Form 10-QSB
U.S. Securities and Exchange Commission
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
[ ] 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 0-20356
MEDICAL INDUSTRIES OF AMERICA, INC.
(Exact name of small business issuer as specified in its charter)
FLORIDA 65-0158479
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
1903 S. CONGRESS AVENUE, SUITE 400, BOYNTON BEACH, FLORIDA 33426
(Address of principal executive offices)
(561)737-2227
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such report(s), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [_]
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 4,540,652 shares of common
stock, no par value, were outstanding as of June 30, 1997.
<PAGE>
MEDICAL INDUSTRIES OF AMERICA, INC.
10-QSB- QUARTER ENDED JUNE 30, 1997
INDEX
FORM 10-QSB FORM 10-QSB FORM 10-QSB
PART NO. ITEM NO. DESCRIPTION PAGE NO.
I. FINANCIAL INFORMATION
1. Financial Statements
- Condensed Consolidated Balance
Sheet as of June 30, 1997 3
- Condensed Consolidated Statements of Operations
and Accumulated Deficit for the Three and Six
Months Ended June 30, 1997 and 1996 5
- Condensed Consolidated Statements of Cash
Flows for the Six Months Ended June 30, 1997
and 1996 6
- Notes to Condensed Consolidated Financial Statements 8
2. Management's Discussion and Analysis or Plan of
Operations 10
II. OTHER INFORMATION
1. Legal Proceedings 12
5. Other Information 12
6. Exhibits and Reports on Form 8-K13
Signatures
2
<PAGE>
MEDICAL INDUSTRIES OF AMERICA, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1997
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ................................... $ 416,679
Trade accounts receivable, net .............................. 1,305,589
Current portion of notes and mortgage receivables .......... 726,158
Inventory of medical supplies ............................... 27,997
Prepaid expenses and other current assets ................... 556,794
------------
Total current assets ...................................... 3,033,217
------------
PROPERTY AND EQUIPMENT:
Mobile cardiac catheterization laboratory
and medical equipment ...................................... 1,896,137
Furniture and office equipment .............................. 244,841
------------
2,140,978
Less: accumulated depreciation and amortization ............. (1,703,392)
------------
Property and equipment-Net ................................ 437,586
------------
OTHER ASSETS:
Notes and mortgage receivables, less current maturities ..... 1,707,231
Goodwill .................................................... 1,557,425
Investment in equity securities ............................. 2,233,200
Other assets ................................................ 149,535
------------
Total other assets ........................................ 5,647,391
------------
TOTAL ASSETS .............................................. $ 9,118,194
============
See Notes to Consolidated Financial Statements
3
<PAGE>
MEDICAL INDUSTRIES OF AMERICA, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1997
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable .............................................. $ 308,842
Accrued liabilities ........................................... 944,051
Current portion of notes payable .............................. 434,652
Current portion of capital lease obligations .................. 112,269
------------
Total current liabilities ................................... 1,799,814
------------
LONG TERM LIABILITIES:
Amounts due on purchase of business, net of current portion ... 1,100,000
Capital lease obligations, net of current portion ............. 14,444
------------
Total long term liabilities .............................. 1,114,444
------------
Total Liabilities ........................................ 2,914,258
------------
SHAREHOLDERS' EQUITY:
Preferred shares, authorized 2,500,000 shares:
issued and outstanding:
Series A convertible shares, 22,276 issued
Series B convertible shares, 10,000 issued
$200 stated value, less minority interest ................... 1,020,000
Series D convertible shares, 62,120 shares
issued and outstanding ...................................... 963,881
Series E convertible shares, 832,000 shares issued
and outstanding ............................................. 832,000
Common shares, no par value, authorized 8,000,000,
4,540,652 shares issued and outstanding including
47,500 escrow .............................................. 21,993,044
Accumulated deficit ........................................... (18,445,614)
------------
6,363,311
Less treasury shares (3,750 shares at cost) ................... (159,375)
------------
Total shareholders' equity ............................. 6,203,936
------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ................ $ 9,118,194
============
See Notes to Consolidated Financial Statements
4
<PAGE>
MEDICAL INDUSTRIES OF AMERICA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
(Unaudited) (Unaudited)
--------------------------- ---------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenue ............................................. $ 1,267,375 $ 391,782 $ 3,187,301 $ 675,076
Other income ........................................ 635,103 -- 635,103 --
------------ ------------ ------------ ------------
Total ............................................... 1,902,478 391,782 3,822,404 675,076
------------ ------------ ------------ ------------
Expenses:
Cost of revenues ................................. 813,945 134,077 1,720,995 277,904
General and administrative expense ............... 513,097 741,607 1,023,774 1,390,284
Depreciation and amortization .................... 104,690 266,263 187,030 364,207
