FORM 10-QSB/A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
- OR -
[ ] 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 0-24542
CONTINENTAL CHOICE CARE, INC.
(Exact Name of Registrant as Specified in Its Charter)
NEW JERSEY 22-3276736
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
25-B VREELAND ROAD
FLORHAM PARK, NEW JERSEY 07932
(Address of Principal Executive Offices) Zip Code
Registrant's Telephone Number, Including Area Code (201) 593-0500
N.A.
Former Name, Former Address and Former Fiscal Year, if Changed Since
Last Report
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) 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 (2) has been subject to such filing requirements for the past 90
days.
Yes X No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13 or 15(d)
of the Securities Exchange Act of 1934 subsequent to the distribution
of securities under a plan confirmed by a court.
Yes _____ No _____
Applicable only to corporate issuers.
Shares outstanding as of May 8, 1996 3,237,500 shares of common stock,
no par value.
Transitional Small Business Disclosure Format: Yes ____ No X
<PAGE>
Continental Choice Care, Inc. and Subsidiaries
Form 10-QSB/A
March 31, 1996
Part I. Financial Information
The comparative consolidated statements of operations, balance sheets
and statements of cash flows for Continental Choice Care, Inc. and Subsidiaries
(the "Company") are presented with management's discussion and analysis of
material changes in operations on the pages which follow.
The consolidated financial statements and accompanying financial
information as of March 31, 1996 and for the three-month periods ended March 31,
1996 and 1995 are unaudited but, in the opinion of management, include all
adjustments (consisting only of normal recurring adjustments and accruals) which
the Company considers necessary for a fair presentation of the financial
position of the Company at such dates and the operating results and cash flows
for those periods. Results for the interim periods are not necessarily
indicative of results for the entire year. The interim consolidated financial
statements and the related notes should be read in conjunction with the notes to
the consolidated financial statements of the Company included in its Form 10-KSB
filed with the Securities and Exchange Commission.
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<PAGE>
CONTINENTAL CHOICE CARE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS Mar. 31, 1996 Dec. 31, 1995
(unaudited)
<S> <C> <C>
Current Assets:
Cash ...................................................................................... $ 2,596,551 $ 1,341,955
Accounts receivable, less allowance for doubtful accounts of $736,000
at March 31, 1996 and $728,000 at December 31, 1995 ................................... 1,357,067 1,685,888
Supplies inventories ...................................................................... 28,937 57,134
Deferred tax asset ........................................................................ 112,670 112,670
Other current assets ...................................................................... 87,974 102,466
Total current assets ................................................................... 4,183,199 3,300,113
Amounts due from affiliates ............................................................... 773,273 763,273
Amounts due from consulting customers ..................................................... 2,914,649 2,553,475
Intangible assets, net .................................................................... 10,056 7,521
Property and equipment, at cost, less accumulated depreciation ............................ 424,425 615,698
Other assets .............................................................................. 20,041 2,956
$8,325,643 $7,243,036
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable .......................................................................... $ 1,159,736 $ 1,444,461
Accrued expenses .......................................................................... 243,032 341,003
Current portion of notes payable and obligations under
capital leases ......................................................................... 46,083 43,082
Income taxes payable ...................................................................... 121,161 20,000
Total current liabilities .............................................................. 1,570,012 1,848,546
Notes payable and obligations under capital leases,
less current portion ................................................................... 64,713 83,148
Deferred income taxes and other liabilities ............................................... 106,159 106,159
170,872 189,307
Commitments and Contingencies
Stockholders' Equity:
Common stock, no par value, 10,000,000 shares authorized
3,237,500 shares issued and outstanding
at March 31, 1996 and December 31, 1995 ................................................ 5,414,061 5,414,061
Preferred stock, 5,000,000 shares authorized, none issued or outstanding .................. -- --
Paid-in capital ........................................................................... 500 500
Retained earnings (deficit) ............................................................... 1,170,198 (209,378)
Total stockholders' equity ................................................................ 6,584,759 5,205,183
$ 8,325,643 $ 7,243,036
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these balance sheets.
