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 March 31, 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.
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(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
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(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: 59,309,799 shares of common
stock, no par value, were outstanding as of April 30, 2000.
<PAGE>
CYBER-CARE, INC.
10-QSB QUARTER ENDED MARCH 31, 2000
TABLE OF CONTENTS
<TABLE>
<CAPTION>
FORM 10-QSB FORM 10-QSB FORM 10-QSB
PART NO. ITEM NO. DESCRIPTION PAGE NO.
<S> <C> <C> <C>
I. FINANCIAL INFORMATION
1. Financial Statements
- Condensed Consolidated Balance Sheet
as of March 31, 2000 3
- Condensed Consolidated Statements of
Operations for the Three Months Ended
March 31, 2000 and 1999 5
- Condensed Consolidated Statements of
Cash Flows for the Three Months Ended
March 31, 2000 and 1999 6
- Notes to Condensed Consolidated
Financial Statements 8
2. Management's Discussion and Analysis
or Plan of Operations 12
II. OTHER INFORMATION
2. Changes in Securities and Use of Proceeds 17
5. Other Information 17
6. Exhibits and Reports on Form 8-K 17
Signatures 18
</TABLE>
2
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CYBER-CARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 2000
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ................................ $ 18,716,801
Trade accounts receivable, net ........................... 7,835,254
Inventories .............................................. 954,975
Note receivable-related party ............................ 482,000
Prepaid expenses and other current assets ................ 1,818,533
------------
Total current assets ................................... 29,807,563
------------
PROPERTY AND EQUIPMENT:
Aircraft and related equipment ........................... 24,145,312
Medical equipment ........................................ 794,884
Property and improvements ................................ 414,536
Furniture and office equipment ........................... 1,552,167
------------
26,906,899
Less accumulated depreciation and amortization ........... (3,428,613)
------------
Net property and equipment ............................. 23,478,286
------------
OTHER ASSETS:
Investment in equity securities .......................... 602,555
Goodwill, net ............................................ 7,540,096
Licenses, net ............................................ 13,163,293
Deferred costs, net ...................................... 2,681,790
Other assets ............................................. 2,537,743
------------
Total other assets ..................................... 26,525,477
------------
TOTAL ASSETS ........................................... $ 79,811,326
============
The Accompanying Notes Are An Integral Part of the
Consolidated Financial Statements
3
<PAGE>
CYBER-CARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 2000
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Lines of credit ............................................ $ 300,477
Current maturities of long-term debt and notes payable ..... 638,841
Current maturities of capital lease obligations ............ 36,641
Accounts payable ........................................... 3,085,632
Accrued liabilities ........................................ 2,573,272
Current maturities of subordinated debentures .............. 367,500
Net liabilities of discontinued operations ................. 432,363
------------
Total current liabilities ................................ 7,434,726
LONG-TERM LIABILITIES:
Long-term debt and notes payable, less current maturities .. 14,522,990
Capital lease obligations, less current maturities ......... 35,190
Convertible subordinated debentures ........................ 6,650,278
Other long-term liabilities ................................ 128,899
------------
Total liabilities ..................................... 28,772,083
------------
SHAREHOLDERS' EQUITY:
Preferred shares, authorized 20,000,000 shares;
19,800,000 available for issuance:
Common shares, .0025 par value, authorized 200,000,000:
issued and outstanding 57,699,176 ........................ 144,248
Capital in excess of par ................................... 97,436,313
Notes receivable from officers ............................. (3,480,168)
Accumulated other comprehensive income ..................... (1,821,074)
Accumulated deficit ........................................ (41,240,076)
------------
Total shareholders' equity ........................... 51,039,243
------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY .............. $ 79,811,326
============
The Accompanying Notes Are An Integral Part of the
Consolidated Financial Statements
4
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CYBER-CARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31,
-----------------------------
2000 1999
------------ ------------
Revenue ...................................... $ 11,023,640 $ 7,504,874
------------ ------------
Cost and expenses:
Cost of services .......................... 7,746,991 3,468,696
General and administrative expenses ....... 3,585,237 2,857,979
Research and development costs ............ 419,398 --
Depreciation and amortization ............. 942,516 505,588
------------ ------------
Total cost and expenses ............. 12,694,142 6,832,263
------------ ------------
Operating (loss) income ...................... (1,670,502) 672,611
------------ ------------
Other (income) expense