Interest expense, net ............................ 50,129 37,599 58,489 73,533
Other ............................................ 4,911 118,609 4,911 118,609
------------ ------------ ------------ ------------
Total expenses ............................. 1,486,772 1,298,155 2,995,199 2,224,537
------------ ------------ ------------ ------------
Income (loss) from continuing operations
before income taxes .............................. 415,706 (906,373) 827,205 (1,549,461)
Income taxes ........................................ 160,000 -- 321,500 --
------------ ------------ ------------ ------------
255,706 -- 505,705 --
Utilization of net operating losses ................. (160,000) -- (321,500) --
------------ ------------ ------------ ------------
Income (loss) from continuing operations ............ 415,706 (906,373) 827,205
Loss from discontinued operations-net of income taxes (11,612) (227,538) (96,030) (582,143)
------------ ------------ ------------ ------------
Net income (loss) ................................... 404,094 (1,133,911) 731,175 (2,131,604)
Accumulated deficit-beginning of year ............... (18,849,708) (12,868,117) (19,176,789) (11,870,424)
------------ ------------ ------------ ------------
Accumulated deficit-end of periods .................. $(18,445,614) $(14,002,028) $(18,445,614) $(14,002,028)
============ ============ ============ ============
Earnings (loss) per share of common stock:
Primary:
Income (loss) from continuing operations ......... $ .10 ($ 1.25) $ .28 $ (2.58)
Loss from discontinued operations ................ (.01) (.32) (.03) (.97)
Net Income (loss) ................................ $ .09 ($ 1.57) $ .25 $ (3.55)
============ ============ ============ ============
Fully diluted earnings per share ............ $ .07 $ .17
============ ============
Weighted average shares outstanding,
excluding contingently issuable shares
Primary ...................................... 4,375,857 720,277 2,986,489 600,615
============ ============ ============ ============
Fully diluted ................................ 5,830,809 4,383,106
============ ============
</TABLE>
See Notes to Consolidated Financial Statements
5
<PAGE>
MEDICAL INDUSTRIES OF AMERICA, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Operating activities:
Net income (loss) from continuing operations ........... $ 827,205 $ (1,549,461)
Net loss from discontinued operations .................. (96,030) (582,143)
Adjustments to reconcile net income (loss) to
net cash provided by (used in)
operating activities:
Depreciation and amortization ...................... 187,030 498,637
Minority Interest .................................. (3,129) (16,292)
Loss (gain) on disposition of property and equipment 2,544 -0-
Common stock issued for services rendered .......... 822,502 -0-
Changes in assets and liabilities:
(Increase) decrease in:
Trade accounts receivable ....................... (484,635) 134,257
Inventories of medical supplies ................. (13,126) (22,243)
Asset held for sale ............................. (100,000) -0-
Prepaid expenses and other current assets ....... (220,744) (363,390)
Other assets .................................... (1,897) (181,482)
Accounts payable ................................ 60,411 (451,731)
Accrued liabilities ............................. (27,002) (119,168)
------------ ------------
Net cash provided by (used in) operating activities 953,129 (2,653,016)
------------ ------------
Investing activities:
Issuance of notes receivable ........................... (697,822) (2,389,212)
Payment of notes receivable ............................ 117,002 --
Purchase of property and equipment ..................... (233,179) (208,127)
Purchase of goodwill ................................... -- (364,402)
Purchase of practice ................................... -- (75,000)
Loss in equity of investment ........................... -- 181,480
------------ ------------
Net cash (used in) investing activities ............. (813,999) (2,855,261)
------------ ------------
Financing activities:
Proceeds from long term debt ........................... 34,000 --
Payment of note payable ................................ -- (183,369)
Proceeds from the issuance of common stock ............. 216,576 3,773,128
Proceeds from the issuance of preferred stock .......... -- 3,932,900
Payments of capital lease obligations .................. (60,436) (340,864)
Payments of long term debt ............................. (154,052) (1,636,451)
Stock payable .......................................... -- 325,000
------------ ------------
Net cash provided by financing activities ........... 36,088 5,870,344
------------ ------------
Net increase in cash ................................... 175,218 362,067
Cash at the beginning of period ........................ 241,461 24,431
------------ ------------
Cash at the end of period .............................. $ 416,679 $ 386,498
============ ============
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Supplemental disclosure of cash flow information:
<S> <C> <C>
Interest paid .......................................... $ 11,708 $ 122,029
============ ============
</TABLE>
Supplemental disclosure of non-cash investing and financing activities:
Non-cash aspects of the acquisition of
Florida Physicians Internet, Inc.:
Fair value of assets acquired ..................... $ 653,048
Accrued payment for acquisition ................... 1,415,000
Preferred shares to be issued in
connection with acquisition ..................... $ 832,000
During the fourth quarter of 1996, the Company converted $700,000 of its
advances to Westmark Group Holdings, Inc. to Westmark Group Holdings, Inc.
