SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB/A
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999
Commission File Number: 0-25474
MEDCOM USA, INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 65-0287558
------------------------------------ ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
18001 Cowan, Suites C & D, Irvine CA 92614
(address of principal executive offices) (Zip Code)
(949) 261-6665
--------------
(Registrant's telephone number, including area code)
N/A
-------------------------------------
(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) or 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____
As of February 11, 2000 the Company had 28,071,863 shares of Common Stock issued
and outstanding.
<PAGE>
Part 1. Financial Information
Item 1. Index to Financial Statements
MEDCOM USA, INCORPORATED
CONSOLIDATED FINANCIAL STATEMENTS Page
Consolidated Balance Sheets at
December 31, 1999 and June 30, 1999 3-4
Consolidated Statements of Operations for the Three and Six Months
Ended December 31, 1999 and 1998 5
Consolidated Statements of Cash Flows for the
Six Months Ended December 31, 1999 and 1998 6
Consolidated Statement of Stockholders' Equity
for the Six Months Ended December 31, 1999 7
Notes to Consolidated Financial
Statements. 8-18
Management's Discussion and Analysis of
Financial Condition and Results of
Operations. 18-24
Part II 24-25
Signatures 26
<PAGE>
MEDCOM USA, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, JUNE 30,
1999 1999
----------- -------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $473,845 $189,772
Restricted cash (Note 2) -- 250,000
Accounts receivable, less allowance
for doubtful accounts of $39,529 685,459 250,913
Inventories (Note 5) 199,581 227,033
Prepaid expenses and other current assets 164,103 100,337
Deposit (Note 9) 600,000 --
Notes receivable, current portion (Note 5) 289,750 150,000
------- -------
Total Current Assets 2,412,738 1,168,055
PROPERTY AND EQUIPMENT,
Property and Equipment net of accumulated depreciation of
$2,495,172 at December 31, 1999 and $2,106,053 at June
30, 1999 2,219,028 2,296,643
OTHER ASSETS
Notes receivable, less allowance of $575,062 956,700 241,200
Licensing rights, net of accumulated amortization 854,752 885,558
Patents, net of accumulated amortization 292,139 327,299
Royalty advances 520,725 515,907
Goodwill, net of accumulated amortization 535,683 819,299
Other 98,999 120,901
------- -------
Total Other Assets 3,258,998 2,910,164
Total Assets $7,890,764 $6,374,862
========== ==========
See notes to consolidated financial statements
<PAGE>
MEDCOM USA, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, JUNE 30,
1999 1999
------------ ------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable (Note 5) $737,061 $649,154
Accrued expenses 640,926 622,820
Borrowing under bank line of credit (Note 2) -- 250,000
Current portion of capitalized lease obligations
(Note 4) 45,738 43,432
Notes and loans payable (Note 3) 447,119 519,119
Current portion of deferred revenue (Note 5) 48,000 --
Dividends payable 110,482 58,025
------- ----------
Total Current Liabilities 2,029,326 2,142,550
LONG TERM LIABILITIES
Capitalized lease obligations (Note 4) 85,660 125,706
Deferred revenue (Note 5) 745,500 --
------- ----------
Total Long Term Liabilities 831,160 125,706
------- ----------
Total Liabilities 2,860,486 2,268,256
--------- ---------
COMMITMENTS (Note 10) -- --
STOCKHOLDERS' EQUITY (Note 7 and 9)
Preferred stock, Series A, B and C $.001
par value, 152,600 shares authorized
- 50,000 (A), 100,000 (B) and 2,060
(C), 10,845 and 6,995 shares issued and
outstanding at December 31, 1999 and
June 30, 1999, respectively (liquidation
preference of $1,849,000)
(Note 9) 7 11
Common stock $.0001 par value 40,000,000
shares authorized:
shares issued and outstanding -
22,627,165 and 16,727,506 at
December 31, 1999 and June 30, 1999,
respectively 2,263 1,673
Additional Paid In Capital 35,809,271 32,093,851
Accumulated Deficit (Note 6) (30,862,263) (27,988,292)
------------ ------------
Total Stockholders' Equity 5,030,278 4,106,606
---------- ---------
Total Liabilities and Stockholders' Equity $7,890,764 $6,374,862
=========== ==========
See notes to consolidated financial statements
<PAGE>
MEDCOM USA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Six Months Ended December 31, 1999 and
1998
(Unaudited)
Three Months Six Months Ended
Ended
Dec. 31 Dec. 31,
1999 1998 1999 1998
Revenues
Intelligent Vending Machines $176,983 $338,407 $472,476 $654,818
(Note 8)
Medical Transaction Processing 618,209 56,154 1,318,123 95,199
-------- ------ --------- ------
Total Revenues 795,192 394,561 1,790,599 750,017
Cost of Services(exclusive
of depreciation and amortization,
shown separately below):
Intelligent Vending Machines 42,690 175,362 118,857 292,547
Medical Transaction Processing 390,731 9,926 425,061 23,749
------- ------- ------- -------
Cost of Services 433,421 185,288 543,918 316,296
------- ------- ------- -------
Gross Profit 361,771 209,273 1,246,681 433,721
Operating Expenses
General & Administrative (Note 7) 1,804,935 1,017,630 2,879,767 2,227,968
Depreciation and Amortization 247,967 256,288 766,037 478,175
Selling & Marketing 266,865 288,188 402,025 653,463
------- ------- ------- -------
Total 2,319,767 1,562,106 4,047,829 3,359,606
--------- --------- ---------- ---------
Expenses
Operating Loss (1,957,996) (1,352,833) (2,801,148) (2,925,885)
Other income (expense)
Interest income 28,550 8,832 34,570 15,690
Interest expense (21,329) (89,127) (51,899) (137,171)
Other -- -- -- 6,500
Loss before income taxes (1,950,775) (1,433,128) (2,818,477)(3,040,866)
Income Tax Provision
-- -- 2,400 --
------ ----- ------- -----
Net Loss
(1,950,775) (1,433,128)(2,820,877)(3,040,866)
Preferred stock dividend (26,390) -- (52,457) --
-------- ----------- -------- ---------
Net Loss applicable to common
stockholders $(1,977,165) $(1,433,128)$(2,873,334)$(3,040,866)
========= ========= ========= =========
Basic and diluted net loss per
share $(.10) $(.15) $(.15) $(.32)
Weighted average common shares
outstanding basic and diluted 20,647,575 9,720,650 19,094,823 9,535,471
See notes to consolidated financial statements
<PAGE>
MEDCOM USA, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 AND 1998
