<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 for the transition period from
_________________ to _______________
Commission File Number 0-23514
ROCKPORT HEALTHCARE GROUP, INC.
- -------------------------------------------------------------------------------
(Exact Name of Registrant as specified in its Charter)
Delaware 33-0611497
- ------------------------------ ---------------------------
State or other Jurisdiction of I.R.S. Employer
Incorporation or Organization Identification No.
50 Briar Hollow Lane, Suite 515W, Houston, Texas 77027
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(Address of Principal Executive Offices) (Zip Code)
(713) 621-9424
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(Registrant's Telephone Number, including Area Code)
Indicate by check mark whether the Registrant (i) has filed all reports
required to be filed by Section 13, or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (ii) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of Common Stock, as of the latest practical date.
Common Stock, $.001 par value 2,927,972
- ----------------------------- ----------------------------------
Title of Class Number of Shares outstanding
at June 30, 1998
No exhibits included.
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ROCKPORT HEALTHCARE GROUP, INC.
COMPANIES IN THE DEVELOPMENTAL STAGE
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
MARCH 31, JUNE 30,
1998 1998
--------- ---------
ASSETS
<S> <C> <C>
Current:
Cash $ 1,398 $ 30,639
Receivables:
Due from employee 100
Stock subscription receivable 100,000
Prepaid expenses 7,449 4,578
--------- ---------
Total Current Assets 8,947 135,216
--------- ---------
Property, Plant and Equipment (Note 1)
Office furniture and equipment 25,317 25,317
Computer equipment and software 39,450 39,450
Telephone equipment 12,617 12,617
--------- ---------
77,384 77,384
Less accumulated depreciation 5,724 9,158
--------- ---------
Net Property, Plant and Equipment 71,660 68,226
--------- ---------
Other
Deposits 12,071 12,071
Organization cost, net of amortization 1,785 1,695
Note receivable 20,000 20,000
--------- ---------
Total Other Assets 33,856 33,766
--------- ---------
$ 114,463 $ 237,209
--------- ---------
--------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Advances payable $ 25,000 $ 55,000
Accounts payable (Note 2) 30,112 38,179
Payroll taxes payable 13,662 55,472
Accrued payroll 15,417 20,058
Accrued interest payable 4,340 6,340
Due to shareholders, directors, officers, and
employee (Note 3) 174,983 219,746
--------- ---------
Total Current Liabilities 263,514 394,795
--------- ---------
Long-Term Debt:
Notes payable (Note 4) 75,000 117,000
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Total Liabilities 338,514 511,795
--------- ---------
Commitments and Contingencies (Notes 5, 7 and 8)
Shareholders' Equity:
Preferred stock, $.001 par value, 1,000,000
authorized, no shares issued and outstanding
Common stock, no par value, 20,000,000 shares
authorized, 2,927,972 shares issued and outstanding 2,462 2,929
Additional paid in capital 84,298 334,832
Retained Earnings (310,811) (613,346)
--------- ---------
Total Shareholders' Equity (224,051) (274,586)
--------- ---------
$ 114,463 $ 237,209
--------- ---------
--------- ---------
</TABLE>
See accompanying notes to financial statements.
2
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ROCKPORT HEALTHCARE GROUP, INC.
COMPANIES IN THE DEVELOPMENTAL STAGE
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
FOR THE THREE MONTHS
ENDED JUNE 30,
-------------------------
1998 1997
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<S> <C> <C>
Income:
Consulting Fees and Other Income $ 0 $ 0
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Operating Expenses:
General and administrative 296,717 15
Depreciation and amortization 3,524 5
---------- ----------
Total Operating Expenses 300,241 20
---------- ----------
Net (Loss) Before Other Income (Expense) and
Income Taxes (300,241) (20)
Other Income (Expense)
Interest Expense (2,294) 0
---------- ----------
(2,294) 0
---------- ----------
Net Loss Before Income Taxes (302,535) (20)
Income Taxes 0 0
---------- ----------
Net Loss $ (302,535) $ (20)
---------- ----------
---------- ----------
Net Loss per share $ (0.11) $ (Nil)
---------- ----------
---------- ----------
Weighted Average Number of Shares Outstanding 2,657,153 1,273,800
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to financial statements.
