Form 10-QSB
U.S. Securities and Exchange Commission
Washington, DC 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, 2000
[ ] 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
CYBER-CARE, 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: 64,533,026 shares of common
stock, $.0025 par value, were outstanding as of July 31, 2000.
<PAGE>
CYBER-CARE, INC.
10-QSB QUARTER ENDED JUNE 30, 2000
TABLE OF CONTENTS
FORM 10-QSB FORM 10-QSB FORM 10-QSB PAGE
PART NO. ITEM NO. DESCRIPTION
NO.
----------- ----------- --------------------------------------- ----
I. FINANCIAL INFORMATION
1. Financial Statements (Unaudited)
- Condensed Consolidated Balance
Sheet as of June 30, 2000 3
- Condensed Consolidated Statements of
Operations and Accumulated Deficit for
the Three and Six Months Ended
June 30, 2000 and 1999 5
- Condensed Consolidated Statements of
Cash Flows for the Six Months Ended
June 30, 2000 and 1999 6
- Notes to Condensed Consolidated
Financial Statements 9
2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 18
II. OTHER INFORMATION
1. Legal Proceedings 23
2. Changes in Securities and Use
of Proceeds 23
6. Exhibits and Reports on Form 8-K 23
Signatures 24
2
<PAGE>
CYBER-CARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 2000
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents .................................... $18,067,701
Marketable securities ........................................ 12,641,170
Trade accounts receivable, net ............................... 7,221,439
Inventories .................................................. 2,561,492
Current maturities of mortgages and notes receivable ......... 155,326
Current portion of notes receivable - related parties ........ 1,235,604
Prepaid expenses and other current assets .................... 957,505
-----------
Total current assets ..................................... 42,840,237
-----------
PROPERTY AND EQUIPMENT:
Aircraft and related equipment ............................... 24,428,749
Medical equipment ............................................ 816,459
Property and improvements .................................... 424,467
Furniture and office equipment ............................... 1,929,144
-----------
27,598,819
Less accumulated depreciation and amortization ............... 3,950,833
-----------
Net property and equipment ............................... 23,647,986
-----------
OTHER ASSETS:
Goodwill, net ................................................ 7,409,016
Licenses, net ................................................ 12,908,991
Mortgages and notes receivable, less current maturities ...... 2,660,575
Notes receivable - related parties, less current maturities .. 500,000
Other assets ................................................. 2,410,602
-----------
Total other assets ....................................... 25,889,184
-----------
TOTAL ASSETS ............................................. $92,377,407
===========
The Accompanying Notes Are An Integral Part of the Consolidated Financial
Statements
3
<PAGE>
CYBER-CARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 2000
(UNAUDITED)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable ........................................... $ 2,938,900
Accrued liabilities ........................................ 2,296,473
Lines of credit ............................................ 916,398
Current maturities of notes payable and long-term debt ..... 873,113
Current maturities of capital lease obligations ............ 34,741
Net liabilities of discontinued operations ................. 148,678
-------------
Total current liabilities ................................ 7,208,303
LONG-TERM LIABILITIES:
Notes payable and long-term debt, less current maturities .. 14,208,395
Capital lease obligations, less current maturities ......... 28,093
Other long-term liabilities ................................ 139,838
-------------
Total liabilities ....................................... 21,584,629
-------------
SHAREHOLDERS' EQUITY:
Preferred stock, authorized 20,000,000 shares; 19,800,000
shares available for issuance ........................... --
Common stock, .0025 par value, authorized 200,000,000;
issued and outstanding 64,341,163 shares .................. 160,853
Capital in excess of par ................................... 123,129,119
Notes receivable from officers and directors ............... (3,943,543)
Accumulated other comprehensive loss ....................... (12,442)
Accumulated deficit ........................................ (48,541,209)
-------------
Total shareholders' equity ......................... 70,792,778
-------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY .............. $ 92,377,407
=============
The Accompanying Notes Are An Integral Part of the Consolidated Financial
Statements
4
<PAGE>
CYBER-CARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30
------------------------------ ------------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenue from operations .................................... $ 9,418,400 $ 8,650,947 $ 20,442,040 $ 16,155,821
------------ ------------ ------------ ------------
Cost and expenses:
Cost of services ..................................... 7,053,318 5,399,307 14,800,309 8,868,003
General and administrative expenses .................. 5,301,190 2,008,928 8,886,427 4,866,907
Research and development costs ....................... 862,992 -- 1,282,390 --
Depreciation and amortization ........................ 973,771 708,632 1,916,287 1,214,220
------------ ------------ ------------ ------------
Total cost and expenses .................... 14,191,271 8,116,867 26,885,413 14,949,130
------------ ------------ ------------ ------------
Operating (loss) income .................................... (4,772,871) 534,080 (6,443,373) 1,206,691
------------ ------------ ------------ ------------
Other (expense) income:
Interest income ...................................... 690,166 210 931,490 28,478
Interest expense, net ................................ (644,991) (602,153) (1,509,105) (1,126,542)
Interest - beneficial conversion feature ............. (155,031) (515,665) (657,321) (752,133)
Gain on sale of subsidiary ........................... -- 1, 255,959 -- 1,255,959
Write-off of investment in equity securities ......... (2,423,629) -- (2,423,629) --
Other income ......................................... 5,223 29,562 12,524 90,300
------------ ------------ ------------ ------------
Total other (expense) income ............... (2,528,262) 167,913 (3,646,041) (503,938)
------------ ------------ ------------ ------------
(Loss) income from continuing operations ................... (7,301,133) 701,993 (10,089,414) 702,753
Loss from discontinued operations .......................... -- 26,197 -- 79,424
------------ ------------ ------------ ------------
Net (loss) income .......................................... (7,301,133) 675,796 (10,089,414) 623,329
Accumulated deficit-beginning of period .................... (41,240,076) (27,695,811) (38,451,795) (27,643,344)
------------ ------------ ------------ ------------
Accumulated deficit-end of period .......................... $(48,541,209) $(27,020,015) $(48,541,209) $(27,020,015)
============ ============ ============ ============
(Loss) income per share of common stock:
Basic (loss) income per share:
(Loss) income from continuing operations ........... $ (.12) $ .03 $ (.18) $ .03
