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Previous: HERITAGE FINANCIAL SERVICES INC /TN/, 10QSB, 1997-05-07 |
Next: 1ST UNITED BANCORP /FL/, 8-K, 1997-05-07 |
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
----- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 1997
--------------------
OR
X 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 0-20438
---------------------------------------------------
TELMED, INC.
-----------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 65-0273037
- ------------------------------ -------------------
(State or other jurisdiction (IRS Employer
of incorporation) Identification No.)
9350 South Dixie Highway, Suite 1220, Miami, Florida 33156
- ------------------------------------------------------ ----------
(Address of principal executive offices) (Zip Code)
Registrant's tel. number, including area code (305) 670-9773
--------------------
- ---------------------------------------------------------------------
(Former name or former address, 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 Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
YES NO
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the Issuer's classes of
Common Stock, as of the latest practicable date. As of January 31, 1996,
there were outstanding 4,340,000 shares of Common Stock, par value $.001 per
share.
Page 1 of 19 pages. Exhibit index at page 17.
<PAGE> 2
I N D E X
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION
Page
----
<S> <C>
Item 1. Financial Statements
Balance Sheets as of January 31, 1997 and
October 31, 1996 3
Statements of Operations for the three months ended
January 31, 1997 and
January 31, 1996 4
Statements of Cash Flows for the three months ended
January 31, 1997 and
January 31, 1996 5
Notes to Financial Statements 6 - 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8 - 9
PART II OTHER INFORMATION 10
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
</TABLE>
-2-
<PAGE> 3
TELMED, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
ASSETS
JANUARY 31, OCTOBER 31,
1997 1996
------------ ------------
<S> <C> <C>
Current Assets
Cash and Cash Equivalents $ 195,667 $ 44,139
Accounts Receivable, Net of Allowance for
Doubtful Accounts of $230,486 and $213,688 570,444 701,254
Due From Affiliates 26,189 26,189
Prepaid Expenses and Other Current Assets 44,794 28,439
------------ ------------
Total Current Assets 837,094 800,021
Property and Equipment - Net 121,444 140,840
Investment in Debt Securities - Available For Sale 17,325 109,487
Goodwill, Net of Accumulated Amortization
of $30,200 and $26,894 35,943 39,249
Other Assets 84,676 100,060
------------ ------------
Total Assets $ 1,096,482 $ 1,189,657
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Loans Payable - Related Parties $ 225,000 $ 245,000
Accounts Payable 217,400 277,263
Accrued Expenses 363,216 478,583
Due to Affiliate 15,000 2,100
Current Portion of Capital Lease Obligation 9,404 9,404
------------ ------------
Total Current Liabilities 830,020 1,012,350
Capital Lease Obligation, Less Current Portion 37,005 39,356
------------ ------------
Total Liabilities 867,025 1,051,706
Minority Interests 19,005 41,112
------------ ------------
Commitments (See Notes)
Stockholders' Equity
Common Stock - Par Value $.001 Per Share,
20,000,000 Shares Authorized, 4,340,000
Shares Issued and Outstanding 4,340 4,340
Additional Paid-In Capital 5,685,016 5,685,016
Accumulated Deficit (5,566,795) (5,677,581)
Unrealized Gain In Investment in Securities 87,891 85,064
------------ ------------
Total Stockholders' Equity 210,452 96,839
------------ ------------
Total Liabilities and Stockholders'
Equity $ 1,096,482 $ 1,189,657
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 3 -
<PAGE> 4
TELMED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------
JANUARY 31, JANUARY 31,
1997 1996
----------- -----------
<S> <C> <C>
Revenues
Service Revenues $ 935,144 $ 1,165,571
Interest and Other 1,723 20,457
----------- -----------
Total Revenues 936,867 1,186,028
----------- -----------
Costs and Expenses
Cost of Services Provided 412,021 513,546
General and Administrative 891,953 752,899
----------- -----------
Total Expenses 1,303,974 1,266,445
----------- -----------
Loss Before Minority Interests and
Sale of CORF ( 367,107) ( 80,417)
Minority Interests In
Consolidated Entities ( 22,107) ( 11,733)
Sale of CORF 500,000 -
----------- -----------
Net Loss $ 110,786 $( 92,150)
=========== ===========
Per Share
Net Loss $ .18 $( .15)
=========== ===========
Weighted Average Shares
Outstanding 620,000 620,000
=========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 4 -
<PAGE> 5
TELMED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
JANUARY 31, JANUARY 31,
1996 1997
------------- -------------
<S> <C> <C>
(Decrease) in Cash and Equivalents:
Cash Flows From Operating Activities:
Net Loss $ 110,786 $ ( 92,150)
Adjustments To Reconcile Net Loss
To Net Cash Used In Operating
Activities:
Unrealized Gain on Marketable Securities 2,827 13,516
Depreciation and Amortization 20,485 22,808
(Increase) Decrease In Accounts Receivable 130,810 ( 128,063)
