UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[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
Commission File Number: 0-24768
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MEDIX RESOURCES, INC.
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(Exact name of small business issuer as specified in its charter)
Colorado 84-1123311
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
7100 E. Belleview Ave, Suite 301, Englewood, CO 80111
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(Address of principal executive offices) (Zip Code)
(303) 741-2045
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(Issuer's telephone number, including area code)
Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of May 11, 2000.
Common Stock, $0.001 par value 41,759,461
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Class Number of Shares
<PAGE>
INDEX
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PART I. FINANCIAL INFORMATION PAGE NO.
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Item 1. Financial Statements
Consolidated Balance Sheets - March 31, 2000
(Unaudited) and December 31, 1999.................. 2
Unaudited Consolidated Statements of
Operations -- For the Three Months Ended
March 31, 2000 and March 28, 1999.................. 3
Unaudited Consolidated Statements of Cash Flows --
For the Three Months Ended March 31, 2000 and
March 28, 1999..................................... 4
Notes to Unaudited Consolidated Financial
Statements......................................... 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................ 7
PART II. Other Information
-----------------
SIGNATURES.................................................. 12
Index to Exhibits........................................... 13
<PAGE>
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2000 1999
------------ -----------
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents ................. $2,057,000 $1,229,000
Accounts receivable, net .................. 141,000 35,000
Notes receivable .......................... 500,000 0
Prepaid expenses and other ................ 172,000 176,000
Assets of discontinued operations ......... 732,000 1,057,000
---------- ----------
Total current assets ...................... 3,602,000 2,497,000
Property and equipment, net .................. 212,000 115,000
Other assets
Intangible assets, net .................... 2,482,000 2,017,000
---------- ----------
Total assets ................................. $6,296,000 $4,629,000
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable ................................. $ 91,000 $ 84,000
Line-of-credit ................................ - 484,000
Accounts payable .............................. 214,000 257,000
Accrued expenses .............................. 314,000 504,000
Accrued payroll tax, interest and penalty ..... 581,000 502,000
Liabilities of discontinued operations ........ - 22,000
---------- ----------
Total current liabilities .................. 1,200,000 1,853,000
Note Payable - 400,000
---------- ----------
Total liabilities 1,200,000 2,253,000
Stockholders' equity
1996 Preferred stock, 10% cumulative
convertible, $1 par value 488 shares
authorized, 155 issued, 1.00 share
outstanding .................................. - -
1997 convertible preferred stock, $1 par
value 300 shares authorized 167.15 shares
issued, zero and 5.00 outstanding ............ - -
1999 Series A convertible preferred stock,
$1 par value, 300 shares authorized,
300 shares issued, 185 and 100 shares
outstanding .................................. - -
1999 Series B convertible preferred stock,
$1 par value, 2,000 shares authorized,
1,832 shares issued, 817 and 65 shares
outstanding .................................. 0 1,000
1999 Series C convertible preferred stock,
$1 par value, 2,000 shares authorized,
1,995 shares issued, 1,995 shares outstanding 2,000 2,000
Common stock $.001 par value, 100,000,000 shares
authorized, 35,342,311 and 27,642,691 issued
and outstanding .............................. 35,000 27,000
Dividends payable with common stock ........... 25,000 25,000
Additional paid-in capital .................... 23,373,000 20,329,000
Accumulated deficit ........................... (18,339,000) (18,008,000)
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Total stockholders' equity ............... 5,096,000 2,376,000
----------- -----------
Total liabilities and stockholders'
equity .................................. $ 6,296,000 $ 4,629,000
=========== ===========
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<PAGE>
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
For the three For the three
months ended months ended
March 31, March 28,
2000 1999
-------------- --------------
Revenues ................................... $ 64,000 $ -
Direct costs of services ................... 3,000 2,000
------------ ------------
Gross Margin ............................... 61,000 (2,000)
Selling, general and administrative ........ 932,000 382,000
expenses ................................... - -
Net loss from operations ................... (993,000) (384,000)
Other income ............................... (32,000) -
Interest expense ........................... 20,000 23,000
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Net loss from continuing operations ........ (981,000) (407,000)
Net gain (loss)from discontinued
operations ................................ 650,000 (188,000)