Discontinued operations ............................ -- -- -- --
------------ ------------ ------------ ------------
Net (loss) income .................................. $ (.12) $ .03 $ (.18) $ .03
============ ============ ============ ============
Diluted (loss) income per share:
(Loss) income from continuing operations ........... $ (.12) $ .02 $ (.18) $ .02
Discontinued operations ............................ $ -- $ -- $ -- $ --
------------ ------------ ------------ ------------
Net (loss) income .................................. $ (.12) $ .02 $ (.18) $ .02
============ ============ ============ ============
Weighted average shares outstanding:
Basic ................................................ 61,861,894 24,000,501 57,492,735 22,611,968
============ ============ ============ ============
Diluted .............................................. 61,861,894 35,676,102 57,492,735 33,463,222
============ ============ ============ ============
</TABLE>
The Accompanying Notes Are An Integral Part of the Consolidated Financial
Statements
5
<PAGE>
CYBER-CARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------------------------
2000 1999
--------------- ---------------
<S> <C> <C>
Operating activities:
(Loss) income from continuing operations ................................................. $ (10,089,414) $ 702,753
Loss from discontinued operations ........................................................ -- (79,424)
Adjustments to reconcile net (loss) income to net cash
used in operating activities:
Depreciation and amortization .................................................... 1,916,287 1,214,220
Provision for doubtful accounts .................................................. 634,816 27,281
Equity in net income of investee ................................................. -- (90,300)
Gain on sale of subsidiary ....................................................... -- (1,255,959)
Write-off of investment in equity securities ..................................... 2,423,629 --
Interest - beneficial conversion feature ......................................... 657,321 752,133
Common stock issued for services ................................................. 91,250 40,000
Net liabilities of discontinued operations ....................................... (624,846) --
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable ......................................................... (1,889,097) (834,085)
Inventories ................................................................. (2,234,112) (66,809)
Prepaid expenses and other current assets ................................... 947,781 (646,521)
Increase (decrease) in:
Accounts payable ............................................................ (131,820) (318,951)
Accrued liabilities ......................................................... 838,887 211,132
--------------- ---------------
Net cash used in operating activities .............................................. (7,459,318) (344,530)
--------------- ---------------
Investing activities:
Payment of notes receivable .............................................................. -- 41,514
Purchase of marketable securities ........................................................ (12,653,612) --
Disbursements for property and equipment ................................................. (1,514,296) (1,366,964)
Advances to related parties .............................................................. (3,921,258) --
Other assets ............................................................................. (997,837) (516,463)
--------------- ---------------
Net cash used in investing activities .............................................. (19,087,003) (1,841,913)
--------------- ---------------
Financing activities:
Payments of capital lease obligations .................................................... (19,804) (10,932)
Payments of long-term debt ............................................................... (218,975) (702,655)
Advances under lines of credit ........................................................... 15,635,713 9,086,547
Repayments of lines of credit ............................................................ (18,500,907) (8,125,461)
Proceeds from exercise of stock options and warrants ..................................... 3,748,557 --
Proceeds from sale of common stock ....................................................... 27,493,703 1,950,000
Proceeds due from escrow agent ........................................................... 5,142,895 --
Repayment of subordinated debentures ..................................................... (367,500) --
Other long-term liabilities .............................................................. (58,267) --
--------------- ---------------
Net cash provided by financing activities ....................................... 32,855,415 2,197,499
--------------- ---------------
Net increase in cash and cash equivalents ................................................ 6,309,094 11,056
Cash and cash equivalents at the beginning of period ..................................... 11,758,607 698,574
--------------- ---------------
Cash and cash equivalents at the end of period ........................................... $ 18,067,701 $ 709,630
=============== ===============
</TABLE>
The Accompanying Notes Are An Integral Part of the Consolidated Financial
Statements
6
<PAGE>
Supplemental disclosure of cash flow information:
Cash payments for interest $997,578 $ 1,190,733
======== ===========
Supplemental disclosure of non-cash investing and financing activities:
During March 2000, the Company refinanced its aircraft debt calling for a fixed
interest rate of 9.95%, payable over sixty months with a balloon payment due
April 1, 2005. As part of the refinancing, the Company purchased an airplane,
which was previously leased, for $1,175,000 and upgraded its engine maintenance
program for $1,111,258.
In March 2000, the Company repaid a $600,000 note by issuing 60,000 shares of
the Company's common stock.
During the quarter ended March 31, 2000, certain officers repaid a portion of
their notes due to the Company in exchange for shares of outstanding common
stock, which were held by the officers.
During the quarter ended March 31, 2000, the Company issued warrants under a
consulting agreement to purchase up to 200,000 common shares valued at $368,000.
During the quarter ended March 31, 2000, the Company issued 942 shares of common
stock valued at $21,077 as additional consideration for an acquisition that was
made in 1998.
During the six months ended June 30, 2000, the Company issued 8,985,998 common
shares upon conversion of $16,174,288 of convertible debentures and applied
$6,173,787 of deferred financing costs to capital in excess of par.
During the six months ended June 30, 2000, the Company issued 20,000 common
shares to a consultant for services rendered and valued at $91,250.
During the six months ended June 30, 2000, the Company entered into an agreement
with a limited liability company, which called for the Company to contribute
100,000 common shares valued at $1,631,300.
During the six months ended June 30, 2000, two directors exercised options to
purchase 337,600 shares of the Company's common stock by issuing a note to the
Company in the amount of $463,375 which bears interest at the federal applicable
rate. This note is included in stockholders equity section.
