UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended JUNE 30, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT
For the transition period from _____________________ to _______________________
Commission file number: 0-22052
PROXYMED, INC.
(Exact name of small business issuer as specified in its charter)
FLORIDA 65-0202059
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2501 DAVIE ROAD, SUITE 230, FT. LAUDERDALE, FLORIDA 33317
(Address of principal executive offices) (Zip Code)
(954) 473-1001
(Issuer's telephone number)
-------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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 reports), and (2)
has been subject to such filing requirements for the past 90 days. [X] Yes [ ]
No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date:
COMMON STOCK, $.001 PAR VALUE
9,484,772 SHARES AS OF AUGUST 5, 1996
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS.
PROXYMED, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JUNE 30, 1996
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 4,469,066
Investment in U.S. Treasury Notes, current portion 5,538,265
Trade receivables, net 314,371
Other receivables 1,339,031
Note receivable 556,522
Inventory 212,252
Other current assets 192,487
-----------
Total current assets 12,621,994
Investment in U.S. Treasury Notes, non-current portion 3,002,888
Property and equipment, net 1,358,922
Intangible assets, net 605,640
Other assets 31,653
-----------
Total assets $17,621,097
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 501,384
Current portion of deferred revenue 164,936
-----------
Total current liabilities 666,320
Deferred revenue, less current portion 60,000
-----------
Total liabilities 726,320
-----------
Stockholders' equity:
Series A 9% Convertible preferred stock, $.01 par value.
Authorized 130,000 shares; issued and outstanding
60,000 shares; liquidation preference $1,500,000 600
Common stock, $.001 par value. Authorized 20,000,000
shares; issued and outstanding 8,776,091 shares 8,776
Additional paid-in capital 24,973,639
Accumulated deficit (8,088,238)
-----------
Total stockholders' equity 16,894,777
-----------
Total liabilities and stockholders' equity $17,621,097
===========
See accompanying notes.
2
<PAGE>
<TABLE>
<CAPTION>
PROXYMED, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- --------------------------
1996 1995 1996 1995
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Net sales $1,809,330 6,004,519 265,904 1,274,430
---------- ---------- ---------- ---------
Costs and expenses:
Cost of sales 441,753 4,183,808 176,696 817,159
Compensatory stock options
and warrants (Note 7) 247,834 - 247,834 -
Selling, general and adminis-
trative expenses 2,089,691 3,093,733 1,022,149 1,022,603
---------- ---------- ---------- ---------
2,779,278 7,277,541 1,446,679 1,839,762
---------- ---------- ---------- ---------
Operating loss (969,948) (1,273,022) (1,180,775) (565,332)
Other income (expense):
Gain (loss) on sale of assets 988,226 (1,073,448) 167,744 805,293
Interest, net 78,043 (133,524) 80,832 (48,557)
---------- ---------- ---------- ---------
Net income (loss) 96,321 (2,479,994) (932,199) 191,404
Dividends on cumulative
preferred stock 88,328 9,319 41,640 9,319
---------- ---------- ---------- ---------
Net income (loss) appli-
cable to common
shareholders $ 7,993 (2,489,313) (973,839) 182,085
========== ========== ========== =========
Net income (loss) per share of
common stock $ 0 (.52) (.14) .04
========== ========== ========== =========
</TABLE>
See accompanying notes.