DECEMBER 31,
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss ($2,820,877) ($3,040,866)
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation and Amortization 766,037 478,175
Imputed value of warrants granted for
services and interest 456,721 222,736
Stock issued for services 742,016 376,275
Changes in assets and liabilities:
Inventories 27,452 (107,429)
Accounts receivable (434,546) (69,997)
Prepaid Expenses and Other Current
Assets (10,707) (97,410)
Notes receivable (82,750) --
Accounts Payable and Accrued
Expenses 234,828 431,163
Royalty advances (4,818) --
Franchise and customer deposits -- (10,042)
Other assets 14,760
Deferred Revenue (16,500) --
-------------------------
NET CASH (USED IN) OPERATING ACTIVITIES (1,128,384) (1,817,395)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition costs paid -- (465,454)
Capital expenditures (106,504) (400,070)
Change in other assets -- (372,067)
--------------------------
NET CASH (USED IN) INVESTING ACTIVITIES (106,504) (1,237,591)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of
long-term debt 10,000 450,000
Payments on debt (263,000) (307,691)
Payments on obligations under
capital leases (37,740) (27,485)
Proceeds from capital leases -- 619,058
Net proceeds from issuance of
common stock 2,159,701 1,214,625
Funds paid on deposit to retire
Series "C" preferred stock (600,000) --
Net proceeds for issuance of
Series "C" preferred stock -- 1,246,846
NET CASH PROVIDED BY FINANCING
ACTIVITIES 1,268,961 3,195,353
--------- ---------
NET INCREASE (DECREASE) IN CASH 34,073 140,367
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 439,772 263,878
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $473,845 $404,245
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
Cash paid during the period for interest $ 40,523 $ 70,953
See notes to consolidated financial statements
<PAGE>
MEDCOM USA, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PREFERRED STOCK COMMON STOCK
SERIES A SERIES C
NUMBER NUMBER NUMBER ADDITIONAL ACCUMU-
OF OF OF PAID IN LATED
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT TOTAL
------ ------ ------ ------ ------ ------ -------- ------- -----
Balance - June 30, 1999 9,250 $ 9 1,745 $ 2 16,727,506 $1,673 $32,093,851 ($27,988,929) $4,106,606
Net loss - six months ended
December 31, 1999 (2,820,877)(2,820,877)
Issuance of common stock for cash
at prices ranging from $.45 to $.82
per share net of $172,260 of expenses 4,118,895 412 2,159,289 2,159,701
Issuance of common stock in
exchange for preferred
stock (4,000) (4) 600 (4)
Issuance of common stock as
Required by existing agreements 215,000 21 (21) --
Issuance of common stock for
services and equipment 1,157,500 116 743,068 743,184
Issuance of common stock for
accounts payable and lease payments 256,839 25 186,098 186,123
Imputed value of stock warrant
grants in exchange for consulting
services and other items 594,489 594,489
Issuance of common stock to employees
and directors 56,314 6 31,530 31,536
Dividend on Series C Preferred stock (52,457) (52,457)
Issuance of common stock for
conversion of notes payable and
accrued interest ____ ______ _____ ______ 94,511 10 81,967 __________ 81,977
------------ -------- -------------- ------------
Balance - December 31, 1999 5,250 $ 5 1,745 $ 2 22,627,165 $2,263 $35,890,271 ($30,862,263) $5,030,278
======================================================================================================
</TABLE>
See notes to consolidated financial statements
<PAGE>
25
MEDCOM USA AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 1 - Organization and Significant Accounting Policies
Organization
MedCom USA, Incorporated (the Company) was incorporated in Delaware on August
15, 1991. The Company was incorporated under the name of Sims Communications,
Inc. and its name was changed to MedCom USA, Incorporated in October 1999.
Although the Company was formed as a communications equipment company, the
Company recently changed its primary business focus to the health care industry.
Services provided by the Company include on-line insurance eligibility
verification, electronic processing of medical claims and e-commerce. The
Company also rents motion pictures through automated videocassette dispensing
units.
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the six-month period ended December 31,
1999 are not necessarily indicative of the results that may be expected for the
year ended June 30, 2000. For further information, refer to the consolidated
financial statements and footnotes included in the Company's annual report on
Form 10-KSB/A.
Principles of Consolidation
The consolidated financial statements includes the accounts of MedCom USA,
Incorporated and its wholly owned subsidiaries: Sims Franchise Group, Inc., Sims
Communications International, Inc., JustMed.com, Inc. and Link Technologies Inc.
and its wholly owned subsidiaries New View Technologies, Inc., Link Dispensing
Systems, Inc., and Southeast Phone Card, Inc. The consolidated financial
statements also include the accounts of One Medical Services, Inc., Movie Bar
Company USA and Vector Vision Inc. All intercompany balances and transactions
have been eliminated in consolidation.
Cash and Cash Equivalents
The Company considers all highly liquid instruments purchased with a maturity
date of three months or less to be cash equivalents.
Inventories
Inventories consists primarily of movie video cassettes, terminals that are held
for sale and other associated miscellaneous parts and are recorded at the lower
of cost or market determined by the first-in, first-out method.
<PAGE>
Note 1 - Organization and Significant Accounting Principles, Continued
Property and Equipment
Property and equipment are recorded and depreciated over their estimated useful
lives (5-7 years), utilizing the straight-line method. Expenditures for
maintenance and repairs are charged to expense as incurred
(Loss) Per Common Share
(Loss) per common share is based on the weighted average number of common shares
outstanding during each of the respective periods. Common shares issuable upon
exercise of the convertible preferred stock, common stock options and common
stock equivalents are excluded from the weighted average number of shares since
their effect would be anti-dilutive.