Effective March 1, 1999, the Company issued 3,866,667 common shares of the
Company valued at $2,900,000 ($.75 per share) to acquire Air Response, Inc.
During the quarter ended March 31, 1999, the Company issued 159,000 common
shares in lieu of payment of penalties and interest owed on the subordinated
debentures. Such shares were valued at $158,250.
On May 3, 1999, the Company sold Valley Pain Centers, Inc. ("Valley") to two
former officers of the Company for 1,544,036 shares of the Company's common
stock with a market value of $2,702,000 ($1.75 a share), cash and other
consideration of $352,000, and the repayment of approximately $300,000 of
liabilities owed by Valley, resulting in a gain of $1,255,959. The Company
retired 1,544,036 shares of the Company's common stock from this transaction.
The Accompanying Notes Are An Integral Part of the Consolidated Financial
Statements
7
<PAGE>
During the six months ended June 30, 1999, the Company issued 298,579 common
shares in lieu of cash payments of penalties and interest owed on the
subordinated debentures valued at $292,503. Penalties were caused by a delay in
filing a registration statement.
During the quarter ended June 30, 1999, the Company issued 45,000 common shares
in lieu of cash payment of accounts payable in the amount of $31,532.
During the quarter ended June 30, 1999, the Company issued 23,540 common shares
as partial consideration for the purchase of operating assets. The shares were
valued at $25,000.
During the quarter ended June 30, 1999, the Company repurchased 54,806 common
shares of the Company at $1.75 from a former officer and director. In payment of
all obligations due the former officer and director, the Company issued a note
in the amount of $100,000.
In January 1999, certain debenture holders exercised their option to convert
$102,077 of subordinated debentures at $1 per share, which the Company issued
102,077 shares of common stock.
During the first quarter of 1999, the Company issued 75,000 shares of the
Company's common stock in lieu of services rendered by two former employees.
During the first quarter of 1999, the Company issued 40,000 shares as part of a
1998 settlement to a former employee.
The value of the above shares was determined using the quoted market prices on
the dates the transactions took place.
The Accompanying Notes Are An Integral Part of the Consolidated Financial
Statements
8
<PAGE>
CYBER-CARE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
(UNAUDITED)
Note 1 - Organization and Summary of Significant Accounting Policies
Organization
Cyber-Care, Inc. ("Cyber-Care" or the "Company") was incorporated in the
State of Florida on September 29, 1989 and commenced operations on February 27,
1990.
The Company is a technology assisted health management company with four
business segments; Technology assisted disease management, physical and
occupational rehabilitation, pharmacy services and an international air
ambulance transport service.
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. Certain information and footnote
disclosures normally included in consolidated financial statements prepared in
accordance with accounting principles generally accepted in the United States of
America have been condensed or omitted pursuant to such rules and regulations.
In the opinion of management, the condensed consolidated 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 the year ended December
31, 1999, included in the Company's Form 10-KSB as filed with the Securities and
Exchange Commission.
Certain reclassifications have been made to the prior year financial
statements to conform to the June 30, 2000 presentation.
The Company's condensed consolidated financial statements include the
activity of the Company and its wholly owned subsidiaries. All significant
intercompany transactions have been eliminated in consolidation.
GOODWILL AND LICENSES
Goodwill is recorded at cost and is amortized using the straight-line
method over periods ranging from 20-25 years.
9
<PAGE>
Licenses, which primarily consist of medical technology and other
licenses, are recorded at cost and are amortized using the straight-line method.
Technology-related licenses are amortized over 10 years while commercial
aircraft licenses are being amortized over 20 years.
Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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.
Comprehensive Income (Loss)
Comprehensive income (loss) is defined as all changes in a Company's net
assets except changes resulting from transactions with shareholders. It differs
from net income (loss) in that certain items recorded to equity would be part of
comprehensive income (loss).
The Company has one comprehensive income statement item, the effect of
which was a loss of $12,442 at June 30, 2000. As a result, the Company's
comprehensive loss was $12,442 and $0 for the six months ended June 30, 2000 and
1999, respectively.
Recently Issued Accounting Pronouncements
In December 1999, the Securities and Exchange Commission staff released
Staff Accounting Bulletin No. 101, "Revenue Recognition". SAB 101 provides
interpretive guidance on the recognition, presentation and disclosure of revenue
in financial statements. The Company is required to ascertain the accounting
impact of SAB 101. The Company is continuing to review the application of SAB
101 to its financial statements and in particular the extent to which it will
require the Company to change its revenue recognition policies. The Company is
currently reviewing SAB 101 to determine if a change in its revenue recognition
policies will be necessary for it to comply with SAB 101 but does not anticipate
it to have a material affect on its reported operating results.
(Loss) Earnings Per Share
Basic (loss) earnings per share is computed using the weighted average
common shares outstanding. Diluted (loss) earnings per share is computed based
on the assumption that all of the convertible preferred stock and convertible
subordinated debentures are converted into common shares, and that all stock
options where the exercise price is less than the market value have been
considered exercised under the treasury stock method.
10
<PAGE>
Under this assumption, the weighted average number of common shares outstanding
has been increased accordingly. Options and warrants have been excluded from the
calculation of loss per share for the three and six months ended June 30, 2000,
because their effect would have been anti-dilutive.
Note 2 - Acquisitions and Dispositions
Effective September 1, 1999 the Company acquired 100% of the outstanding
common stock of CyberCare, Inc. in exchange for 7,324,996 shares of the
Company's common stock valued at $1.12 per share and options to purchase 934,997
shares of the Company's common stock with a fair value of $553,836. The
acquisition has been accounted for using the purchase method of accounting. The
net assets and revenue and expenses of Cybercare, Inc. have been included in the
Company's consolidated financial statements from the date of acquisition. The
former shareholders of Cybercare, Inc. have been given registration rights which
provide that if the fair market value of the Company's common stock at the
effective date of the registration statement is less than $1.50, enough
additional shares will be issued to ensure that those shareholders have received
at least $1.50 per share.