Interest income ........................... (241,324) (28,268)
Interest expense .......................... 864,114 524,389
Interest-beneficial conversion feature .... 502,290 236,468
Other income .............................. (7,301) (60,738)
------------ ------------
Total other expense (income) ........ 1,117,779 671,851
------------ ------------
(Loss) income from continuing operations ..... (2,788,281) 760
Loss from discontinued operations ............ -- 53,227
------------ ------------
Net loss ..................................... $ (2,788,281) $ (52,467)
============ ============
Basic and diluted loss per share:
Continuing operations ..................... $ (.05) $ --
Discontinued operations ................... -- --
------------ ------------
Net loss .................................. $ (.05) $ --
============ ============
Weighted average shares outstanding
Basic and diluted ......................... 53,074,384 24,906,947
============ ============
The Accompanying Notes Are An Integral Part of the
Consolidated Financial Statements
5
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CYBER-CARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------
2000 1999
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<S> <C> <C>
Operating activities:
(Loss) income from continuing operations ........... $ (2,788,281) $ 760
Loss from discontinued operations .................. -- (53,227)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization ................. 942,516 505,588
Provision for doubtful accounts ............... 110,673 --
Equity in net income of investee .............. -- (60,738)
Interest - beneficial conversion feature ...... 502,290 236,468
Common stock issued for services .............. 12,500 --
Net liabilities of discontinued operations .... (341,161) --
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable ........................ (2,095,414) (1,059,643)
Inventories ................................ (627,595) (41,781)
Prepaid expenses and other current assets .. (395,247) 87,208
Accounts payable ........................... 89,912 (262,671)
Accrued liabilities ........................ 1,115,686 577,192
------------ ------------
Net cash used in operating activities ........... (3,474,121) (70,844)
------------ ------------
Investing activities:
Purchase of goodwill ............................... -- (56,745)
Payment of notes receivable ........................ -- 8,499
Disbursements for property and equipment ........... (818,975) (246,299)
Other assets ....................................... (2,283,729) 16,090
------------ ------------
Net cash used in investing activities ........... (3,102,704) (278,455)
------------ ------------
Financing activities:
Payments of capital lease obligations .............. (10,807) (41,715)
Proceeds from long-term debt ....................... -- --
Payments of long-term debt ......................... (138,652) (131,852)
Advances under lines of credit ..................... 6,472,814 --
Repayments of lines of credit ...................... (9,953,929) --
Proceeds from exercise of warrants ................. 2,152,170 --
Proceeds from sale of common stock ................. 9,896,703 --
Proceeds due from escrow agent ..................... 5,142,895 470,000
Other long-term debt ............................... (26,175) --
------------ ------------
Net cash provided by financing activities ....... 13,535,019 296,433
------------ ------------
Net increase (decrease) in cash and cash equivalents 6,958,194 (52,865)
Cash and cash equivalents at the beginning of period 11,758,607 584,506
------------ ------------
Cash and cash equivalents at the end of period ..... $ 18,716,801 $ 531,640
============ ============
</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 ................... $526,895 $646,139
======== ========
Supplemental disclosure of non-cash investing and financing activities:
During March 2000, the Company refinanced its aircraft loans. The refinanced
loans call 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 the Company under the Company's cashless exercise policy. The
notes were repaid through a cashless exercise of 58,750 shares of common stock
returned to the Company.
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 which was
made in 1999.
During the quarter ended March 31, 2000, the Company issued 5,127,141 common
shares upon conversion of $9,475,197 of convertible debentures and applied
$3,708,000 of deferred financing costs to capital in excess of par.
Effective March 1, 1999, the Company issued 3,866,666 common shares of the
Company valued at $2,900,000 ($.75 per share) to acquire Air Response, Inc.
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 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.
7
<PAGE>
CYBER-CARE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 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 (the "SEC"). Certain information and
footnote disclosures normally included in consolidated 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 condensed 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.
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.
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.
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.
Comprehensive Income
The Company has one comprehensive income item, the effect of which was a
loss of $53,025. As a result, the Company's comprehensive loss was $2,841,306
and $52,467 for the three months ended March 31, 2000 and 1999, respectively.
