UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 29, 1998
INTEGRATED MEDICAL RESOURCES, INC.
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(Exact name of registrant as specified in its charter)
Kansas 0-21427 48-1096410
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
11320 West 79th Street, Lenexa, Kansas 66214
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (913) 962-7201
N/A
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(Former name or former address, if changed since last report.)
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ITEM 5: Other Events.
On June 1, 1998 the Company issued a press release announcing, among
other things, the approval by the stockholders of the Company of the issuance of
common stock to Kardatzke Management, Inc. and certain other parties. A copy of
the press release is attached as Exhibit 99.1 hereto.
On June 10, 1998, the Company issued a press release which discussed
certain aspects of the Company's strategic plan and projected financial results.
A copy of the press release is attached as Exhibit 99.2 hereto.
Also attached as Exhibit 99.3 are unaudited balance sheets of the
Company at March 31, 1998 and April 30, 1998 and a proforma balance sheet as of
April 30, 1998.
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ITEM 7: Exhibits
Exhibit Description
99.1 June 1, 1998 Press Release
99.2 June 10, 1998 Press Release
99.3 Unaudited Consolidated Balance Sheets of the Company at March 31,
1998, April 30, 1998 and proforma at April 30, 1998
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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 hereunto duly authorized.
INTEGRATED MEDICAL RESOURCES, INC.
(Registrant)
June 9, 1998 By:/s/ Troy A. Burns
-----------------
Troy A. Burns
President
(Authorized Officer)
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EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
99.1 June 1, 1998 Press Release
99.2 June 10, 1998 Press Release
99.3 Unaudited Consolidated Balance Sheets of the Company at March 31,
1998, April 30, 1998 and proforma at April 30, 1998
<PAGE>
Exhibit 99.1
FOR IMMEDIATE RELEASE
JUNE 1, 1998
INTEGRATED MEDICAL RESOURCES SHAREHOLDERS APPROVE INCREASE IN
AUTHORIZED COMMON STOCK; COMPANY INDICATES SECOND QUARTER
FINANCIAL RESULTS LIKELY TO FALL SHORT OF EXPECTATIONS
Lenexa, Kansas, June 1, 1998 -- Integrated Medical Resources, Inc. (Nasdaq Stock
Market: IMRI) the manager of the leading network of medical clinics for the
diagnosis and treatment of impotence, announced today that, at the company's
annual meeting on May 29, shareholders of the company approved an increase in
the authorized common stock from 10 million to 25 million and approved the
previously announced transaction with Kardatzke Management, Inc. in which that
firm has provided Integrated Medical Resources with an infusion of capital in
return for an equity stake in the company.
Shareholder approval of the two proposals, details of which are included in the
proxy materials for the annual meeting, provides Integrated Medical Resources
with an immediate infusion of about $4.2 million of new equity, in addition to
the $2.8 million Kardatzke infused in March. This will allow the company to
reduce debt, pay off convertible notes, and have some additional working
capital.
"This infusion of equity will bring the company into compliance with the equity
requirements of NASDAQ," said the Company's recently appointed Chairman and
Chief Executive Officer, Stanley E. Kardatzke, M.D.
In other actions taken at the annual meeting shareholders re-elected Dwayne
Sigler and Sam Colella as directors of the company.
The company noted that the third nominee, Scott Jenkins had, for personal
reasons, resigned from the Board of Directors a few days prior to the annual
meeting and thus was not elected to another term. This creates a vacancy on the
Board of Directors, which the Board expects to fill in the near future, pursuant
to the Company's By-Laws.
Second Quarter Results Outlook
Dr. Kardatzke reported that Integrated Medical's cash position in March and
April was critical, making it impossible to implement marketing efforts needed
to coincide with the introduction of Pfizer's new impotency drug, Viagra(R). As
a result, revenues for April and May will be below previous expectations. "Our
revenues for the months of April and May appear to be under $3 million. This
shortfall was due to lower new patient revenues. Now, however, with this
infusion of new capital we have implemented aggressive marketing plans to take
advantage of the heightened awareness of impotency since the introduction of
Viagra(R). During the last week of
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May, we saw significant increases in our call volumes and in new patient
appointments made. Therefore, we expect to see positive results in June from
these recently increased marketing efforts. We now expect second quarter
revenues to be in the mid-$4 million range. Obviously, this reduced revenue
level will significantly impact earnings, although it is too early in the
quarter to accurately assess what that impact will be."