Effective March 1, 1999, the Company acquired 100% of the outstanding
common stock of Air Response, Inc. ("Air Response") in exchange for 3,866,667
shares of common stock valued at $0.75 per share plus $2,900,000 of additional
consideration which is contingent upon Air Response achieving certain agreed
upon pre-tax profit levels. The acquisition has been accounted for using the
purchase method of accounting. The net assets and revenue and expenses of Air
Response have been included in the Company's consolidated financial statements
from the date of acquisition.
On May 3, 1999, the Company sold Valley Pain Centers, Inc. ("Valley") to
two former officers of the Company for 1,544,036 shares of the Company's common
stock with a market value of $2,702,000 ($1.75 a share), cash and other
consideration of $352,000, and the repayment of approximately $300,000 of
liabilities owed by Valley, which resulted in a gain on the sale of $1,255,959.
The Company retired 1,544,036 shares of the Company's common stock from this
transaction.
11
<PAGE>
The following unaudited pro forma summary presents the consolidated
results of operations as if the acquisitions of Air Response, Inc. and
CyberCare, Inc. had occurred on January 1, 1999 after giving effect to certain
adjustments, including amortization of goodwill and related income tax effects.
The pro forma financial information does not purport to be indicative of the
results of operations that would have occurred had the transactions taken place
at the beginning of the periods presented or of future results of operations.
SIX MONTHS ENDED JUNE 30,
----------------------------------
2000 1999
--------------- ---------------
Revenue .................................. $ 20,442,040 $ 17,255,052
--------------- ---------------
Loss from continuing operations .......... $ (10,089,414) $ (664,877)
--------------- ---------------
Net loss ................................. $ (10,089,414) $ (664,877)
--------------- ---------------
Basic loss per share ..................... $ (.18) $ (.03)
--------------- ---------------
Note 3 - Private Placement
On February 28, 2000, the Company received approximately $11,000,000, less
underwriters fees of approximately $1,000,000, by selling 500,000 shares of the
Company's common stock at $22 per share. The Company also issued warrants to
purchase up to 100,000 additional common shares at an exercise price of $31.50
per share.
On April 10, 2000, the Company received approximately $20,000,000, less
underwriters fees of approximately $2,403,000, by selling 1,295,546 shares of
the Company's common stock at $15.44 per share. The Company also issued warrants
to purchase up to 500,000 additional common shares at an exercise price of
$18.44 per share.
Note 4- Joint Venture Agreement
On March 21, 2000, the Company entered into a definitive agreement which
calls for the Company and SIIC Medical Science and Technology Group Limited
(SIIC) (a Hong Kong public company) to establish a joint venture corporation to
undertake the marketing, application and service rendering of the Company's
"Electronic Housecall System" System and future related technologies and
products within a defined Asian territory including China. The Company will
initially invest $500,000 for a 33% interest in the joint venture agreement. The
Company, SIIC and the joint venture have agreed on terms and conditions relating
to licensing, distribution and manufacturing.
12
<PAGE>
Note 5- Stock Dividend
During the quarter ended March 31, 2000, the Board of Directors of the
Company approved a 5% stock dividend of the Company's international air
ambulance transport subsidiaries to shareholders of record on March 31, 2000.
The Company will pay this dividend in cash upon the sale of these subsidiaries.
Note 6- Limited Liability Company
On April 3, 2000, the Company entered into an operating agreement with an
unrelated party, which calls for the Company and the unrelated party to
establish a limited liability company. The limited liability company will be
established to develop strategic alliances, possibly through mergers and
acquisitions, with other healthcare and technology companies for the benefit of
its investors, including the Company. The Company invested 100,000 common shares
of its common stock in exchange for an 18.5% interest in the limited liability
company. This investment is being recorded using the equity method of
accounting.
Note 7- Notes Receivable-Related Parties
During the six months ended June 30, 2000, the Company advanced $560,000
to shareholders of Help Innovations, Inc. from which the Company acquired
certain assets on November 15, 1999. The advance is collateralized by common
stock of the Company, which is being held in escrow and was originally issued to
the shareholders of Help Innovations, Inc. as part of the November 15, 1999
asset acquisition.
During the six months ended June 30, 2000, the Company advanced $400,000
to an officer of its air ambulance subsidiary. The note calls for interest to be
charged at 8.50% per annum and is due on or before March 31, 2001. The note is
collateralized by 773,333 common shares of the Company held by the officer.
During the six months ended June 30, 2000, the Company advanced $500,000
to an officer/director of the Company. The note calls for interest at 10% per
annum and is due on March 18, 2003.
During the six months ended June 30, 2000, the Company advanced various
amounts totaling $50,300 to various officers. These amounts are due on demand
and are interest bearing.
During the six months ended June 30, 2000, the Company through its
subsidiary, Pharmacy Care Specialists paid $172,603 to the State of Florida
Medicaid program for overpayment of pharmaceutical drugs invoiced for the period
prior to March 1, 1998, the date of acquisition of PCS. The Company was
indemnified for any liabilities not known or disclosed at the acquisition date,
by the former shareholders. The Company has reflected this amount as a
receivable due from the former shareholders in the accompanying balance sheet.
Note 8- Investment in Equity Securities
13
<PAGE>
During the three months ended June 30, 2000, the Company determined that
its investment in Westmark Group Holdings was permanently impaired and, as a
result, has written off the entire $2,423,629 investment.
Note 9- Marketable Securities
The Company's marketable securities are considered "available for sale" and, as
such, are stated at market value. The net unrealized gains and losses on
marketable securities are reported as part of accumulated other comprehensive
loss. Realized gains or losses from the sale of marketable securities are based
on the specific identification method.