Loss Per Share
Basic loss per share is calculated by dividing net loss by the weighted
average number of common shares outstanding. Options, warrants and shares of
common stock issuable upon the conversion of debentures have been excluded from
the calculation of loss per share because their effect would have been
antidilutive at both March 31, 2000 and 1999.
Note 2 - Businesses Acquired
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 $.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.
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.
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 of 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.
9
<PAGE>
Three months ended March 31
2000 1999
------------ ------------
Revenue ................................ $ 11,023,640 $ 8,822,305
============ ============
Loss from continuing operations ........ $ (2,788,281) $ (893,200)
============ ============
Net loss ............................... $ (2,788,281) $ (893,200)
============ ============
Basic loss per share ................... $ (.05) $ (.03)
============ ============
Note 3 - Private Placement
On February 28, 2000, the Company received approximately $11 million, less
underwriters fees of approximately $1 million, 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 million, less
underwriters fees of approximately $3 million, 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 February 18, 2000, the Company entered into a memorandum of 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.
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.
Note 6- 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.
10
<PAGE>
Note 7 - 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 a closed network pharmacy located in Lakeland,
Florida which provides unit-dosed medications to over 2,500 residents in
assisted-living facilities across Florida. Pharmacy Services delivers
medications to the facilities and provides training workshops.
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 considering selling or spinning
this segment. See prior press releases and 1999 10KSB.
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 three months ended March 31, 2000 and 1999 was
as follows:
For the three months ended March 31, 2000:
<TABLE>
<CAPTION>
Technology
Assisted International Physical and
Disease Air Ambulance Occupational Pharmacy
Management Transport Rehabilitation Services Total
------------ -------------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenue .......................................... $ 169,537 $ 6,133,355 $ 3,180,176 $ 1,537,742 $ 11,020,810
Income (loss) from
continuing operations .......................... $ (3,437,430) $ 14,792 $ 519,489 $ (8,990) $ (2,912,139)
Depreciation and amortization .................... $ 357,353 $ 499,643 $ 54,087 $ 23,576 $ 934,659
Total assets ..................................... $ 11,769,115 $ 27,215,691 $ 8,065,163 $ 1,609,778 $ 48,659,747
</TABLE>
11
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For the three months ended March 31, 1999:
<TABLE>
<CAPTION>
Technology
Assisted International Physical and
Disease Air Ambulance Occupational Pharmacy
Management Transport Rehabilitation Services Total
------------ -------------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenue .......................................... $ 102,600 $ 4,227,330 $ 2,177,708 $ 970,334 $ 7,477,972
Income (loss) from
continuing operations .......................... $ (160,174) $ 420,145 $ 600,159 $ 92,790 $ 952,920
Depreciation and
amortization ................................... $ 24,839 $ 360,330 $ 59,990 $ 21,743 $ 466,902
Total assets ..................................... $ 2,639,419 $ 26,057,042 $ 6,925,123 $ 1,700,874 $ 37,322,458
</TABLE>
Reconciliation to consolidated amounts:
FOR THE THREE MONTHS ENDED
MARCH 31,
----------------------------
2000 1999
------------ ------------
Revenue
Total revenue for reportable segments ....... $ 11,020,810 $ 7,477,972
Other revenues .............................. 2,830 26,902
------------ ------------
Total revenues from operations ............ $ 11,023,640 $ 7,504,874
============ ============
Income (Loss) from continuing operations
Segments .................................... $ (2,912,139) $ 952,920
Unallocated amounts
Interest-beneficial conversion feature .... (502,290) (236,468)
Other ..................................... 626,148 (715,692)
Loss from discontinued operation .......... -- (53,226)
------------ ------------
Net loss ....................................... $ (2,788,281) $ (52,466)
============ ============
Assets
Total assets for reportable segments ........ $ 48,659,747 $ 37,322,458
Other assets ................................ 30,998,032 4,518,514
Corporate headquarters - fixed assets ....... 153,547 130,965
------------ ------------
Total assets ................................ $ 79,811,326 $ 41,971,937
============ ============
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN 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 and state levels, changes in
reimbursement for services by government or private payors, competitive
pressures in the healthcare industry and the Company's response thereto, 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
Financial Statements listed in Item 7 and the Notes thereto appearing in the
Company's 1999 Annual Report on Form 10-KSB.