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<PAGE>
CONTINENTAL CHOICE CARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended
Mar. 31, 1996 Mar. 31, 1995
(unaudited) (unaudited)
<S> <C> <C>
Net Patient Revenues:
Equipment and supplies ......................................................... $ 815,835 $ 1,488,838
Services ....................................................................... 829,515 671,608
Total net patient revenues ............................................... 1,645,350 2,160,446
Costs and Expenses:
Cost of goods sold ............................................................. 300,104 799,584
Cost of services ............................................................... 254,426 284,085
Provision for doubtful accounts ................................................ 205,145 226,583
Selling, general and administrative ............................................ 1,116,944 1,185,731
Depreciation and amortization .................................................. 34,120 37,305
Interest income ................................................................ (6,824) (23,267)
Total costs and expenses ................................................. 1,903,915 2,510,021
Loss from operations .............................................................. (258,565) (349,575)
Gain on sale of former New Jersey in-center facility .............................. 1,749,080 -0-
Income (loss) before income taxes ................................................. 1,490,515 (349,575)
Provision for income taxes ........................................................ 110,939 -0-
Net income (loss) ........................................................ $ 1,379,576 $ (349,575)
Net income (loss) per share........................................................ $ .43 $ (.11)
Weighted average number of shares outstanding ..................................... 3,237,500 3,237,500
</TABLE>
The accompanying notes to consolidated financial statements are an
integral part of these statements.
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<PAGE>
CONTINENTAL CHOICE CARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
Mar. 31, 1996 Mar. 31, 1995
(unaudited) (unaudited)
<S> <C> <C>
Cash Flows From Operating Activities:
Net income (loss) .......................................................... $ 1,379,576 $ (349,575)
Adjustments to reconcile net income (loss) to net cash
provided from (used in) operating activities --
Depreciation and amortization .......................................... 34,120 37,305
Provision for doubtful accounts .......................................... 205,145 226,583
Gain on sale of former New Jersey in-center facility ..................... (1,749,080) -0-
Increase (decrease) in accounts receivable ................................. 123,776 (20,982)
Decrease in supplies inventories ........................................... 2,001 6,235
Increase in other assets ................................................... (8,279) (22,184)
Increase in amounts due from affiliates .................................... (10,000) -0-
Increase (decrease) in accounts payable .................................... (343,750) 382,600
Decrease in accrued expenses ............................................... (97,971) (51,235)
Increase (decrease) in income taxes payable ................................ 101,161 (30,492)
Net cash provided from (used in) operating activities .................. (363,301) 178,255
Cash Flows From Investing Activities:
Proceeds from sale of former New Jersey in-center facility ................. 2,010,330 -0-
Amounts loaned or advanced to consulting customers ......................... (611,274) (779,738)
Amounts repaid by consulting customers ..................................... 250,000 -0-
Purchases of property and equipment ........................................ (15,725) (111,660)
Net cash provided from (used in) investing activities ................ 1,633,331 (891,398)
Cash Flows From Financing Activities:
Principal payments on notes payable and obligations
under capital leases ................................................... (15,434) (15,241)
Deferred costs ............................................................. -0- (30,000)
Net cash used in financing activities .................................. (15,434) (45,241)
Net increase (decrease) in cash .......................................... 1,254,596 (758,384)
Cash, beginning of year ....................................................... 1,341,955 2,169,250
Cash, end of period ........................................................... $ 2,596,551 $ 1,410,866
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for income taxes................................ $ 5,939 $ 63,687
Cash paid during the period for interest.................................... $ 354 $ 1,508
</TABLE>
The accompanying notes to consolidated financial statements are an
integral part of these statements.