(Increase) In Due From Affiliates - ( 21,350)
Increase Decrease In Minority Interest ( 22,107) 11,731
(Increase) Decrease In Prepaid Expenses and
Other Current Assets ( 16,355) ( 18,476)
(Decrease) Increase In Accounts Payable
and Accrued Expenses ( 175,230) 71,977
------------- -------------
Net Cash Used In Operating Activities 51,216 ( 140,007)
------------- -------------
Cash Flows From Investing Activities:
Decrease In Available For Sale Investments 92,162 223,628
(Acquisition) Disposition Of Equipment 2,217 ( 8,080)
Decrease In Other Assets 15,384 56,491
Sale of Investment In General Partnership - 29,357
Investment In Institute of Health and Healing - ( 28,292)
------------- -------------
Net Cash Provided By Investing
Activities 109,763 273,104
------------- -------------
Cash Flows From Financing Activities:
Loan from Affiliate 12,900 -
Loan Receivable - 46061 Ontario Ltd. - ( 450,000)
Repayment of Loans from Related Parties ( 20,000) -
Decrease in Capital Lease Obligation ( 2,351) -
------------- -------------
Net Cash Used In Financing Activities ( 9,451) -
------------- -------------
Increase (Decrease) In Cash and
Cash Equivalents 151,528 ( 316,903)
Balance At Beginning Of Period 44,139 493,916
------------- -------------
Balance At End Of Period $ 195,667 $ 177,013
============= =============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 5 -
<PAGE> 6
TELMED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 1997
NOTE 1 - DESCRIPTION OF BUSINESS AND FINANCIAL DIFFICULTIES
TelMed, Inc. (the "Company") was incorporated on June 24, 1991 under
the laws of the State of Delaware. The Company is currently seeking
regulatory approval to market a portable fetal monitor for use by
women with high risk pregnancies. During fiscal 1996, the Company
began in-home clinical (Phase II) tests of the monitor, and expects to
complete Phase II testing during fiscal 1997. Thereafter, the Company
will seek approval from the U.S. Food and Drug Administration ("FDA")
to market the device. There can be no assurance that Phase II
clinical testing will be successfully completed or that the FDA will
grant its approval based on the Company's clinical studies.
In August 1993, the Company acquired all of the outstanding Common
Stock of ConsulMed, Inc. ("ConsulMed"). ConsulMed provides in-home
nursing care and rehabilitative therapy for private pay and Medicare
patients located within the State of Florida. ConsulMed expanded its
operations to provide rehabilitative therapy, primarily to Medicare
patients, through its comprehensive out-patient rehabilitation
facilities ("CORFs"). ConsulMed has established two CORFs in Florida,
one of which was sold subsequent to year-end. ConsulMed also offers
management support services to assist independent owners in the
establishment and operation of CORFs.
The Company has incurred consolidated net losses of approximately
$2,962,000, $1,025,000 and $974,000 for the years ended October 31,
1996, 1995 and 1994, respectively. The Company had an accumulated
deficit of approximately $5,677,000 and negative working capital of
approximately $212,000 at October 31, 1996. These factors raised
substantial doubt about the Company's ability to continue as a going
concern. The accompanying financial statements do not include any
adjustments that might result from the outcome of the aforementioned
uncertainly. Management anticipates that TelMed's field monitor will
not generate revenues through at least the end of fiscal 1997, and
that ConsulMed will require additional funds for operations at least
through the first half of fiscal 1997.
Management's plans regarding these matters include i) implementing a
cost-cutting program to reduce overhead expenses, ii) using available
accounts receivable financing and related party loans for operating
capital, and iii) selling business assets. There is no assurance that
such efforts will be successful.
NOTE 2 - MANAGEMENT REPRESENTATION
The accompanying financial statements are unaudited for the interim
period, but include all adjustments (consisting only of normal
recurring accruals) which management considers necessary for the fair
presentation of results at January 31, 1997 and 1996.
These financial statements do not purport to contain complete
disclosure in conformity with generally accepted accounting principles
and should be read in conjunction with the Company's audited financial
statements at, and for the year ended October 31, 1996.
The results reflected for the three months period ended January 31,
1997 are not necessarily indicative of the results for the entire
fiscal year to end on October 31, 1997.
- 6 -
<PAGE> 7
TELMED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 1997
NOTE 3 - STOCKHOLDERS' EQUITY
In December, 1996 the Company's Board of Directors ratified, subject
to stockholder approval, a 1-for-7 reverse split of the Company's
Common Stock, an increase in par value to $.007 per share, and a
change in the number of authorized shares from 20,000,000 to
10,000,000. The Company's stockholders approved the recapitalization
on January 31, 1997.