3
<PAGE>
<TABLE>
<CAPTION>
PROXYMED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED JUNE 30,
1996 1995
----------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 96,321 (2,479,994)
Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Depreciation and amortization expense 155,505 171,417
Common stock issued for services 56,000 -
Compensatory warrants issued (Note 7) 247,834 -
Amortization of covenant not-to-compete (40,000) -
(Gain) loss on sale of assets (988,226) 1,073,448
Changes in assets and liabilities, net of
effect of acquisitions and dispositions:
Accounts receivable 331,527 819,893
Inventory 26,011 55,970
Other (121,987) 84,815
Accounts payable and accrued expenses (221,468) (3,270,328)
----------- ----------
Net cash used in operating activities (458,483) (3,544,779)
----------- ----------
Cash flows from investing activities:
Purchase of U.S. Treasury Notes (8,541,153) -
Proceeds from sale of dispensary assets - 2,669,051
Capital expenditures (571,149) (160,301)
----------- ----------
Net cash provided by (used in)
investing activities (9,112,302) 2,508,750
----------- ----------
Cash flows from financing activities:
Net proceeds from sale of equity securities 13,041,309 1,468,250
Proceeds from exercise of stock options and warrants 942,656 -
Payment of preferred stock dividends (82,963) -
Payment of notes payable and long-term debt - (793,772)
Collection of notes receivable 92,753 -
Payment of capital lease obligations (417,884) (101,886)
----------- ----------
Net cash provided by financing activities 13,575,871 572,592
----------- ----------
Net increase (decrease) in cash 4,005,086 (463,437)
Cash at beginning of period 463,980 1,137,913
----------- ----------
Cash at end of period $ 4,469,066 674,476
=========== ==========
Supplemental disclosure of cash flow information:
Cash paid for interest $ 28,088 83,354
=========== ==========
Common stock issued for business acquired $ - 21,000
=========== ==========
</TABLE>
See accompanying notes.
4
<PAGE>
PROXYMED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) BASIS OF PRESENTATION - The accompanying unaudited financial statements of
ProxyMed, Inc. and subsidiaries (the "Company") have been prepared in accordance
with the instructions to Form 10-QSB and do not include all of the information
and disclosures required by generally accepted accounting principles. However,
such information reflects all adjustments (consisting solely of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
statement of results for the interim periods.
The results of operations for the three and six months ended June 30,
1996 are not necessarily indicative of the results to be expected for the full
year. Reference is made to the Company's annual report on Form 10-KSB for the
year ended December 31, 1995.
(2) STOCK SPLIT - On June 12, 1996, the Board of Directors authorized a
three-for-two stock split on the Company's common stock payable July 8, 1996 to
shareholders of record on June 24, 1996. All applicable share and per share data
have been retroactively adjusted for the stock split.
(3) REVENUE RECOGNITION - Revenues from the Company's prescription drug
dispensing activities are reported at net realizable amounts from HMO providers
and patients at the time the individual prescriptions are filled or services are
provided. Revenues from sales of software or software licenses are recognized
upon delivery of the software, or ratably upon the completion of any significant
Company obligations. Revenues from software rentals are recognized over the
rental period. Revenues from sales of computer hardware are recognized upon
shipment of the hardware.
(4) INVENTORY - Inventory, which consists primarily of prescription drugs, is
stated at the lower of cost (first-in, first-out method) or market.
(5) NET INCOME (LOSS) PER SHARE - Net income (loss) per share is generally
computed by dividing net income (loss) applicable to common shareholders by the
weighted average shares of common stock outstanding during the applicable period
(5,872,757 shares and 4,799,738 shares for the six months ended June 30, 1996
and 1995, respectively; and 6,799,926 shares and 5,234,888 shares for the three
months ended June 30, 1996 and 1995, respectively). Common stock equivalents
have been included in the computation using the modified treasury stock method
for those periods in which the Company reported net income; however, they have
been excluded from the computation in those periods in which the Company
reported losses as their effect would be anti-dilutive.
5
<PAGE>
(6) SALE OF COMMON STOCK - In May 1996, the Company completed the sale of
3,367,500 shares of common stock in an underwritten offering to the public at
$4.42 per share. An additional 82,500 shares of common stock were sold by the
underwriter on behalf of an unaffiliated selling shareholder. The sale of shares
by the Company resulted in net proceeds of $13,041,309, after expenses of
$1,831,816. Net proceeds from the offering are being used for sales and
marketing of the Company's healthcare information technology products and
services, product development, payment of capital lease obligations, and working
capital. As part of the transaction, the Company issued warrants to purchase
300,000 shares of common stock to the underwriter, which are exercisable for
five years at a price of $5.63 per share.
(7) COMPENSATORY STOCK OPTIONS AND WARRANTS - In May 1996, the Company entered
into an Electronic Commerce and Healthcare Information Licensing Agreement with
Personalized Programming, Inc. ("PPI"). The agreement requires the Company to
provide PPI with a "software developer's toolbox" to enable PPI to integrate the
Company's products and services as a prescription module in PPI's existing
physician practice management software, The Medical Manager. The Medical Manager
software is presently being used by over 110,000 physicians in 22,000 offices
throughout the United States. The Company will derive a royalty from each
prescription module sold, and PPI will be entitled to a portion of all
transaction fees revenue derived from the Company's prescription products. As
part of the agreement, the Company granted a five-year warrant to PPI for the
purchase of 150,000 shares of common stock for $3.50 per share. The compensatory
value of this warrant, along with certain other options and warrants granted to
non-employees of the Company, has been computed using the Black-Scholes model,
and has been charged to expense in the three month period ended June 30, 1996 in
the amount of $247,834.