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<PAGE>
CONTINENTAL CHOICE CARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Nature of business:
Continental Choice Care, Inc. is a New Jersey corporation incorporated
in December 1993 in connection with the reorganization of the health care
related subsidiaries and affiliated companies of TechTron, Inc., a Delaware
corporation ("TechTron"). Continental Choice Care, Inc. and its subsidiaries are
referred to collectively as the "Company." The Company is engaged primarily in
the business of providing dialysis related equipment, services and supplies to
individuals in their homes and other residential alternative sites, including
prisons and nursing homes. The Company owned and operated an in-center facility
in Cape May Court House, New Jersey, ("New Jersey in-center facility") for the
provision of in-center dialysis for the Company's clients. The New Jersey
in-center facility and certain other assets were sold by the Company in March
1996. See "Recent Developments". During fiscal year 1995, the Company commenced
operations at a training center owned by the Company in Linden, New Jersey.
Training centers are freestanding centers to train individual clients in the
self-administration of dialysis treatments ("Training Centers"). The Company is
also engaged in the provision of consulting and administrative services and
acute care dialysis nursing placement services. The Company discontinued
infusion services in 1995 and does not intend to provide such services in the
future.
Substantially all of the Company's revenues are dependent upon
reimbursement from third party payors, including the Medicare and Medicaid
programs and commercial insurance companies. Such third party payors maintain
standards which providers must satisfy to remain eligible for participation and
reimbursement, thus the Company's future operating results are dependent on its
ability to remain eligible for participation in such third party payor programs.
A significant portion of the Company's patients are covered by Medicare under
the End Stage Renal Disease Program ("ESRD"). This program began in 1973 through
legislation which extended benefits to qualifying individuals with permanent
kidney failure at rates set from time to time by the government. The Company is
generally reimbursed by Medicare 80% of an allowed rate established by the
government for the services rendered in connection with ESRD. The patient or
third party insurance company is responsible for the remaining 20% of the fee in
these cases. Any change in these regulations or reimbursement could have a
significant impact on the Company's operations. In addition, the continuing
efforts of third party payors to contain or reduce health care costs by lowering
reimbursement rates, increasing case management review of services and
negotiating reduced contract pricing could have a material adverse impact on the
Company's operations. The Company's operations and cash flows are dependent upon
the rate and timeliness of payment for patient services from third party payors.
In 1996 and 1995, approximately 31% and 35%, respectively, of the Company's cash
receipts were received under the Medicare program, while approximately 69% and
65%, respectively, of cash receipts were received from commercial insurance
companies or contracted entities and Medicaid programs.
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<PAGE>
The health care industry is subject to extensive government
regulations. Such regulations are broad and subject to change and
interpretation. Such regulations do not specifically address certain of the
Company's business arrangements and it is possible the Company's past or present
arrangements or business practices could be challenged. Regulations could be
amended or interpreted to require the Company to change its practices or
business arrangements, the impact of which could have a material adverse effect
on the Company's business and prospects.
The Company is dependent upon referrals of patients for treatment by
physicians practicing in communities served by the Company. A limited number of
physicians account for a significant portion of the Company's patient referral
base. The loss of key referring physicians could have a material adverse impact
on the Company's operations.
(2) Earnings per share:
Earnings (loss) per share is computed by dividing the net income by the
weighted average number of common shares outstanding during the periods. The
impact of common stock equivalents is antidilutive and thus not included in the
calculation of earnings per share in 1996 and 1995.
(3) Related Party transactions:
As of March 31, 1996 and December 31, 1995, $399,236 and $550,754
respectively, was due from the South Bronx Kidney Center, a dialysis facility
located in the Bronx section of New York (the "Bronx Facility"), and is included
in amounts due from consulting customers in the accompanying consolidated
balance sheets. The amounts are net of certain transactions not recorded due to
realization uncertainties. Alpha Administration Corp. ("Alpha"), an entity owned
by the Company's Chairman, President and Corporate Medical Director ("Certain
Executive Officers"), has the option to purchase the Bronx Facility.
