SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
---------------
[X] QUARTERLY REPORT PURSUANT SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended March 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from____________________to_____________________
Commission File No. 1-13392
U.S. DIAGNOSTIC LABS INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 11-3164389
(State or Other Jurisdiction of (IRS Employer Identification number)
Incorporation or Organization)
777 S. Flagler Drive, Suite 1006
Phillips Point West
West Palm Beach, Florida 33401
(Address of Principal Executive Offices)
(407) 832-0006
(Issuer's Telephone Number, Including Area Code)
Not Applicable
(Former Name, Former Address and Former Fiscal Year,
if changed Since Last Report)
Check whether the issuer (I) filed all reports required to be filed by
section 13 or 15 (d) of the Securities Exchange Act of 1934 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.
Yes X No______
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
CLASS OUTSTANDING AT MARCH 31, 1996:
Common Stock, $.01 par value 7,662,099 shares
Traditional Small Business Disclosure Format
Yes X No______
-1-
<PAGE>
U.S. DIAGNOSTIC LABS INC.
INDEX TO FORM 10-QSB
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 1996
and December 31, 1995.......................................................3
Consolidated Statements of Operations for the Three Months
ended March 31, 1996 and 1995...............................................5
Consolidated Statements of Stockholders' Equity
as of March 31, 1996........................................................6
Consolidated Statements of Cash Flows for the Three Months
ended March 31, 1996 and 1995...............................................7
Notes to Consolidated Financial Statements..................................8
Pro Forma Condensed Balance Sheet as of March 31, 1996.....................10
Pro Forma Condensed Statement of Operations for the
Three Months ended March 31, 1996..........................................12
Item 2. Management Discussion and Analysis
of Financial Condition and Results
of Operations....................................................14
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K...................................20
SIGNATURES.................................................................21
-2-
<PAGE>
U.S. DIAGNOSTIC LABS INC. AND SUBSIDIARIES
- - ------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
- - ------------------------------------------------------------------------------
<TABLE>
MARCH 31, DECEMBER 31,
1 9 9 6 1 9 9 5
------------------ ---------------
<S> <C> <C>
ASSETS:
CURRENT ASSETS:
Cash $ 51,334,141 $ 4,373,876
Accounts Receivable[Net of Estimated Uncollectibles
of $5,290,127 and $5,871,683 ] 12,340,646 10,818,919
Prepaid Expenses 1,967,121 900,619
Other Current Assets 280,861 270,796
------------------ ---------------
TOTAL CURRENT ASSETS 65,922,769 16,364,210
------------------ ---------------
PROPERTY, PLANT AND EQUIPMENT - NET 24,527,165 22,550,884
------------------ ---------------
OTHER ASSETS:
Other Assets 505,480 371,196
Deferred Charges 2,500,000 --
Goodwill - Net 13,349,773 12,941,462
Covenants Not-to-Compete - Net 2,135,951 2,305,639
Customer Lists 2,697,750 2,745,833
------------------ ---------------
TOTAL OTHER ASSETS 21,188,954 18,364,130
------------------ ---------------
TOTAL ASSETS $ 111,638,888 $ 57,279,224
================== ===============
</TABLE>
See Notes to Consolidated Financial Statements.
-3-
<PAGE>
U.S. DIAGNOSTIC LABS INC. AND SUBSIDIARIES
- - -------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
- - -------------------------------------------------------------------------------
<TABLE>
MARCH 31, DECEMBER 31,
1 9 9 6 1 9 9 5
------------------ ----------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDER'S EQUITY:
CURRENT LIABILITES:
Accounts Payable $ 2,037,274 $ 1,509,958
Accrued Expenses 2,056,392 1,352,441
Short-Term Borrowings 207,612 667,286
Current Portion of Long-Term Debt 4,382,188 3,831,975
Obligations Under Capital Leases - Current Portion 2,393,715 2,519,982
Other Current Liabilities 13,134 536,759
------------------ ---------------
TOTAL CURRENT LIABILITIES 11,090,315 10,418,401
------------------ ---------------
LONG-TERM LIABILITIES:
Long-Term Debt - Net of Current Portion 15,453,112 15,992,617
Obligations Under Capital Leases - Net of Current Portion 5,716,815 5,072,018
Convertible Debentures 50,500,000 --
Deferred Revenue 399,199 423,500
Deferred Income Taxes 137,444 164,452
------------------ ---------------
TOTAL LONG-TERM LIABILITIES 72,206,570 21,652,587
------------------ ---------------
TOTAL LIABILITIES 83,296,885 32,070,988
------------------ ---------------
MINORITY INTEREST 812,363 715,543
------------------ ---------------
COMMITMENTS -- --
STOCKHOLDERS' EQUITY:
Preferred Stock, $.01 Par Value; Authorized
5,000,000 Shares, None Issued -- --
Common Stock, $.01 Par Value; 50,000,000 Shares
Authorized and 7,662,099 and 7,032,622 Shares Issued and
Outstanding at March 31, 1996. 76,621 70,326
Additional Paid in Capital 24,327,929 22,953,590
Retained Earnings 4,038,116 2,495,678
------------------ ---------------
Totals 28,442,666 25,519,594
Less: Deferred Charges (913,026) (1,026,901)
------------------ ---------------
TOTAL STOCKHOLDERS' EQUITY 27,529,640 24,492,693
------------------ ---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 111,638,888 $ 57,279,224
================== ===============
</TABLE>
See Notes to Consolidated Financial Statements.