(8) LICENSE FEES - On February 1, 1996, the Company, Bergen Brunswig Drug
Company and IntePlex, Inc. (collectively, "Bergen"), signed a strategic
marketing agreement whereby Bergen paid a one-time, non-refundable fee of
$1,000,000 for a non-exclusive license to market the Company's electronic
prescription processing products throughout the U.S. The Company will pay Bergen
from 10% to 30% of net revenues derived from the sale of these products,
depending on the overall annual volume of sales. The $1,000,000 fee, and related
incidental costs, were recognized in the first quarter of 1996. Bergen Brunswig
Drug Company and IntePlex, Inc. are wholly-owned subsidiaries of Bergen Brunswig
Corporation, a supplier of pharmaceutical products with reported 1995 revenues
of $8.4 billion.
On March 1, 1996, the Company entered into a license agreement with
Blue Cross and Blue Shield of Massachusetts, Inc. ("BCBSM"), a large health
insurance provider based in Boston. Under this agreement, BCBSM agreed to pay a
one-time license fee of $204,000 in exchange for an exclusive right to license
ProxyScript to physicians in six New England states. The Company recognized
$189,000 of the license fee as revenue in the first quarter of 1996,
representing the portion of the fee earned.
6
<PAGE>
(9) SALE OF ASSETS AND SALE OF SUBSIDIARY
(a) SALE OF ASSETS - On March 15, 1995, the Company sold to Eckerd
Corporation ("Eckerd") certain, but not all, of the assets related to the
Company's HMO prescription drug dispensing operations for $4,851,481. The
purchase price included $3,525,000 for the Company's prescription drug files,
transferable licenses, customer lists, goodwill and other intangible assets
relating to the portion of the pharmaceutical dispensing business sold, payable
as follows: $1,325,000 was paid at closing, and $900,000 and $350,000 was paid
on August 4, 1995 and April 5, 1996, respectively, based on prescription
business retained by Eckerd. Under the terms of the agreement, up to $950,000
remains to be paid on October 5, 1996 (included in other receivables). This
final payment is subject to downward adjustment if the cumulative percentage of
business is less than 75% of the prescription business which existed at the time
of the sale, which was approximately 91,000 prescriptions per month. To the
extent that the number of prescriptions filled by Eckerd is less than 75% of
this base number per month, the Company will receive a proportionate payment
amount per prescription filled.
The portion of the sales price that is based on retention of
prescriptions (originally totaling $2,200,000) was recorded as deferred revenue,
and is being recognized as income when earned. As a result of deferring this
income until earned, the Company recorded a loss of $1,889,602 upon the
consummation of this transaction in the first quarter of 1995. Based on
prescription data supplied by Eckerd, the Company has been recording an
appropriate portion of this deferred income as earned in subsequent quarters,
including $988,226 earned for the six months ended June 30, 1996, and $807,635
earned for in the second quarter of 1995. As of June 30, 1996, approximately
$85,000 of deferred revenue remains to be earned from future prescription sales
by Eckerd. The Company estimates that the ultimate cumulative gain on this
transaction (including collection of the remaining deferred revenue) will be
nominal after accruing for costs associated with the transaction, including
severance pay, lease termination costs, costs associated with the Company's
obligation to perform clinical pharmacy services through September 15, 1996, and
other items. Net sales related to these prescription drug dispensing operations
were $-0- for the three and six months ended June 30, 1996; and approximately
$-0- and $3,404,000 for the three and six months ended June 30, 1995.
(b) SALE OF SUBSIDIARY - On September 29, 1995, the Company sold to
National Health Care Affiliates, Inc. and an affiliate thereof (collectively
"NHCA") all of the outstanding common stock of its wholly-owned subsidiary
ProxyFusion, Inc. for $1,542,029. ProxyFusion, Inc. provides home infusion
therapy services, including pharmacy and nursing services, primarily to HMO
patients. Net sales related to this operation were $-0- in the three and six
months ended June 30, 1996; and approximately $708,000 and $1,339,000 for the
three and six months ended June 30, 1995.