Goodwill
The excess of the cost of the net tangible and identifiable intangible assets of
acquired businesses is stated at cost and a portion is being amortized in
conjunction with the recognition of related licensing and royalty income and the
balance is over seven years.
Revenue Recognition
Revenues from the sale of intelligent vending equipment are recognized upon
delivery of the equipment. Revenue related to the providing of technical and
other support related to the One Medical Services Program is recognized as the
services are rendered. Revenue from the sale of MedCard units is recognized upon
shipment. Revenue from the billing services using the MedCard System are
recorded at the time the billing service is rendered at the expected net
realizable value of the Company's share of the monies to be collected. Revenue
is recognized upon the sale of phone cards at the time of the sale. Revenue on
the rental of cellular phones through ACDC machines is recognized at the time
the rental is completed. Processing fees related to medical transactions and
financial processing are recognized as revenue at the time the transaction is
completed. Deferred gross profit on equipment, which has been sold and leased
back is recognized over the term of the resulting lease. Automated movie rental
revenues are recognized at the time of rental and upon usage of prepaid movie
cards (where applicable)..
Patents
Patent costs are those costs related to filing for patents and the value
allocated to patents based upon the business acquisition of Link Technologies
and subsidiaries. They are amortized on a straight-line basis based on the
expected useful life of seven years.
Note 2 - Bank Line of Credit
The Company had a secured revolving line of credit with a bank for up to
$250,000. The line of credit arrangement was terminated during the quarter ended
September 30, 1999. The balance at June 30, 1999 was $250,000. The line of
credit was secured by a restricted certificate of deposit
<PAGE>
with a balance at June 30, 1999 of $250,000. Interest on the line was at 5.77%
per annum, payable monthly.
Note 3 - Notes and Loans Payable
Notes payable consists of the following at December 31, 1999:
8% Convertible note payable, principal due May, 1998. Debt includes
conversion to common stock feature with conversion rate of
$1.25 per share. Currently in default. $25,000
Note payable - non-interest bearing, payable in monthly installments
of $1,500 through June, 2000. This note was converted to common
stock in January 2000. 34,500
Convertible bridge financing note -bearing
interest at 11%, principal due on
November 1, 2000 and interest on demand.
Debt includes conversion to common
stock feature at $.70 per share. 70,000
Note Payable - franchisee, bearing interest at 10%, principal
and interest due in full on October 31, 1999; debt includes
conversion to common stock feature at $.875 per share.
Currently in default. 317,619
---------
Total $447,119
========
Note 4 - Capitalized Lease Obligations
The Company leases various equipment under capitalized leases. The leases bear
interest at 13-19% and are payable in monthly installments. At December 31,
1999, the Company owed $131,398 of which $45,738 represents the current portion.
The terms for the leases vary from 48 to 60 months and the leases are
collateralized by the underlying equipment.
Note 5 - License and Other Agreements
On July 20, 1999, the Company licensed the exclusive rights to market the One
Medical Service system to an unrelated corporation (the Licensee). The Company
received $475,250 during the six months ended December 31, 1999 and received an
additional $91,750 during February 2000. The Company also received a 7-year, 8%
unsecured note receivable in the amount of $810,000 as part of the transaction.
The note will be paid by monthly royalty payments due the Company and other
scheduled payment amounts over its term. The deferred revenue related to this
note is being recognized as revenue as the royalties are earned. $16,500 of
revenue has been recognized during the six months ended December 31, 1999. The
Licensee can convert the moneys paid for royalty and licensing fee into an
eighty-one percent (81%) ownership interest in One Medical Service. It can
acquire the remaining nineteen percent (19%) for the greater of $132,000 or the
fair market value of such interest. The Licensee also agreed to purchase
approximately $200,000 of the Company's inventory and related accounts payable.
The inventory is being released to the Licensee as requested at which time the
Licensee pays the related accounts payable. The Licensee
<PAGE>
acquired approximately $186,000 of this inventory during the six months ended
December 31, 1999. The Licensee hired the full time employees involved with this
operation. The Company retained as employees those persons who devoted less than
full time to the One
Note 5 - License and Other Agreements, Continued
Medical Services Network. These people primarily provide technical support,
installations, repairs, maintenance of the underlying software and billing
support. The Company charges the Licensee for these services on a time and
materials basis. The Licensee also assumed other overhead associated with the
One Medical operation.
In November 1998, the Company purchased certain assets of MedCard Management
Systems, Inc., along with the licensing rights to the MedCard name and the
MedCard System software and network. The Company has agreed to fund the
operations of MedCard Management Systems, Inc. during its initial operations,
while the customer base is being expanded and while the on-line version of the
system is being developed. The Company assumed approximately $500,000 of such
expenses of MedCard during the six months ended December 31, 1999. These
expenses are included in general and administrative, and selling and marketing
expenses in the accompanying consolidated statements of operations.
Note 6 - Continuing Operations
The accompanying financial statements have been prepared on a going concern
basis that contemplates the realization of assets and liquidation of liabilities
in the ordinary course of business. The Company has continued to suffer
recurring losses from operations. The consolidated financial statements do not
include any adjustments that might be necessary if the Company is unable to
continue as a going concern. If the Company is unable to generate profits from
operations or raise additional equity financing, it may not be able to continue
as a going concern. See additional discussion in the Company's Form 10-KSB/A for
the year ended June 30, 1999. If the Company is unsuccessful in obtaining
additional funding for its operations, the Company will, if necessary, either
sell certain assets or divisions, reduce its operations or otherwise reorganize
its operations so that its operating expenses would be less than its revenues.
Note 7 - Stockholders' Equity
During the six months ended December 31, 1999, the following equity transactions
occurred:
The Company issued 545,951 shares of common stock at $.82 per share in a private
placement raising $430,952 net of $16,728 in offering costs. The Company also
issued a five-year warrant to purchase 109,190 shares of common stock at $1.12
per share, with a cost of $69,528, based upon an imputed value of $.64 per
share.