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Net Loss ................................... $ (331,000) $ (595,000)
============ ============
Net loss per common share -
continuing operations ..................... $ (0.03) $ (0.02)
============ ============
Net income (loss) per common share -
discontinued operations ................... $ 0.02 $ (0.01)
============ ============
Net loss per common share (Note 5) ......... $ (0.01) $ (0.03)
============ ============
Weighted average shares outstanding ........ 33,965,334 21,536,831
============ ============
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<PAGE>
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the For the
three three
months ended months ended
March 31, March 28,
------------ -------------
Cash flows from (used in) operating activities
Net (loss) .................................... $ (331,000) $ (595,000)
Adjustment to reconcile net income (loss) to
net cash flows from (used in) operating
activities
Gain on sale of staffing businesses ....... (823,000) --
Depreciation and amortization .............. 33,000 60,000
Options and warrants issued for litigation
settlement, and services, respectively .... 137,000 73,000
Net changes in current assets and current
liabilities ............................... (145,000) (424,000)
----------- -----------
Net cash flows (used in) operating
activities ............................. (1,129,000) (886,000)
----------- -----------
Cash flows used in investing activities
Proceeds from sale of property and equipment .. -- 2,000
Purchase of property and equipment ............ (105,000) (3,000)
Proceeds from notes receivable ................ -- 533,000
Proceeds from the disposal of staffing
businesses ................................... 500,000 --
Business acquisition costs, net of cash
acquired .................................... (94,000) --
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Net cash flows (used in) investing
activities ........................... 301,000 532,000
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Cash flows from (used in) financing activities
Advances, net ................................. (484,000) 235,000
Payments on capital leases and debt ........... -- (19,000)
Proceeds from the exercise of stock
options and warrants ......................... 2,140,000 --
Net proceeds from issuance of preferred stock . -- 100,000
----------- -----------
Net cash flows from (used in)
financing activities ................. 1,656,000 316,000
----------- -----------
Net (decrease) increase in cash and cash
equivalents ..................................... 828,000 (38,000)
Cash and cash equivalents, at beginning of period 1,229,000 40,000
----------- -----------
Cash and cash equivalents, at end of period ...... $ 2,057,000 $ 2,000
=========== ===========
Non-cash investing and financing activities for the three months ended
March 31, 2000:
Acquisition of the assets and assumption of certain liabilities of a business
from a related party (Note3)
Financed insurance policies of $7,000 by issuing a note payable.
Conversion of a $400,000 note payable into 800,000 shares of common stock
Conversion of preferred stock into common stock (Note 4)
Non-cash investing and financing activities for the three months ended
March 28, 1999:
Issuance of 142,857 shares of common stock for a $50,000 reduction in
preferred redemption payable.
350,000 options to purchase common stock valued at approximately $48,000 were
granted for services.
125,000 warrants to purchase common stock valued at approximately $25,000 were
granted for services.
Dividends declared payable in common stock were $2,000.
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<PAGE>
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements are unaudited and reflect all adjustments
(consisting only of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of the financial position and
operating results for the interim periods. The unaudited consolidated financial
statements as of March 31, 2000 have been derived from audited financial
statements. The consolidated financial statements contained herein should be
read in conjunction with the financial statements and notes thereto contained in
the Company's Form 10-KSB for the fiscal year ended December 31, 1999. The
results of operations for the three months ended March 31, 2000 are not
necessarily indicative of the results for the entire fiscal year ending December
31, 2000.
2. DISPOSITION OF STAFFING BUSINESS SEGMENT
In February of 2000, the Company closed on the sale of the assets of its
remaining staffing businesses for $1,000,000. The purchase price was paid with
$500,000 cash at closing and the Company receiving a $500,000 subordinated note
receivable. The note provides for interest at prime plus 1% and is due in May of
2001. This sale was the final step of a plan approved by the board of directors
in December 1999 for the Company to divest itself of the staffing businesses
and focus its efforts on its Internet communication software products for the
healthcare industry.
The accompanying unaudited financial statements reflect the results of
operations of the staffing businesses as a discontinued business segment. The
discontinued results of operations include those direct revenues and expenses
associated with running the staffing businesses as well as an allocation of
corporate costs.