7
<PAGE>
Pro forma data reflecting the results of operations as if both the sale
of assets to Eckerd and the sale of the subsidiary to NHCA had occurred as of
January 1, 1995 is as follows. Due to revenues and costs subsequent to these
dispositions from the marketing and development of the Company's healthcare
information technology products and services, amongst other factors, such pro
forma data may not be indicative of future results of operations.
<TABLE>
<CAPTION>
PRO FORMA - PRO FORMA -
SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30, 1995 JUNE 30, 1995
---------------- ------------------
<S> <C> <C>
Net sales $1,261,000 567,000
---------- ---------
Costs and expenses:
Cost of sales 872,000 419,000
Selling, general and adminis-
trative expenses 1,323,000 779,000
---------- ---------
2,195,000 1,198,000
---------- ---------
Operating loss (934,000) (631,000)
Other income (expense):
Gain (loss) on sale of assets 9,000 (2,000)
Interest, net (63,000) (49,000)
---------- ---------
Net loss $ (988,000) (682,000)
========== =========
Net loss per share of common stock $(.21) (.13)
========== =========
</TABLE>
(10) EMPLOYEE MATTER - The Company is a party to an administrative proceeding
involving a former employee. Based on its internal investigation, the Company
does not anticipate that the ultimate resolution of this matter will be
material.
8
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
GENERAL
From inception until 1995, the Company's business was principally
related to the dispensing of prescription drugs through a variety of methods of
delivery, including retail and institutional pharmacies and its home infusion
therapy subsidiary. In the first quarter of 1995, management determined that the
Company's retail pharmacy business was undesirable, primarily due to the need
for substantial additional capital required to achieve the economies of scale
required for profitable operations, and decided to shift the emphasis of the
Company's business. As part of the retail pharmacy operations, the Company
provided at no charge to its customers certain of its healthcare information
technology products and services, which were favorably received. Management also
recognized a need for these products and services in the marketplace.
Consequently, the Company elected to pursue the commercialization of its
healthcare information technology products and services. In March 1995, the
Company sold its retail pharmacy operations to Eckerd, and in September 1995 the
Company sold its home infusion subsidiary to NHCA. These sales enabled the
Company to pay off substantial debt to a major drug supplier and to raise cash
needed for the further development and commercialization of its new products and
services. Through December 31, 1995, revenues from the Company's healthcare
information technology products and services were not material.
The Company also owns and operates ProxyCare, Inc. ("ProxyCare"), its
institutional pharmacy subsidiary which dispenses prescription drugs to patients
in long-term care facilities; however, the Company is considering whether
ProxyCare fits within its long-term business plan. There are no understandings,
commitments or agreements at the date of this Form 10-QSB for the sale of
ProxyCare.
RESULTS OF OPERATIONS
THREE AND SIX MONTHS ENDED JUNE 30, 1996,
COMPARED TO THREE AND SIX MONTHS ENDED JUNE 30, 1995
NET SALES. Net sales for the three months ended June 30, 1996 decreased
by $1,008,526, or 79%, to $265,904 from net sales of $1,274,430 for the three
months ended June 30, 1995. Net sales for the six months ended June 30, 1996
decreased by $4,195,189, or 70%, to $1,809,330 from net sales of $6,004,519 for
the six months ended June 30, 1995. These decreases were attributable to the
Eckerd and NHCA dispositions which occurred in 1995. The combined net sales of
these operations comprised 70% and 79% of the Company's net sales in the three
and six months ended June 30, 1996, respectively. Net sales for the three months
ended June 30, 1996 which were not attributable to the operations sold decreased
$300,810, or 53%, to $265,904 compared to net sales of $566,714 in the 1995
quarter. This decrease was primarily due to a decline in the net sales of
ProxyCare for the 1996 quarter of $301,187 versus the same quarter in 1995. Net
sales for the six months ended June 30, 1996 which were not attributable to the
operations sold increased $548,021, or 43%, to $1,809,330 compared to net sales
of $1,261,309 in the
9
<PAGE>
1995 period. This increase was primarily due to the net effect of two factors.