preferred stock.
7
<PAGE>
MEDICAL INDUSTRIES OF AMERICA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1997
(UNAUDITED)
Note 1 - Organization and Summary of Significant Accounting Policies
Organization
Medical Industries of America, Inc., f/k/a Heart Labs of America, Inc.,
was incorporated in the State of Florida and has its principal executive office
in Boynton Beach, Florida. Medical Industries of America, Inc. through its
wholly owned subsidiary, Florida Physicians Internet, Inc. operates a
multi-specialty medical group practice that is rapidly expanding in the areas of
physician practice management. The Company also provides diagnostic and
therapeutic healthcare services to the surgical and medical community through
its mobile cardiac catheterization services to hospitals primarily in the State
of Florida. Unless the context otherwise requires, all references to the
"Company" include Medical Industries of America, Inc. and its wholly-owned
subsidiaries.
The Company's Consolidated Financial Statements include the Company's
active subsidiaries: Heart Labs of America, Inc. and Florida Physicians
Internet, Inc. The Company's discontinued operations include Essential Care
Medical Centers, Inc. and Essential Care Medical Centers #5, Inc..
Basis of Presentation and Consolidation
The accompanying consolidated financial statements are unaudited. These
statements have been prepared in accordance with the rules and regulations of
the Securities and Exchange Commission (the "SEC"). Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. In the opinion of management,
the financial statements reflect all adjustments (which include only normal
recurring adjustments) necessary to state fairly the consolidated financial
position and consolidated results of operations as of and for the periods
indicated. These consolidated financial statements should be read in conjunction
with the Company's consolidated financial statements and notes thereto for year
ended December 31, 1996, included in the Company's Form 10-KSB as filed with the
Securities and Exchange Commission.
Earnings (Loss) Per Common Share
Earnings (loss) per common share is calculated by dividing earnings (loss)
by the weighted average common shares outstanding after giving effect to the 1
for 20 reverse stock split effective November 1, 1996. Fully diluted earnings
per share have been computed based on the assumption that all of the convertible
preferred stock is converted into common shares, and that all stock options have
been exercised. Under this assumption, the weighted average number of common
shares outstanding has been increased accordingly. For 1996, there is no fully
dilutive computation because the effect would be antidilutive.
8
<PAGE>
Estimates
The preparation of financial statements in conformity with general
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statement and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Reclassifications
Certain reclassifications have been made in the 1996 financial statements
to conform with the 1997 presentation.
Note 2 - Business Acquired
Effective January 9, 1997 the Company entered into a purchase agreement
with Florida Physicians Internet, Inc. ("FPII"). Florida Physicians Internet,
Inc. is a group medical practice specializing in cardiology, neurology,
pulmonology, pediatrics, and internal medicine. This group practice is led by
Dr. A. Razzak Tai, MD, FACCP, ACCP, MRCP. Consideration for the purchase
included the issuance of the Company's preferred shares in an amount equal to
$832,000, cash payments of $1,415,000 over a three year period and the issuance
of stock options.
Effective August 1, 1997, the Company entered into an asset purchase
agreement with Dr. Rodney Menk, D.O. to acquire his practice for $20,000.