The Company has also advanced funds to Continental Dialysis of the
Bronx, Inc. ("CDBI") for the construction of a new In-Center Dialysis Facility
in the Bronx, New York, a company owned by Certain Executive Officers. At
December 31, 1995, $479,000 had been advanced to CDBI. Additional 1996 advances
to CDBI totaled $402,411.
The Company, as well as Certain Executive Officers, have guaranteed an
aggregate of $2,400,000 of bank credit facilities of the Upper Manhattan
Dialysis Center, Inc. ("UMDC") to construct the UMDC facility and to provide
working capital to UMDC. The facilities are comprised of a $500,000 Credit
Facility (the "Revolver") and separate loans originally totalling $1,900,000. As
of March 31, 1996, an aggregate of $1,877,000 was outstanding under the credit
facilities. Under the terms of the Revolver, which was renewed and will mature
in August, 1996, certain amounts due the Company are subordinated to UMDC's
obligations to the bank. No
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<PAGE>
assurance can be given that the bank will not call upon the guarantees of the
Company or Certain Executive Officers. In addition, amounts due the Company from
UMDC may not be paid if UMDC is in default under the terms of the $1,900,000
credit facility. Certain Executive Officers acquired an aggregate of 50% of the
common stock of UMDC as of March 31, 1996. In 1994, the Company loaned certain
principals of UMDC (who are not affiliated with the Company) $450,000 and UMDC
an aggregate of $304,524 at a designated prime rate less 1%. Certain of these
loans are due on demand and certain of these loans which were due on various
stated maturity dates have been extended by the Company to become due on
November 30, 1995. These notes remain outstanding as of March 31, 1996. The
Company intends to extend the due dates. In addition, the Company provided
equipment and supplies to UMDC aggregating $805,412 through March 31, 1996 at no
margin. These amounts and the previously mentioned loans to UMDC and its
principals, are included in amounts due from consulting customers in the
accompanying consolidated balance sheets. The total amounts due from UMDC and
its principals of $1,634,002 and $1,523,284 as of March 31, 1996 and December
31, 1995, respectively, are net of certain transactions not recorded due to
realization uncertainties. The Company is the guarantor of a lease for UMDC. The
Company also is the guarantor of a lease for CDBI. At March 31, 1996, $881,411
is due from CDBI and has been included in amounts due from consulting customers.
(4) Recent Developments:
In March 1996, Courthouse Dialysis, Inc. sold substantially all of its
assets, including the New Jersey in-center facility to Renal Treatment Centers -
New Jersey, Inc. ("RTC - NJ"). In addition, Continental Dialysis, Inc. sold its
rights to provide certain services to designated patients in the Cape May Court
House, New Jersey area to RTC Supply, Inc. The respective buyers of the assets
are subsidiaries of Renal Treatment Centers, Inc. ("RTC"). The prices paid in
the all-cash transaction were approximately $1,370,000 to Courthouse Dialysis,
Inc. and approximately $640,000 to Continental Dialysis, Inc. and resulted in an
aggregate net gain of $1,749,080. A significant portion of the proceeds received
by Courthouse Dialysis, Inc. were used to repay intercompany balances due to
other subsidiaries of the Company. The obligations of the buyers were guaranteed
by RTC and the obligations of the sellers were guaranteed by the Company. In
connection with the transaction, Certain Executive Officers entered into a
Covenant Not to Compete which obligates each of them to refrain from competing
with the buyers and RTC in New Jersey within 35 miles of Cape May Court House,
New Jersey in certain businesses for a term of seven years. The restricted
activities include most of those previously conducted by the Company in the
covered area.
MANAGEMENTS' DISCUSSION AND ANALYSIS
Results of Operations
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<PAGE>
Three months ended March 31, 1996 Compared With Three Months Ended
March 31, 1995.