First, the Company recognized income totaling $1,189,000 from two one-time
license fees in the first quarter of 1996 (Bergen and BCBSM), whereas no license
fee income was received in the first quarter of 1995. Second, sales by the
Company's remaining drug dispensing operations, ProxyCare, decreased $670,077,
or 54%, to $580,041 for the six months ended June 30, 1996, as compared to net
sales of $1,250,118 for the six months ended June 30, 1995. This decrease was
due primarily to the loss of business from several customers in the first
quarter of 1996. The Company believes that price fluctuations are not a
significant factor affecting ProxyCare's sales because of contractual fixed
pricing arrangements with many customers.
GROSS PROFIT MARGIN. Gross profit margin for the three months ended
June 30, 1996 was 34%, which is comparable to a gross profit margin of 36% for
the three months ended June 30, 1995. Gross profit margin for the six months
ended June 30, 1996 was 76% compared to a gross profit margin of 30% for the six
months ended June 30, 1995. This increase is due to the favorable impact of the
one-time license fee revenues received in the first quarter of 1996 from Bergen
and BCBSM. The effect of the gross margin changes for the 1996 periods vs. the
1995 periods was not significant.
COMPENSATORY STOCK OPTIONS AND WARRANTS. As described in Note 7 of
Notes to Consolidated Financial Statements, the Company issued certain
compensatory stock options and warrants in the three month period ended June 30,
1996, primarily related to the PPI licensing agreement. No similar charges were
incurred in 1995.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses for the three months ended June 30, 1996 of $1,022,149
was comparable to selling, general and administrative expenses of $1,022,603 for
the three months ended June 30, 1995. Selling, general and administrative
expenses for the six months ended June 30, 1996 decreased by $1,004,042, or 32%,
to $2,089,691 from selling, general and administrative expenses of $3,093,733
for the six months ended June 30, 1995. After deducting selling, general and
administrative expenses related to the operations sold to Eckerd and NHCA,
selling, general and administrative expenses "as adjusted" in the three and six
month periods ended June 30, 1996 increased by 30% and 58%, respectively. These
increases are the net effect of two factors. First, selling, general and
administrative expenses for ProxyCare decreased in each period by approximately
45% primarily due to cost control measures instituted after the loss of certain
customers in the 1996 periods. As a result of these measures, ProxyCare's
selling, general and administrative expenses as a percentage of sales was
maintained at approximately 31% of net sales in the 1996 periods, compared to
28% in the 1995 periods. Secondly, other selling, general and administrative
expenses for the Company's other recurring operations, as adjusted, increased by
$929,796, or 95%, to $1,907,432 in the six months ended June 30, 1996, compared
to $977,636 for the six months ended June 30, 1995, primarily due to the
Company's efforts to develop and market its new products and services. This
increase primarily resulted from the following: (i) payroll and related costs
for sales, customer service, and clinical pharmacy service and management
personnel related to the Company's new products and services ($560,000); (ii)
marketing expenses related to these products and services, marketing materials,
attendance at national and local trade shows, expenses for pilot
10
<PAGE>
programs for potential customers and travel costs ($154,000); (iii) additional
depreciation, amortization and computer costs related to new network equipment
and capitalized software costs ($84,000); (iv) insurance costs related to the
addition of officer and director insurance and product liability insurance for
the Company's new products and services ($50,000); (v) consulting fees to
various software and business consultants ($61,000); and (vi) a credit of
$40,000 for the amortization of a non-compete agreement. In addition, selling,
general and administrative expenses for the 1996 period include commissions
payable under the Bergen agreement of $56,700, which were not incurred in the
1995 period.
INTEREST, NET. The Company earned net interest income for the three and
six month periods ended June 30, 1996 of $80,832 and $78,043, respectively,
whereas the Company incurred net interest expense for the three and six month
periods ended June 30, 1995 of $48,557 and $133,524, respectively. This reflects
the use of proceeds from the Eckerd and NHCA sales, and proceeds from the sale
of equity securities, to retire all indebtedness, resulting in the elimination
of interest expense, and the investment of available cash in U.S. Treasury Notes
in earning interest income. As of June 30, 1996, the Company has retired all
interest-bearing indebtedness.