Note 3 - Discontinued Operations
In the fourth quarter of 1996, the Company closed seven of its nine
medical centers. It is the Company's intent that the remaining two medical
centers are to be spun off into a separate company controlled by unrelated third
parties which is anticipated to become a publicly traded company.
Note 4 - Accounts receivable
During the 1st quarter of 1997, the Company entered into a an agreement
with a company whereby the Company can sell on an ongoing basis and without
recourse an undivided interest in designated accounts receivables. Subsequent to
June 30, 1997, the Company repaid all advances and mutually terminated the
agreement.
Note 5 - S-8 Registration Statements
For the period from January 1997 to April 1997, the Company issued a total
of 555,800 shares of common stock which the vast majority was issued to
attorney's for legal services pursuant to S-8 registration statements. These
shares had an aggregate market value of $1,160,160.
9
<PAGE>
Note 6 - Note Receivable
In June 1997, the Company and Westmark Group Holdings, Inc. agreed to a
revised payment schedule with a minimum payment plus additional payments
dependent on Westmark's cash flow, capital infusion, and/or other forms of
capital raised.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
GENERAL
During 1997 and 1996, the Company principally derived its revenues from
its mobile cardiac catheterization laboratories. In the first two quarters of
1997, the Company also derived revenue from Florida Physicians Internet, Inc., a
group practice acquired in January 1997.
COMPARISON OF THE RESULTS OF OPERATIONS FOR SIX MONTHS ENDED JUNE 30, 1997 AND
JUNE 30, 1996
Revenues increased 372% to $3,187,301 for the six months ended June 30,
1997 from $675,076 for the six months ended June 30, 1996, principally as a
result of the acquisition of FPII in January 1997, and the revenue from the sale
of equipment. During the 1st two quarters of 1997, FPII recorded revenues of
$1,395,991. Revenues from the Company's mobile cardiac catheterization labs
increased 48% to $906,977 from $613,119 for the six months ended June 30, 1997
and June 30, 1996, respectively. This increase is primarily due to the Company
obtaining contacts that fully utilize two of its mobile labs and the addition of
a third mobile lab. Balance of the revenues was from the sale of the mobile lab.
Other income for the six months ended June 30, 1997 consists of a cash legal
settlement which is offset by direct expenses totaling $264,897.
Cost of revenues which included medical supplies, technical salaries and
benefits and other expenses directly associated with the Company's services
increased to $1,720,995 from $277,904 for the six months ended June 30, 1997 and
1996, respectively. This increase is due to the acquisition of FPII, the
increased use of the mobile labs and the cost of the equipment sold. FPII has a
higher cost of services due to the cost of the physicians. As a percentage of
revenue, cost of services increased to 54% of revenue from 41% of revenue for
the six months ended June 30, 1997 and 1996, respectively.
General and administrative expenses decreased 26% to $1,023,774 for the
six months ended June 30, 1997 compared to $1,390,284 for the six months ended
June 30, 1996. This decrease is primarily due to the reduction in salaries and
consulting fees.
Interest expense decreased to $58,489 for the six months ended June 30,
1997 as compared to $73,533 for the six months ended June 30, 1996. This
decrease is attributable to the Company refinancing certain notes receivables
but is offset partially by the Company entering into an accounts receivable
financing arrangement .
Income from continuing operations increased to $827,205 for the six months
ended June 30, 1997 compared to a net loss of $1,549,461 for the six months
ended June 30, 1996 resulting from an increase in the results of operations and
other income.
10
<PAGE>
Net income for the six months ended June 30, 1997 was $731,175 compared to
a loss of $2,131,604 for the six months ended June 30, 1996. This increase is
primarily attributable to an increase in revenue, a decrease in expenses, the
acquisition of a profitable practice, a reduction in salaries and consulting
fees and other income.