The Company issued 200,000 shares of common stock at $.56 per share in a private
placement raising $112,000. The Company also issued a five-year warrant to
purchase 40,000 shares of common stock at $.59 per share, with a cost of
$16,481, based upon an imputed value of $.41 per share.
<PAGE>
The Company issued 1,111,111 shares of common stock at $.45 per share in a
private placement to a single investor raising $450,000, net of $50,000 in
offering costs. The Company also issued a three-year warrant to purchase 200,000
shares of common stock at $1.00 per share, with a cost of $39,581, based upon an
imputed value of $.20 per share. Additionally, the Company issued 100,000 shares
of common stock as a penalty for not having completed its registration statement
Note 7 - Stockholders' Equity, Continued
within the required time frame pursuant to the private placement agreement. The
imputed value of such a penalty was $64,800.
The Company issued 2,261,833 shares of common stock at $.56 per share in a
private placement raising $1,166,749, net of $105,532 of offering costs. The
Company also issued three-year warrants to purchase 452,367 shares of common
stock at $.59 per share, with a cost of $140,404, based upon an imputed value of
$.31 per share.
The Company issued 600 shares of common stock for the conversion of 4,000 shares
of Series A preferred stock.
The Company issued 1,157,500 shares of its common stock for $743,184 of services
and equipment received. Additionally, the Company issued two three-year warrants
to purchase a total of 1,050,000 shares of its common stock at $1.00 per share,
with a combined cost of $213,700, based upon imputed values of $.19 and $.46 per
share.
The Company issued 84,571 shares of its common stock in payment of $89,653 of
previously existing accounts payable.
The Company issued 94,511 shares of common stock in payment of $81,977 of notes
payable and accrued interest.
The Company issued 172,268 shares of common stock in payment of $43,412 of
accounts payable related to leased equipment and $53,058 as a prepayment on
future lease payments.
The Company issued a five-year warrant to purchase 100,000 shares of its common
stock at $1.25 per share in exchange for developmental services, with a
capitalized software development cost of $56,224, based upon an imputed value of
$.56 per share. Additionally, the Company issued warrants to purchase 176,334
shares of common stock at prices ranging from $.59 to $1.00 per share to the
holders of the Series C preferred stock and a certain note holder. Warrants to
purchase 60,000 of the shares expire in 2002 and the balance expires in 2004.
$103,317 of expense has been recognized as stock based compensation/services on
the accompanying statements of operations, based on imputed values ranging from
$.52 to $.81 per warrant.
The Company issued 115,000 shares of common stock to an existing stockholder,
with an imputed value of $74,520 as required under the original conversion
agreement.
The Company issued warrants to purchase 550,000 shares of the common stock of
its wholly owned subsidiary, JustMed.com, Inc. at $5.00 per share in exchange
for services and capitalized software development costs. The warrants expire in
three years. Warrants for the purchase of
<PAGE>
450,000 of the JustMed.com shares may, at the option of the warrant holder, be
exercised for 650,000 shares of the Company's common stock at an exercise price
equal to 125% of the closing price of the Company's common stock at the date of
conversion. The value of these warrants, which was based upon the value of the
underlying services provided, was determined to be $221,248, based upon imputed
values ranging from $0.19 to $0.58 per share. The Company also issued to an
unrelated party (the originator of the JustMed.com concept) an additional four-
Note 7 - Stockholders' Equity, Continued
year warrant to purchase 1,000,000 shares of JustMed.com's common stock at $2.00
per share No value is ascribed to this warrant the fair value was determined to
be $0.
The Company issued 56,314 shares of common stock to employees and directors of
the Company under the Stock Bonus Plan during the six months ended December 31,
1999, with a total compensation cost of $31,536.
The total value of the above mentioned stock and warrants that is included in
general and administrative expenses in the accompanying consolidated statements
of operations was $904,826 and $71,150 for the three months ended December 31,
1999 and 1998, respectively and $1,198,737 and $364,912 for the six months then
ended.
The Company accounts for stock based compensation in accordance with Financial
Accounting Standards Board Statement No. 123, "Accounting for Stock Based
Compensation," ("FAS 123") which encourages, but does not require, companies to
recognize compensation expense for grants of stock, stock options and other
equity instruments to employees. FAS 123 requires the recognition of expense for
such grants, described above, to acquire goods and services from all
non-employees. Additionally, although expense recognition is not mandatory for
issuances to employees, FAS 123 requires companies that choose not to adopt the
new fair value accounting rules to disclose pro forma net income and earnings
per share information using the new method.
The Company has adopted the disclosure-only provisions of FAS 123. Accordingly,
no compensation cost has been recognized for the issuances of stock options to
employees. The Company issued five-year options to purchase 1,495,000 shares of
common stock to officers and directors of the Company under the Non-Qualified
Stock Option Plan during the six months ended December 31, 1999. The options
have an exercise price of $.5625 per share (unrecognized imputed charge of
473,522, or $.32 per share). The Company also issued an option to purchase
100,000 shares of common stock to an officer of the Company under the Qualified
Stock Option Plan during the six months ended December 31, 1999. The option has
an exercise price of $1.00 per share and vests ratably over a two-year period
(unrecognized imputed charge of $23,051 or $.23 per share).
The Company uses the Black Scholes option pricing model to determine the imputed
value of all options and warrants issued, using the following assumptions:
-------------------------------------------------------------
Quarter Ended Quarter Ended
September 30, 1999 December 31, 1999
-------------------------------------------------------------
Expected life 2 to 3 years 2 to 3 years
------------------------------------------------------------
Volatility 96% 81%
-------------------------------------------------------------
<PAGE>
-------------------------------------------------------------
Risk free interest 6% 6.5%
rate
-------------------------------------------------------------
Dividend rate 0% 0%
-------------------------------------------------------------
Note 8 - Business Segments
The Company has two reportable segments: intelligent vending machines and
medical transaction processing. The intelligent vending machines segment include
telecommunications, automated movie rentals and financial transaction
processing. These components were previously considered separate segments,
however, they are now combined to reflect the Company's new and increased
emphasis in the health care segment of the business. Telecommunications include
cellular telephone rentals, the sale of prepaid phone cards and other
telecommunications related services. The automated movie section rents
videocassettes through automated dispensing units in hotels, primarily in
Florida and California. The medical transaction segment includes insurance claim
verification and processing, the One Medical licensing and royalty revenue and
other related income. The medical transaction processing segment utilizes a
communication and transaction processing terminal that allows on-line
verification of health insurance and the processing of medical claims with
various health insurance providers.