3
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ROCKPORT HEALTHCARE GROUP, INC.
STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE QUARTER ENDED JUNE 30, 1998
(UNAUDITED)
<TABLE>
ADDITIONAL TOTAL
PREFERRED COMMON PAID IN RETAINED SHAREHOLDERS'
STOCK STOCK CAPITAL EARNINGS EQUITY
--------- ------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Beginning 3-31-98 $ 0 2,462 84,298 (310,811) $(224,051)
Stock Issued 467 251,534 252,000
Net Loss (302,535) (302,535)
--------- ------- -------- -------- ---------
Balance, End of Period $ 0 2,929 335,832 (613,346) $(274,586)
--------- ------- -------- -------- ---------
--------- ------- -------- -------- ---------
</TABLE>
See accompanying notes to financial statements.
4
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ROCKPORT HEALTHCARE GROUP, INC.
STATEMENT OF CASH FLOWS
THREE MONTHS ENDED JUNE 30, 1998
<TABLE>
THREE MONTHS ENDED
JUNE 30,
1998 1997
-----------------------
<S> <C> <C>
Operating Activities:
Net loss $(302,535) $ (20)
Adjustments to reconcile net loss to cash flow
from (for) operating activities:
Depreciation 3,434
Amortization of organization costs 90 5
Changes in assets and liabilities:
Accounts payable (8,067) 15
Payroll taxes payable (41,810)
Accrued payroll (4,641)
Accrued management fees (35,000)
Accrued interest payable (2,000)
Prepaid expenses 2,871
--------- -----
Cash For Operating Activities (204,623) 0
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Financing Activities:
Proceeds from sale of stock 152,001
Proceeds from notes payable 72,000
Loans from shareholders 9,763
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Cash From Financing Activities 233,764 0
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Investing Activities:
Collection of employee loans 100
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Cash Used in Investing Activities 100 0
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Net Increase in Cash 29,241 0
Cash and Cash Equivalents, beginning of period 1,398 0
--------- -----
Cash and Cash Equivalents, end of period $ 30,639 $ 0
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</TABLE>
See accompanying notes to financial statements.
5
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ROCKPORT HEALTHCARE GROUP, INC.
(FORMERLY KNOWN AS PROTOKOPOS CORPORATION)
COMPANIES IN THE DEVELOPMENTAL STAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS
The company was incorporated under the laws of the State of Delaware on
May 4, 1992. On December 17, 1997, the Company purchased Rockport Group of
Texas, Inc. through the issuance of 1,442,432 shares of common stock, and the
surrender, redemption, and retirement of 254,760 of Treasury common stock
shares. These financial statements have been consolidated effective
December 17, 1997.
In connection with the Company's purchase of its subsidiary, Rockport Group of
Texas, Inc., the then management of the company resigned and was replaced by
the management of Rockport Group of Texas, Inc.
Effective January 16, 1998, the Company filed and has been approved by the
State of Delaware to change its name to Rockport Healthcare Group, Inc. The
Company is in the process of notifying and effectuating this name change with
the Securities and Exchange Commission.
In addition to Rockport Group of Texas, Inc., as of June 30, 1998, the
following wholly owned subsidiaries had been formed:
Rockport Occupational Network, Inc.
Rockport Advanced Care, Inc.
Rockport Community Network, Inc.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash on hand and held in bank in
unrestricted accounts.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost. Expenditures for renewals
and betterment's are capitalized and maintenance and repairs are expensed as
incurred. Depreciation and amortization are computed by the straight-line
method over the estimated useful lives of the assets as follows:
Office furniture and equipment............. 7 years
Computer equipment and software............ 3 to 5 years
Telephone equipment........................ 7 years
ORGANIZATION COSTS
Prior to the acquisition of Rockport Group of Texas, Inc., the Company's
activities had been limited to organizational matters. The Company's
organization costs of $271 have been amortized on a straight-line basis over a
period of five years. As of March 31, 1997, all but $5 had been expensed, with
this $5 expensed during this reporting period. Organization costs for
subsidiaries are amortized on the straight-line basis over a period of five
years.