The results of operations of the Company's discontinued staffing businesses for
the three months ended March 31, 2000 and March 28, 1999 are as follows:
March 31, March 28,
2000 1999
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Revenue ........................................ $ 1,128,000 $ 3,100,000
Direct costs of services ....................... 927,000 2,465,000
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Gross margin ................................... 201,000 635,000
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Selling, general and administrative expenses ... 219,000 728,000
Interest expense ............................... 18,000 95,000
Litigation settlement .......................... 137,000 --
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Net loss ....................................... $ (173,000) $ (188,000)
=========== ===========
Also reflected in the accompanying unaudited balance sheet at March 31, 2000 are
the following assets related to the Company's discontinued staffing business
segment which were not acquired by the purchaser.
Current assets
Accounts receivable, net of 248,000 allowance ................ $724,000
Prepaid expenses and other ................................... 8,000
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Total current assets ........................................ $732,000
========
During the first quarter of 2000, the Company reported the following gain on the
disposal of the assets of its staffing business:
Sales price ................................................ $ 1,000,000
Accounts receivable collection costs ....................... (100,000)
-----------
900,000
Assets acquired
Property and equipment ................................... (85,000)
Deposits ................................................. (14,000)
Liabilities assumed
Accounts payable ......................................... 3,000
Accrued liabilities ...................................... 19,000
-----------
Gain on disposal of staffing businesses .................... 823,000
Loss from operation of staffing business
through disposal date ..................................... (173,000)
-----------
Net gain on disposal of staffing businesses ................ 650,000
===========
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<PAGE>
3. ACQUISITION OF ASSETS
In March of 2000 the Company acquired the assets and assumed certain liabilities
of Automated Design Concepts, Inc., an entity owned by a director of the
Company. To finance the acquisition the Company issued 60,400 shares of common
stock valued at $374,000 and paid $100,000. The Company also entered into a
two-year lease for $1,000 per month expiring in February 2002. The acquisition
has been accounted for as a purchase, with the following allocation to the
assets acquired and liabilities assumed:
Cash .................... $ 6,000
Accounts receivable ..... 27,000
Goodwill ................ 390,000
Accounts payable ........ (41,000)
Accrued liabilities ..... (8,000)
---------
Total purchase price $ 474,000
=========
The results of operations have been reflected from the date of acquisition
forward. The resulting goodwill is being amortized over 15 years.
4. EQUITY TRANSACTIONS
During the first quarter of 2000, 5 shares of the 1997 preferred stock , 85
shares of the 1999 Series A preferred stock, and 752 shares of the 1999 Series B
preferred stock were converted into 50,000, 340,000, and 1,504,000 shares of
common stock, respectively.
Additionally, the Company received proceeds of $2,140,000 from the exercise of
stock options and warrants resulting in the issuance of 4,945,220 shares of
common stock.
The Company also issued 800,000 shares of common stock from the conversion of a
$400,000 note payable.
5. STOCK OPTIONS
In January 2000, the Company granted options to purchase 600,000 shares of its
common stock at an exercise price of $4.97 per share to an executive officer
and director of the Company, and options to purchase 10,000 shares at an
exercise price of $4.13 per share to another employee, all under the Company's
1999 Stock Option Plan.
In February 2000, the Company granted options to purchase 550,000 shares of its
common stock at exercise prices of $3.97 per share to two executive officers of
the Company, and options to purchase 50,000 shares at an exercise price of $3.94
per share to another employee, all under the Company's Stock Option Plan.
In February 2000, the Company issued a warrant to purchase 35,000 shares of its
common stock at an exercise price of $3.96 per share, in connection with the
settlement of litigation involving the Company. The Company recorded an
expense of approximately $137,000 related to the issuance of the warrant,
valued using the Black Scholes option pricing model.
In March 2000, the Company granted options to purchase 400,000 shares at an
exercise price of $4.97 per share to an executive officer of the Company, and
options to purchase 10,000 shares at an exercise price of $4.13 per share to
another employee, under the Company's 1999 Stock Option Plan.
In April 2000, the Company granted options to purchase 100,000 shares at an
exercise price of $3.82 per share to six employees of the Company, options to
purchase 10,000 shares at an exercise price of $4.00 per share to another
employee, and options to purchase 150,000 shares at an exercise price of $3.38
per share to another employee, all under the Company's 1999 Stock Option Plan.