Operating results and other financial data are presented for the two reportable
segments of the Company for the six months ended December 31, 1999 and 1998.
Results for the six months ended December 31, 1998 have been combined into the
two segments to reflect the current method of operations. Net revenue includes
sales to external customers within the segment and related licensing and royalty
revenue. Cost of services includes costs associated with net revenue within the
segments. Segment income (loss) does not include general and administrative,
selling and marketing, and other income (expense) items or income taxes.
Identifiable assets for each operating segment consist of receivables,
inventory, prepaid expenses, net property and equipment and goodwill. Corporate
assets are cash, patents, deposit relating to the retirement of the preferred
stock and notes receivable related to a previously discontinued segment:
<TABLE>
<S> <C> <C> <C> <C> <C>
Net- Cost of Depreciation Segment Profit Identifiable
Revenues Services & Amort. (Loss) Assets
December 31, 1999:
-----------------
Intelligent Vending
Machines $472,476 $118,857 $420,349 $(66,730) $2,234,154
Medical
Transaction
Processing $1,318,123 $425,061 $308,778 $584,284 $4,125,906
Corporate & Other -- -- $ 36,910 $ (36,910) $1,530,704
----------------------------------------------------------------------
Consolidated $1,790,599 $543,918 $766,037 $480,644 $7,890,764
========= ======= =========
Selling, General
& Administrative $3,299,121
---------
Loss Before Income Taxes $(2,818,477)
===========
<PAGE>
December 31, 1998
Intelligent Vending
Machines $654,818 $292,547 $387,553 $ (25,282) $4,065,332
Note 8 - Business Segments, Continued
Medical
Transaction
Processing $ 95,199 $ 23,749 $ 53,712 $ 17,738 $2,356,393
Corporate & Other -- -- $ 36,910 $(36,910) $ 918,455
--------------------------------------------------------------------
Consolidated $750,017 $316,296 $478,175 $ (44,454) $7,340,180
======= ======= ======= =========
Selling, General
& Administrative $2,996,412
Loss Before Income Taxes $(3,040,866)
===========
</TABLE>
Medical transaction processing revenues for the six months ended December 31,
1999 include revenues of $567,000 which represent amounts received or accrued
during the period from the licensing of the Company's One Medical System.
Goodwill associated with the acquisition of One Medical Services was reduced by
$291,417 and charged to depreciation and amortization during the six months
ended December 31, 1999.
Note 9 - Subsequent Events
The Company retired all of its outstanding Series C preferred stock during
January 2000. Outside investors purchased 1,445 shares of the Series C preferred
stock and converted them into 2,890,000 shares of the Company's common stock.
The Company paid $160,567 to the converting former Series C stockholders as
payment in full of all dividends and other amounts to which they were entitled.
The owner of 300 shares of the Series C preferred stock converted its Series C
shares into 600,000 shares of the Company's common stock. The Company issued an
additional 60,000 shares of its common stock and a warrant to purchase 132,000
of the Company's common stock at a price of $0.75 per share at any time prior to
December 22, 2002 to this stockholder as payment in full of all dividends and
other amounts to which it was entitled. For assisting in arranging the
conversion of the preferred shares, the Company issued 175,000 shares of common
stock to a financial consultant.
The Company deposited $600,000 into an escrow account to facilitate the
retirement of the Series C preferred stock. The Company deposited an additional
$105,000 during January 2000. $509,000 of these funds will be subsequently
remitted to the Company in 2000 and the balance was used as settlement of the
required payoff to the former Series C stockholders and related legal fees.
The Company issued 1,210,000 shares of its common stock in January 2000 in
private placements raising $664,274 net of $75,714 of offering costs. The
Company also issued three year warrants
<PAGE>
to purchase 242,000 shares of common stock at prices ranging from $.59 to $2.17
per share. The Company also issued 133,333 shares in January 2000 to existing
shareholders as required pursuant to the original purchase and conversion
agreements.
As disclosed in Note 3, the Company converted debt totaling approximately
$30,000 to common stock in January 2000.
Note 10 - Commitments
A consultant has informed the Company that it may take legal action against the
Company regarding the non-issuance of 200,000 shares of the Company's common
stock which the consultant alleges it earned. The Company believes that this
claim is without merit, as the consultant did not perform any of the required
services. The Company intends to vigorously defend this matter if it should
arise. The Company is also involved in various legal matters that arise during
the normal course of business. The Company believes that none of the items
referred to above will have a material adverse effect on the Company's financial
position or results of operations.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations - Three and Six Months Ending December 31, 1999
Total revenues increased from $750,017 to $1,790,599 for the six months ended
December 31, 1998 and 1999 and from $394,561 to $795,192 for the three months
then ended. The Company's Medical Transaction Processing Segment accounted for
all of the increase, while the Intelligent Vending Machine segment had lower
revenues for those periods. The Medical Transaction Processing segment increased
from $95,199 to $1,318,123 for the nine month periods and form $56,154 to
$618,209 for the three month periods. Intelligent Vending Machine segment income
declined from $654,818 to $472,476 and from $338,407 to $176,983 for the six and
three month periods, respectively. The Company is in a state of transition with
its expansion and focus on the Medical Transaction Processing Segment.
Conversely, there has been a gradual decline in the emphasis on intelligent
vending machine income. Medical transaction processing revenues for the six
months ended December 31, 1999 include revenues of $583,500 which represent
amounts received or accrued during the period from the licensing of the
Company's One Medical System and related royalty income.