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INCOME TAXES
The Company has adopted the liability method of accounting for income taxes in
accordance with SFAS No. 109, ACCOUNTING FOR INCOME TAXES. Under the new
accounting standard, the Company provides deferred income taxes based on
enacted income tax rates in effect on the dates temporary differences between
financial reporting and tax bases of assets and liabilities reverse. The
effect on deferred tax assets and liabilities of a change in income tax rates
is recognized in the period that includes the enactment date.
The Company will file its initial income tax return using the cash basis of
accounting. Since the utilization of net operating loss, carryforwards are not
assured, no benefit for future offset of taxable income has been recognized.
REVENUE RECOGNITION
Revenue will be recognized as products and services are delivered and earned.
Losses are recognized when reasonable estimates of the amount of the loss can
be made.
NOTE 2: PRIOR PERIOD ADJUSTMENT
The Company's prior president and controlling shareholder, Jehu Hand had
advanced $1,198 to fund operations; $1,168 had been expensed in prior periods,
with $30 having been expensed during the first six months of this reporting
period. In connection with the purchase of the Company's subsidiary, Mr. Hand
released the Company of this liability, such that the $1,168 expensed in
previous years has been reported as an adjustment of prior periods.
NOTE 3: DUE TO SHAREHOLDER, DIRECTOR, OFFICER, EMPLOYEE
Shareholders who are also directors and officers of the Company and an employee
of the Company's subsidiary have advanced funds to the Company's subsidiary for
operations, and have deferred receipt of a portion of remuneration owed during
this reporting period, the balance of which remains in the amount of $219,746,
$88,500 of which is represented by deferred management fees, as of June 30,
1998. These monies are to be repaid as funds become available.
The Company has expensed management fees in the consolidated income statement
of $75,000 of which $35,000 has been accrued and reported as due to the
shareholders or the employees of the Company as of June 30, 1998.
Prior to its acquisition, the Company's subsidiary had expensed management fees
of $36,667.
NOTE 4. NOTES PAYABLE
The subsidiary's preferred stock shareholder who is also a director of both the
Company and it's subsidiary has loaned the Company's subsidiary $100,000 for an
8% note payable due over a one year period, commencing upon the Company first
obtaining a positive cash flow. This note payable has been reduced by $25,000,
as a result of the payment made by the Company to the prior controlling
shareholder on behalf of this shareholder to effectuate the transfer of control
of the Company. Additional loans in the amount of $42,000.00 were advance
during the three months ended June 30, 1998.
NOTE 5: ADVANCES PAYABLE
Advances have been made to the Company's subsidiary to assist in meeting its
financial commitments by a disinterested party. These advances total $25,000,
and are due upon demand and are without interest.
7
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NOTE 6: LEASES
The Company's subsidiary has assumed leases for office space and office
equipment under operating leases expiring at various dates through 2002.
Management expects that in the normal course of business, leases will be
renewed or replaced by similar leases. Future minimum lease payments for each
year in the five-year period ending March 31, 2002 are as follows:
$64,794
95,303
49,482
3,660
1,830
NOTE 7: LEGAL PROCEEDINGS
There are no legal proceedings against the Company.
NOTE 8: ACQUISITION
As of December 12, 1997, the Company entered into an agreement with
Rockport Group of Texas, Inc. ("RGT"), a Nevada corporation, for the
shareholders of the Company to exchange 80% of the Company's issued and
outstanding common stock for all of the issued and outstanding stock of RGT.
Effective December 17, 1997, the exchange of stock occurred, making the RGT a
wholly owned subsidiary of the Company.
The Company's subsidiary has remitted to Jehu Hand, the controlling shareholder
prior to this acquisition, $5,000 for legal fees in connection with
effectuating this acquisition and change in control.
The Company changed its name to Rockport Healthcare Group, Inc. effective
January 16, 1998, and plans to issue additional common stock during 1998. Upon
the successful funding of this private placement, funds are expected to be
provided therefrom to effectuate its on-going operations.