- 6 -
<PAGE>
6. LOSS PER SHARE
In accordance with the Securities and Exchange Commission's position on
accounting for preferred stock with convertible features that are in the money
at the time of issuance, the Company has imputed a value associated with such
conversion features and has recorded the value as a discount on the preferred
stock. The Company amortizes the imputed discount on the preferred stock over
the period from issuance of the preferred stock to the earliest period at which
the preferred stock becomes convertible. The Company recorded additional
dividends to preferred stockholders of approximately $3,000 for the quarter
ended March 28, 1999, which represents an imputed increase to the dividend yield
and not a contractual obligation on the part of the Company to pay such imputed
dividends.
Loss per share applicable to common stockholders is calculated as follows:
For the For the
three months three months
ended ended
March 31, 2000 March 28, 1999
-------------- --------------
Net loss ............................. $ (331,000) $ (595,000)
Preferred stock dividends ............
stated rate ......................... -- (2,000)
Preferred stock dividends ............
imputed discount .................... -- (3,000)
------------ ------------
Net loss applicable to common
stockholders ........................ $ (331,000) $ (600,000)
============ ============
Basic loss per common share .......... $ (0.01) $ (0.03)
============ ============
Weighted average shares
outstanding ......................... 33,965,334 21,536,831
============ ============
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
- --------
We are an information technology company headquartered in Denver, Colorado, with
offices in Thousand Oaks, California, East Brunswick, New Jersey and New York
City. We specialize in the development, marketing and management of software and
connectivity solutions for clinical and business transactions within the
healthcare industry Through our wholly owned subsidiary, Cymedix Lynx
Corporation, a Colorado corporation, we have developed Cymedix.com, a unique
healthcare communication technology product. Created by a team of healthcare
professionals, Cymedix.com provides instantaneous access to patient clinical,
financial and administrative information. Its software also supplies healthcare
institutions, such as health plans, insurers and hospitals, as well as
practicing physicians with a set of non-invasive technology tools that can be
attached to their existing software applications and provide Internet-enabled
transaction capability between all parties.
Implementation of the Cymedix.com software suite promises to speed and improve
the efficacy of daily interactions between health caregivers and their staffs,
other ancillary providers (such as labs or pharmacy benefit managers), insurance
companies, hospitals, Integrated Delivery Networks (IDNs) and Health Management
Organizations (HMOs). We believe that the market for robust and practical
healthcare solutions is growing rapidly, and that segment growth will continue
to accelerate as the joined emphases of consumer choice, quality, administrative
service and cost containment ratchets up demand for ever more efficient and
user-friendly methods of delivering quality healthcare.
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
This Report contains forward-looking statements, which mean that such statements
relate to events or transactions that have not yet occurred, our expectations or
estimates for our future operations and economic performance, our growth
strategies or business plans or other events that have not yet occurred. Such
statements can be identified by the use of forward-looking terminology such as
"might," "may," "will," "could," "expect," "anticipate," "estimate," "likely,"
"believe," or "continue" or the negative thereof or other variations thereon or
comparable terminology. The following paragraphs contain discussions of
important factors that should be considered by prospective investors for their
potential impact on forward-looking statements included in this Report. These
important factors, among others, may cause actual results to differ materially
and adversely from the results expressed or implied by the forward-looking
statements.
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<PAGE>
We have reported net losses of ($4,847,000), ($5,422,000) and ($515,000) for the
years ended December 31, 1999, December 27, 1998 and December 28, 1997. At March
31, 2000, we had an accumulated deficit of ($18,339,000). We expect to continue
to experience loses, in the near term, as we attempt to develop and market our
Cymedix software products. The current operation of our business and our ability
to continue to develop and market our Cymedix software products will depend upon
our ability to obtain additional financing. At present, we are not receiving any
significant revenues from the sale of our Cymedix software products. We are
attempting to meet our current cash flow needs by raising capital in the private
debt and equity markets and through the exercise of currently outstanding
warrants. The development and marketing of the Cymedix software products require
substantial capital investments. There can be no assurance that additional
investments or financings will be available to us as needed to support the
development of Cymedix products. Failure to obtain such capital on a timely
basis could result in lost business opportunities, the sale of the Cymedix
business at a distressed price or the financial failure of our company.