-4-
<PAGE>
U.S. DIAGNOSTIC LABS IN. AND SUBSIDIARIES
- - -------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
- - -------------------------------------------------------------------------------
<TABLE>
THREE MONTHS ENDED
MARCH 31,
1 9 9 6 1 9 9 5
------- -------
<S> <C> <C>
REVENUE - [NET OF ALLOWANCES] $ 12,073,575 $ 4,798,153
--------------- ---------------
OPERATING EXPENSES:
Selling, General and Administrative 7,557,508 3,561,891
Depreciation and Amortization 1,304,209 396,106
--------------- ---------------
TOTAL OPERATING EXPENSES 8,861,717 3,957,997
--------------- ---------------
INCOME FROM OPERATIONS 3,211,858 840,156
--------------- ---------------
OTHER INCOME [EXPENSE]:
Interest Income 38,567 26,198
Interest [Expense] (692,989) (193,907)
Other Income [Expense] (36,243) --
--------------- ---------------
TOTAL OTHER [EXPENSE] (690,665) (167,709)
--------------- ---------------
INCOME BEFORE TAXES AND MINORITY INTEREST 2,521,193 672,447
MINORITY INTEREST IN INCOME OF SUBSIDIARIES (184,166) (62,367)
PROVISION FOR INCOME TAXES (794,589) (12,306)
--------------- ---------------
NET INCOME $ 1,542,438 $ 597,774
=============== ===============
EARNINGS PER COMMON SHARE:
Primary $ .25 $ .15
=============== ===============
Fully Diluted $ .16 $ --
=============== ===============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
Primary 6,218,847 4,031,961
=============== ===============
Fully Diluted 17,491,361 --
=============== ===============
</TABLE>
See Notes to Consolidated Financial Statements.
-5-
<PAGE>
U.S. DIAGNOSTIC LABS INC. AND SUBSIDIARIES
- - -------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
- - -------------------------------------------------------------------------------
<TABLE>
COMMON ADDITIONAL TOTAL
NUMBER OF PAID-IN DEFERRED RETAINED STOCKHOLDERS'
SHARES AMOUNT CAPITAL CHARGES EARNINGS EQUITY
--------- -------- ----------- --------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE - DECEMBER 31, 1995 7,032,622 $ 70,326 $ 22,953,590 $ (1,026,901) $2 ,495,678 $ 24,492,693
Warrants Exercised at Various
Prices 468,407 4,684 369,262 -- -- 373,946
Shares Issued in Connection
with MIC Acquisition 68,070 681 424,757 -- -- 425,438
Shares Issued in Connection
with Prepayment of CMI
Consulting Agreement. 93,000 930 580,320 -- -- 581,250
Amortization of Deferred
Charges -- -- -- 113,875 -- 113,875
Net Income -- -- -- -- 1,542,438 1,542,438
---------- ---------- -------------- --------------- ----------- -------------
BALANCE - MARCH 31, 1996 7,662,099 $ 76,621 $ 24,327,929 $ (913,026) $ 4,038,116 $ 27,529,640
========== ========== ============== ============== ============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
-6-
<PAGE>
U.S. DIAGNOSTIC LABS IN. AND SUBSIDIARIES
- - -------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
- - -------------------------------------------------------------------------------
<TABLE>
THREE MONTHS ENDED
MARCH 31,
1 9 9 6 1 9 9 5
------- -------
<S> <C> <C>
NET CASH - OPERATING ACTIVITIES $ 511,428 $ 3,575,777
--------------- ---------------
INVESTING ACTIVITIES:
Intangible Assets -- (2,754,950)
Purchase of Property and Equipment -- (57,778)
Acquisition of Laborde -- (830,000)
Acquisition of CROV -- (350,000)
Acquisition of Arrow -- (150,000)
--------------- ---------------
NET CASH - INVESTING ACTIVITIES -- (4,142,728)
--------------- ---------------
FINANCING ACTIVITIES:
Proceeds from Convertible Debentures 48,000,000 --
Repayments on Notes Payable and Obligations
Under Capital Leases (2,931,797) (1,392,807)
Proceeds from Borrowing -- 780,000
Common Stock Issued 1,380,634 100,000
--------------- ---------------
NET CASH - FINANCING ACTIVITIES 46,448,837 (512,807)
--------------- ---------------
NET INCREASE [DECREASE] IN CASH AND CASH EQUIVALENTS 46,960,265 (1,079,758)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIODS 4,373,265 2,824,440
--------------- ---------------
CASH AND CASH EQUIVALENTS - END OF PERIODS $ 51,334,141 $ 1,744,682
=============== ===============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the periods for:
Interest $ 682,989 $ 189,552
Income Taxes $ -- $ --
</TABLE>
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
During the period ended March 31, 1996, the Company entered into several
equipment lease agreements which are stated on the balance sheet at their
capitalized cost of $3,001,361.
See Notes to Consolidated Financial Statements.
-7-
<PAGE>
U.S. DIAGNOSTIC LABS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - -------------------------------------------------------------------------------
[1] In the opinion of U.S. Diagnostic Labs Inc. [the "Company"], the
accompanying unaudited financial statements contain all adjustments [consisting
of only normal accruals] necessary to present fairly the financial position of
the Company as of March 31, 1996 and the results of its operations for the three
months ended March 31, 1996 and 1995 and changes in cash flows for the three
months then ended.
The accounting policies followed by the Company are set forth in Note 1 to the
Company's financial statements in the December 31, 1995 U.S. Diagnostic Labs
Inc. Annual Report on Form 10-KSB which is incorporated by reference.
The year-end condensed balance sheet data was derived from audited financial
statements, but does not include all disclosures required by generally accepted
accounting principles.
[2] The results of operations for the three months ended March 31, 1996 are not
necessarily indicative of the results to be expected for the full year.
[3] Earnings per common share is computed by dividing the net income for the
period by the weighted average number of common shares outstanding. All stock
options and warrants have been included as common stock equivalents in the
computation of earnings per common share on a fully diluted basis.
[4] Effective March 29, 1996, the Company consummated a $50 million offering of
9% Subordinated Convertible Debentures Due 2003. The closing of this transaction
occurred on April 3, 1996. The investment banking firm who acted as the agent in
connection with the offering was issued 319,445 five-year warrants. The Company
plans to use the net proceeds of this issuance to fund the probable acquisitions
where there is already a signed letter of intent and also future acquisitions
which are being discussed and negotiated.
[5] The Company has signed "Letters of Intent" to acquire the following six [6]
outpatient diagnostic facilities.