The following is a summary of the Company's investments in marketable securities
at June 30, 2000:
<TABLE>
<CAPTION>
GROSS UNREALIZED
AMORTIZED ---------------------------------
COST GAINS LOSSES MARKET
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Available for sale securities:
U.S. Treasury securities and debt
Securities of U.S. Government agencies .... $ 6,278,149 $ 112 $ 12,554 $ 6,265,707
City and state government obligations ..... 6,375,463 -- -- 6,375,463
--------------- --------------- --------------- ---------------
$ 12,653,612 $ 112 $ 12,554 $ 12,641,170
=============== =============== =============== ===============
</TABLE>
There were no gross realized gains or losses on sales of available for sale
securities during the three and six-month periods ended June 30, 2000.
The amortized cost and estimated fair value of available for sale securities by
contractual maturity at June 30, 2000 is as follows:
MARKET
COST VALUE
----------- -----------
Due in one year or less ........................ $ 6,278,149 $ 6,265,707
Due after one year through five years .......... -- --
Due after five years through ten years ......... -- --
Due after 10 years ............................. 6,375,463 6,375,463
----------- -----------
$12,653,612 $12,641,170
=========== ===========
Expected maturities may differ from contractual maturities because the issuer of
the securities may have the right to prepay obligations without a prepayment
penalty.
14
<PAGE>
Note 10- Litigation and Contingencies
The Company is engaged in litigation with various parties regarding
matters of dispute, which have arisen in the normal course of business. In each
instance of litigation where there is a material amount at dispute, the Company
has the benefit of indemnification from a third party. The Company anticipates
that there will not be a material impact on its financial condition or results
of operations from these matters.
As of August 4, 2000, the Company is aware of 14 purported class action
lawsuits that have been filed against Cyber-Care and certain of its executive
officers alleging violations of federal securities laws. The Complaints allege
that the Company made misrepresentations or omissions regarding the development
and future sales forecasts of its Electronic HouseCall System products. All of
the actions were filed in the United States District Court for the Southern
District of Florida and are in the process of being consolidated into one
action. The complaints seek unspecified damages and costs. The Company and the
executives believe the claims lack merit and they intend to vigorously defend
these lawsuits. However, the Company cannot predict the outcome of this
litigation or the impact that these lawsuits or any other suits, claims, or
investigations relating to the same subject matter may have on the Company's
liquidity or financial condition. In light of the foregoing, the liability, if
any, of the Company in relation to such possible claims cannot be estimated at
this time.
Note 11 - Segment and Related Information
The Company's reportable segments are technology assisted disease
management, physical and occupational rehabilitation, pharmacy services and
international air ambulance transport.
TECHNOLOGY ASSISTED DISEASE MANAGEMENT offers the Electronic Housecall
System, and will provide other hardware and software products using internet
technology for use in disease management services, data gathering and research.
PHYSICAL AND OCCUPATIONAL REHABILITATION provides physical and
occupational therapy, speech therapy and pain rehabilitation services.
PHARMACY SERVICES is an institutional pharmacy located in Lakeland,
Florida, which provides unit-dosed medications to over 5,600 residents in
assisted-living facilities in Florida. Pharmacy Services delivers medications to
the facilities.
INTERNATIONAL AIR AMBULANCE TRANSPORT offers national and international
fixed-wing air ambulance transport services to ill, injured or otherwise
incapacitated persons requiring relocation and possible emergency medical care
during flight. Circumstances requiring the Company's transport services include
the relocation of patients requiring specialized medical procedures such as
organ transplants, cancer treatment, specialized cardiac surgery, burn care,
stroke care and advanced brain and spinal cord surgery, as well as
transportation to hospitals and medical facilities recognized nationally for
excellence in their respective fields. We are currently considering selling or
spinning off this segment.
15
<PAGE>
The accounting policies of the reportable segments are the same as those
described in Note 1 to the Company's Condensed Consolidated Financial
Statements. The Company evaluates the performance of its operating segments
based upon income before taxes and nonrecurring charges such as beneficial
conversion feature and extraordinary items.
Segment information for the six months ended June 30, 2000 and 1999 was as
follows:
For the six months ended June 30, 2000:
<TABLE>
<CAPTION>
TECHNOLOGY
ASSISTED PHYSICAL AND INTERNATIONAL
DISEASE OCCUPATIONAL PHARMACY AIR AMBULANCE
MANAGEMENT REHABILITATION SERVICES TRANSPORT TOTAL
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Revenue ............................ $ 463,090 $ 6,064,405 $ 3,064,322 $ 10,846,796 $ 20,438,613
Income (loss) from
continuing operations ............ $ (8,111,079) $ 680,308 $ 52,944 $ (682,841) $ (8,060,668)
Depreciation and
amortization ..................... $ 714,004 $ 116,138 $ 45,959 $ 1,012,722 $ 1,888,823
Total assets ....................... $ 17,118,808 $ 10,042,326 $ 2,555,004 $ 27,934,534 $ 57,650,672
</TABLE>
For the six months ended June 30, 1999:
<TABLE>
<CAPTION>
TECHNOLOGY
ASSISTED PHYSICAL AND INTERNATIONAL
DISEASE OCCUPATIONAL PHARMACY AIR AMBULANCE
MANAGEMENT REHABILITATION SERVICES TRANSPORT TOTAL
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Revenue ............................ $ 226,566 $ 4,214,960 $ 2,215,287 $ 9,452,194 $ 16,109,007
Income (loss) from
continuing operations ............ $ (206,160) $ 836,372 $ 270,132 $ 674,879 $ 1,575,223
Depreciation and
amortization ..................... $ 49,679 $ 112,502 $ 45,528 $ 913,693 $ 1,121,402
Total assets ....................... $ 2,640,236 $ 7,252,043 $ 2,114,463 $ 26,111,178 $ 38,117,920
</TABLE>
Reconciliation to consolidated amounts:
FOR THE SIX MONTHS
ENDED JUNE 30,
----------------------------
2000 1999
------------ ------------
Revenue
Total revenue for reportable segments ........ $ 20,438,613 $ 16,109,007
Other revenues ............................... 3,427 46,814
------------ ------------
Total revenues from operations ........... $ 20,442,040 $ 16,155,821
============ ============
(Loss) income from continuing operations
Segments ..................................... $ (8,060,668) $ 1,575,223
Unallocated amounts
Interest-beneficial conversion feature ... (657,321) (752,133)
Write-off of investment in equity
securities.............................. (2,423,629) --
Interest income .......................... 931,498 28,478
Other .................................... 120,706 (148,815)
Loss from discontinued operation ......... -- (79,424)
------------ ------------
Net (loss) income ................................ $(10,089,414) $ 623,329
============ ============
Assets
Total assets for reportable segments ......... $ 57,650,672 $ 38,117,920
Other assets ................................. 34,507,488 1,959,696
Corporate headquarters - fixed assets ........ 219,247 121,558
------------ ------------
Total assets ................................. $ 92,377,407 $ 40,199,174
============ ============
16
<PAGE>
Note 12- Subsequent Events
Sale of Rehabilitation Subsidiary
On June 30, 2000, the Company entered into a letter of intent to sell one
of its rehabilitation subsidiaries to the former owner. The agreement calls for
the Company to sell 100% of the stock in the subsidiary in exchange for an
interest bearing note in the amount of $1,850,000, forgive $2,000,000 in
intercompany loans and sell the former owner 500,000 shares of the Company's
common stock at a price of $6.83 per share payable by an interest bearing note.