Our company, through its subsidiary Cymedix Lynx Corporation, has only recently
begun its medical software line of business through the acquisition of a
development stage medical software business in 1998. Our company has little
experience in marketing software products, providing software support services,
evaluating demand for products, financing a software business and dealing with
government regulation of software products. While we have recently put together
a team of experienced executives, they have come from different backgrounds and
may require some time to develop an efficient operating structure and corporate
culture for our company. We believe our structure of multiple offices serves our
customers well, but it does present an additional challenge in building our
corporate culture and operating structure.
Our products are still in the development stage and have not yet proven their
effectiveness or their marketability. As a developer of software products, we
will be required to anticipate and adapt to evolving industry standards and new
technological developments. The market for our software products is
characterized by continued and rapid technological advances in both hardware and
software development, requiring ongoing expenditures for research and
development, and timely introduction of new products and enhancements to
existing products. The establishment of standards is largely a function of user
acceptance. Therefore, such standards are subject to change. Our future success,
if any, will depend in part upon our ability to enhance existing products, to
respond effectively to technology changes, and to introduce new products and
technologies to meet the evolving needs of its clients in the healthcare
information systems market. We are currently devoting significant resources
toward the development of products. There can be no assurance that we will
successfully complete the development of these products in a timely fashion or
that our current or future products will satisfy the needs of the healthcare
information systems market. Further, there can be no assurance that products or
technologies developed by others will not adversely affect our competitive
position or render our products or technologies noncompetitive or obsolete.
Certain of our products provide applications that relate to patient medical
histories and treatment plans. Any failure by our products to provide accurate,
secure and timely information could result in product liability claims against
us by our clients or their affiliates or patients. We maintain insurance that we
believe is adequate to protect against claims associated with the use of our
products, but there can be no assurance that our insurance coverage would
adequately cover any claim asserted against us. A successful claim brought
against us in excess of our insurance coverage could have a material adverse
effect on our results of operations, financial condition or business. Even
unsuccessful claims could result in the expenditure of funds in litigation, as
well as diversion of management time and resources.
We have been granted certain patent rights, a trademark and copyrights. However,
patent and intellectual property legal issues for software programs, such as the
Cymedix products, are complex and currently evolving. Since patent applications
are secret until patents are issued, in the United States, or published, in
other countries, we cannot be sure that we are first to file any patent
application. In addition, there can be no assurance that competitors, many of
which have far greater resources than we do, will not apply for and obtain
patents that will interfere with our ability to develop or market product ideas
that we have originated. Further, the laws of certain foreign countries do not
provide the protection to intellectual property that is provided in the United
States, and may limit our ability to market our products overseas. We cannot
give any assurance that the scope of the rights we have are broad enough to
fully protect our Cymedix software from infringement.
Litigation or regulatory proceedings may be necessary to protect our
intellectual property rights, such as the scope of our patents. In fact, the
computer software industry in general is characterized by substantial
litigation. Such litigation and regulatory proceedings are very expensive and
could be a significant drain on our resources and divert resources from product
development. There is no assurance that we will have the financial resources to
defend our patent rights or other intellectual property from infringement or
claims of invalidity.
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<PAGE>
We also rely upon unpatented proprietary technology and no assurance can be
given that others will not independently develop substantially equivalent
proprietary information and techniques or otherwise gain access to or disclose
our proprietary technology or that we can meaningfully protect our rights in
such unpatented proprietary technology. We will use our best efforts to protect
such information and techniques, however, no assurance can be given that such
efforts will be successful. The failure to protect our intellectual property
could cause us to loose substantial revenues and to fail to reach our financial
potential over the long term.
The healthcare and medical services industry in the United States is in a
period of rapid change and uncertainty. Governmental programs have been
proposed, and some adopted, from time to time, to reform various aspects of the
U.S. healthcare delivery system. Some of these programs contain proposals to
increase government involvement in healthcare, lower reimbursement rates and
otherwise change the operating environment for our customers. We cannot predict
with any certainty what impact, if any, proposals for healthcare reforms might
have on our software business.