NOTE 9: CONTINGENT LIABILITIES
The Company's subsidiary has issued 1,000 shares of its 8%, cumulative, non-
participating preferred stock. The stock is redeemable at $200 per share and
is expected to be redeemed out of the future cash flow of the Company.
NOTE 10: RELATED PARTY TRANSACTION
In connection with the acquisition by the Company of RGT, RGT remitted on
behalf of the then three common stock shareholders $75,000 ($25,000 for each)
to the controlling shareholder of the Company, Jehu Hand, for the right to
exchange the common stock of RGT for that of stock of the Company. The
Company's subsidiary has reflected in their consolidated financial statements
this remittance made on behalf of its then shareholders as a $25,000 reduction
in the prior advances and/or the note payable made by each of these
shareholders/directors.
NOTE 11: PROSPECTIVE SUBSEQUENT EVENTS/GOING CONCERN
The Company has proposed through the sale of additional common stock to raise
additional funding which will allow and provide for on-going operations, as
well as future potential acquisitions and the ability for the Company to meet
its financial responsibilities and commitments. Should the proposed funding
not materialize, the Company would not be able to proceed prospectively, and
therefore, would no longer anticipate being a going concern.
NOTE 12: INCOME TAXES
The fiscal year end of the Company is March 31. As of March 31, 1997, the
Company would have had a net operating loss carryforward of $3,258 that would
begin expiring in the year 2010; however, due to the
8
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effects of the prior period adjustment (Note 2), this net operating loss
carryforward will be adjusted to $2,090. The consolidated tax return filed
for the March 31, 1998 fiscal year reflects a loss of $232,886, which will
increase the carryover loss. This component would expire in the year 2013.
NOTE 13: STOCK OPTION PLAN
The Company had stock option plans for directors, officers, employees,
advisors, and employees of companies that do business with the Company, which
provide for non-qualified stock options. The Stock Option Committee of the
Board determined the option price which can not be less than the fair market
value at the date of the grant of 110% of the fair market value if the Optionee
holds 10% or more of the Company's common stock. The price per share of shares
subject to a Non-Qualified Option shall not be less than 85% of the fair market
value at the date of the grant. Options generally expire either three months
after termination of employment, or ten years after date of grant (five years
if the Optionee holds 10% or more of the Company's common stock at the time of
grant).
On May 4, 1997, all outstanding stock option agreements had expired, and there
were no extensions or renewals.
9
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
The Company is seeking capital to fully commence operations and implement
its business plan. Sales of the Company's common stock, as well as loans and
advances from shareholders and officers have funded organizational activities
to date.
The goal of the Company is to deliver, through various subsidiaries,
comprehensive, integrated services and/or products to defined healthcare
populations. The companies will be a managed care organization comprised of
doctors, hospitals, clinics, chiropractors, dentists, prescription drug,
hearing and vision care providers, focused to address three health care
markets: Workers' Compensation; Catastrophic diseases and injuries; and the
nearly 110 million Americans who are uninsured, non-insurable and underinsured.
Healthcare is a massive and dynamic industry in which significant niche
opportunities exist. The Company has targeted a number of these inadequately
served niche markets believed to afford the prospect of a high rate of return
for stockholders. The Company will employ innovative and cost effective
techniques and procedures for the delivery of these services. The strategy for
accomplishing responsible but rapid growth and obtaining the competitive edge,
includes entry into strategic alliances and acquisition of compatible quality
networks and health care service companies.
Substantial resources has been invested in developing the infrastructure
to include core management functions, such as customer service, provider
relations and finance, designed to support each of the Company's product lines.
This will reduce the cost of operating each separate subsidiary and will
improve the quality of services rendered.
The Rockport Healthcare Group, Inc. subsidiaries include:
Rockport Community Network, Inc. is a preferred provider organization
(PPO) dedicated to developing national networks of high quality
doctors, hospitals, dentists, chiropractors, prescription drug,
hearing, vision care providers and other healthcare providers of
goods and services to serve the workers' compensation and accident
and health markets.
Rockport Occupational Network, Inc. is an equity model exclusive
provider organization (EPO) designed specifically to align the
incentives among the stakeholders: employees, payors, providers and
the network and offers highly managed workers' compensation health
services.