<TABLE>
NAME LOCATION BUSINESS PURCHASED OWNERSHIP %
<S> <C> <C> <C>
South Coast Radiology Coos Bay, OR Multi-Modality Imaging 100
Allegheny MRI (Four Centers) Pittsburgh, PA MRI 100
Heights Imaging Center Haddon Heights, NJ Multi-Modality Imaging 100
DISC Charleston, SC Multi-Modality Imaging 80
Radiation Oncology Centers Modesto, CA Radiation Therapy 50.1
U.S. Imaging (Six Centers) Houston, TX Multi-Modality Imaging 100
</TABLE>
The Company intends to finance these acquisitions, with cash, notes and common
stock of the Company. These acquisitions will be accounted for as asset or stock
purchases with the excess purchase price over the fair value of the assets
attributed to goodwill totaling approximately $21,000,000.
The following pro forma [unaudited] combined results of operations are adjusted
for the effect of the convertible debt offering, amortization of goodwill,
non-compete covenants, and depreciation on assets acquired as though the
acquisitions referred to here occurred at the beginning of the periods
presented.
THREE MONTHS ENDED
MARCH 31,
1 9 9 6
-------------------
Net Revenues $ 21,590,000
---------------
Net Income $ 2,252,000
===============
Primary Earnings Per Share $ .25
=============
Fully Diluted Earnings Per Share $ .17
=============
-8-
<PAGE>
U.S. DIAGNOSTIC LABS INC.
- - -------------------------------------------------------------------------------
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
- - -------------------------------------------------------------------------------
The following unaudited pro forma combined condensed balance sheet as
of March 31, 1996 and the unaudited pro forma combined condensed statement of
operations for the three months ended March 31, 1996 have been prepared to
reflect the probable acquisitions to be consummated during the second quarter of
1996 giving effect to the transactions under the purchase method of accounting
and the assumptions and adjustments in the accompanying notes to the pro forma
financial statements. The unaudited pro forma combined condensed statement of
operations for the three months ended March 31, 1996 was prepared as if all
transactions had occurred on January 1, 1996. The unaudited pro forma combined
condensed balance sheet as of March 31, 1996 has been prepared as if the
probable acquisitions had occurred as of that date.
The unaudited pro forma combined condensed financial statements have
been prepared by the Company's management based upon the historical financial
statements of the Company and the aforementioned to be acquired companies. These
pro forma financial statements are not necessarily indicative of the results
that would have occurred if the transactions had occurred on the dates indicated
or which may be realized in the future.
-9-
<PAGE>
U.S DIAGNOSTICS LABS INC.
- - -------------------------------------------------------------------------------
PRO FORMA COMBINED CONDENSED BALANCE SHEET FOR THE THREE MONTHS ENDED
MARCH 31, 1996 [IN THOUSANDS]
[UNAUDITED]
- - -------------------------------------------------------------------------------
<TABLE>
HEIGHTS
SOUTH COAST ALLEGHENY IMAGING DISC U.S.
USDL RADIOLOGISTS GROUP CENTER IMAGING R.O.C. IMAGING
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
CURRENT ASSETS:
Cash and Cash Equivalents $ 51,334 $ 155 $ 214 $ 296 $ 56 $ 146 $ 444
Accounts Receivable - Net 12,341 694 1,335 512 1,440 2,598 5,133
Other Current Assets 2,248 -- 3 8 4 -- 650
------------- ----------- ------------ ----------- ------------- ------------ -----------
TOTAL CURRENT ASSETS 65,923 849 1,552 816 1,500 2,744 6,227
------------- ----------- ------------ ----------- ------------- ------------ -----------
PROPERTY AND EQUIPMENT - NET 24,527 252 1,471 1,261 513 340 5,404
------------- ----------- ------------ ----------- ------------- ------------ -----------
OTHER ASSETS:
Other Assets 3,005 -- 30 21 22 3 462
Goodwill - Net 13,350 -- -- -- -- -- --
Covenant Not-to-compete - Net 2,136 -- -- -- -- -- --
Other Intangibles - Net 2,698 -- -- -- -- -- --
------------- ----------- ------------ ----------- ------------- ------------ -----------
TOTAL OTHER ASSETS 21,189 -- 30 21 22 3 462
------------- ----------- ------------ ----------- ------------- ------------ -----------
TOTAL ASSETS $ 111,639 $ 1,101 $ 3,053 $ 2,098 $ 2,035 $ 3,087 $ 12,093
============= =========== ============ =========== ============= ============ ===========
</TABLE>
-10 A-
<PAGE>
- TABLE CONTINUED -
PRO FORMA
AS ADJUSTED
PRO FORMA MARCH 31,
ASSETS: ADJUSTMENTS 1 9 9 6
CURRENT ASSETS:
Cash and Cash Equivalents $ (16,114) [A] $ 36,531
Accounts Receivable - Net (512) [A] 23,541
Other Current Assets -- 2,913
----------- -----------
TOTAL CURRENT ASSETS (16,626) 62,985
----------- -----------
PROPERTY AND EQUIPMENT - NET 9,584 43,352
----------- -----------
OTHER ASSETS:
Other Assets -- 3,543
Goodwill - Net 21,385 [A] 34,735
Covenant Not-to-compete - Net 1,550 [A] 3,686
Other Intangibles - Net 1,600 [A] 4,298
----------- -----------
TOTAL OTHER ASSETS 24,535 46,262
----------- -----------
TOTAL ASSETS $ 17,493 $ 152,599
=========== ===========
-10 B-
<PAGE>
U.S DIAGNOSTICS LABS INC.
- - -------------------------------------------------------------------------------
PRO FORMA COMBINED CONDENSED BALANCE SHEET FOR THE THREE MONTHS ENDED
MARCH 31, 1996 [IN THOUSANDS]
[UNAUDITED]
- - -------------------------------------------------------------------------------
<TABLE>
HEIGHTS
SOUTH COAST ALLEGHENY IMAGING DISC
USDL RADIOLOGISTS GROUP CENTER IMAGING R.O.C.