As with any business, growth in absolute amounts of selling, general and
administrative expenses or the occurrence of extraordinary events could cause
actual results to vary materially and adversely from the results contemplated by
the forward-looking statements. Budgeting and other management decisions are
subjective in many respects and thus susceptible to incorrect decisions and
periodic revisions based on actual experience and business developments, the
impact of which may cause us to alter our marketing, capital expenditures or
other budgets, which may, in turn, affect our results of operation. Assumptions
relating to the foregoing involve judgments with respect to, among other things,
future economic, competitive and market conditions, and future business
decisions, all of which are difficult or impossible to predict accurately and
many of which are beyond our control. Although we believe the assumptions
underlying the forward-looking statements are reasonable, any of the assumptions
could prove inaccurate, and therefore, there can be no assurance that the
results contemplated in the forward-looking statements will be realized.
In light of the significant uncertainties inherent in the forward-looking
information included herein, the inclusion of such information should not be
regarded as a representation by us or any other person that our objectives or
plans for the Company will be achieved.
RESULTS OF OPERATION
Comparison of These Three Months Ended March 31, 2000 and March 28, 1999
Total revenues for the three months ended March 31, 2000, were $64,000 compared
with $0 for the three months ended March 28, 1999. Cymedix currently provides
all of our revenues. Cymedix first recorded revenue in November 1999 for pilot
program fees.
Selling, general, and administrative expenses increased approximately $550,000
or 144% from $382,000 for the three months ended March 28, 1999, to $932,000 for
the three months ended March 31, 2000.
Interest expense decreased approximately 13% from $23,000 for the three months
ended March 28, 1999 to $20,000 for the three months ended March 31, 2000.
Net loss from continuing operations increased approximately $574,000 from
$407,000 for the three months ended March 28, 1999, to $981,000 for the three
months ended March 31, 2000, due to all of the reasons discussed above.
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<PAGE>
Results from discontinued operations changed from a loss of $188,000 for the
three months ended March 28, 1999, to a gain of $650,000 for the three months
ended March 31, 2000. This change reflects a gain on the disposal of the
staffing business of $823,000.
Net loss decreased approximately $264,000 from $595,000 for the three months
ended March 28, 1999, to $331,000 for the three months ended March 31, 2000, due
to the reasons discussed above.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
We have $2,057,000 in cash as of March 31, 2000 with net working capital of
$2,339,000 as of March 31, 2000. During the quarter ended March 31, 2000, net
cash used in operating activities was $1,129,000. During the quarter ended
March 31, 2000, we raised $2,140,000 from the exercise of options and warrants.
In February of 2000, we sold the assets of our remaining staffing businesses for
$1,000,000. The purchase price was paid with $500,000 cash at closing and a
$500,000 subordinated note which is payable in May 2001.
Subsequent to March 31, 2000 and through May 11, 2000, we received approximately
$1,897,000 from the exercise of options and warrants. As of May 11, 2000, we had
outstanding 5,976,000 warrants with a total exercise price of $3,108,000, which
are callable for $.01 per warrant upon thirty days written notice. Currently, we
have not provided any written notice to holders that we will call these
warrants. We expect to receive $3,108,000 from the exercise of these callable
warrants over the next several months. However, there can be no assurance that
any of these warrants will be exercised.
We expect to continue to experience losses and negative cash flows from
operations, in the near term, as we attempt to develop our Cymedix software
products. The current operation of our business and our ability to continue to
develop our Cymedix software products will depend upon our ability to obtain
additional financing. At present, we are not receiving any significant revenues
from the sale of our Cymedix software products. We are attempting to meet our
current cash flow needs by raising capital in the private debt and equity
markets and through the exercise of currently outstanding warrants. The
development and marketing of the Cymedix software products require substantial
capital investments. We believe that we have adequate cash on hand and available
from likely exercise of currently outstanding options and warrants to fund
operations for the year ended December 31, 2000. However, there can be no
assurance that additional funding, if needed, will be available on terms
acceptable to us, or at all.
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<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, the Company is involved in claims and litigation that arise
out of the normal course of business. Currently, there are no pending matters,
other than the matter set forth under "Legal Proceedings - Current Business" in
the Company's Form 10-KSB filed with the Securities and Exchange Commission on
March 30, 2000, that in management's judgment might be considered material.
Management does not believe that any such litigation will have a material effect
on the Company.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Set forth below are the unregistered sales of securities by the Company for the
quarter reported on. See Note 4 to the unaudited consolidated financial
statements elsewhere herein for a description of the terms of the Units of
Preferred Stock and warrants.
