<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the period ended September 30, 1996
OR
[ ] 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: 0-22162
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INFOMED HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 22-3209241
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6600 POWERS FERRY ROAD 30339
ATLANTA, GEORGIA (zip code)
(Address of principal
executive office)
(770) 644-6700
(Registrant's telephone number, including area code)
1180 SW 36th Avenue, Pompano Beach, Florida 08540
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of the registrant's common
stock, as of the latest practicable date:
OUTSTANDING AT
CLASS OCTOBER 31, 1996
Common Stock, $.001 par value 2,390,072 shares
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
See following pages, numbered 3 through 8 inclusive.
2
<PAGE> 3
INFOMED HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
September 30, June 30,
1996 1996
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 750,202 $ 1,116,222
Accounts receivable, less allowance for doubtful accounts of $1,460,000
and $1,427,000, respectively 2,434,625 1,759,865
Inventories 101,034 157,475
Prepaid expenses and other current assets 114,855 62,195
------------ ------------
Total current assets 3,400,716 3,095,757
Property and equipment, at cost, net 630,750 670,497
Receivables due after one year 1,366 66,763
Intangible assets, at cost, net 9,583 124,995
Other assets 68,508 72,225
------------ ------------
Total assets $ 4,110,923 $ 4,030,237
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Current portion of long-term debt $ 143,187 $ 170,188
Accounts payable 874,323 1,258,680
Accrued compensation and benefits 664,889 653,223
Other accrued liabilities 1,543,131 1,734,868
Customer deposits 1,406,841 975,746
Unearned revenue 1,389,526 1,105,533
------------ ------------
Total current liabilities 6,021,897 5,898,238
Long-term debt, less current portion 79,099 79,099
Other liabilities 33,883 33,883
------------ ------------
Total liabilities 6,134,879 6,011,220
------------ ------------
Commitments and contingencies
Stockholders' deficit:
Convertible preferred stock, $.001 par value; 315,000 shares authorized;
265,000 shares issued and outstanding 265 265
Common stock, $.001 par value; 20,000,000 shares authorized; 2,367,676 and
2,336,244 shares issued and outstanding, respectively 2,368 2,337
Additional paid-in capital 4,434,947 4,423,033
Accumulated deficit (6,222,268) (6,167,350)
Treasury stock, 58,967 shares, at cost (239,268) (239,268)
------------ ------------
Total stockholders' deficit (2,023,956) (1,980,983)
------------ ------------
Total liabilities and stockholders' deficit $ 4,110,923 $ 4,030,237
============ ============
</TABLE>
The accompanying notes to the consolidated financial statements (unaudited) are
an integral part of these statements.
3
<PAGE> 4
INFOMED HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
(unaudited)
<TABLE>
<CAPTION>
1996 1995
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Revenue:
Software and equipment $ 667,469 $ 1,886,325
Maintenance and other services 1,884,632 1,873,136
------------ ------------
Total revenue 2,552,101 3,759,461
Costs and expenses:
Cost of software and equipment 424,314 813,280
Cost of maintenance and other services 557,552 551,985
Research and development 379,125 622,843
Selling, general and administrative 1,006,987 1,619,877
Amortization and depreciation expense 178,412 248,607
------------ ------------
Total costs and expenses 2,546,390 3,856,592
------------ ------------
Income (loss) from operations 5,711 (97,131)
Other income (expense):
Gain on sale of assets - 146,088
Interest income (expense), net 5,621 (1,030)
------------ ------------
Net income $ 11,332 $ 47,927
============ ============
Earnings (loss) per share:
Net loss per share $ (0.02)$ (0.01)
============ ============
Shares used in computation 2,348,155 2,318,445
============ ============
</TABLE>
The accompanying notes to the consolidated financial statements (unaudited) are
an integral part of these statements.
