FORM 10-QSB/A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(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, 2000
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- OR -
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-24542
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CONTINENTAL CHOICE CARE, INC.
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(Exact Name of Registrant as Specified in Its Charter)
NEW JERSEY 22-3276736
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
44 ASPEN DRIVE
LIVINGSTON, NEW JERSEY 07039
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(Address of Principal Executive Offices) Zip Code
Registrant's Telephone Number, Including Area Code (973) 422-1666
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N.A.
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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
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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 12, 2000 3,612,544 shares of common
stock, no par value.
Transitional Small Business Disclosure Format: Yes ____ No X
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CONTINENTAL CHOICE CARE, INC. AND SUBSIDIARIES
FORM 10-QSB/A
MARCH 31, 2000
This Report on Form 10-QSB/A contains "forward-looking statements" that are
based on management's assumptions, estimates and projections. Although these
statements may appear throughout this report, we specifically direct your
attention to the portion of this report entitled "Management's Discussion and
Analysis." Forward looking statements are generally accompanied by words such as
"believe", "intend", "anticipate", "estimate", "expect" and similar words. The
Company's actual results could differ materially from the results anticipated in
such forward-looking statements as a result of known and unknown risks,
uncertainties and other factors.
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, 2000 and for the three month periods ended March 31,
2000 and 1999 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/A filed with the Securities and Exchange Commission.
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<TABLE>
<CAPTION>
CONTINENTAL CHOICE CARE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS MARCH 31, 2000 DEC. 31, 1999
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(UNAUDITED)
Current Assets:
<S> <C> <C>
Cash and cash equivalents .............................................. $ 2,605,768 $ 118,245
Investments in U.S. Government securities .............................. 100,000 1,580,220
Accounts receivable, less allowance for doubtful accounts of $10,993
at March 31, 2000 and $13,543 at December 31, 1999 ............... 114,656 83,038
Amounts due from consulting customers .................................. 415,082 -0-
Other current assets ................................................... 157,543 223,239
Notes receivable ....................................................... -0- 1,027,00
Pine Tree escrow deposit ............................................... -0- 915,000
----------- -----------
Total current assets ............................................. 3,393,049 3,946,742
Amounts due from affiliates ............................................ 520,108 504,567
Note receivable ....................................................... 527,000 -0-
Amounts due from officer ............................................... 330,000 330,000
Property and equipment, at cost, less accumulated depreciation ......... 127,653 134,592
Goodwill and other intangibles, less accumulated amortization .......... 194,196 198,214
Other assets .......................................................... 83,005 50,579
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$ 5,175,011 $ 5,164,694
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Line of credit ......................................................... $ 102,500 $ 70,000
Accounts payable ....................................................... 634,839 771,773
Accrued expenses ....................................................... 1,855,105 1,560,429
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Total current liabilities ..................................... 2,592,444 2,402,202
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Commitments and Contingencies
Stockholders' Equity:
Preferred stock, 5,000,000 shares authorized, none issued or outstanding -- --
Common stock, no par value, 10,000,000 shares authorized,
3,512,544 shares issued and outstanding at March 31, 2000
and 3,267,500 at December 31, 1999 ............................... 6,843,811 5,645,061
Accumulated deficit .................................................... (4,261,244) (2,882,569)
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Total stockholders' equity ....................................... 2,582,567 2,762,492
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$ 5,175,011 $ 5,164,694
=========== ===========
The accompanying notes to consolidated financial statements are
an integral part of these balance sheets.
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CONTINENTAL CHOICE CARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
AND ACCUMULATED DEFICIT
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
2000 1999
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Revenues from continuing operations
Dry cleaning services ........................... $ 315,917 $ 430,248
Consulting services ............................. 83,331 83,331
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399,248 513,579
Costs of services .................................. 225,295 321,608
General and administrative expenses ................ 655,083 756,283
Stock option compensation expenses ................. 1,003,500 -0-
Depreciation and amortization ...................... 15,138 49,852
Settlement costs ................................... 322,609 -0-
Interest income, net ............................... (28,620) (25,164)
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Total costs and expenses ................ 2,193,005 1,102,579
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Loss from continuing operations .................... (1,793,757) (589,000)
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Income from discontinued operations, less applicable
income taxes of $-0- in 2000 .................... 415,082 -0-
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Net loss ................................ (1,378,675) (589,000)
(Accumulated deficit) retained earnings,
Beginning of period ............................. (2,882,569) 989
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End of period ................................... $(4,261,244) $ (588,011)
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Basic and diluted income (loss) per share:
Continuing operations ........................... $ (.54) $ (.18)
Discontinued operations ......................... .12 -0-
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Net loss per share .............................. $ (.42) $ (.18)
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Basic and diluted weighted average shares
outstanding ..................................... 3,323,352 3,246,833
=========== ===========
The accompanying notes to consolidated financial statements are
an integral part of these statements.