Net Patient Revenues
Net patient revenues of the Company are derived from providing
equipment and supplies to patients (50% for 1996 and 69% for 1995) and services
(50% for 1996 and 31% for 1995), which services consist of contract nursing
services and dialysis treatments provided by the Company's former New Jersey
in-center facility and the Training Facility. In 1996 and 1995, 31% and 35%,
respectively, of the Company's cash receipts were received under the Medicare
program, while approximately 69% and 65%, respectively, of cash receipts were
received from commercial insurance companies or contracted entities and Medicaid
programs.
The Company anticipates that Medicare payments will continue to be a
major source of revenue. The reimbursement rates for dialysis treatments and for
Epogen, a dialysis medication, are separately determined by Medicare and are
subject to change from time to time. The Medicare reimbursement rate for
dialysis treatments per month per patient was $1,193 in both 1996 and 1995. The
continuing profitability of the Company is also dependent upon such factors as
substantial government regulation and the ability to grow and remain profitable
in a highly competitive industry.
Competition for patients and referral sources in the dialysis business
is highly competitive. The Company competes with many health care providers
ranging in size from single location in-center facilities and small home health
care providers to regional and national companies, and may face additional
competition from others that may decide to enter into business in the geographic
areas served by the Company. Many of the Company's competitors have
substantially greater financial resources than the Company. In addition, the
Company faces competition from other health care providers seeking acquisition
candidates of the type and size which are or may in the future be sought by the
Company. There is no assurance that the Company can continue to compete
effectively with such providers. In the past, the Company has been successful in
serving the home dialysis market. The combination of increased competition from
the Company's larger competitors and the pressures to reduce reimbursement rates
paid by private insurers make it difficult for the Company to maintain or
improve its revenue base. There is no assurance that the Company's increased
sales and marketing efforts will be successful in increasing the Company's net
patient revenues.
Net patient revenues were $1,645,350 in 1996 as compared with
$2,160,446 in 1995. The decrease of $515,096 is attributable to a reduction of
sales to consulting customers of $309,574 for the first quarter 1996 as compared
to the same period in 1995. In addition, there were no net patient revenues
related to the Company's infusion services business for the first quarter of
1996 as compared to $203,000 for 1995 as a result of the termination of that
business in June 1995. Additionally, reductions in the Company's former southern
New Jersey equipment and supplies revenues of $58,394 and New York sales of
equipment and supplies of $50,238 were partially offset by $143,236 due to the
opening of the Company's Training Facility.
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<PAGE>
The Company is not permitted to operate, own or control health care
facilities licensed under New York law and has, accordingly, determined to
provide service in New York through consulting, administrative, or
subcontracting service arrangements with Consulting Customers in New York. The
Consulting Customers are, or are expected to be, partially or 100% owned by the
Certain Executive Officers.
In addition, the Company is the assignee of the Bronx Facility
Agreement between Alpha and the Bronx Facility. The Bronx Facility Agreement
provides that for a maximum annual consulting fee of $240,000, the Company, as
assignee, will provide various administrative and consulting services to the
Bronx Facility. The Company has also provided equipment and supplies to the
Bronx Facility under the agreement in exchange for the Company's listed cost for
the equipment and supplies. The $240,000 consulting fee is expressly
subordinated to the payment of operating expenses of the Bronx Facility arising
after April 16, 1993. Effective August 1994, the Company entered into an
agreement to provide administrative and consulting services to UMDC for a
monthly fee of $33,333. The agreement with UMDC similarly provides for
reimbursement to the Company for services rendered and for its direct costs of
equipment and supplies. The UMDC agreement was automatically renewed in 1995,
extends for a period of two years and is automatically renewable for successive
two year periods unless either party decides to terminate. Neither consulting
fee has been recorded in 1996 or 1995 due to realization uncertainties.