- 7 -
<PAGE> 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Three Months Ended January 31, 1997 compared to Three Months Ended January 31,
1996
ConsulMed contributed all of the operating revenue of the Company during the
three months ended January 31, 1997 and 1996. Service revenues of decreased
20% from $1,165,571 for the first three months of fiscal 1996, to $935,144 for
the first three months of fiscal 1997. Service revenues represent income from
in-home nursing care services provided. Cost of service provided of $412,021
and $513,546 consists primarily of payroll and related costs. With the
expansion of managed care, especially in the South Florida area, the
opportunities to provide third party nursing services greatly diminished in
that managed care providers provided such services through wholly owned
subsidiaries or through contract with national service companies. This trend
is expected to continue, resulting in increased pressure on the Company's
ability to generate revenue from in-home nursing care.
General and administrative costs increased 18% from $752,730 to $891,953 during
the first three months of fiscal year-end 1997. These costs consist of
operating expenses incurred by ConsulMed of $729,074 and $595,075 in quarter
end January 31, 1997 and 1996 respectively, as well as officer salary,
professional fees and general overhead expenses incurred by the parent company
of $162,879 and $157,655.
ConsulMed recorded a loss from operations of $240,000 for the first quarter of
fiscal year 1997. This compares with a profit of just under $60,000 for the
three months ended January 31, 1996.
Liquidity and Capital Resources
The Company experienced significant cash flow problems during fiscal year 1996.
These difficulties continued into the first quarter of fiscal year 1997.
Although during fiscal 1996, the Company adopted certain cost reductions in
general and administrative expenses with respect to administrative staff, this
was offset by increased expenses associated with the establishment of
Comprehensive Outpatient Rehabilitative Facility ("CORF") and the development
of the pulmonary program. The Company funded Consul-Med's operating deficit
and the continued expenses associated with testing the fetal monitor, through
the utilization of remaining cash and loans from related parties. In addition,
subsequent to year-end, the Company began factoring accounts receivable. In
the first quarter of fiscal 1997, the Company sold one of its CORF facilities
for $500,000 and retained a management contract.
The Company continues to revise its operating budget, evaluate the
profitability of the various operating departments, and reduce administrative
costs and personnel in order to preserve existing cash and anticipated cash
flow.
The ability of the Company to continue as a going concern in dependent on the
Company's ability to generate cash flow and return to profitable operations, or
obtain suitable financing from third parties. No assurances can be given,
however, that these goals can be accomplished.
The Company has no current commitments for capital expenditures.
- 8 -
<PAGE> 9
Forward Looking Statements
From time to time, the Company may publish forward looking statements relating
to such matters as anticipated financial performance, business prospects,
technological developments, new products, usage and development activities and
some other matters. The words "may", "will", "expect", "anticipate",
"continue", "estimate", "project", "intend" and similar expressions are
intended to identify such forward looking statements. The Private Securities
Litigation Reform Act of 1995 provides a safe harbor for forward looking
statements. In order to comply with the terms of the safe harbor, the Company
notes that a variety of factors could cause its actual results and experience
to differ materially from anticipated results and other expectations expressed
by the Company's forward looking statements. The risks and uncertainties that
may effect the operations, performance, development and results of business,
include but are not limited to, the following:
(1) Consul-Med's home health care services could experience
continued decrease in revenues.
(2) Consul-Med's CORF operations could experience difficulties in
generating increased revenues or revenues could decrease due to competitive and
other factors.
(3) Tel-Med's fetal monitor's clinical testing could be prolonged
due to further testing requirements.
(4) The FDA could require additional testing prior to final
determination.
(5) There can be no assurances that the fetal monitor will
ultimately receive FDA approval or that this device can be sold or licensed to
third parties.
(6) There can be no assurances that additional funding, if
necessary, could be obtained in order to continue the operations of the
business.
(7) There can be no assurances that the Company's desire to
acquire other business can be achieved.
- 9 -
<PAGE> 10
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Reports on Form 8-K
The Company did not file any reports on Form 8-K for the quarter for
which this report was filed.
- 10 -
<PAGE> 11
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.
TELMED, INC.
Date: March 13, 1997 /s/ ALAN I. MILLER, M.D.
--------------------------------
Alan I. Miller, M.D., President
Date: March 13, 1997 /s/ JEFFREY I. BINDER
--------------------------------
Jeffrey I. Binder, Chairman
Date: March 13, 1997 /s/ SYED NAQVI
--------------------------------
Syed Naqvi, Principal
Financial Officer
- 11 -
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> JAN-31-1997
<CASH> 195,000
<SECURITIES> 0
<RECEIVABLES> 800,000
<ALLOWANCES> 230,000
<INVENTORY> 0
<CURRENT-ASSETS> 837,000
<PP&E> 277,000
<DEPRECIATION> 155,000
<TOTAL-ASSETS> 1,096,000
<CURRENT-LIABILITIES> 830,000
<BONDS> 0
0
0
<COMMON> 4,000
<OTHER-SE> (62,000)
<TOTAL-LIABILITY-AND-EQUITY> 1,096,000
<SALES> 0
<TOTAL-REVENUES> 1,437,000
<CGS> 0
<TOTAL-COSTS> 412,000
<OTHER-EXPENSES> 892,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 111,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 111,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 111,000
<EPS-PRIMARY> .18
<EPS-DILUTED> 0
</TABLE>
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