COMPARISON OF THE RESULTS OF OPERATIONS FOR THREE MONTHS ENDED JUNE 30, 1997 AND
JUNE 30, 1996
Revenues increased to $1,267,375 for the three months ended June 30, 1997
from $391,782 for the three months ended June 30, 1996, principally as a result
of the acquisition of FPII in January 1997 and the revenue from the mobile
catheterization labs. During the 2nd quarter of 1997, FPII recorded revenues of
$674,747. Revenues from the Company's mobile cardiac catheterization labs
increased 54% to $508,295 from $329,825 for the three months ended June 30, 1997
and 1996, respectively. This increase is primarily due to the Company obtaining
contracts that fully utilize two of its mobile labs and the addition of a third
mobile lab. Other income for the three months ended June 30, 1997 consists of a
cash legal settlement which is offset by direct expenses totaling $264,897.
Cost of revenues, which included medical supplies, technical salaries and
benefits and other expenses directly associated with the Company's services
increased to $813,945 from $134,077 for the three months ended June 30, 1997 and
1996, respectively. This increase is primarily due to the acquisition of FPII
and the increased use of the mobile labs. FPII has a higher cost of services due
to the cost of the physicians. As of percentage of revenue, costs of services
increased to 64% of revenue from operations from 34% of revenue from operations
for the three months ended June 30, 1997 and 1996, respectively.
General and Administrative expenses decreased 31% to $513,097 for the
three months ended June 30, 1997 compared to $741,607 for the three months ended
June 30, 1996. This decrease is primarily due to the a reduction in salaries and
consulting fees.
Interest expense increased to $50,129 for the three months ended June 30,
1997 as compared to $37,599 for the three months ended June 30, 1996. This
increase is attributable to the company entering into an accounts receivable
financing arrangement.
Income from continuing operations increased to $415,706 for the three
months ended June 30, 1997 compared to a net loss of $906,373 for the three
months ended June 30, 1996 resulting from an increase in the results of
operations and other income.
Net income for the three months ended June 30, 1997 was $404,094 compared
to a net loss of $1,133,911 for the three months ended June 30, 1996. This
increase is primarily attributable to an increase in revenue, a decrease in
expenses, the acquisition of a profitable practice, a reduction in salaries and
consulting fees and other income.
In January 1997, the Company leased its third mobile lab for 36 months
with monthly payments of $22,000.
On January 9, 1997 the Company effectuated a purchase agreement with
Florida Physicians Internet, Inc. ("FPII"). Consideration for the purchase
included the issuance of the Company's Series
11
<PAGE>
E preferred shares in an amount equal to $832,000, cash payments of $1,415,000
over a three year period and the issuance of stock options.
In March 1997, the Company entered into an asset purchase agreement
whereby it sold one of its mobile cardiac catheterization labs for $100,000 in
cash and a promissory note in the amount of $700,000 bearing interest at ten
percent to be paid over nine months at $60,000 per month with a balance of
unpaid principal and accrued interest due and payable on December 15, 1997. Upon
execution of the sale of the mobile lab, the Company entered into a service
agreement with the purchaser of the mobile lab whereby the Company will manage
all the affairs of the lab for a fee equal to 14% of the owners revenue plus the
costs incurred in performing its duties under this Agreement.
In April 1997, the Company entered into a settlement agreement with the
plaintiffs of the Tula Business, Inc. et al lawsuit. The terms of this
settlement required the Company to issue 2,063,346 unrestricted common shares,
the plaintiffs to exercise 144,384 warrants into common stock at $1.50 per
share, an aggregate of $216,576 received by the Company and the payment by the
plaintiffs and other claimants of $900,000 to the Company in settlement of its
claims.
The Company had a working capital surplus of $1,333,403 at June 30, 1997
compared to working capital deficiency of $689,797 at June 30, 1996. Working
capital in 1996 included $3,761,519 cash that was received from a Regulation S
offering during the 1st quarter.
12
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
In February 1997, a lawsuit was filed in the United States District Court,
Southern District of New York, by Tula Business, Inc. et al alleging the Company
failed to accurately convert preferred shares of stock issued pursuant to a
transaction exempt from the registration requirements of the SEC pursuant to
Regulation S promulgated under the Securities Act of 1933 as amended
("Regulation S") into shares of common stock. Similar charges were made by four
other shareholders of preferred stock who threatened to file a lawsuit similar
to the one brought by Tula Business, Inc. et al. The plaintiffs sought
additional shares. Effective April 7, 1997, the Company entered into a
settlement agreement and mutual releases with the plaintiffs of the Tula
Business, Inc. et al lawsuit and four other shareholders of preferred stock. The
terms of the settlement required the Company to issue 2,063,346 unrestricted
common shares, the exercise of 144,384 warrants into common stock at $1.50 per
share (for an aggregate of $216,576 received by the Company) and the payment by
the Tula Business, Inc. et al plaintiffs and certain of the four other claimants
of $900,000 to the Company in settlement of its claims.