OTHER. Upon the sale of the Company's retail pharmacy operations to
Eckerd in March 1995, the Company recorded a loss of $1,878,741 in the three
month period ended March 31, 1995. Pursuant to the agreement with Eckerd, the
Company earns additional proceeds from the sale based on subsequent prescription
sales by Eckerd. Based on data provided by Eckerd, the Company earned $805,293,
$820,482 and $167,744 of additional sale proceeds in the three month periods
ended June 30, 1995, March 31, 1996 and June 30, 1996, respectively. As of June
30, 1996, the Company can earn up to an additional $85,000 of income from the
Eckerd transaction. If all of the remaining deferred revenue is earned, the
Company will ultimately record a nominal cumulative gain on the sale.
NET INCOME (LOSS). As a result of the foregoing, the Company recorded a
net loss of $932,199 for the three months ended June 30, 1996, as compared to
net income of $191,404 for the three months ended June 30, 1995, and net income
of $96,321 for the six months ended June 30, 1996 as compared to a net loss of
$2,479,994 for the six months ended June 30, 1995. Notwithstanding the net
income recorded for the six months ended June 30, 1996, which resulted
substantially from one-time license fees earned, the Company anticipates that it
will continue to incur significant operating losses until it generates a
substantial flow of recurring revenues from the sale of its new products and
services. There can be no assurance that the Company will realize a significant
level of recurring revenues from the sale of these new products and services, or
that revenues from these operations or those of ProxyCare will ultimately result
in significant reductions in losses or achievement of profitability.
11
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
In the six month period ended June 30, 1996, the Company generated
negative cash flow from operations of $458,483. However, as a result of the sale
of 3,367,500 shares of common stock in May 1996 which resulted in net proceeds
of $13,041,309, and the exercise of certain stock options and warrants in the
second quarter of 1996 which resulted in net proceeds of $942,656, the Company
had cash, cash equivalents and investments in U.S. Treasury Notes totaling
$13,010,219 as of June 30, 1996. These available funds continue to be used for
operations, for the further development and marketing of the Company's new
products and services, and for the acquisition of equipment and other general
corporate purposes. In addition to these cash resources, the Company expects to
receive additional non-operating cash as follows: (i) $950,000 in October 1996
from the Eckerd sale (subject to downward adjustment as described in Note 9 of
Notes to Consolidated Financial Statements above), (ii) payments of $556,522 by
the end of 1996 on the note receivable from the NHCA sale (of which $324,754 was
collected in July 1996), and (iii) $109,500 due from BCBSM on or before
September 1, 1996 (less $32,850 payable under the Bergen Agreement). In
addition, in August 1996 the Company completed the conversion of all of the
Series A Preferred Stock into common stock, which eliminates the payment of
future cash dividends on the Series A Preferred Stock.
Accounts receivable turnover for ProxyCare was 3.8 times in 1996
compared to 5.8 times in 1995. Inventory turnover for ProxyCare was 3.8 times in
1996 compared to 6.9 times in 1995. Both of these indicators were adversely
affected by the decline in ProxyCare's 1996 sales as discussed above.
The Company expects to continue to incur significant negative net cash
flow from operations until it begins receiving substantial recurring revenues
from the sale of its new products and services. Furthermore, while the Company
presently has no material commitments for capital expenditures, management is
committed to the strategy of investing funds in further marketing and
development of its products and services, including pursuing pilot programs at
no cost to the customer. However, with the cash resources received in the second
quarter of 1996, and from the other expected sources of cash described above,
management believes that its cash resources are sufficient to support its
planned operations for the foreseeable future.
12
<PAGE>
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K.
(b) Reports on Form 8-K.
During the quarter ended June 30, 1996, the following reports on
Form 8-K were filed:
May 23, 1996 - Reporting on the sale of 3,367,500 shares of
common stock resulting in net proceeds to the Company of
$13,041,309.
May 31, 1996 - Reporting on the Electronic Commerce and
Healthcare Information Licensing Agreement between the Company
and Personalized Programming, Inc.
13
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
PROXYMED, INC.
(Registrant)
Date AUGUST 9, 1996 /S/ BENNETT MARKS
--------------------- -------------------------------------
Bennett Marks
Executive Vice President - Finance,
Chief Financial Officer and Principal
Accounting Officer
14
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
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0
600
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</TABLE>