Rockport Advanced Care, Inc. is a comprehensive and integrated
catastrophic disease and injury network organization comprised of
nationally recognized providers of disease/illness/injury specific
tertiary and quartinary care including: trauma; burns; transplants;
hearts; high risk maternal; perinatal and neonatal; cancer; gamma
knife; neurological and gastrointestinal disease.
10
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Rockport Group of Texas, Inc. provides consulting services to the
managed care industry and houses the core management functions of the
Company.
The Company is also in the process of establishing or acquiring a company to
market a medical access savings card. This savings card will be marketed to the
uninsured, non-insurable and under-insured populations. The initial marketing
of the card will be in Texas and Louisiana. An agreement in principle has been
reached with a Hispanic owned marketing company located in Houston, Texas to
market the card to the Hispanic population initially in Texas. The medical
access savings card not only provides for savings on healthcare products and
services, it also assists, through the toll free provider referral telephone
number, those individuals not knowledgeable in healthcare specialties to locate
and use the proper type of healthcare provider .
The following activities, acquisitions and investments are required to
begin operations and generate revenue:
Rockport Community Network - Network access agreements have been executed
with Medview Services, Incorporated, F. A. Richard and Associates and TARECO,
Inc. Several payor contracts have been signed which will generate revenue
beginning in August, 1998.
Rockport Occupational Network, Inc. - Establishment of the exact equity
structure, with accompanying legal opinions that the structure does not violate
any Federal or state regulations, is in the process of being completed. Primary
care physicians in the Houston market have been identified and contacted. It is
anticipated that the legal review will be completed, providers in the Houston
market will be contracted, initial payor agreements signed and revenue will
begin in September, 1998. Costs for these legal work are estimated to amount to
$10,000.00.
Rockport Advanced Care, Inc. will begin development of its specialty
networks for catastrophic diseases and injuries in early 1999 and will not
begin to produce revenue until the last quarter of 1999.
The acquisition of MedCorp Southwest, Inc. is scheduled to be completed in
August, 1998. The purchase price is $550,000.00 with $100,000.00 down payment
at closing and a note payable in the amount of $450,000.00 payable in equal
monthly installments at eight percent interest over sixty months. Monthly
revenue on the existing business of MedCorp is anticipated to amount to
$26,000.00 per month. The remaining note balance at any time during the note
period may be converted to common stock of the Company at $2.50 per share.
Development of the Medical Access Savings Card is scheduled to begin in
August, 1998, and Card sales to begin in October, 1998. Acquisition and
installation of the systems necessary to process the Card will cost
approximately $100,000.00.
Current funds of the Company are currently inadequate to accomplish the
tasks and acquisitions above and to fund the negative cash flow from
operations, the total of which is expected to amount to approximately
$800,000.00. This amount is anticipated to be raised from the sale of the
Company's stock.
11
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For several years, the Federal government has proposed various forms of
national health insurance. Should a comprehensive national health insurance
program be enacted, the Company would have to modify its business plan
accordingly.
The Company employed eleven full time staff as of June 30, 1998. As the
Company implements its business plan, more employees will be added as required
by the Company's operations.
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS - None
Item 2. CHANGES IN SECURITIES - None
Item 3. DEFAULTS UPON SENIOR SECURITIES - None
Item 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS - None
Item 5. OTHER INFORMATION - None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 27 - Financial Data Schedule
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.
ROCKPORT HEALTHCARE GROUP, INC.
(Registrant)
---------------------------------------
August 15, 1998 Larry K. Hinson
Chief Financial and Accounting Officer
(duly authorized officer)
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 30,639
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 104,578
<PP&E> 77,384
<DEPRECIATION> 9,158
<TOTAL-ASSETS> 237,209
<CURRENT-LIABILITIES> 394,795
<BONDS> 0
0
0
<COMMON> 2,929
<OTHER-SE> (277,515)
<TOTAL-LIABILITY-AND-EQUITY> 237,209
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 300,241
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,294
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (302,535)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (302,535)
<EPS-PRIMARY> (.11)
<EPS-DILUTED> (.11)
</TABLE>