<S> <C> <C> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts Payable $ 2,037 $ -- $ -- $ 32 $ 95 $ 84
Accrued Expenses 2,071 48 4 346 104 728
Notes Payable 4,590 71 237 308 1,086 --
Obligations under Capital
Leases 2,393 -- -- -- -- --
------------- ----------- ------------ ----------- ------------ -----------
TOTAL CURRENT LIABILITIES: 11,091 119 241 686 1,285 812
------------- ----------- ------------ ----------- ------------ -----------
LONG-TERM LIABILITIES:
Notes Payable 15,453 -- 221 1,685 38 60
Obligations under Capital
Leases 5,717 -- -- -- -- --
Convertible Debentures 50,500 -- -- -- -- --
Deferred Revenue 399 -- -- -- -- --
Deferred Income Taxes 137 -- -- -- -- --
------------- ----------- ------------ ----------- ------------ -----------
TOTAL LONG-TERM LIABILITIES 72,206 -- 221 1,685 38 60
------------- ----------- ------------ ----------- ------------ -----------
MINORITY INTEREST 812 -- -- -- -- --
------------- ----------- ------------ ----------- ------------ -----------
STOCKHOLDERS' EQUITY:
Common Stock 77 1 -- -- 150 48
Additional Paid-in Capital 24,328 -- -- -- -- --
Retained Earnings [Deficit] 4,038 981 2,591 (273) 562 2,167
------------- ----------- ------------ ----------- ------------ -----------
Totals 28,443 982 2,591 (273) 712 2,215
Less: Deferred Charges 913 -- -- -- -- --
------------- ----------- ------------ ----------- ------------ -----------
TOTAL STOCKHOLDERS' EQUITY 27,530 982 2,591 (273) 712 2,215
------------- ----------- ------------ ----------- ------------ -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 111,639 $ 1,101 $ 3,053 $ 2,098 $ 2,035 $ 3,087
============= =========== ============ =========== ============ ===========
</TABLE>
-11 A-
<PAGE>
- TABLE CONTINUED -
<TABLE>
PRO FORMA
AS ADJUSTED
U.S. PRO FORMA MARCH 31,
IMAGING ADJUSTMENTS 1 9 9 6
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts Payable $ 388 $ -- $ 2,636
Accrued Expenses 1,525 -- 4,826
Notes Payable 4,489 3,649 [A] 14,430
Obligations under Capital
Leases -- -- 2,393
----------- ----------- -----------
TOTAL CURRENT LIABILITIES: 6,402 3,649 24,285
----------- ----------- -----------
LONG-TERM LIABILITIES:
Notes Payable -- 5,776 [A] 23,233
Obligations under Capital
Leases -- -- 5,717
Convertible Debentures -- -- 50,500
Deferred Revenue -- -- 399
Deferred Income Taxes -- -- 137
----------- ----------- -----------
TOTAL LONG-TERM LIABILITIES -- 5,776 79,986
----------- ----------- -----------
MINORITY INTEREST 2,551 3,363
----------- ----------- -----------
STOCKHOLDERS' EQUITY:
Common Stock 6 (179) [A,B] 103
Additional Paid-in Capital 2,550 14,859 [A,B] 41,737
Retained Earnings [Deficit] 3,135 (9,163) [B] 4,038
----------- ----------- -----------
Totals 5,691 5,517 45,878
Less: Deferred Charges -- -- 913
----------- ----------- -----------
TOTAL STOCKHOLDERS' EQUITY 5,691 5,517 44,965
----------- ----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 12,093 $ 17,493 $ 152,599
=========== =========== ===========
</TABLE>
-11 B-
<PAGE>
U.S DIAGNOSTICS LABS INC.
-------------------------------------------------------------------------------
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED
MARCH 31, 1996 [IN THOUSANDS, EXCEPT PER SHARE DATA]
[UNAUDITED]
------------------------------------------------------------------------------
<TABLE>
HEIGHTS
SOUTH COAST ALLEGHENY IMAGING DISC
USDL RADIOLOGISTS GROUP CENTER IMAGING R.O.C.
<S> <C> <C> <C> <C> <C> <C>
NET REVENUES $ 12,074 $ 970 $ 2,477 $ 885 $ 1,108 $ 1,194
GENERAL AND ADMINISTRATIVE
EXPENSES 7,558 660 1,424 516 793 994
INTEREST EXPENSE 693 2 10 59 29 20
DEPRECIATION AND AMORTIZATION 1,304 46 116 68 27 42
OTHER [INCOME] EXPENSE (2) (7) (3) (3) (15) (12)
MINORITY INTEREST 184 -- -- -- 55 73
------------- ----------- ------------ ----------- ------------ -----------
INCOME BEFORE INCOME TAXES 2,337 269 930 245 219 77
INCOME TAXES PRO FORMA 795 108 372 98 88 31
------------- ----------- ------------ ----------- ------------ -----------
NET INCOME $ 1,542 $ 161 $ 558 $ 147 $ 131 $ 46
============= =========== ============ =========== ============ ===========
EARNINGS PER COMMON SHARE:
Primary .25
===================
Fully Diluted .16
===================
WEIGHTED AVERAGE NUMBER OF SHARES:
Primary 6,218,847
===============
Fully Diluted 17,491,361
=============
</TABLE>
-12 A-
<PAGE>
- TABLE CONTINUED -
<TABLE>
PRO FORMA
AS ADJUSTED
U.S. PRO FORMA MARCH 31,
IMAGING ADJUSTMENTS 1 9 9 6
<S> <C> <C> <C>
NET REVENUES $ 2,882 $ -- $ 21,590
GENERAL AND ADMINISTRATIVE
EXPENSES 1,766 (550) [E] 13,161
INTEREST EXPENSE 114 1,367 [D] 2,294
DEPRECIATION AND AMORTIZATION 279 462 [C] 2,344
OTHER [INCOME] EXPENSE -- -- (42)
MINORITY INTEREST -- -- 312
----------- ----------- -------------
INCOME BEFORE INCOME TAXES 723 (1,279) 3,521
INCOME TAXES PRO FORMA 256 (479) 1,269
----------- ----------- -------------
NET INCOME $ 467 $ (800) $ 2,252
=========== =========== =============
EARNINGS PER COMMON SHARE:
Primary .25
===================
Fully Diluted .17
===================
WEIGHTED AVERAGE NUMBER OF SHARES:
Primary 8,851,847
=============
Fully Diluted 25,152,741
=============
</TABLE>
-12 A-
<PAGE>
U.S. DIAGNOSTIC LABS INC.