4
<PAGE> 5
INFOMED HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
(unaudited)
<TABLE>
<CAPTION>
1996 1995
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 11,332 $ 47,927
Adjustments to reconcile net income
to net cash used for operating activities:
Amortization and depreciation 178,412 248,607
Provision for bad debt expense 32,801 65,000
Gain on sale of assets - (146,088)
Changes in operating assets and liabilities:
Accounts and other receivables (642,164) 171,237
Inventories 56,441 53,067
Prepaid expenses and other assets (48,943) (6,079)
Accounts payable (384,357) (663,690)
Accrued compensation and other accrued liabilities (246,321) (386,075)
Customer deposits and unearned revenue 715,088 (504,010)
------------ ------------
Net cash used for operating activities (327,711) (1,120,104)
Cash flows from investing activities:
Purchases of property and equipment (23,253) (95,830)
Proceeds from sale of certain assets of Script Systems, Inc. - 2,767,000
------------ ------------
Net cash provided by (used for) investing activities (23,253) 2,671,170
Cash flows from financing activities:
Principal payments on debt (27,001) (553,019)
Proceeds from exercise of warrants and options 11,945 8,811
Purchase of treasury stock - (30,000)
Escrow funds held by bank - (525,000)
------------ ------------
Net cash used for financing activities (15,056) (1,099,208)
------------ ------------
Net change in cash and cash equivalents (366,020) 451,858
Cash and cash equivalents, beginning of period 1,116,222 643,429
------------ ------------
Cash and cash equivalents, end of period $ 750,202 $ 1,095,287
============ ============
Supplemental disclosures of cash flow information:
Cash paid for interest $ - $ 35,852
============ ============
Preferred dividends accrued - not paid $ 66,250 $ 66,250
============ ============
</TABLE>
The accompanying notes to the consolidated financial statements (unaudited) are
an integral part of these statements.
5
<PAGE> 6
INFORMED HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
SEPTEMBER 30, 1996
NOTE 1 - CONSOLIDATED FINANCIAL STATEMENTS
The consolidated balance sheet as of September 30, 1996, and the consolidated
statements of operations and cash flows for the three month periods ended
September 30, 1996 and 1995 have been prepared by the Company, and are
unaudited. In the opinion of management, all adjustments (which include normal
recurring adjustments) considered necessary for a fair presentation have been
included. Interim results are not necessarily indicative of the results that
may be expected for the year.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. These financial statements should be read in
conjunction with the consolidated financial statements and notes thereto as of
June 30, 1996, appearing in the Company's Form 10-K.
NOTE 2 - SALE OF ASSETS
On August 28, 1995, the Company sold substantially all of the assets of Script
Systems, Inc. ("Script") to Medic Computer Systems, Inc. ("Medic") for
$2,967,000 resulting in a gain of approximately $146,000 which was included in
the gain on sale of assets for the quarter ended September 30, 1995. The book
value on the date of sale of the assets sold and liabilities assumed were as
follows: accounts receivable of $518,000, fixed assets of $172,000, software
development costs of $422,000, other intangibles of $2,245,000, less deferred
maintenance revenues of $546,000 and other liabilities of $114,000. The
Company retained the obligations to deliver and the rights to revenue of the
backlogged Script orders while Medic assumed ongoing support and maintenance
obligations.
On a pro forma basis, the Company, without Script, would have generated
$2,239,000 in revenues, a net loss of $647,000 and a net loss per share of
$0.31 for the quarter ended September 30, 1995.
NOTE 3 - ACQUISITION
On October 8, 1996, the Company, through a wholly owned subsidiary, completed
the acquisition of Simione Central Holding, Inc. ("Simione") pursuant to a
Merger Agreement. In connection therewith, each issued and outstanding share
of Simione common stock was converted into and exchanged for the right to
receive 0.22021 shares (approximately 8,000,000 shares) of the Company's common
stock (the "Exchange Ratio"). Under the terms of the Merger Agreement, all
outstanding options and warrants to purchase Simione common stock were
converted into the right to purchase shares of the Company's common stock. In
addition, all of the shares of the Company's $10.00 stated value Class A
Covertible Preferred Stock and the accrued dividends thereon were converted
into the Company's common stock. For more information concerning the merger,
see the Company's current reports on Form 8-K dated September 13, 1996 and
October 23, 1996.