12
<PAGE>
RESULTS OF OPERATIONS - CYBER-CARE CONSOLIDATED
COMPARISON OF THE RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31,
2000 AND 1999.
Total revenue from operations increased 46.9% to $11,023,640 for the
three months ended March 31, 2000 from $7,504,874 for the three months ended
March 31, 1999, primarily driven by increases in the air ambulance, physical and
occupational rehabilitation and pharmacy segments. Acquisitions in the air
ambulance, physical and occupational rehabilitation segments contributed to the
growth. In addition, revenue also increased from increased rates and miles flown
in the air ambulance business and opening 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, production and
distribution channels for its Electronic Housecall System and generated only
nominal revenues during the quarter ended March 31, 2000.
Cost of services, which includes payroll, materials and other expenses
directly associated with our services increased 123% or $4,278,295, from
$3,468,696 for the three months ended March 31, 1999 to $7,746,991 for the three
months ended March 31, 2000. The increase resulted from costs associated with
acquisitions in the air ambulance, and physical therapy and rehabilitation
segments and costs associated with internal growth.
General and administrative expenses increased 25%, to $3,585,237, for the
three months ended March 31, 2000 from $2,857,979 for the three months ended
March 31, 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 locations of the air ambulance
business, 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 $1,670,502 for the three months ended March
31, 2000 as compared to an operating income of $672,611 for the three months
ended March 31, 1999. A significant portion of this increase, $3,437,430, was
due to expenses incurred by Cybercare Technologies as it develops the Electronic
Housecall System product and related market.
We had a net loss of $2,788,281 for the three months ended March 31, 2000
in comparison to $52,467 for the three months ended March 31, 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 first quarter of 2000.
LIQUIDITY AND CAPITAL RESOURCES -- CYBER-CARE
Historically, we have financed our growth from the issuance of common
stock and convertible debentures. For the three months ended March 31, 2000, we
raised approximately $11 million 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.
13
<PAGE>
In addition, we raised another $20 million in April 2000. Our capital
requirements based on our current business plan will continue to be significant
through fiscal 2000. We had working capital of approximately $22.4 million as of
March 31, 2000. In addition, we have credit facilities of approximately $5.25
million, of which approximately $5.0 million was available for borrowing as of
March 31, 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 March 31, 2000, we had current liabilities of approximately $7.4
million, which includes: (a) approximately $300,000 which consists of three
credit facilities, which accrue interest at rates between 8% and 11.5%; and (b)
approximately $638,000 which consists of the current portion of our long-term
notes payable. In addition, we will owe minimum payments on operating leases of
approximately $1.7 million during fiscal 2000. As of March 31, 2000, we had long
term liabilities of approximately $21.3 million which includes: (a)
approximately $14.5 million of notes payable and long-term debt, which mature
through April 2005; and (b) approximately $6.6 million of convertible
subordinated debentures, which may be converted to common stock at prices
between $.50 and $3.50 per share.
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 $3,474,121 and $70,844
for the three months ended March 31, 2000 and 1999, respectively. The $3,403,277
increase is due primarily to the Company's net loss.
Our net cash used in investing activities for the three months ended March
31, 2000 was $3,102,704 as compared to net cash used in investing activities for
the three months ended March 31, 1999 of $278,455. This is due primarily to an
increase in equipment purchases relating to aircraft.
Our net cash flows provided by financing activities during the three
months ended March 31, 2000 was $13,535,019 versus $296,433 during the three
months ended March 31, 1999. The increase was due primarily to private placement
proceeds received during the three months ended March 31, 2000.
14
<PAGE>
RESULTS OF OPERATIONS -- TECHNOLOGY ASSISTED DISEASE MANAGEMENT SEGMENT
Technology assisted disease management segment had minimal revenue for the
period and had incurred development and startup costs of approximately
$3,437,000 for the three months ended March 31, 2000.