NOTES TO THE UNAUDITED PRO FORM COMBINED CONDENSED FINANCIAL
STATEMENTS
-------------------------------------------------------------------------------
[A] To record the probable acquisitions and the allocation of purchased cost to
acquired assets at fair value and the resulting goodwill.
[B] Adjusts for the elimination of common stock and retained earnings of the
probable acquisitions.
[C] Adjusts depreciation and amortization expense to properly reflect the
allocation of the purchase price as required per purchase accounting for eachof
the probable acquisitions.
[D] Adjusts interest expense for notes to be issued in connection with the
probable acquisitions and the $50 million convertible debentures.
[E] Adjusts for the effects of the new employment contracts, radiologists'
agreements, and management fee agreements pursuant to the probable acquisitions
plus other identifiable elimination of certain expenses.
-13-
<PAGE>
Item 2: MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
OVERVIEW
The Company did not commence operations until the completion of its first
acquisition in October 1993. The acquisitions completed by the Company to date
are as follows: (i) Havertown Medical Lab in October 1993, (ii) Computerized
Medical Imaging in June 1994, (iii) Columbus Diagnostic Center in August 1994,
(iv) Alpha Laboratory in November 1994, (v) Morton Clinical Laboratory in
December 1994, (vi) Santa Fe Imaging Center in January, 1995, (vii) Laborde
Diagnostic Center in February 1995, effective January 2, 1995 (80% owned),
(viii) Community Radiology of Virginia in February 1995, (ix) Arrow Clinical
Laboratories in March 1995, (x) Salisbury Imaging Center effective April 1995
(80% owned), (xi) Orange Park Diagnostic Center effective June 1995, (xii) San
Francisco Magnetic Resonance Center in September 5, 1995, (xiii) Advanced
Medical Imaging Center in October 1995, (xiv) Modesto Imaging Center effective
September 1995, (xv) FutureCare Affiliates, Inc. in November 1995, (xvi)
Radiation Oncology Centers, Inc. effective March 31, 1996 and (xvii) Heights
Imaging Center effective June 1, 1996. The following acquisitions are expected
to close in May and June 1996: (i) South Coast Radiologist, (ii) U.S. Imaging,
(iii) DISC Imaging and (iii) Allegheny Imaging. The Company's ability to meet
its objective to become the leading network provider of imaging services is
dependent to a large extent upon its continuing ability to consummate
acquisitions of Imaging Centers and Therapy Centers and to increase revenues
after completion of each acquisition.
As a result of the acquisitions, the Company will have recorded
approximately $35.4 million of goodwill and other intangibles on its pro forma
balance sheet which will be amortized over varying periods of up to 20 years and
will result in annual charges to income of approximately $2.5 million for the
next two years and lesser amounts in future years. The Company recognized
approximately $834,000 on a historical basis and approximately $2,000,000 on a
pro forma basis of goodwill and other intangibles amortization in 1995 and
approximately $192,000 in 1994. Future acquisitions will likely result in
additional amortization charges.
The Company's financial performance is substantially dependent upon its
ability to integrate the operations of acquired Imaging Centers and Therapy
Centers into the Company's infrastructure and reduce operating expenses of
acquired entities, its ability to deliver equivalent service to clients
immediately after an acquisition without significant interruption or
inconvenience and various other risks associated with the acquisition of
businesses, including expenses associated with the integration of the acquired
businesses. In order to manage its planned continuing rapid growth, the Company
will be required to hire additional management and implement new systems.
Although to date the acquired entities have been operated by the Company on a
profitable basis and successfully integrated into the Company, there can be no
assurance that the Company will be able to successfully operate these and other
operations that may be acquired in the future. Several potential acquisitions
being considered by the Company are substantially larger than those acquired in
the past, which will substantially increase revenues but may also pose
additional operational issues. If the Company is unable to manage growth
effectively, the Company's operating results could be materially adversely
affected.
Approximately 95% all of the Company's revenues are derived from third
party payors. For 1995, the Company derived approximately 69% of its revenues
from non-government payors and approximately 26% from government sponsored
healthcare programs (principally, Medicare and Medicaid). The Company's revenues
and profitability may be materially adversely affected by the current trend in
the healthcare industry toward cost containment as government and private third
party payors seek to impose lower reimbursement and utilization rates and
negotiate reduced payment schedules with services providers. Continuing
budgetary constraints at both the federal and state level and the rapidly
escalating costs of healthcare and reimbursement programs have led,
-14-
<PAGE>
and may continue to lead, to significant reductions in government and other
third party reimbursements for certain medical charges and to the negotiation of
reduced contract rates or capitated or other financial risk- shifting payment
systems by third party payors with service providers. In addition, rates paid by
private third party payors, including those that provide Medicare supplemental
insurance, are generally higher than Medicare payment rates. Changes in the mix
of the Company's patients among the non-government payors and government
sponsored healthcare programs, and among different types of non-government
payors and government sponsored healthcare programs, and among different types
of non-government payor sources, could have a material adverse effect on the
Company. Further reductions in payments to physicians or other changes in
reimbursement for healthcare services could have a material adverse effect on
the Company, unless the Company is otherwise able to offset such payment
reductions through cost reductions, increased volume, introduction of new
procedures or otherwise.