Cost of Goods Sold/Cost of Services
Cost of goods sold was $300,104 or 37% of net patient revenues
attributable to equipment and supplies in the three months ended March 31, 1996
as compared with $799,584 or 54% of net patient revenues attributable to
equipment and supplies in 1995. This decrease in cost of goods sold is primarily
the result of a decrease of equipment and supplies purchased by Consulting
Customers at no margin.
The cost of services totaled $254,426 or 31% of net patient revenues
attributable to services in 1996, a reduction from $284,085 or 42% of net
patient revenues in 1995; this reduction resulted primarily from the use of
lower cost personnel.
Selling, General and Administrative Expenses
Selling, general and administrative expenses totaled $1,116,944 or 68%
of net patient revenues for the three months of 1996 as compared with $1,185,731
or 55% of net patient revenues in 1995. The net decrease of $68,787 is primarily
comprised of reduced fees paid to consultants and accountants of $72,245,
combined with tighter control over payroll and operating costs partially offset
by an increase in salaries, rent and other office expenses aggregating $66,229
due to the opening of the Company's Training Facility.
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Provision for Doubtful Accounts
The provision for doubtful accounts was $205,145 for the first three
months of 1996 as compared with $226,583 in the corresponding period in 1995.
The provision for doubtful accounts is incurred to the extent deemed to be
adequate to absorb possible losses resulting from uncollectible receivables.
Management takes into consideration such factors as business volume, historical
loss experience, regional and economic conditions and industry trends in
developing the allowance for doubtful accounts. At March 31, 1996, the allowance
for doubtful accounts was $736,000 as compared with $728,000 as of December 31,
1995. As a percentage of receivables outstanding, such allowance was 35% at
March 31, 1996 and 30% at December 31, 1995. Management believes the stated
allowance as of March 31, 1996 is adequate to absorb possible losses resulting
from uncollectible receivables.
Depreciation and Amortization Expense
Depreciation and amortization expense in 1996 totaled $34,120, a
decrease of $3,185 from the three months of 1995. This decrease is primarily the
result of the write-off of intangibles related to the 1994 LDL acquisition at
year end 1995.
Net Interest Income
Net interest income was $6,824 in the three months ended March 31, 1996
and $23,267 in 1995. Interest expense on the Company's debt obligations in both
periods was more than offset by interest earned on the remaining proceeds from
the 1994 Offering of common stock. See "Liquidity and Capital Resources."
Provision for Income Taxes
The Federal income tax provision was $30,000 in 1996 and $0 in 1995.
The state income tax provision was $80,939 in 1996 and $0 in 1995. During the
first quarter of 1996, net operating losses were utilized to reduce Federal and
state income taxes.
Liquidity and Capital Resources
The Company experienced a positive net cash flow of $1,254,596 during
the first three months of 1996 comprised of $1,633,331 provided from investing
activities, derived primarily from the proceeds of the sale of certain southern
New Jersey assets of the Company, partially offset by $363,301 used in operating
activities and $15,434 used in financing activities.
The Company has made advances to certain affiliates and Consulting
Customers. In the second quarter of 1994, a note receivable of $125,868 was
created for the amount due from TechTron for costs incurred by the Company on
TechTron's behalf. This note bears interest at an
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Internal Revenue Service imputed rate for instruments having a maturity of two
or more years and otherwise without a stated interest rate. Principal and
accrued interest under the note is due and payable in full no later than
December 31, 1996. The note has been guaranteed by Certain Executive Officers.
Through March 31, 1996, the Company had advanced loans to certain principals of
UMDC (who are not affiliated with the Company) aggregating $450,000 and loans to
UMDC in the amount of $622,448, and had provided $561,554 of equipment and
supplies to UMDC for which the Company had not yet been reimbursed. The loans
bear interest at prime less 1% and are not expected to be repaid before December
31, 1996. The Company, Certain Executive Officers and the shareholders of UMDC
have guaranteed UMDC's credit facilities aggregating $2,400,000, of which
approximately $1,877,000 is outstanding as of March 31, 1996. Through December
31, 1994, Alpha had funded $565,000 of the cash requirements of the Bronx
Facility with funds provided from the Company. The advances were converted into
loan agreements with Alpha, bearing interest of 8%, and payable in full in 1999.