Both notes are to be collateralized by the underlying common shares purchased,
the stock of the subsidiary and the stock of other related companies owned by
the former owner. The terms of the agreement also call for the waiver of any
shares or other contingent consideration, which would have been due to the
former owner under the terms of the original purchase agreement between the
Company and former owner of the rehabilitation subsidiary. Such shares on an
amortized basis would have been 1,578,874. The Company anticipates that upon the
completion of the sale of the subsidiary, will result in a loss of approximately
$2.9 million.
Sale of Air Ambulance Segment
On August 4, 2000, the Company signed a Letter of Intent to sell its Air
Ambulance segment for $8.5 million plus assumption of all debt to a board member
and outside investors. The Company has received a non-refundable deposit of
Cyber-Care common stock valued at $1 million. Under the terms of the
transaction, the purchasers will pay an additional $1.4 million in Cyber-Care
common stock and will issue a short-term note bearing interest at 10% for $6.1
million collateralized by substantially all of the Air Ambulance assets. The
sale is subject to the approval of the Board of Directors.
17
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD-LOOKING STATEMENT
This Quarterly Report on Form 10-QSB contains forward-looking statements.
For this purpose, any statements contained herein that are not statements of
historical fact may be deemed to be forward-looking statements. Without limiting
the foregoing, the words "believes," "anticipates," "plans," "expects," and
similar expressions are intended to identify forward-looking statements. There
are a number of important factors that could cause the Company's actual results
to differ materially from those indicated by such forward-looking statements.
These factors include, without limitation, changes in the regulation of the
healthcare industry at either the federal or state levels, changes in
reimbursement for services by government or private payors, competitive
pressures in the healthcare industry and the Company's response thereto, delays
or inefficiencies in the introduction of new products, the Company's ability to
obtain capital in favorable terms and conditions, and general conditions in this
economy.
The following discussion of the Company's results of operations and
financial condition should be read in conjunction with the Company's condensed
consolidated unaudited Financial Statements listed in Part I, Item I and the
Notes thereto appearing elsewhere in this Form 10-QSB, and the Company's audited
Consolidated Financial Statements listed in Item 7 and the Notes thereto
appearing in the Company's 1999 Annual Report on Form 10-KSB.
RESULTS OF OPERATIONS - CYBER-CARE CONSOLIDATED
COMPARISON OF THE RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2000
AND 1999.
Total revenue from operations increased 26.5% to $20,442,040 for the six
months ended June 30, 2000 from $16,155,821 for the six months ended June 30,
1999, driven by increases in the air ambulance, physical and occupational
rehabilitation and pharmacy segments. Revenue from the acquisitions of Carolina
Rehab, Air Response, and Southeast Medical was $2,077,000, $1,425,000 and
$407,000, respectively for the six months ended June 30, 2000. In addition,
revenue also increased from increased rates and miles flown in the air ambulance
business and opening of new locations in the physical therapy and rehabilitation
segment. Cybercare Technologies, Inc. which was purchased by the Company in
September 1999, is in the process of developing, producing and distributing its
Electronic Housecall System and generated only nominal revenues during the six
months ended June 30, 2000.
Cost of services, which includes payroll, materials and other expenses
directly associated with our services, increased 66.9% or $5,932,306, from
$8,868,003 for the six months ended June 30, 1999 to $14,800,309 for the six
months ended June 30, 2000. The increase resulted from the acquisitions of
Carolina Rehab, Air Response, Southeast Medical and Cyber-Care Technologies. In
addition, the increase was due to additional maintenance to the aircraft fleet,
raise in fuel costs, expansion of our pharmacy and rehabilitation segments and
costs associated with the EHC unit.
18
<PAGE>
General and administrative expenses increased 82.6% to $8,886,427, for the
six months ended June 30, 2000 from $4,866,907 for the six months ended June 30,
1999. The increase was due to increased costs associated with internal growth
which included infrastructure and additional staff needed by the technology
segment, operating additional air ambulance locations, back office support and
corporate staff and finance and accounting staff, and from acquisitions in the
air ambulance and physical and occupational rehabilitation segments.
We had an operating loss of $6,443,373 for the six months ended June 30,
2000 as compared to operating income of $1,206,691 for the six months ended June
30, 1999. A significant portion of this increase in loss, $8,108,248, was due to
expenses incurred by Cybercare Technologies as it continues to develop the
Electronic Housecall System product and related markets.