Commenting on this development, Dr. Kardatzke said, "since coming aboard in
mid-April, my focus has been on 1) improving the company's capital structure to
a point where it will remain at or above minimum NASDAQ requirements; 2)
eliminating inefficiencies in the way Integrated Medical Resources is managed;
3) redirecting our strategy to enhance patient revenues; 4) lower administrative
expenses as a percent of revenues; and 5) achieve profitability in the second
half of 1998.
Now, the infusion of equity has allowed marketing programs to resume. "With the
new capital, we have implemented our marketing plans with increased advertising
budgets to take advantage of the heightened awareness of impotency since the
introduction of Viagra(R). Although we expect to achieve significant revenue
increases from prescribing and selling Viagra(R) in our clinics, our main source
of growth in revenues is expected to be through enhancing patient revenues
related to diagnosis of the medical causes of impotency. Thus, our clinics are
named 'The Diagnostic Center for Men'," Kardatzke added.
Troy Burns, M.D., the company's founder and its medical director, added "We, as
physicians, as well as the Pfizer Company, are continuing to caution patients
who present to us with impotence and requesting Viagra(R) that, impotence is
only a symptom of an underlying condition. A significant percentage of men with
impotence are suffering from the early signs of a more serious, potentially
life-threatening, disease such as hypertension, high cholesterol, heart disease,
diabetes or cancer. We wholeheartedly agree with the statement made by Pfizer a
few days ago, reminding us that men with impotence still need a good medical
evaluation when they present with the symptom."
Looking forward, Dr. Kardatzke said Integrated Medical will focus on improving
its performance and achieving sustainable profitability through enhancing its
advertising program, decentralizing certain inefficient administrative
functions, and empowering and incenting managers to achieve corporate
objectives. "We believe growth of our managed clinics in new markets and
increasing penetration in existing markets will enhance revenues, reduce SG&A as
a percent of sales and allow Integrated Medical Resources to become strongly
profitable," Kardatzke said.
About the Company
Integrated Medical Resources, Inc. provides complete management services to
physicians who offer comprehensive diagnostic, educational and treatment
services to address the medical and emotional needs of patients and their
partners through the largest network of medical clinics in the U.S. dedicated to
the diagnosis and treatment of impotence. Integrated Medical Resources
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Inc. common shares are traded on The Nasdaq Stock Market under the Symbol IMRI.
Safe Harbor Statement
This press release contains forward-looking statements of management
expectations and initiatives (within the meaning of the Private Securities
Litigation Reform Act of 1995) which should be viewed in the context of certain
factors that could affect actual results. Forward-looking statements are subject
to certain risks and uncertainties that could cause actual results to differ
materially from those anticipated in such statements. Risks include, but are not
limited to, the timing of Medicare reimbursement, the way Viagra(R) affects the
market or regulatory issues, which could impact the company negatively. You
should review the company's annual report on Form 10-K for the year ended
December 31, 1997, Forms 8-K dated March 5, 1998, April 14, 1998 and April 28,
1998, and Form 10-Q dated May 15, 1998, filed with the Securities and Exchange
Commission for important factors that might cause such a difference.
Viagra(R) is a trademark of Pfizer, Inc.
For more information on Integrated Medical Resources toll-free
via fax, simply dial 1-800- PRO-INFO, follow the voice menu
prompts and enter the company code
"IMRI" on any touch-tone phone.
Visit the IMRI website: www.potency.com
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Exhibit 99.2
FOR IMMEDIATE RELEASE
JUNE 10, 1998
INTEGRATED MEDICAL RESOURCES
ANNOUNCES STRATEGIC PLANS AND
PROJECTED FINANCIAL RESULTS
Lenexa, Kansas, June 10, 1998--Integrated Medical Resources, Inc.
