Form 10-QSB
U.S. Securities and Exchange Commission Washington, D.C. 20549
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from to
Commission File Number 1-14150
THE COMPANY DOCTOR
(Exact Name of Small Business Issuer as Specified in its Charter)
DELAWARE 72-1234136
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1200 EAST COPELAND, SUITE 100, ARLINGTON, TX 76011
(Address of Principal Executive Offices) (Zip Code)
Issuer's telephone number, including area code: (817) 277-0000
(Previous Address) (Previous Zip Code)
Check whether the Issuer (1) filed all reports required to be
filed by Section 13 or 15 (d) of the Exchange Act, during the
past 12 months and (2) has been subject to the 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 stock, as of the latest practicable date:
There were 4,607,001 shares of the Issuer's common stock, at
par value of $.01 per share, outstanding as of March 31, 1996.
<TABLE>
THE COMPANY DOCTOR AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<CAPTION>
ASSETS
March 31, June 30,
1996 1995
Unaudited
<S> <C> <C>
Current assets
Cash $68,976 $-
Investment in money market funds 7,561,539 -
Accounts receivable, less allowance
for doubtful accounts of $25,000 594,147 430,152
Accounts receivable-related parties 114,641 42,146
Prepaid expenses 86,833 17,119
Total current assets 8,426,136 489,417
Property and equipment 1,115,884 1,002,072
Less accumulated depreciation
and amortization (614,516) (507,473)
501,368 494,599
Other assets
Intangibles, net 214,919 7,820
Deferred tax asset 30,000 -
Deposits and other 52,368 28,285
Advance to stockholder 27,565 13,639
Total other assets 324,852 49,744
Total assets $9,252,356 $1,033,760
LIABILITIES AND STOCKHOLDERS - (DEFICIT) EQUITY
Current liabilities
Checks written in excess of
bank balance $ - $18,265
Line-of-credit and notes payable 94,787 48,250
Current maturities of capital
lease obligations 114,234 131,088
Accounts payable-trade 290,093 421,055
Accrued payroll and payroll taxes 114,258 184,338
Accrued expenses 6,078 149,962
Total current liabilities 619,450 952,958
Capital lease obligations, net
of current maturities 239,788 372,478
Total liabilities 859,238 1,325,436
Stockholders' (deficit) equity
Common stock, $.01 par value;
25,000,000 shares authorized;
2,208,443 and 4,607,001 shares
issued and outstanding at
June 30, 1995 and March 31, 1996
respectively 46,070 22,085
Additional paid-in-capital 9,549,391 1,003,009
Accumulated (deficit) equity (1,202,343) (1,316,770)
Total stockholders' equity
(deficit) 8,393,118 (291,676)
Total liabilities and stockholders
(deficit) equity $9,252,356 $1,033,760
</TABLE>
<TABLE>
THE COMPANY DOCTOR AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF OPERATIONS
(UNAUDITED)
<CAPTION>
For the Three Months Ended
March 31,
1995 1996
<S> <C> <C>
Revenues $782,183 $989,388
Cost of services provided 297,482 380,940
General and administrative expenses 514,923 572,550
Marketing expenses 7,670 30,094
820,075 983,584
(Loss) income from operations (37,892) 5,804
Other (income) expenses
Interest expense 8,743 23,870
Interest (income) - (47,422)
Total other (income) expenses 8,743 (23,552)
(Loss) Income before income taxes (46,635) 29,356
Income tax benefit - 30,000
Net (loss) income $(46,635) $59,356
Net (loss) income per common share $(.02) $.01
Weighted average common shares
outstanding 2,208,443 4,523,178
</TABLE>
<TABLE>
THE COMPANY DOCTOR AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<CAPTION>
For the Nine Months Ended
March 31,
1995 1996
<S> <C> <C>
Revenues $2,164,422 $2,975,561
Cost of services provided 755,801 1,038,673
General and administrative expenses 1,553,017 1,767,950
Marketing expenses 43,691 59,297
2,352,509 2,865,920
(Loss) income from operations (188,087) 109,641
Other (income) expenses
Interest expense 72,217 72,636
Interest (income) - (47,422)
Total other (income) expenses 72,217 25,214
(Loss) Income before income taxes (260,304) 84,427
Income tax benefit - 30,000
Net (loss) income $(260,304) $114,427
Net (loss) income per common share $(.12) $.03
Weighted average common shares
outstanding 2,208,443 3,554,488
</TABLE>
<TABLE>
THE COMPANY DOCTOR AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
<CAPTION>
For the nine Months Ended
March 31,
1996 1995
<S> <C> <C>
Cash flows from operating activities
Net income (loss) $114,427 $(260,304)
Adjustments to reconcile net income
(loss) to net cash (used in) provided
by operating activities
Depreciation and amortization 107,652 108,806
Deferred tax asset (30,000) -
Change in assets and liabilities
Accounts receivable (161,024) 11,590
Prepaid expenses (69,714) (4,706)
Deposits (24,083) (14,649)
Net advances to stockholders (13,926) 6,051
Checks written in excess of bank
balance (18,265) -
Accounts payable (140,340) 47,160
Accrued expenses (218,715) 161,464
(568,415) 315,716
Net cash (used in) provided
by operating activities (453,988) 55,412
Cash flows from investing activities
Purchases of property and equipment (80,765) (3,856)
Purchases of investments in money
market funds (7,561,539) -
Purchase of intangibles - (7,820)
Acquisition costs paid (22,047) -
Net cash (used in) provided
investing activities. (7,664,351) (11,676)
Cash flows from financing activities
Proceeds from line-of-credit and
notes payable 46,537 -
Gross proceeds from sales of
common stock (IPO), and prior sale
of convertible preferred stock 10,160,000 -
Deferred offerings costs paid (1,861,825) -
Payments on equipment leases (157,397) (63,616)
Net cash provided by (used in)
financing activities 8,187,315 (63,616)
Cash (decrease) increase 68,976 (19,880)
Cash at beginning of period - 30,966
Cash at end of period $68,976 $11,086
</TABLE>
Supplemental disclosures of interest paid:
Interest paid on borrowings for the nine months ended March 31,
1995 and March 31, 1996 was $72,217 and $72,636, respectively.