We had a net loss of $10,089,414 for the six months ended June 30, 2000 in
comparison to a net profit of $623,329 for the six months ended June 30, 1999 as
a result of the Cyber-Care Technologies losses and the one time $2,423,629
write-off of our investment in Westmark Group Holdings. In particular, the
majority of the loss was due to expenses incurred and investments made by
Cybercare Technologies to develop the Electronic Housecall System for which only
nominal revenues were generated during the first two quarters of 2000.
COMPARISON OF THE RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2000
AND 1999
Total revenue from operations increased 8.9% to $9,418,400 for the three
months ended June 30, 2000 from $8,650,947 for the three months ended June 30,
1999, due to revenue from the acquisitions of Carolina Rehab, Air Response and
Southeast Medical. In addition, revenue also increased from increased rates and
miles flown in the air ambulance business and opening of new locations in the
physical therapy and rehabilitation segment. Cybercare Technologies, which was
purchased by the Company in September 1999, is in the process of developing,
producing and distributing its Electronic Housecall System and generated only
nominal revenues during the quarter ended June 30, 2000.
Cost of services, which includes payroll, materials and other expenses
directly associated with our services, increased 30.6% or $1,654,011, from
$5,399,307 for the three months ended June 30, 1999 to $7,053,318 for the three
months ended June 30, 2000. The increase resulted from the acquisitions of
Carolina Rehab, Air Response, Southeast Medical and Cyber-Care Technologies. In
addition, the increase was due to additional maintenance of the aircraft fleet,
raise in fuel costs and expansion of our pharmacy and rehabilitation segments
and costs associated with the EHC unit.
19
<PAGE>
General and administrative expenses increased 163.9%, to $5,301,190, for
the three months ended June 30, 2000 from $2,008,928 for the three months ended
June 30, 1999. The increase was due to increased costs associated with internal
growth which included infrastructure and additional staff needed by our
technology segment, operating additional air ambulance locations, back office
support and corporate staff and finance and accounting staff, and from
acquisitions in the air ambulance and physical and occupational rehabilitation
segments.
We had an operating loss of $4,772,871 for the three months ended June 30,
2000 as compared to operating income of $534,080 for the three months ended June
30, 1999. A significant portion of this increase, $4,664,845, was due to
expenses incurred by Cybercare Technologies as it continues to develop the
Electronic Housecall System product and related markets.
We had a net loss of $7,301,133 for the three months ended June 30, 2000
in comparison to a net profit of $675,796 for the three months ended June 30,
1999, as a result of the items discussed above. In particular, the loss was due
to expenses incurred and investments made by Cybercare Technologies to develop
the Electronic Housecall System for which only nominal revenues were generated
during the three months ended June 30, 2000.
LIQUIDITY AND CAPITAL RESOURCES
Historically, we have financed our growth from the issuance of common
stock and convertible debentures. For the six months ended June 30, 2000, we
raised approximately $27,500,000 through equity offerings, which we are using
for general working capital purposes and for the development of products and
technologies in the Cybercare Technologies segment. Our capital requirements
will continue to be significant through fiscal 2000. We had working capital of
approximately $35,632,000 as of June 30, 2000. In addition, we have credit
facilities of approximately $5,000,000, of which approximately $4,000,000 was
available for borrowing as of June 30, 2000.
We anticipate that our current working capital and available borrowings
will provide sufficient liquidity to fund the Company's operations through
fiscal 2000. However, we can provide no assurance that our ability to fund
operations through fiscal 2000 will not be shortened due to factors beyond our
control, such as lower than expected revenues or increased expenses.
As of June 30, 2000, we had current liabilities of approximately
$7,208,000, which includes: (1) approximately $916,000 which consists of three
credit facilities, which accrue interest at rates between 8.0% and 11.5%; and
(2) approximately $873,000 which consists of the current portion of our notes
payable and long-term debt. In addition, we will owe minimum payments on
operating leases of approximately $1,700,000 during the remainder of fiscal
2000. As of June 30, 2000, we had long-term liabilities of approximately
$14,400,000, which includes approximately $14,200,000 of notes payable and
long-term debt pertaining to our aircraft, which mature at various dates through
April 2005.
20
<PAGE>
Except for borrowings available under our lines of credit, we have no
commitment for additional financings or borrowings. We can provide no assurance
that additional debt or equity financing will be undertaken, and, if undertaken,
will be successful. Lower than expected earnings resulting from adverse
conditions or otherwise, could restrict our ability to expand our operations, or
otherwise fully execute our business plan.
Our net cash flow used in operating activities was $7,459,318 and $344,530
for the six months ended June 30, 2000 and 1999, respectively. The $7,642,103
increase is due primarily to the Company's net loss.
Our net cash used in investing activities was $19,087,003 and $1,841,913
for the six months ended June 30, 2000, and 1999, respectively. This is due
primarily to an increase in equipment purchases relating to aircraft, the
purchase of marketable securities and advances to related parties.
Our net cash flows provided by financing activities was $32,855,415 and
$2,197,499 for the six months ended June 30, 2000 and 1999, respectively. The
increase was due primarily to private placement proceeds received during the six
months ended June 30, 2000.
RESULTS OF OPERATIONS -- TECHNOLOGY ASSISTED DISEASE MANAGEMENT SEGMENT
Technology assisted disease management segment had minimal revenue for the
period and incurred development and start-up costs of approximately $8,111,079
for the six months ended June 30, 2000.
RESULTS OF OPERATIONS - PHYSICAL AND OCCUPATIONAL REHABILITATION SERVICES
SEGMENT
Physical and occupational rehabilitation's revenue increased 43.9%, or
$1,849,445, to $6,064,405, from $4,214,960, primarily as a result of
acquisitions made at the end of 1999, internal growth and offset by the sale of
Valley Pain.