In July 1999 the Company licensed its rights to the One Medical Service Network
to an unrelated third party for $1,377,000 of which $567,000 was required to be
paid during the first six months according to a predetermined schedule. The
Company has received all of the initial cash payments ($567,000) by February
2000. The remainder ($810,000) will be paid in accordance with the terms of an
unsecured promissory note which is payable prior to July 2006. Goodwill
associated with the acquisition of One Medical Services was reduced by $10,896
and $291,417 and charged to depreciation and amortization during the three and
six months ended December 31, 1999, respectively.
Cost of services for the medical transaction processing segment increased from
$23,749 to $425,061 for the six months ended December 31, 1999, and from $9,926
to $390,731 for the
<PAGE>
three months then ended as a result of this segment not being fully operational
during the comparable period of the prior year Additionally, the cost of sales
percentage for the three months ended December 31, 1999 increased to 63% of
segment revenues because of a sale of 500 terminals to a single Independent
Sales Organization, with a cost percentage of approximately 66%. Cost of
services for the intelligent vending segment decreased from $292,547 to $118,857
for the six months ended December 31, 1999, and from $175,362 to $42,690 for the
three months then ended as a result of the phasing out of certain aspects of the
intelligent vending machine segment during the year ended June 30, 1999.
Gross profit for the six months ended December 31, 1999 totaled $1,246,681 with
a margin of 70%. The comparable gross profit last year was $433,721 or 58%
margin. Gross profit was $361,771, or 45% for the three months ended December
31, 1999, as compared to $209,273, or 53% for the three months ended December
31, 1998. The change in margin is a result of the shift from intelligent vending
transactions to the medical transaction processing segment
General and administrative expenses were $651,799 higher for the six months
ended December 31, 1999 compared to the same period last year primarily related
to an increase in equity based compensation for services, which increased from
$364,912 to $1,198,737, or $833,825. Offsetting this amount, the Company
realized the benefits of cost reductions made during the latter part of the
prior fiscal year and during the current fiscal year. Additionally, in the prior
year, the Company incurred significant start-up costs related to its new lines
of business and the expansion of its other business segments. General and
administrative expenses were $787,305 higher for the three months ended December
31, 1999 as compared to the same period last year. primarily related to an
increase in equity based compensation for services, which increased from $71,150
to $904,826 and costs related to the expansion of the Company's MedCard System.
Depreciation and amortization were $287,862 higher for the six months ended
December 31, 1999 compared to the same period last year primary due to recording
of $280,521 of amortization recorded related to the One Medical Services
goodwill during the quarter ended September 30, 1999. Aside from that item,
depreciation and amortization have remained consistent from year to year, with
the additional expense related to new assets and the MedCard License being
offset by asset dispositions, including the 520 scrip terminals sold in June
1999.
Selling and marketing expenses decreased from $653,463 for the six months ended
December 31, 1999 to $402,025 for the comparable period in the current year for
three primary reasons. First, during the prior year, the Company expended moneys
on marketing the Link scrip terminals, which were sold in June 1999. Second, the
Company stopped its sales and marketing efforts, including applicable salaries,
related to the One Medical Services in July 1999. Also, during the first six
months of the current fiscal year, the Company was more focused on developing
new products and services, and integrating its existing technology, than on
sales and marketing of its older products. Selling and marketing expenses
decreased from $288,188 for the three months ended December 31, 1998 to $266,865
for the comparable period in the current year, as the Company reduced its
marketing efforts related to its older products and increased its marketing
efforts related to the MedCard System.
Interest income increased by $18,880 and $19,718 for the six and three month
periods ended December 31, 1999, respectively, as compared to the same periods
of the prior year as a result of
<PAGE>
increased cash levels maintained by the Company and interest earned on the One
Medical note receivable..
Interest expense decreased by $85,272 and $67,798 for the six and three month
periods ended December 31, 1999, respectively, as compared to the same periods
of the prior year as a result of the reduction of long term debt and the pay off
of the Company's line of credit. Total notes payable and capital lease
obligations declined from $2,068,827 at December 31, 1998 to $578,517 at
December 31, 1999.
The Company reported preferred stock dividends totaling $52,457 and $26,390 for
the six and three month periods ending December 31, 1999, respectively, which
are entirely related to the Series C preferred stock that was not outstanding
during similar periods in the prior year.
In April 2000, the Company acquired 100% of the stock of DCB Actuaries &
Consultants SRO (DCB), a Czech Republic based company and certain technology and
intellectual property from DSM, LLC (DSM), a Florida limited liability company.
DCB developed and currently operates a health insurance decision support system
with advanced data structures. The purchase price of DCB was approximately
$2,500,000 and was comprised of the following:
Purchase price - preferred stock - Series D $ 494,000
Purchase price - cash 1,403,848
Direct costs of acquisition - cash (estimated) 135,763
Direct costs of acquisition - 12,880 shares of
common stock 52,037
Excess of liabilities over assets of DCB 412,480
Total acquisition value $2,498,128
==========
The purchase price of the technology and intellectual property acquired from DSM
was approximately $3,305,000 and was comprised of the following:
Purchase price - preferred stock - Series D $2,356,000
Purchase price - cash 746,153
Direct costs of acquisition - cash (estimated) 104,488
Direct costs of acquisition - 24,249 shares of
common stock 97,963
Total acquisition value $3,304,604
==========
Each of the 2,850 shares of Series D preferred stock issued related to the
acquisition of DCB and the DSM technology are convertible into 202.4 shares of
the Company's common stock at any time at the option of the holder, for a total
of 576,923 shares of common stock. The Company can convert the Series D
Preferred shares into shares of Medcom's common stock, in the manner described
above, at any time after April 15, 2001 so long as the bid price of Medcom's
common stock exceeds $4.94 and the shares of common stock issuable upon the
conversion of the Series D Preferred shares are either covered by an effective
registration statement or are eligible for sale pursuant to Rule 144 of the
Securities and Exchange Commission.