Supplemental disclosures of noncash investing and financing
activities:
Effective February 6, 1996, the Company acquired a medical
practice. The purchase price was allocated as follows:
Assets acquired
Accounts receivable $75,466
Property and equipment 33,047
Intangible 207,708
316,221
Less liabilities assumed (21,982)
294,239
Acquisition costs paid (22,047)
Common stock issued valued at $5.25 (272,192)
$ -
THE COMPANY DOCTOR AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Summary of Accounting Policies
The summary of the Issuer's significant accounting policies are
incorporated by reference to the Company's Prospectus of February
6, 1996.
The accompanying unaudited condensed financial statements reflect
all adjustments which, in the opinion of management, are
necessary for a fair presentation of the results of operations,
financial position and cash flows. The results of the interim
period are not necessarily indicative of the results for the full
year.
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
On March 31, 1996, the Company had cash of $68,976 and
$7,561,539 invested in money market funds, primarily from the
proceeds of the initial public offering (IPO) of February 1996.
In addition, the Company had other current assets totaling
$795,621 resulting in total current assets of $8,426,136.
Current liabilities were $619,450 which resulted in a current
ratio of 13.6 to 1.
The Company closed its initial public offering (IPO) in February,
1996. The Company sold a total of 1,840,000 Units, each Unit
consisting of one share of Common Stock and one Warrant to
purchase an additional share of Common Stock. The Units were
sold at a price of $5.25 per Unit providing the Company with
gross offering proceeds of $9.66 million. After payment of
expenses associated with the offering, the Company retained
proceeds in excess of $7.9 million. The Company intends to use
the net proceeds from the offering to finance the acquisition and
capitalization of an insurance subsidiary, acquire complementary
medical practices, establish and manage new facilities, expand
sales and marketing programs and for other current working
capital purposes.
THE COMPANY DOCTOR AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations (continued)
Liquidity and Capital Resources
The foregoing discussion contains certain forward-looking
statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of
1934, which are intended to be covered by the safe harbors
created thereby. These statements include the plans and
objectives of management for future operations, including plans
and objectives relating to the capitalization of an insurance
subsidiary, acquisition of complementary medical practices and
establishing and managing new facilities. The forward-looking
statements included herein are based on current expectations that
involve numerous risks and uncertainties. Assumptions relating
to the foregoing involve judgments with respect to, among other
things, future economic, competitive and market conditions and
future business decisions, all of which are difficult or
impossible to predict accurately and many of which are beyond the
control of the Company. Although the Company believes that the
assumptions underlying the forward-looking statements are
reasonable, any of the assumptions could be inaccurate and,
therefore, there can be no assurance that the forward-looking
statements included in this Form 10-QSB will prove to be
accurate. In light of the significant uncertainties inherent in
the forward-looking statements included herein, the inclusion of
such information should not be regarded as a representation by
the Company or any other person that the objectives and plans of
the Company will be achieved.
Results of Operations
Revenue
Revenues are derived primarily from the management of physician
practices engaged in the diagnosis, treatment and management of
work-related injuries and illnesses and from other occupational
healthcare services such as employment-related physical
examinations, drug and alcohol testing, functional capacity
testing and other related programs. The Company's business
exhibits some seasonality. From November through January,
factors such as plant closings, vacations and holidays result in
fewer occupational injuries and illnesses. Also, employers
generally hire fewer employees in the calendar year's fourth
quarter, thus reducing the number of pre-hiring physical
examinations and drug and alcohol tests during this period.
Patient visits also decline in summer months due to plant
closings, vacations and fewer illnesses related to adverse
weather. Accordingly, results of operations during the Company's
first and second fiscal quarters of each year (quarters ended
September and December), will tend to be somewhat lower than the
remaining quarters of the fiscal year.