As the merger is being treated for financial accounting purposes as an
acquisition of the Company by Simione, following the merger, the historical
financial statements of Simione shall become the financial statements of the
Company and shall include the business of InfoMed from the date of acquisition.
NOTE 4 - PRESENTATION AND RECLASSIFICATIONS
Certain items in the 1995 consolidated financial statements have been
reclassified for comparative purposes.
6
<PAGE> 7
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
For the three months ended September 30, 1996, the Company's cash decreased by
$366,020. The decrease was primarily due to an increase in accounts and other
receivables of $642,164 and decreases in accounts payable of $384,357 and
accrued compensation and other accrued liabilities of $246,321. These uses of
cash were partially offset by increases in customer deposits and unearned
revenue of $715,088.
The Company has a working capital deficit of $2,621,181 and a stockholders'
deficit of $2,023,956 at September 30, 1996. The working capital deficit
includes $1,406,841 of customer deposits and $1,389,526 of unearned income
which will not require cash payment by the Company.
On August 28, 1995, the Company sold substantially all of the assets of Script
to Medic for $2,967,000 resulting in a gain of approximately $146,000 which was
included in the gain on sale of assets for the quarter ended September 30,
1995. The book value on the date of sale of the assets sold and liabilities
assumed were as follows: accounts receivable of $518,000, fixed assets of
$172,000, software development costs of $422,000, other intangibles of
$2,245,000, less deferred maintenance revenues of $546,000 and other
liabilities of $114,000. The Company retained the obligations to deliver and
the rights to revenue of the backlogged Script orders while Medic assumed
ongoing support and maintenance obligations.
On a pro forma basis, the Company, without Script, would have generated
$2,239,000 in revenues, a net loss of $647,000 and a net loss per share of
$0.31 for the quarter ended September 30, 1995. For the quarter ended
September 30, 1996, the actual net profit of $11,000 represents a 102.0%
increase in earnings based upon the pro forma net loss for the quarter ended
September 30, 1995.
In addition to the elimination of expenses related to the sale of Script
assets, the Company has implemented reductions of certain expenses to continue
to improve profitability and cash flows. Based upon the sale of Script, the
sale of certain property during the fiscal year ended June 30, 1996, and
resources currently available, management believes, but can make no assurances,
that the Company has sufficient cash resources necessary to fund operations.
The forgoing comments reflect management's analysis of the Company at September
30, 1996 and are not indicative of effects on cash flow given the recent merger
with Simione.
RESULTS OF OPERATIONS
Revenues
Total revenues decreased $1,207,360, or 32.1%, for the three months ended
September 30, 1996 as compared to September 30, 1995; however, home care
revenues increased $313,000, or 14.0%, for the same period. Software and
equipment revenue decreased $1,218,856, or 64.6%, primarily due to the sale of
Script described above. Revenues from maintenance and other services increased
$11,496, or 0.6%, which reflects price increases in the current year of up to
10.0% plus increased volume due to an expanded customer base, partially offset
by the sale of Script.
Debate on the issue of national health care continues to create uncertainty in
the health care industry. One result of the changing environment is the
movement towards managed care delivery of services. The effect on future
Company revenues is unknown at this time; however, management is continuously
striving to position the Company towards the best possible outcome. In this
regard, the Company continues to focus on the sale of systems to larger health
care delivery systems and multi-office home care providers. In addition, the
merger with Simione is designed to place the Company as a leader in the home
health care industry as it makes the transition to managed care and prospective
pay.
7
<PAGE> 8
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (continued)
Cost of Sales
Combined cost of sales decreased by $383,399, or 28.1%, for the three months
ended September 30, 1996 as compared to the same period of the previous year
primarily due to a reduced level of equipment sales resulting primarily from
the sale of Script. Cost of sales on software and equipment decreased
$388,966, or 47.8%, for the quarter, while cost of sales on maintenance and
other services increased by $5,567, or 1.0%.
The decrease in gross margin for software and equipment from 56.9% to 36.4% for
the quarters ended September 30, 1995 and 1996, respectively, reflects the
reduction of revenues in comparison to relatively fixed expenses. Gross margin
for maintenance and other services decreased from 70.5% to 70.4% for the
quarters ended September 30, 1995 and 1996, respectively.