Cost of services, which includes payroll, medical supplies, and other
expenses associated with increased revenue increased from $1,304,865 or 31% of
revenue for the six months ended June 30, 1999, to $3,584,464, or 59.1% of
revenue for the six months ended June 30, 2000. This increase is due to the
acquisitions of Carolina Rehab and Southeast Medical and internal expansion of
the number of facilities. General and administrative expenses for the six months
ended June 30, 2000 were $1,518,908, or 25.1% of revenue, compared to $1,910,247
or 45.3% of revenue for the six months ended June 30, 1999. The 20.2%
improvement reflects our ability to control overhead costs so that they do not
rise at the same rate as revenues. Income from continuing operations decreased
18.7% or $156,064 to $680,308 for the six months ended June 30, 2000, from a
profit of $836,372 in the year earlier, reflecting the acquisitions, internal
growth and was offset by the sale of Valley Pain.
21
<PAGE>
RESULTS OF OPERATIONS - INTERNATIONAL AIR AMBULANCE TRANSPORT SEGMENT
International air ambulance transport's revenue increased 14.8%, or
$1,394,602, to $10,846,796 for the six months ended June 30, 2000, from
$9,452,194 for the six months ended June 30, 1999, driven by the acquisition of
Air Response, effective March 1, 1999, and increased rates, utilization of
aircraft and miles flown. Cost of services, which includes fuel, maintenance,
payroll and other expenses directly associated with our service increased from
$6,240,465, or 66.0% of revenues, for the six months ended June 30, 1999 to
$8,457,257, or 78.0% of revenues, for the six months ended June 30, 2000. This
increase is due to increases in fuel prices, payroll and repairs and
maintenance. General and administrative expenses increased 20.1% to $1,243,088
for the six months ended June 30, 2000 from $1,034,901 for the six months ended
June 30, 1999. Net loss was $682,841 for the six months ended June 30, 2000,
compared to net income of $674,879 for the same period last year, reflecting
increased operating costs associated with the acquisition of Air Response, an
increase in overall operating costs, and the decrease in aircraft availability
due to scheduled and unscheduled maintenance.
RESULTS OF OPERATIONS - PHARMACY SERVICES SEGMENT
Pharmacy's revenue increased 38.3%, or $849,035, to $3,064,322 for the six
months ended June 30, 2000 compared to $2,215,287 for the six months ended June
30, 1999. The increase reflects substantial growth resulting from adding
additional adult living facility customers. Cost of services, which includes
pharmaceutical supplies, payroll, and other expenses directly associated with
our services increased from $1,297,824, or 58.6% of revenue for the six months
ended June 30, 1999 to $2,328,660, or 76% of revenue, for the six months ended
June 30, 2000. This increase is due cost relating to the expansion of the
facility, increase in the number of personnel and increase in cost of
pharmaceutical supplies. General and administrative expenses for the six months
ended June 30, 2000 were $625,532, or 20.4% of revenue, compared to $597,019, or
26.9% of revenue, for the six months ended June 30, 1999. Income from continuing
operations was $52,944 for the six months ended June 30, 2000, compared to
operating income of $270,132 for the six months ended June 30, 1999, reflecting
the move and expansion into our new 15,000 square foot fulfillment center and
our costs associated with growth.
22
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is engaged in litigation with various parties regarding
matters of dispute, which have arisen in the normal course of business. In each
instance of litigation where there is a material amount at dispute the Company
has the benefit of indemnification from a third party. The Company anticipates
that there will not be a material impact on its financial condition or results
of operations from these matters.
As of August 4, 2000, the Company is aware of 14 purported class action
lawsuits that have been filed against Cyber-Care and certain of its executive
officers alleging violations of federal securities laws. The Complaints allege
that the Company made misrepresentations or omissions regarding the development
and future sales forecasts of its Electronic HouseCall System products. All of
the actions were filed in the United States District Court for the Southern
District of Florida and are in the process of being consolidated into one
action. The complaints seek unspecified damages and costs. The Company and the
executives believe the claims lack merit and they intend to vigorously defend
these lawsuits. However, the Company cannot predict the outcome of this
litigation or the impact that these lawsuits or any other suits, claims, or
investigations relating to the same subject matter may have on the Company's
liquidity or financial condition. In light of the foregoing, the liability, if
any, of the Company in relation to such possible claims cannot be estimated at
this time.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
During the quarter ended June 30, 2000, the Company issued 10,000 shares
of common stock valued at $78,750 for payment of services rendered.
During the quarter ended June 30, 2000, the Company sold 1,295,546 shares
of common stock for $17,597,000, net of underwriter fees.
During the quarter ended June 30, 2000, the Company issued 1,330,338
shares of common stock upon exercise of stock options and warrants which
resulted in proceeds of $1,695,137 in cash and 22,748 shares of the Company's
common stock to certain directors under the Company's stock option plans.
During the quarter ended June 30, 2000, the Company issued 3,858,847
shares of common stock upon conversion of subordinated debentures valued at
$6,792,846.
During the quarter ended June 30, 2000, the Company contributed 100,000
common shares valued at $1,631,300 for an 18% interest in a limited liability
company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8K
(a) None
23
<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.
CYBER-CARE, INC.
----------------
(Registrant)
AUGUST 8, 2000 By: /s/ MICHAEL F. MORRELL
-------------- --------------------------------------------------------
(Date) Michael F. Morrell, Chairman of the Board & Chief
Executive Officer
AUGUST 8, 2000 By: /s/ PAUL C. PERSHES
-------------- --------------------------------------------------------
(Date) Paul C. Pershes, President and Director
AUGUST 8, 2000 By: /s/ DANA PUSATERI
-------------- --------------------------------------------------------
(Date) Dana Pusateri, Chief Operating Officer
AUGUST 8, 2000 By: /s/ LINDA MOORE
-------------- --------------------------------------------------------
(Date) Linda Moore, Senior Vice President
AUGUST 8, 2000 By: /s/ ARTHUR KOBRIN
-------------- --------------------------------------------------------
(Date) Arthur Kobrin, Chief Accounting Officer
24