The Company has loaned $57,405 to Alpha to enable Alpha to meet its obligations
under its agreement with the estate of the former director of the Bronx
Facility. All notes from Alpha have been guaranteed by Certain Executive
Officers. As of March 31, 1996, $399,236 was due from the Bronx facility. Total
repayments made by the Bronx Facility in 1996 were $250,000. Additional 1996
advances to the Bronx Facility for supplies and equipment totaled $98,482.
The Company has also advanced funds to CDBI for the construction of a
new in-center dialysis facility in the Bronx, New York. At December 31, 1995,
$479,000 had been advanced to CDBI. Additional 1996 advances to CDBI totaled
$402,411.
In March 1996, Courthouse Dialysis, Inc. sold substantially all of its
assets, including the New Jersey in-center facility, to RTC - NJ. In addition,
Continental Dialysis, Inc. sold its rights to provide certain services to
designated patients in the Cape May Court House, New Jersey area to RTC Supply,
Inc. The transactions resulted in an aggregate net gain of $1,749,080. A
significant portion of the proceeds received by Courthouse Dialysis, Inc. were
used to repay intercompany balances due to other subsidiaries of the Company.
As of April 30, 1996, the Company had completed the planned use of
proceeds of its 1994 Offering of common stock. The Company expects that the cash
flow from operations and from the sale of the New Jersey in-center facility will
be sufficient to fund its operations at least through 1996. After such time, the
Company may require additional funds. The Company has no current commitments or
arrangements for additional financing and there can be no assurance that
additional financings, through bank borrowings, debt or equity financings or
otherwise, will be available on acceptable terms, if at all.
Alpha has the option to purchase the Bronx facility for $500,000, to be
paid in five $100,000 annual installments, plus the cash requirements of the
Bronx Facility and less certain offsets. Alpha has agreed to exercise or not
exercise the option at the sole discretion and expense of the Company. The
Company has guaranteed payment of $200,000 per year on a five year employment
agreement through April, 1998 between an unrelated third party and Alpha. The
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Certain Executive Officers have assumed the Company's obligation under this
guaranty, thereby making the Company's guaranty secondary to those of the
Certain Executive Officers.
The Company has also guaranteed leases for UMDC and CDBI for their
respective in-center facilities in New York. Each has a 15 year term at an
annual rental of $145,000 and $138,000, respectively.
Part II.
Item 6. Exhibits and Reports on Form 8-K.
(a) No Exhibits accompany this 10-QSB/A.
(b) Report filed on Form 8-K, April 3, 1996, reporting a closing
effective March 26, 1996, in which Courthouse Dialysis, Inc.
sold substantially all of its assets to Renal Treatment Centers
- New Jersey for approximately $1,360,000 and Continental
Dialysis, Inc. sold its rights to provide certain services to
designated patients in the Cape May, New Jersey, area to RTC
Supply, Inc. for approximately $640,000 in an
all cash transaction.
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SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CONTINENTAL CHOICE CARE, INC.
Registrant
Date: May 24, 1996 By: __________________________________
STEVEN L. TRENK
President and Chief Operating
Officer and Director
Date: May 24, 1996 By: ___________________________________
RONALD A. LEFKON
Chief Financial Officer
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<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CONTINENTAL CHOICE CARE, INC.
Registrant
Date: May 24, 1996 By: /s/ Steven L. Trenk
STEVEN L. TRENK
President and Chief Operating
Officer and Director
Date: May 24, 1996 By: /s/ Ronald A. Lefkon
RONALD A. LEFKON
Chief Financial Officer
- 14 -
<PAGE>
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0
0
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