The Company reports revenue at the estimated net realizable amounts from
patients, third-party payors and others for services rendered including
estimated prospectively determined adjustments under reimbursement agreements
with third-party payors. These adjustments are accrued on an estimated basis in
the period the related services are rendered and adjusted in future period as
final settlements are determined. As a result, the Company does not have any
significant bad debt expense.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1996 COMPARED WITH
THE THREE MONTHS ENDED MARCH 31, 1995
Net patient revenue for the three months ended March 31, 1996 increased
$7,275,422 from $4,798,153 to $12,073,575 as compared to the comparable 1995
period. Net income for the three months ended March 31, 1996 increased $994,664
from $597,774 to $1,542,438 as compared to 1995. The revenue increase reflects
(i) primarily the acquisition of nine Imaging Centers, which accounted for
approximately $6.6 million of the increase, (ii) enhanced marketing efforts by
the Company and (iii) recapture of certain Medicare business which former
physician-owners were previously prohibited from referring to Imaging Centers
until the sale of such Imaging Centers to the Company. The net income increase
reflects the direct relationship of such acquisitions, the implementation of
internal controls over administrative functions and the consolidation of
administrative and accounting functions.
Upon acquisition of an Imaging Center, the Company initiates a process to
improve operating performance through the implementation of marketing programs
and the consolidation of accounting and administrative functions. It generally
requires three to six months for the benefits form such programs to be reflected
in operating results. As a result, actual and pro forma results of operations
for the three months ended March 31, 1996 do not fully reflect such benefits
with respect to the acquisition of two Imaging Centers completed in late 1995.
The Company's clinical laboratory operations have continued to experience
intense competitive and pricing pressures since 1995 as a result of managed care
and independent physician practice competition. Clinical laboratory revenues
accounted for approximately $569,000 or 4.7% of the Company's revenues for the
three months ended March 31, 1996 (2.6% on a pro forma basis). The Company has
not been seeking additional clinical laboratory acquisitions.
Selling, general and administrative expenses for the three months ended
March 31, 1996 increased $3,995,617 from $3,561,891 in the 1995 period to
$7,557,508 in the 1996 period, but declined as a percentage of net revenues from
approximately 74.2% to 62.6%. The increase relates to (i) the increase in net
revenues from the acquisitions described above, (ii) the increase in corporate
overhead as the Company consolidated or commenced consolidation of most
administrative operations at its headquarters and (iii) legal, accounting and
other general expenses related to a public entity.
-15-
<PAGE>
Amortization resulting from the goodwill and other intangibles for the
three months ended March 31, 1996 increased approximately $276,000 from $116,000
to $392,000 as compared to 1995. The increase was due to the acquisitions.
Income tax expense for the three months ended March 31, 1996 increased
$782,283 from $12,306 to $794,589 as compared to 1995. The increase relates to
the increase in net income at applicable tax rates and the use of the Company's
remaining net operating loss carryforwards in 1995.
Primary earnings per share for the three months ended March 31, 1996 as
compared to March 31,1995 increased from $0.15 to $0.25 on an additional
2,186,886 weighted average number of shares outstanding. Fully diluted earnings
per share were $.15 on 17,491,361 weighted average number of shares outstanding.
PRO FORMA RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1996.
Pro forma results for the three months ended March 31, 1996 reflects
operations as if all acquisitions had occurred on January 1, 1996. The Pro forma
net patient revenue and expense reflect operations of South Coast Radiologists,
Allegheny Imaging, Heights Imaging, DISC Imaging, Radiation Oncology and U.S.
Imaging from January 1, 1996 to March 31,1996.
Pro forma net patient revenues for the three months ended March 31, 1996
were approximately $21.590,000. Pro forma general and administrative expenses
for the three months ended March 31, 1996 were approximately $13,161,000, pro
forma interest expense was approximately $2,294,000 and pro forma depreciation
and amortization was approximately $2,344,000. Pro forma net income for the
three months ended March 31, 1996 was approximately $2,252,000 or $ .25 per
primary share and $.17 per fully diluted share. The pro forma revenue increase
reflects enhanced marketing efforts and the recapture of certain Medicare
business which former physician-owners were previously prohibited from referring
to Imaging Centers until the sale of such facility to the Company. The Company
believes that had all the acquisitions included in the 1996 pro forma results
actually been consummated prior to January 1, 1996, and the Company had
implemented its marketing programs for the full year, revenue growth would have
been higher than that set forth in the pro forma statement of operations. The
pro forma increase in net income reflects the cost savings from (i)
consolidating administrative and accounting controls, (ii) large purchase
discounts, and (iii) other significant savings from finance, radiology and
maintenance contract renegotiations.
LIQUIDITY AND CAPITAL RESOURCES
Prior to the Company's initial public offering ("IPO") in October 1994,
the Company funded its activities primarily through a private placement of
613,680 shares of Common Stock which yielded net proceeds of approximately $1.1
million and an aggregate of $4.7 million ($4.2 million net) of bridge loans
which were repaid upon the consummation of the IPO. The Company used
approximately $4.59 million for acquisitions and approximately $800,000 for due
diligence and professional fees related to acquisitions and working capital. The
net proceeds of the IPO, after deducting underwriting discounts, commissions and
other offering expenses, were approximately $6.8 million, of which $4.8 million
was used to repay all of the outstanding bridge notes and accrued interest, and
the balance of $2.0 million was used for acquisitions. In June 1995, the Company
completed an $850,000 bridge financing, the net proceeds of which were
approximately $725,000 and were utilized by the Company for an acquisition. The
net proceeds of a secondary offering in August 1995, after deducting
underwriting discounts, commissions and other offering expenses, were
approximately $9.0 million, of which $875,000 were used to repay principal and
accrued interest on the bridge notes and the balance for acquisitions.