<PAGE>
DCB is a member of an international network of actuarial consulting firms,
Woodrow Milliman, an international network of actuarial and consulting firms
represented in 34 countries, employing over 3,000 people worldwide. DCB was
formed in 1991 and currently employs approximately 65 professionals in the Czech
Republic, primarily highly qualified software engineers, actuaries and
consultants.
DCB developed and operates a Health Information Gateway, which is a state of the
art, web-based infrastructure, featuring advanced data mining capabilities,
designed to meet the information needs of the worldwide health care industry in
a real time basis. The Health Information Gateway can be a valuable tool for
healthcare entities of almost any size, from the small physician group to the
large hospital chain or insurance company and plan.
There are four main components, each targeting a different group of users. They
include:
o Risk Management - Actuarial analysis and PMPM predictions (per member per
month predicted cost) are provided. These features are ideal for the
insurance company or managed care plan, as well as for a hospital
concerned with controlling its costs. This segment is of particular
interest to those involved with the financial implications of operating a
healthcare facility or insurance concern.
o Clinical Services - Electronic patient record system, critical care
pathways and electronic medical documents are available. On-line documents
include x-rays, diagnostic results, lab reports, EKGs and physician notes.
The electronic medical documents feature allows a healthcare provider to
review these patient critical documents on-line, possibly from home or the
office. More than one physician in multiple locations can also review the
records simultaneously. This has significant implications regarding the
ability to provide quick and effective consultations. This aspect can be
used by healthcare providers of any size, while improving the care given to
the patient. The critical care pathways can indicate a standard treatment
regimen based upon the patient's particular background and symptoms, as
compared to the actual course of action being followed. The Clinical
Services segment is geared towards the physicians and improving the overall
standard of care and the ability to enhance the ease by which it is given.
o Administrative and Management Functions - The Gateway can assist with
quality assurance and management, as well as claims analysis. Market and
sales scrutiny can also be accomplished. This aspect covers not only
certain of the financial concerns, but also enables the healthcare provider
(from the small physician practice to the large hospital organization or
insurance company) to review its performance, against its own goals or the
results of other similarly sized or located organizations. It provides a
barometer of their overall performance. The reporting features can be
tailored to meet the information needs of the user, whether they are a
small independent practitioner or a large healthcare chain.
o Patient Services - The patients will also benefit from the Health
Information Gateway. They will be able to monitor personal health
profiles, in addition to their own medical treatment histories. Early
warning and reminder alerts will also be available on line.
<PAGE>
The Company intends to market DCB's Health Information Gateway to hospitals,
insurance companies, governmental agencies and consultants in the United States
and abroad. The Company will offer the Health Information Gateway in two
formats, a direct license of the technology to the end user, as well as
providing the service under an Application Service Provider (ASP) relationship.
By offering both alternatives, the Company believes it will be able to capture a
larger market share, since it will be able to accommodate the needs of different
sized organizations with varying budgetary constraints. The ASP center is
currently under construction in a newly leased facility in Florida.
DCB's has other products related to healthcare, pensions and medical insurance.
One such product is its "VFlex" product. VFlex stands for Virtual Flexible
Benefits. Using VFlex, employees will have the ability to administer their own
benefits over a company's intranet from anywhere in the world. The Company
anticipates marketing this program to large companies with multi-national
operations.
In May, 2000, the Company acquired from the Licensor all rights to the MedCard
system, including all programs, intellectual property, trade names and existing
contracts. This acquisition effectively terminated the original License
Agreement, except that the royalty provisions of the original License Agreement
remain intact. The Company believes the acquisition of the associated rights to
the technology and the other aspects, along with the simultaneous termination of
the License Agreement will ensure its exclusive and perpetual use of the MedCard
System. In consideration for this acquisition, the former Licensor received
100,000 shares of the Company's restricted stock and a three-year warrant to
purchase 400,000 shares of the Company's common stock at $3.57 per share, with a
cost of $449,446 based upon an imputed value of $1.12 per share, using the Black
Scholes method. The acquisition did not alter the royalty arrangements of the
original License Agreement. The Company did not pay any royalties to the
Licensor during the quarter ended December 31, 1999.
The Company continues to concentrate its efforts on the development of the
MedCard and DCB operations, The continued development of these business
applications will contribute to the majority of the Company's revenue in the
future.
Liquidity and Sources of Capital
During the six months ended December 31, 1999, the Company's operating cash
requirement was $1,128,384, attributable to a net loss of $(2,820,877) mitigated
by non-cash charges for depreciation and amortization ($766,037) and the
issuance of stock and options for services ($1,198,737). This shortfall was
funded by the sale of common stock for $2,159,701 and the $475,250 licensing fee
collected that related to One Medical Service. Partially offsetting this funding
were capital expenditures of $106,504.
The Company used its previously restricted cash to pay its line of credit,
resulting in the $250,000 decrease in cash during the period. (See Note 2 to the
accompanying financial statements).
The $3,040,866 net loss for the six months ended December 31, 1998 was funded by
a $599,011 charge for equity based compensation (to conserve cash) and proceeds
of $1,214,625 from the private sale of the Company's common stock and proceeds
of $1,246,846 from the sale of the Company's Series C preferred stock.
<PAGE>
The Company expects to incur additional losses during the quarter ending June
30, 2000. The Company is forecasting a profit during the quarter ending December
31, 2000, for its MedCard division. The DCB division, including the Czech based
subsidiary, is expected to generate losses until the middle of the Company's
next fiscal year, as the Company begins an extensive marketing and promotion
campaign in the United States and develops the necessary personnel and
technological infrastructure. MedCom will incur significant costs related to the
start up of domestic operations for DCB. The Company is forecasting a
Company-wide net profit for the quarter ending December 31, 2000. Improvement in
operating results is expected to be the result of increased revenues from the
MedCard transaction system and the release of an on-line version of MedCard
system, as well as revenues from the sale or licensing of DCB technology and
services.
There can be no assurance that the Company's projections in this regard will be
accurate or that the Company will ever earn a profit.