ITEM 5. OTHER INFORMATION
On April 28, 1997, the Board of Directors of the Company elected Glen E.
Barber, Terry R. Lazar, CPA and Dr. A. Razzak Tai, MD to its Board of Directors.
Mr. Barber founded New Age Communications, Inc. in 1988 and currently serves as
president. New Age Communications, Inc., of Tallahassee, Florida is a master
distributor of operator services to Oncor, Conquest and LDDS. For the past four
years, Mr. Barber has served as president and director of the Museum of Art in
Tallahassee, Florida. From 1991 through 1993, Mr. Barber served on the Advisory
Board to Oncor Communications, Inc. of Bethesda, Maryland.
Mr. Lazar founded and serves as the senior partner of Lazar, DeThomasis,
Sanders and Company, LLP of Jericho, New York, a full service accounting firm
specializing in real estate, healthcare, manufacturing, insurance hotel industry
and entertainment. In addition, Mr. Lazar serves as partner and director of
finance of the Ambulatory Surgery Center.
Dr. Tai serves as medical director for the Company and is Board Certified
in Internal Medicine and Cardiovascular Diseases in England and the United
States. He is a Fellow of the American College of Cardiology, a Fellow of the
American College of Chest Physicians, a Fellow of the American Angiology and a
Fellow of the Clinical Council of Cardiology and the American Heart Association.
Dr. Tai has served on the committee for the American College of Chest Physicians
and is a past President of the American Heart Association.
On January 9, 1997 the Company effectuated a purchase agreement with
Florida Physicians Internet, Inc. ("FPII"). Florida Physicians Internet, Inc. is
a group medical practice specializing in cardiology, neurology, pulmonology,
pediatrics, and internal medicine. This group practice is led by Dr. A. Razzak
Tai, MD, FACCP, ACCP, MRCP. Consideration for the purchase included the issuance
13
<PAGE>
of the Company's preferred shares in an amount equal to $832,000, cash payments
of $1,415,000 over a three year period and the issuance of stock options.
EMPLOYMENT AGREEMENT
In May 1997, the Company effectuated an employment agreement with its new
president, Paul C. Pershes which was approved by the Board of Directors. The
term of the agreement is 5 years, with compensation equal to an annual salary of
$150,000, the granting of 775,000-925,000 stock options to be vested over a 4
year period and the payment of normal business expenses.
14
<PAGE>
SIGNATURES
In accordance with 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.
MEDICAL INDUSTRIES OF AMERICA, INC.
(Registrant)
MAY 12, 1997 By: /S/ MICHAEL F. MORRELL
(Date) Michael F. Morrell, Chairman of the Board &
Chief Executive Officer
MAY 12, 1997 By: /S/ PAUL C. PERSHES
(Date) Paul C. Pershes, President
MAY 12, 1997 By: /S/ LINDA MOORE
(Date) Linda Moore, Senior Vice President
MAY 12, 1997 By: /S/ ARTHUR P. KOBRIN
(Date) Arthur P. Kobrin, Chief Financial Officer
15
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 416,679
<SECURITIES> 0
<RECEIVABLES> 1,679,201
<ALLOWANCES> 373,612
<INVENTORY> 27,997
<CURRENT-ASSETS> 3,033,217
<PP&E> 2,140,978
<DEPRECIATION> 1,703,392
<TOTAL-ASSETS> 9,118,194
<CURRENT-LIABILITIES> 1,799,814
<BONDS> 0
0
2,815,881
<COMMON> 21,993,044
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 9,118,194
<SALES> 3,187,301
<TOTAL-REVENUES> 3,187,301
<CGS> 1,720,995
<TOTAL-COSTS> 2,995,199
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 58,489
<INCOME-PRETAX> 827,205
<INCOME-TAX> 0
<INCOME-CONTINUING> 827,205
<DISCONTINUED> (96,030)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 731,175
<EPS-PRIMARY> 0.25
<EPS-DILUTED> 0.17
</TABLE>