(Nasdaq Stock Market: IMRI) the manager of the leading national network of
medical clinics for the diagnosis and treatment of impotence, announced
today that with the strengthened balance sheet provided by the recent capital
infusions approved by the Company's stockholders on May 29, 1998, the
Company was positioned to implement its strategic plan through the
remainder of its current fiscal year which ends December 31, 1998.
The Company's strategic plan includes the following:
1. Raising additional capital with the assistance of an investment
banking firm. The Company is in discussions with various investment banking
firms to select a firm to assist it in analyzing potential sources of financing,
including debt and equity.
2. The Company intends to begin an industry consolidation strategy to
acquire profitable men's health clinics and to achieve operating and advertising
cost synergies. The Company has entered into nondisclosure agreements and is in
the early stages of discussions with several possible acquisition candidates.
In addition, the Company announced that its recently
reinvigorated advertising efforts, in conjunction with the Viagra(R) phenomenon,
has led to significantly increased call center activity and patient flow at the
clinics. However, as previously reported, revenues for the first part of the
current quarter were below expectations. The Company incurred an operating loss
of $687,000 in April (unaudited) and now expects to report a loss for the second
quarter of as much as $3 million, or $0.30 per share on a fully diluted basis.
If recent advertising-driven patient flow trends continue, the Company expects
to be profitable by end of the fourth quarter of 1998, subject to
extraordinary or nonrecurring charges or expenses.
Dr. Stan Kardatzke, Chairman and Chief Executive Officer,
said: "Our strengthened balance sheet and the confidence shown by our major
investors have provided us the stability needed to move ahead through this
year. We have set forth an aggressive plan for the next seven months, and
while there is no guarantee that we won't hit some snags along the way, I am
nevertheless confident that the market presents an opportunity for us to move
forward with expansion through industry consolidation."
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About the Company
Integrated Medical Resources, Inc. provides complete management services to
physicians who offer comprehensive diagnostic, educational and treatment
services to address the medical and emotional needs of patients and their
partners through the largest network of medical clinics in the U.S. dedicated to
the diagnosis and treatment of impotence. The common shares of Integrated
Medical Resources, Inc. are traded on The Nasdaq Stock Market under the
Symbol "IMRI".
Safe Harbor Statement
This press release contains forward-looking statements of management
expectations initiatives (within the meaning of the Private Securities
Litigation Reform Act of 1995) which should be viewed in the context of certain
factors that could affect actual results. Forward-looking statements are subject
to certain risks and uncertainties that could cause actual results to differ
materially from those anticipated in such statements. Risks include, but are not
limited to, the timing of Medicare reimbursement, the way Viagra(R) affects the
market or regulatory issues, which could impact the company negatively. You
should review the Company's annual report on Form 10-K for the year ended
December 31, 1997, Forms 8-K dated March 5, 1998, April 14, 1998, and April 28,
1998, and Form 10-Q dated May 15, 1998, filed with the Securities and Exchange
Commission for important factors that might cause such a difference.
The Company will file a current report on Form 8K today containing certain pro
forma balance sheet information.
Viagra(R) is a trademark of Pfizer, Inc.
For more information on Integrated Medical Resources toll-free via fax,
simply dial 1-800-PRO-INFO, follow the voice menu prompts and enter the company
code "IMRI" on any touch-tone phone.