THE COMPANY DOCTOR AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations (continued)
Net revenues for the nine months ended March 31, 1996 increased
$811,139 or 37.5% to $2,975,561 from the $2,164,422 net revenue
level achieved for the same nine month period last year. Net
revenues for the quarter ended March 31, 1996 increased $207,205
or 26.5% to $989,388 from the $782,183 net revenues level
achieved in the same quarter last year. This growth is
attributable to three factors: 1) the further development of the
facilities managed by the Company; 2) the Company's ability to
capture additional market share; and 3) the acquisition through
Donald F. Angle, M.D., P.A., of a medical practice in Lancaster,
Texas on Feb. 6, 1996. With respect to the development of new
facilities, the Garland and Arlington, Texas facilities opened in
mid-1994 and were not in operation for the entire nine month
period ended March 31, 1995.
Cost of Services Provided
Cost of services provided for the nine months ended March 31,
1996, as a percent of net revenues was 34.9%, which exactly
matched the 34.9% performance of one year ago. Cost of services
provided for the current quarter as a percent of net revenues was
38.5% which was slightly higher than the 38.0% level of the same
quarter one year ago.
General and Administrative
General and administrative expenses for the first nine months
ended March 31, 1996, as a percent of revenue, were 59.4%, which
was a decline of 12.4% from the 71.8% for the same nine month
period a year ago, while revenues increased 37.5% for the nine
months ended March 31, 1996 over the prior year. General and
administrative expenses for the current quarter totaled $572,550
which was 57.9% of revenue, a decline from the 65.8% of revenue
from a year ago. The decrease of 12.4% over the two comparable
nine months periods, is the result of the Company's management of
fixed and variable costs. This positive trend may slow or
possibly reverse in the next quarter ended June 30, 1996,
resulting from further implementation of the plan to acquire and
capitalize an insurance company. The insurance company is
expected to enhance the Company's services provided to employer
clients as part of its overall expansion plans.
Marketing Expenses
Marketing expense at 2% of revenues for the nine month period
ended March 31, 1996, represents a more aggressive approach as
post IPO planned expansion activity has increased.
THE COMPANY DOCTOR AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations (continued)
Net Interest
Interest income is related to funds invested from the proceeds of
the IPO. During the quarter ended March 31, 1996, interest
income was $47,422 against interest expense of $23,870.
Net Income or (loss)
Considering the effect of some seasonality in the Company's
business, the net income for the nine months ended March 31,
1996, of $114,427, was 3.8% of revenue, but much more
importantly, it was a significant increase over the $260,304 loss
(or 12% of revenue) for the same period a year ago. The change
represents an improvement of $374,731 (from $260,304 net loss to
$114,427 net income) and as a percent of revenue, was a 17.3%
improvement over the prior year. The net income for the nine
months ended March 31, 1996, includes an income tax expense
credit of $30,000 taken in the quarter ended March 31, 1996,
resulting from the partial recognition of the beneficial effects
of the prior years Net Operating Losses carryforwards (NOL).
THE COMPANY DOCTOR AND SUBSIDIARIES
MARCH 31, 1996
FORM 10-QSB
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Issuer has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
THE COMPANY DOCTOR
(Issuer)
Date: May 15, 1996 By: /s/ Fred G. Parrish
Fred G. Parrish
V.P., Chief Operating Officer,
Chief Financial Officer
By: /s/ Donald F. Angle
May 15, 1996 Donald F. Angle, M.D.
Chairman, President, Chief Executive Officer,
Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> JUN-30-1996 JUN-30-1996
<PERIOD-END> MAR-31-1996 MAR-31-1996
<CASH> 68,976 68,976
<SECURITIES> 7,561,539 7,561,539
<RECEIVABLES> 619,147 619,147
<ALLOWANCES> 25,000 25,000
<INVENTORY> 0 0
<CURRENT-ASSETS> 8,426,136 8,426,136
<PP&E> 1,115,884 1,115,884
<DEPRECIATION> 614,516 614,516
<TOTAL-ASSETS> 9,252,356 9,252,356
<CURRENT-LIABILITIES> 619,450 619,450
<BONDS> 0 0
0 0
0 0
<COMMON> 46,070 46,070
<OTHER-SE> 8,347,048 8,347,048
<TOTAL-LIABILITY-AND-EQUITY> 9,252,356 9,252,356
<SALES> 989,388 2,975,561
<TOTAL-REVENUES> 1,036,810 3,022,983
<CGS> 380,940 1,038,673
<TOTAL-COSTS> 602,644 1,827,247
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 23,870 72,636
<INCOME-PRETAX> 29,356 84,427
<INCOME-TAX> (30,000) (30,000)
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 59,356 114,427
<EPS-PRIMARY> .01 .03
<EPS-DILUTED> .01 .03
</TABLE>