RESULTS OF OPERATIONS - PHYSICAL AND OCCUPATIONAL REHABILITATION SERVICES
SEGMENT
Physical and occupational rehabilitation's revenue increased 46%, or
$1,002,468, to $3,180,176, from $2,177,708, primarily by the 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 $580,428, or 26.7% of
revenue for the three months ended March 31 1999, to $1,831,841, or 57.6% of
revenue for the three months ended March 31, 2000. The increase was primarily
due to increases in revenue by internal growth and acquisitions. General and
administrative expenses for the three months ended March 31, 2000 were $739,068,
or 23.2% of revenue, compared to $908,811 or 41.7% of revenue for the three
months ended March 31, 1999. The 18.5% improvement reflects our ability to
control overhead costs so that they do not rise at the same rate as revenues.
Operating income decreased 13.5% or $80,670 to $519,489 for the three months
ended March 31, 2000, from a profit of $600,159 in the year earlier, reflecting
the acquisitions, internal growth and was offset by the sale of Valley Pain.
RESULTS OF OPERATIONS - INTERNATIONAL AIR AMBULANCE TRANSPORT SEGMENT
International air ambulance transport's revenue increased 45%, or
$1,906,025, to $6,133,355 for the three months ended March 31, 2000, from
$4,227,330 for the three months ended March 31, 1999, driven by the acquisition
of Air Response, effective March 1, 1999, and internal growth resulting from
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 $2,325,883, or 55% of revenues, for the three
months ended March 31, 1999 to $4,614,749, or 75% of revenues, for the three
months ended March 31, 2000. This increase is due to increases in fuel prices,
payroll and repairs and maintenance. General and administrative expenses
decreased 27% to $643,105 for the three months ended March 31, 2000 from
$882,583 for the three months ended March 31, 1999. Net income decreased 96% or
$405,353 to $14,792 for the three months ended March 31, 2000, reflecting
increased operating costs associated with the acquisition of Air Response and an
increase in overall operating costs.
RESULTS OF OPERATIONS - PHARMACY SERVICES SEGMENT
Pharmacy's revenue increased 58.5%, or $567,408, to $1,537,742 for the three
months ended March 31, 2000 compared to $970,334 for the three months ended
March 31, 1999. The increase reflects substantial internal growth resulting from
adding additional adult living facility customers. Cost of services, which
includes pharmaceutical supplies, payroll, and other
15
<PAGE>
expenses directly associated with our services increased from $558,014, or 57.5%
of revenue for the three months ended March 31, 1999 to $1,205,850, or 78.4% of
revenue, for the three months ended March 31, 2000. This increase is due to
increase in pharmaceutical costs and payroll. General and administrative
expenses for the three months ended March 31, 2000 were $311,066, or 20% of
revenue, compared to $294,604, or 30.4% of revenue, for the three months ended
March 31, 1999. Operating loss was $8,990 for the three months ended March 31,
2000, compared to operating income of $95,973 for the three months ended March
31, in 1999, reflecting the move and expansion into our new 15,000 square foot
fulfillment center and our costs associated with growth.
16
<PAGE>
PART II
OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
During the quarter ended March 31, 2000, the Company issued 60,000 shares
of common stock valued at $607,000.
During the quarter ended March 31, 2000, the Company sold 500,000 shares
of common stock for $9,896,703.
During the quarter ended March 31, 2000, the Company issued 3,405,284
shares of common stock upon exercise of stock options and warrants which
resulted in proceeds of receiving $2,502,545 in cash and 312,945 shares of the
Company's common stock to certain directors under the Company's cashless stock
option exercise plan.
During the quarter ended March 31, 2000, the Company issued 5,127,141
shares of common stock upon conversion of subordinated debentures valued at
$9,475,197.
During the quarter ended March 31, 2000, the Company issued 942 shares of
the Company's common stock valued at $21,077 as additional consideration for an
acquisition which was made in 1999.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8K
(a)
None
17
<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)
MAY 15, 2000 By: /S/ MICHAEL F. MORRELL
(Date) Michael F. Morrell, Chairman of the Board & Chief
Executive Officer
MAY 15, 2000 By: /S/ PAUL C. PERSHES
(Date) Paul C. Pershes, Director
MAY 15, 2000 By: /S/ LINDA MOORE
(Date) Linda Moore, Senior Vice President
MAY 15, 2000 By: /S/ ARTHUR KOBRIN
(Date) Arthur Kobrin, Chief Accounting Officer
18
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<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 18,716,801
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