The Company retired its Series C Preferred stock during January 2000. The
Company believes that the retirement of this stock will increase the Company's
ability to continue to raise capital through the sale of common stock by
removing the downward pressure resulting from the conversion feature of the
preferred stock.
Between January 1, 2000 and June 30, 2000, the Company raised approximately an
additional $3.9 million, net of expenses of approximately $486,000 from the
issuance of 2,143,750 shares of common stock at prices ranging from $.56 to
$4.00 per share. 933,750 of these shares were issued at prices below market
because the shares were restricted from sale in public markets. None of these
shares were issued to the Company's employees. Additionally, the Company has
received approximately $2.2 million upon the exercise of options and warrants to
purchase approximately 1.9 million shares of the Company's common stock at
prices ranging from $.44 to $5.00 per share.
The Company's auditors stated in their report on the Company's financial
statements for the year ended June 30, 1999 that due to MedCom's recurring
losses form operations there is substantial doubt as to MedCom's ability to
continue in business. The existence of such an explanatory paragraph in the
auditor's opinion can make it more difficult for the Company to raise or borrow
additional funds,
Although the Company has reduced its cash requirements for normal operations
through the sale of the Link assets and the license of the One Medical Services
Network, it will still need cash to fund operating losses during the year ending
June 30, 2000. As of June 30, 2000 the Company had approximately $1,900,000 in
cash. The Company projects that it may need to obtain an additional $1,000,000
to fund its operations before its cash inflows equal its cash outflows,
depending upon whether the Company is able to finance some of its equipment
acquisitions. The Company is currently attempting to obtain such equipment
financing. The Company may also seek additional funding to be able to capitalize
upon the existing opportunity for both the MedCard System and DCB's health
Information Gateway. Obtaining this additional funding will allow the Company to
fully implement its business plan and to capitalize on the market potential in a
faster manner. There can be no assurance, however, that the Company will be
successful in obtaining additional funding. If the Company is unsuccessful in
obtaining additional funding for
<PAGE>
its operations, the Company will, if necessary, either sell certain assets or
divisions, reduce its operations or otherwise reorganize its operations so that
its operating expenses would be less than its revenues.
The Company had $342,619 of convertible notes payable that were in default as of
December 31, 1999, including a note for $317,619 of which $5,214 was
subsequently paid with the balance converted into 357,035 shares of the
Company's common stock. A convertible note in the amount of $25,000 remains in
default as the Company is unable to locate the lender. With respect to the other
notes payable, approximately $3,000 was paid and $31,500 was converted into
common stock during the quarter ended January 31, 2000. The maturity date on a
note in the principal amount of $70,000 was subsequently extended to November 1,
2000 and converted to 100,000 shares of common stock in June 2000.
Year 2000 Issue
The Company did not experience any issues related to the year 2000 issue.
However, the Company continues to monitor operations to identify any potential
problems. The Company believes that to the extent issues are subsequently
identified, if any, they will not have a material impact on the Company's
financial position or results of operations.
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
See Item 3 to the Company's annual report on Form 10-KSB/A for the year
ended June 30, 1999 for information concerning the Company's legal proceedings.
Item 2. Changes in Securities.
Note 7 to the financial statements included as part of this report
discloses the shares of the Company's common stock which were issued or sold
during the six months ended December 31, 1999. With the exception of the shares
issued pursuant to the Stock Bonus Plan, none of securities described in Note 7
were registered under the Securities Act of 1933.
The shares issued pursuant to the Stock Bonus Plan were registered by
means of a registration statement on Form S-8.
With respect to the foregoing, the shares issued upon the conversion of
the Series A preferred stock and in settlement of the notes payable were issued
in reliance upon the exemption provided by Section 3(a)(9) of the Act.
The remaining shares issued or sold during the quarter were issued or sold
in reliance upon the exemption provided by Section 4(2) of the Act. The persons
who acquired these shares were either accredited or sophisticated investors. The
shares of common stock were acquired for investment purposes only and without a
view to distribution. The persons who acquired these shares were fully informed
and advised about matters concerning the Company, including the Company's
business, financial affairs and other matters. The persons acquired these shares
for their own accounts. The certificates representing the shares of common stock
bear legends stating that the shares may not be offered, sold or transferred
other than pursuant to an effective registration statement under the Securities
Act of 1933, or pursuant to an applicable exemption from registration. The
shares are "restricted" securities as defined in Rule 144 of the Securities and
Exchange Commission.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
At an annual meeting of the Company's shareholders held on October 14,
1999 the following proposals were adopted:
Shares Shares Shares which
Description of Voted Voted Abstained from
Proposal in Favor Against Voting
Election of the following
persons as directors:
<PAGE>
Mark Bennett 15,186,077 0 64,771
Michael Malet 15,186,077 0 64,771
David Breslow 15,186,077 0 64,771
Julio Curra 15,186,077 0 64,771
Changing name of the 15,171,016 31,407 48,425
Company to Medcom USA,
Incorporated
Adoption of the Company's 1998 7,806,127 269,365 90,695
Incentive Stock Option Plan
Adoption of the Company's 1998 7,770,955 280,202 115,030
Non-Qualified Stock Option Plan
Adoption of the Company's 1999 7,749,695 313,216 103,276
Stock Bonus Plan
Approval of Erhardt Keefe Steiner &15,087,015 85,227 78,606
Hottman PC as the Company's
independent accountants for the fiscal
year ending June 30, 1999
At a special meeting of the Company's shareholders held on October 14, 1999 the
following proposal was adopted:
Shares Shares Shares which
Description of Voted Voted Abstained from
Proposal in Favor Against Voting
Issuance of such number of 6,813,244 263,313 128,816
shares of common stock as
may be required by the terms
of the Company's Series C
Preferred Stock
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K.
During the three months ending December 31, 1999, the Company did not file
any reports on Form 8-K.
<PAGE>
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.
MEDCOM USA, INCORPORATED
By: /s/ Mark Bennett
-------------------------------------------
Mark Bennett
President
/s/ Alan Ruben
-------------------------------------------
Alan Ruben
Principal Financial and Accounting Officer
Date: July 14, 2000