Visit the IMRI website: www.potency.com
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<TABLE>
<CAPTION>
Exhibit 99.3
INTEGRATED MEDICAL RESOURCES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
March 31, 1998 Pro-Forma
as filed in May 29, 1998 April 30, 1998
Form 10-Q April 30, 1998 Equity Pro-Forma
ASSETS (unaudited) (unaudited) Transactions(1) Unaudited
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents............ $ 576,791 $ 206,948 $2,741,875 $2,948,823
Accounts receivable, less
allowance of $1,984,593 at
3/31/98 and $1,985,462 at
4/30/98.............................. 8,828,427 8,598,494 8,598,494
Supplies............................. 381,172 379,211 379,211
Prepaid expenses..................... 157,439 221,307 221,307
----------- ------------ ------------
Total current assets.............. 9,943,829 9,405,960 2,741,875 12,147,835
---------- ----------- --------- ----------
NON-CURRENT ASSETS:
Property and equipment:
Office equipment and software..... 1,920,454 1,920,454 1,920,454
Furniture, fixtures and
equipment......................... 6,365,728 6,375,865 6,375,865
Leasehold improvements............ 51,836 151,836 151,836
------------ ------------ ------------
Total.......................... 8,438,018 8,448,155 8,448,155
Accumulated depreciation.......... (3,160,664) (3,300,151) (3,300,151)
--------- --------- ---------
5,277,354 5,148,004 5,148,004
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Intangible assets.................... 156,577 176,073 176,073
Other assets......................... 293,391 272,722 272,722
TOTAL ASSETS......................... $15,671,151 $15,002,759 $2,741,875 $17,744,634
=========== =========== ========== ===========
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INTEGRATED MEDICAL RESOURCES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
March 31, 1998 Pro-Forma
as filed in May 29, 1998 April 30, 1998
LIABILITIES AND Form 10-Q April 30, 1998 Equity Pro-Forma
STOCKHOLDERS EQUITY (unaudited) (unaudited) Transactions Unaudited
CURRENT LIABILITIES:
Accounts payable..................... $3,028,283 2,622,045 2,622,045
Accrued payroll...................... 696,177 602,453 602,453
Accrued advertising.................. 729,371 826,251 826,251
Accrued restructuring charge......... 529,591 357,924 357,924
Other accrued expenses............... 89,361 95,323 95,323
Working capital line of credit....... 2,856,744 2,712,271 2,712,271
Current portion of long-term debt.... 2,902,476 2,995,070 (1,273,846) 1,721,224
Current portion of capital lease
obligations.......................... 205,188 202,926 202,926
----------- ------------ ----------- ----------
Total current liabilities......... 11,037,191 10,414,263 (1,273,846) 9,140,417
---------- ---------- ----------- ---------
NON-CURRENT LIABILITIES:
Deferred rent........................ 202,835 205,197 205,197
Long-term debt, less current 2,631,799 959,170 959,170
portion..............................
Capital lease obligations, less
current portion...................... 106,564 87,979 87,979
---------- ---------- -----------
Total non-current liabilities..... 2,941,198 1,252,346 1,252,346
--------- --------- ---------
STOCKHOLDERS' EQUITY:
Preferred stock, $.0001 par value:
Authorized shares - 1,696,698.....
Issued and outstanding shares -
none.............................. --- --- ---
Common stock, $.001 par value:
Authorized shares - 10,000,000....
Issued and outstanding shares -
6,963,616......................... 6,964 8,073 1,926 9,999
Treasury stock, at cost.............. (11,347) (11,347) (11,347)
Additional paid-in capital........... 18,719,548 21,049,003 4,030,971 25,079,974
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INTEGRATED MEDICAL RESOURCES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
Accumulated deficit.................. (17,022,403) (17,709,579) (17,176)(2) (17,726,755)
------------ ------------ -------- ------------
Total stockholders' equity........ 1,692,762 3,336,150 4,015,721 7,351,871
------------ ------------ ----------- ------------
TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY.................. $15,671,151 $15,002,759 $2,741,875 $17,744,634
=========== =========== ========== ===========
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(1) Reflects the conversion to common stock of amounts previously loaned to
the Company by Kardatzke Management, Inc., Institutional Venture
Partners VI Limited Partnership and its affiliates and Frazier
Healthcare II L.P. as approved by the shareholders of the Company on
May 29, 1998 and as described in more detail in the Company's proxy
statement for the 1998 Annual Shareholders Meeting.
(2) The April 1998 Balance Sheet is being presented proforma, however, the
actual equity transaction occurred May 29, 1998. As such, this amount
represents the amortization of the discounted convertible note for the
month of May.
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