Research and Development Costs
Research and development costs decreased $243,718 (approximately 39.1%) for the
quarter ended September 30, 1996, as compared to the quarter ended September
30, 1995. These costs primarily include salaries and related benefits,
training costs, and purchases of developmental software to be used in the
development of new products. The decrease in these costs noted above resulted
from reductions in programming staff related to the sale of Script as well as
the reduction of costs as previously described.
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased $612,890, or 37.8%, for
the three months ended September 30, 1996 as compared to the same period ended
September 30, 1995. The decrease resulted primarily from the sale of certain
Script assets, as well as reductions in salaries and related benefits due to
the elimination of employee positions throughout the Company, as well as
reductions in office rents, communications costs and other operating costs.
Amortization and Depreciation Expenses
Amortization and depreciation expenses decreased $70,195, or 28.2%, for the
three months ended September 30, 1996 versus the same period last year due to
the sale of Script assets and a reduction in the amount of capitalized software
development costs.
Income from Operations
Income from operations for the three months ended September 30, 1996 increased
$102,842 to $5,711 from a loss of $97,131 in 1995. The improvement in income
from operations is primarily due to the sale of Script in 1995 and other
factors discussed above.
8
<PAGE> 9
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
The following Exhibits are filed as part of this Quarterly Report on
Form 10-Q:
Exhibit No. Description
2.1 Amended and Restated Agreement and Plan of Merger
dated as of September 5, 1996 by and among InfoMed
Holdings, Inc., Simione Central Holding, Inc. and
Infosub, Inc. (incorporated by reference to the
registrant's Current Report on
Form 8-K dated September 13, 1996).
11.1 Computation of Earnings per Share.
27.1 Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K:
The Company filed a Current Report on Form 8-K, dated
September 13, 1996, announcing the signing of an Agreement and
Plan of Merger between the Company and Simione Central
Holding, Inc.
The Company filed a Current Report on Form 8-K, dated October
23, 1996, reporting the completion of the merger between the
Company and Simione Central Holding, Inc.
9
<PAGE> 10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INFOMED HOLDINGS, INC.
Dated: November 14, 1996 By: /s/ Gary M. Bremer
------------------------
GARY M. BREMER
Chief Executive Officer
Dated: November 14, 1996 By: /s/ Lori N. Siegel
------------------------
LORI N. SIEGEL
Chief Financial Officer
10
<PAGE> 1
EXHIBIT 11
INFOMED HOLDINGS, INC.
COMPUTATION OF LOSS PER SHARE
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
<TABLE>
<CAPTION>
PRIMARY EARNINGS PER SHARE: 1996 1995
----------- -----------
<S> <C> <C>
NET INCOME $ 11,332 $ 47,927
Less dividends on the Company's preferred stock (66,250) (66,250)
----------- ------------
Net loss available to common shareholders $ (54,918) $ (18,323)
=========== ============
Weighted average common shares outstanding 2,348,155 2,318,445
=========== ============
Net loss per share $ (0.02) $ (0.01)
=========== ============
</TABLE>
Fully diluted earnings per share is not presented as amounts do
not differ significantly from primary earnings per share.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF INFOMED HOLDINGS, INC FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 750,202
<SECURITIES> 0
<RECEIVABLES> 3,894,625
<ALLOWANCES> (1,460,000)
<INVENTORY> 101,034
<CURRENT-ASSETS> 3,400,716
<PP&E> 1,687,930
<DEPRECIATION> (1,057,180)
<TOTAL-ASSETS> 4,110,923
<CURRENT-LIABILITIES> 6,021,897
<BONDS> 0
0
265
<COMMON> 2,368
<OTHER-SE> (2,026,589)
<TOTAL-LIABILITY-AND-EQUITY> 4,110,923
<SALES> 0
<TOTAL-REVENUES> 2,552,101
<CGS> 0
<TOTAL-COSTS> 981,866
<OTHER-EXPENSES> 1,564,524
<LOSS-PROVISION> 32,801
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 11,332
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,332
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> 0
</TABLE>