As of March 31, 1996, the Company had approximately $51.3 million in cash
and cash equivalents and working capital of $54,832,454, primarily as a result
of the offering of $50 million principal amount of 9% Subordinated Convertible
Debentures Due 2003 (the "Debentures") through a Rule 144A offering. In May
1996,
-16-
<PAGE>
the Company received net proceeds of approximately $6.9 million from the
exercise of the overallotment option on the offering of the Debentures. For the
three months ended March 31, 1996, the Company generated approximately $47.0
million in cash. The Company generated $511,428 from operations primarily due to
net income and non-cash amortization and generated $46,448,837 from financing
activities, primarily from the Debentures offset by the repayment of notes and
capital leases. The Company generally collects its receivables within 60 days,
although, in accordance with industry practice, it keeps a large allowance for
doubtful accounts (approximately one-third of gross receivables) as many third
party payors do not reimburse for the full amount of bills.
The Company expects to realize additional savings and revenue at the
Imaging Centers it acquired in 1995 as a result of (i) further consolidation of
billing and collections in 1996, and (ii) implementing a regional "Open-MRI"
marketing program targeted towards print and television advertising in an effort
to enhance patient referrals.
The Company's facilities are generally cash flow positive from the date of
acquisition, and as such the Company's capital needs primarily relate to the
acquisition of additional facilities. Acquisitions will be funded through cash,
notes, equity securities issued by the Company, or any combinations of the
foregoing. The Company has used approximately $2.0 million of the proceeds from
the Debentures for acquistions and intends to use an additional approximately
$16 million within the next 30 days for additional acquisitions for a pending
acquisition of four Imaging Centers in Pittsburgh, six in Houston and San
Antonio, joint ventures to develop and operate Imaging Centers in Wilkes Barre,
Pennsylvania and Nassau, Bahamas. The Company will use the remaining proceeds
for future acquisitions and for working capital and general corporate purposes.
At May 15, 1996, the Company has outstanding 4,199,049 Class A Warrants
and 3,850,451 Class B Warrants. Each Class A Warrant entitles the holder to
purchase one share of Common Stock and one Class B Warrant at an exercise price
of $6.25 at any time until October 20, 1999. Each Class B Warrant entitles the
holder to purchase one share of Common Stock at an exercise price of $8.00 at
any time until October 20, 1999. The Class A and B Awarrants are subject to
redemption in certain circumstances. In addition, the Company has outstanding
(i) Unit Purchase Options relating to 331,500 Units, each Unit consisting of one
share of Common Stock, one Class A Warrant and one Class B Warrant ("Units")
held by the underwriter of the Company's public offerings, of which 170,000 have
an exercise price of $7.25 per Unit and 161,500 have an exercise price of $7.82
per Unit, (ii) approximately 1.2 million other warrants with exercise prices
ranging from $2.50 to $9.00, and (iii) 1,007,000 Stock Options with exercise
prices ranging from $2.00 to $6.50. The Company is unable to predict the timing
of the exercise of any of the above securities, although they are likely to be
exercised at such time as the market price of the Common Stock is substantially
above the exercise price of the Warrants, which will result in dilution to
existing stockholders. Further, there can be no assurance that the Company will
be able to effectively utilize the proceeds from any warrant exercises, which
proceeds could be substantial.
The Company has an unused line of credit of $1 million at the prime
interest rate with a bank, and has been negotiating to increase the size of such
line.
As of March 31, 1996, the Company had an aggregate of approximately $19.8
million of notes payable, of which approximately $4.4 million are classified as
current. Substantially all of these amounts relate to notes issued in connection
with acquisitions and equipment purchases. At that date, the Company also had
approximately $8.1 million of capital lease obligations, of which approximately
$2.4 million are due in 1996. Substantially all of these obligations are related
to equipment for the Company's Imaging Centers acquired pursuant to completed
acquisitions. The Company's monthly payments for capitalized lease obligations
aggregate approximately $200,000. The Company also pays aggregate annual rent of
approximately $2.1 million for its 14 facilities. The Company has employment and
consulting agreements with its executive officers and consultants providing for
annual compensation of approximately $980,000 in 1996. The Company also has
employment agreements with radiologists at its facilities who generally receive
a percentage of net collected revenues at their center.
-17-
<PAGE>
CHARGE TO INCOME IN THE EVENT OF RELEASE OF ESCROW SHARES
In connection with the IPO, stockholders of the Company deposited the
Escrow Shares, which will be released to such stockholders if the Company
attains certain earnings before taxes of at least $14 million in 1996. In the
event the 506,853 Escrow Shares beneficially owned by current officers,
directors, employees or consultants of the Company are released from escrow,
compensation expense will be recorded for financial reporting purposes for 1996
and such release will be deemed additional compensation expense of the Company.
If incurred, such compensation expense for 1996 will likely be substantial and
would have the effect of substantially reducing or eliminating reportable
earnings. Although the amount of compensation expense recognized by the Company
will not affect the Company's total stockholder's equity or its working capital
and is not expected to have a material effect on the Company's operations, it
may have a negative effect on the market price of the Company's securities.
-18-
<PAGE>
PART II
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS:
10.1 - 1993 Stock Option Plan(1)
10.2 - Asset Purchase Agreement among the Company, Columbus Diagnostic
Center Inc. and Physicians Diagnostic Associates of Columbus.
L.P.(1)
10.3 - Amended Employment Agreement with Jeffrey Goffman(1)
10.5 - Employment Agreement with Robert Burke, M.D.(1)
10.6 - Form of Consulting Agreement with HPM Inc.(1)
10.7 - Consulting Agreement with MED LNC Inc.(1)
10.8 - Equipment Lease with Ventura Partners.(1)
10.9 - Form of Lease between the Company and Murry Goodman with respect
to Phillips Point.(1)
10.10 - Lease between the Company and United Properties Co.(1)
10.11 - Asset purchase Agreement dates as of December 31, 1994 among the
Company, Santa Fe Imaging Center, Ltd. and Santa Fe Imaging Center
Inc., a subsidiary of the Company. (2)
10.12 - Equipment Lease dated as of December 31, 1994 between Santa Fe
Imaging Center Ltd.(1) and Santa Fe Imaging Center Inc., a
subsidiary of the Company and the Company.(2)
10.13 - Property lease dated as of December 31, 1994 among Santa Fe
Imaging Center, Ltd.(1) and Santa Fe Imaging Center Inc., a
subsidiary of the Company and the Company.(2)
10.14 - Asset Purchase Agreement dated as of February 27, 1995 among the
Company, Open Air MRI, Inc., Community Radiology of Virginia, Inc.