<TABLE>
<S> <C> <C> <C> <C> <C>
Security No. of
Issued Date Shares Consideration Purchasers Exemption Claimed
- ------------ ---- ---------- ------------- ---------- -----------------
Common Stock Jan 800,000 Conversion Privat e Section 3(a)(9)
of Debt Investors
Common Stock Jan 1,032,000 Conversion Private Section 3(a)(9)
of Debt Investors
Common Stock Feb 152,000 Conversion Private Section 3(a)(9)
of Debt Investors
Common Stock Mar 440,000 Conversion Private Section 3(a)(9)
of Debt Investors
Common Stock Jan 2,426,000 $1,118,688 Private Section 4(2) &
For Exercised Investors Regulation D
Warrants
Common Stock Feb 715,500 $133,375 Private Section 4(2) &
For Exercised Investors Regulation D
Warrants
Common Stock Mar 1,267,120 $520,375 Private Section 4(2) &
For Exercised Investors Regulation
</TABLE>
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On February 14, 2000, the Company held a special meeting of shareholders to vote
upon a proposal by the Board of Directors to increase the number of authorized
shares of the Company's
Common Stock from 50,000,000 to 100,000,000 by amending the Company's Articles
of Incorporation. On such date, a quorum of the shareholders was not present, in
person or by proxy, and the meeting was adjourned to be reconvened on March 20,
2000. On such date, a quorum was present, and the proposed amendment to the
Company's Articles of Incorporation was approved with, holders of 10,795,628
shares voting "for" the proposal, holders of 1,058,064 shares voting "against"
the proposal, and holders of 51,315 shares voting "abstain".
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
Included as exhibits are the items listed on the Exhibit Index.
The Registrant will furnish a copy of any of the exhibits listed
below upon payment of $5.00 per exhibit to cover the costs to
the Registrant of furnishing such exhibit.
b. Reports on Form 8-K during the quarter reported on:
1) On January 12, 2000, the Company filed a Form 8-K reporting
under Item 5 a press release announcing the agreement of the
Company's subsidiary, Cymedix Lynx Corporation ("Cymedix"),
and Advance Paradigm, Inc., to develop a pilot program to
test the use of Cymedix's software.
- 11 -
<PAGE>
2) On January 18, 2000, the Company filed a Form 8-K reporting
under Item 5 a press release announcing the execution of a
definitive agreement of the Company's subsidiary, Cymedix and
WellPoint Pharmacy Management for a pilot program to test the
use of Cymedix's software.
3) On February 24, 2000, the Company filed a Form 8-K reporting
under Item 5 a press release announcing that the Special
Meeting of the Company's shareholders held on February
14, 2000, was adjourned for lack of a quorum and would be
reconvened on March 20, 2000.
4) On February 24, 2000, the Company filed a Form 8-K reporting
under Item 5 a press release announcing the sale of the
Company's remaining medical staffing operations.
5) On March 6, 2000, the Company filed a Form 8-K reporting
under Item 2 and 7 the sale of the Company's remaining
medical staffing operations.
6) On March 16, 2000, the Company filed a Form 8-K reporting
under Item 5 the text of an interview in The Wall Street
Transcript of the Company's President and CEO.
- 12 -
<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.
Dated: May 15, 2000
MEDIX RESOURCES, INC.
(Registrant)
/s/ Patricia A. Minicucci
-------------------------
Patricia A. Minicucci
Executive Vice President
(Principal Financial and Accounting Officer)
INDEX TO EXHIBITS
27 Financial Data Schedule
- 13 -
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 2,057,000
<SECURITIES> 0
<RECEIVABLES> 141,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,602,000
<PP&E> 212,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,296,000
<CURRENT-LIABILITIES> 1,168,000
<BONDS> 0
0
0
<COMMON> 35,000
<OTHER-SE> 5,061,000
<TOTAL-LIABILITY-AND-EQUITY> 6,296,000
<SALES> 0
<TOTAL-REVENUES> 64,000
<CGS> 0
<TOTAL-COSTS> 3,000
<OTHER-EXPENSES> 932,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,000
<INCOME-PRETAX> (981,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (981,000)
<DISCONTINUED> 650,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (331,000)
<EPS-BASIC> (.01)
<EPS-DILUTED> (.01)
</TABLE>
