
after giving affect to the reverse split. Such actions will be
subject to the approval of the Company's shareholders. If the
reverse split is carried out, the currently outstanding shares
of Common Stock would be reduced to 4,522,959.
In addition, the Board of Directors has approved 2,000,000
shares (before the 5:1 reverse split or 400,000 shares after the
split) for the United Vision Group, Inc. 1995 Stock Option Plan
B, subject to shareholder approval. After the reverse split and
the Cook equity investment, a total of 5,908,891 Common Stock
shares would be outstanding with a total of 980,000 shares
committed to the Company's Employee Stock Option Plans (80,000
shares for the 1994 plan; 500,000 shares for the 1995 Stock
Option Plan A; and 400,000 shares for the newly formed 1995
Stock Option Plan B). Of the projected 12,000,000 authorized
shares, approximately 5,111,109 Common Stock shares would remain
authorized but unissued for warrant coverage and potential
acquisitions. The Board believes that opportunities exist to
acquire additional businesses, particularly physician practices
or managed care networks, in stock transactions. (See
Subsequent Events.)
Management does not believe that inflation has had a material
effect on the results of the Company's operations.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Except as noted below, the Company is not party to any material
litigation, nor, to the knowledge of the Company, is any
material litigation threatened.
In August 1994, an action entitled Barry A. Ginsberg, O.D.,
Vista Optical of Pompano, Inc. and Eynayim Investment
Corporation v. J. K. Enterprises of Deerfield Beach, Inc. and
Optiplan, Inc. was filed in the Broward County, Florida District
Court. Mr. Ginsberg, a former employee of the Company, alleges
that the Company, through its subsidiaries, breached an
employment agreement and a written and various oral contracts
concerning the transfer of assets to the Company. The plaintiff
seeks unspecified damages. During the period ended December 31,
1995, several motions by the plaintiff were dismissed. The
Company denies the allegations and is vigorously defending
against the claim.
In April 1995, an action entitled Dynex Sport Optics, Inc. v.
United Vision Group, Inc. ("Dynex") was filed against the
Company in the United States District Court for the District of
New Jersey in connection with an alleged agreement between the
Company and Dynex. According to Dynex, the Company promised to
issue 1,250,000 shares of its Common Stock in exchange for 100%
of the stock of Dynex and to provide $250,000 in working capital
to Dynex. The Company denies that the alleged agreement is
enforceable and believes that, in any event, Dynex deliberately
concealed or misrepresented the business, assets, rights and
prospects of Dynex. The Company is vigorously defending against
the claim. The Company has moved for a change of venue to
Florida.
United Vision Group, Inc. is a defendant in certain other legal
actions in the normal course of business, none of which is
expected to result in a material adverse effect on the Company's
net worth, total cash flows, or results of operations.
ITEM 2. CHANGES IN SECURITIES
In connection with the August 7, 1995 Merger, the Company
issued 166,579.5924 shares of Series B Preferred Stock (the
"Series B Preferred"). On March 4, 1996, the Certificate of
Incorporation of the Company was amended to increase the number
of authorized common shares from 10 million to 30 million. As a
result, the 166,579.5924 shares of Series B Preferred Stock were
converted to 16,657,959 shares of the Company's Common Stock.
For a complete description of the Series B Preferred, see the
Company's Current Report on Form 8-K (Date of Report: August 7,
1995) dated August 17, 1995, which is incorporated by reference
in response to this Item.
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - None
(b) Reports on Form 8-K - None
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
UNITED VISION GROUP, INC.
May 14, 1996 By: J. Richard Damron, Jr.
Date J. Richard Damron, Jr.
Principal Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The accompanying supplemental data are to be used in conjunction with the
unaudited financial statements and associated notes to the financial
statements for the quarter ended March 31, 1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 50,000<F1>
<SECURITIES> 12,000
<RECEIVABLES> 531,617<F2>
<ALLOWANCES> 0
<INVENTORY> 448,285
<CURRENT-ASSETS> 1,185,899
<PP&E> 3,841,227<F3>
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,834,990
<CURRENT-LIABILITIES> 3,170,828
<BONDS> 0
0
0
<COMMON> 22,615
<OTHER-SE> 5,788,519<F4>
<TOTAL-LIABILITY-AND-EQUITY> 5,834,990
<SALES> 2,511,063
<TOTAL-REVENUES> 2,511,063
<CGS> 649,234
<TOTAL-COSTS> 3,262,152
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 65,041
<INCOME-PRETAX> (816,130)
<INCOME-TAX> 0
<INCOME-CONTINUING> (816,130)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (816,130)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> 0
<FN>
<F1> Cash includes Restricted Cash of $50,000
<F2> Receivables are recorded net of allowances for doubtful accounts
<F3> PP&E is recorded Net of Depreciation
<F4> Other Stockholders Equity includes Additional Paid in Capital
</FN>
</TABLE>