and CROV Acquisition Corp., a subsidiary of the Company.(3)
10.15 - Radiology Agreement dated as of February 27, 1995 between Stephen
Raskin, M.D., P.C. and CROV Acquisition Corp., a subsidiary of the
Company.(3)
10.16 - Management Agreement dated as of February 27, 1995 among the
Company, Open Air MRI, Inc., Community Radiology of Virginia, Inc.
and CROV Acquisition Corp., a subsidiary of the Company.(3)
10.17 - Escrow Agreement dated as of February 27, 1995 among the
Company, Open Air MRI, Inc., Community Radiology, Inc. and CROV
Acquisition Corp., a subsidiary of the Company.(3)
10.18 - Guaranty dated as of February 27, 1995 of the Company.(3)
10.19 - Stock Purchase Agreement dated as of February 15, 1995 among the
Company, Laborde Diagnostic, Inc. and Jeffrey J. Laborde, M.D.(4)
10.20 - Employment Agreement dated as of February 15, 1995 among the
Company, the Laborde Diagnostics, Inc. and Jeffrey J. Laborde,
M.D.(4)
10.21 - 1995 Long Term Incentive Plan(5)
10.22 - Consulting Agreement with Gordon Rausser(5)
10.23 - Consulting Agreement with Coyote Consulting(5)
10.24 - Consulting Agreement with Sawgrass Consulting(5)
10.25 - Asset Purchase Agreement dated as of October 10, 1995 among the
Company, Central Alabama Medical Enterprises, Inc. and Advanced
Medical Imaging Center, Inc., a subsidiary of the Company(6)
10.26 - Property Lease dated as of October 10, 1995 among the Company,
Central Alabama Medical Enterprises, Inc. and Advanced Medical
Imaging Center, Inc., a subsidiary of the Company(6)
-19-
<PAGE>
10.27 - Employment Agreement dated as of August 1, 1995 between the
Company and David Cohen(6)
10.28 - Employment Agreement dated as of January 1, 1996 between the
Company and Todd Smith (7)
10.29 - Amendment to Employment Agreement of Jeffrey Goffman (7)
10.30 - Amendment to Employment Agreement of Robert Burke, M.D. (7)
10.31 - Amendment to Coyote Consulting Agreement (7)
11 - Earnings Per Share Calculation
27 - Financial Data Schedule
- - -----------
(1) Incorporated by reference to the Company's Registration Statement on
Form SB-2 (file no. 33-73414)
(2) Incorporated by reference to the Company's Report on Form 8-K dated
January 11, 1995.
(3) Incorporated by reference to the Company's Report on Form 8-K dated
February 27, 1995.
(4) Incorporated by reference to the Company's Report on Form 8-K dated
March 20,1994.
(5) Incorporated by reference to the Company's Registration Statement on
Form SB-2 (file no. 33-93536)
(6) Incorporated by reference to the Company's Report on Form 8-K dated
October 30,1995
(7) Incorporated by reference to the Company's Annual Report on Form 10-KSB
for the year ended December 31, 1995.
(b) The Company filed a Report on the Form 8-K during the three months
ending March 31, 1996 dated March 29, 1996 with respect to the issuance pursuant
to Rule 144A of the offering of up to $57,500,000 of 9% Subordinated Convertible
Debentures Due 2003.
-20-
<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.
U.S. DIAGNOSTIC LABS INC.
Dated: May 15, 1996 By: /S/ JEFFREY A. GOFFMAN
-------------------------
Jeffrey A. Goffman
Chairman and Chief
Financial Officer
-21-
U.S.DIAGNOSTIC LABS INC. AND SUBSIDIARIES
- - ------------------------------------------------------------------------------
EXHIBIT 11
- - ------------------------------------------------------------------------------
THREE MONTHS ENDED
MARCH 31,
1996 1995
------ ------
Average Shares Outstanding Disregarding
Dilutive Outstanding Stock Options and
Warrants and after Adjustments for Shares
Held in Escrow 6,218,847 4,031,961
Assumed Exercise of all Dilutive and
Anti-Dilutive Warrants based on the
Modified Teasury Stock Method using the
Quarter End Price 11,272,514 4,971,825
----------- ----------
Fully Diluted Shares Outstanding 17,491,361 9,003,786
=========== ==========
Net Income Adjusted for Fully Diluted
Calculations $ 2,736,000 $ 1,369,000
=========== ===========
Fully Diluted Earnings Per Share $ .16 $ .15
=========== ===========
This calculation is submitted in accordance with the Securities Exchange Act of
1934 Release No.9083 although it is contrary to Para 40 of APB No.15 because it
may produce an anti-dilutive result.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND STATEMENT OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 51,334,141
<SECURITIES> 0
<RECEIVABLES> 17,630,773
<ALLOWANCES> (5,920,127)
<INVENTORY> 0
<CURRENT-ASSETS> 65,922,769
<PP&E> 28,019,703
<DEPRECIATION> (3,492,538)
<TOTAL-ASSETS> 111,638,888
<CURRENT-LIABILITIES> 11,090,315
<BONDS> 78,653,442
0
0
<COMMON> 76,621
<OTHER-SE> 27,638,888
<TOTAL-LIABILITY-AND-EQUITY> 111,638,888
<SALES> 0
<TOTAL-REVENUES> 12,073,575
<CGS> 0
<TOTAL-COSTS> 8,861,717
<OTHER-EXPENSES> 36,234
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 692,989
<INCOME-PRETAX> 2,521,193
<INCOME-TAX> 794,589
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,542,438
<EPS-PRIMARY> 0.25
<EPS-DILUTED> 0.16
</TABLE>