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CONTINENTAL CHOICE CARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31,
2000 1999
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(unaudited) (unaudited)
Cash Flows From Operating Activities:
Net loss ....................................... $(1,378,675) $ (589,000)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization .................. 16,692 62,229
Stock grant and warrants issued ................ 189,000 70,500
Income from discontinued operations ............ (415,082) -0-
Stock option compensation expense .............. 1,003,500 -0-
Changes in operating assets and liabilities:
Increase in accounts receivable, net .... (31,618) (61,341)
Decrease (increase) in other assets ..... 33,270 (127,705)
Increase in amounts due from affiliates . (15,541) (23,450)
(Decrease) increase in accounts payable . (136,934) 189,084
Increase in accrued expenses ............ 294,676 8,544
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Net cash used in operating activities ................ (440,712) (471,139)
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Cash Flows From Investing Activities:
Repayment of notes receivable .................. 500,000 -0-
Repayment of PineTree deposit .................. 915,000 -0-
Issuance of notes receivable ................... -0- (250,000)
Purchases of U.S. Government securities ........ -0- (1,493,181)
Proceeds from sale of U.S. Government securities 1,480,220 2,000,000
Purchases of property and equipment ............ (5,735) (2,291)
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Net cash provided by investing activities ............ 2,889,485 254,528
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Cash Flows From Financing Activities:
Net borrowings under line of credit ............ 32,500 30,000
Proceeds from exercise of stock options ........ 6,250 -0-
Principal payments on notes payable ............ -0- (4,365)
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Net cash provided by financing activities ............ 38,750 25,635
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Net increase (decrease) in cash and cash equivalents . 2,487,523 (190,976)
Cash and cash equivalents, beginning of year ......... 118,245 3,058,676
----------- -----------
Cash and cash equivalents, end of period ............. $ 2,605,768 $ 2,867,700
----------- ===========
Supplemental Disclosures of Cash Flow Information:
Cash paid for income taxes ..................... $ 5,682 $ 4,141
=========== ===========
Cash paid for interest ......................... $ 1,447 $ 3,140
=========== ===========
<FN>
Non-Cash Disclosures:
The Company issued 30,000 shares of common stock to an outside consultant
valued at $180,000 and 150,000 warrants to financial services providers
for consideration of professional services valued at approximately
$238,000.
The Company issued 158,151 shares of common stock valued at $1,003,500 in
connection with the cashless exercise of stock options.
The accompanying notes to consolidated financial statements
are an integral part of these statements.
</FN>
</TABLE>
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CONTINENTAL CHOICE CARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) NATURE OF BUSINESS AND DISCONTINUED OPERATIONS:
Continental Choice Care, Inc., (the "Company"), is currently engaged in
the dry cleaning service industry and provides consulting services under
agreement.
(2) INCOME (LOSS) PER SHARE:
Basic income (loss) per share represents net income (loss) divided by
the weighted average shares outstanding. Diluted income (loss) per share
represents net income (loss) divided by the weighted average shares outstanding
adjusted for the incremental dilution of outstanding employee stock options and
awards, if dilutive.
As of March 31, 2000 and 1999, the basic and diluted weighted average
common shares outstanding were 3,323,352 and 3,246,833 respectively. As of March
31, 2000, there were 1,312,100 of outstanding stock options issued to Directors,
officers and employees of the Company as well as 150,000 warrants issued to
financial services providers which were excluded from basic and diluted net
income (loss) per share for both periods because the effect would be
antidilutive.
(3) RELATED PARTY TRANSACTIONS:
As of December 31, 1999, the Company had advanced $504,567 to TechTron.
During 2000, an additional $15,541 was advanced to TechTron. The Company has
obtained notes from TechTron for all of the advances. The majority of the notes
issued in connection with these advances bear interest at a rate of 8% per annum
and are payable upon demand. Payments on the notes are not anticipated in 2000
due to the fact that TechTron does not expect to earn sufficient revenues to
make payment.
Several promissory notes and associated guarantees of related parties
were in default under the original terms of the notes. As of March 31, 2000,
amounts due the Company from TechTron totaled $520,108. Of this amount, $125,868
was secured by a promissory note dated August 9, 1994. Under the original terms
of this note, principal and interest were due and payable by December 31, 1996.
The terms of the note were amended by the Company to become due and payable on
demand. All amounts due from TechTron are guaranteed by Certain Executive
Officers. Any demand for payment under the personal guarantees will have to be
made by the Company's Board of Directors. The Company's Board of Directors does
not currently intend to make demand for payment.
On November 16, 1999, the Company sold its majority interest in United
Dry Cleaning, LLC ("United"), a subsidiary of the Company, to UDC Acquisition
Corp, Inc. ("UDC"), an Arizona corporation, pursuant to terms of a Stock
Purchase Agreement. The majority of the outstanding common stock of UDC is owned
by Jeffrey M. Trenk, brother of Steven L. Trenk, son of Alvin S. Trenk and
nephew of Martin G. Jacobs, collectively, the Certain Executive Officers. The
aggregate purchase price for the Company's stock interest, $10,000, was offset
against amounts due to Jeffrey M. Trenk from the Company.
5
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Under the terms of the sale, UDC acquired substantially all of the
assets and liabilities of United at the time of sale. The Company did not
recognize any gain or loss related to the transaction. The sale included net
fixed assets of $199,292, a write-off of net goodwill of $588,959 offset by a
relief from liabilities of $1,544,015. As of March 31, 2000, the Company has
advanced $69,152 to UDC. The Company has obtained demand promissory notes for
the advances. The notes bear interest at a rate of 8% per annum and have been
guaranteed by Jeffrey M. Trenk, President of UDC.
On March 21, 2000, the Company awarded 30,000 shares of the Company's
common stock, valued at $180,000, as additional compensation to Jeffrey M.
Trenk. Jeffrey M. Trenk currently provides consulting services to the Company's
dry cleaning operation. The Company has recorded $180,000 in general and
administrative expenses relating to the issuance of these shares in the
accompanying Consolidated Statements of Operations and Accumulated Deficit.
(4) TELECOMMUNICATIONS MERGER:
On February 5, 1999, the Company and TelaLink Network, Ltd., a
privately held Delaware corporation ("TelaLink") executed an Agreement and Plan
of Merger ("Merger Agreement") to merge the two companies in a stock-for-stock
transaction (the "Merger"). On September 21, 1999, the Company terminated the
Merger Agreement upon determining that financing for the proposed transactions
would not be available on terms acceptable to the Company. During 1999, the
Company recorded $272,173 in failed acquisition costs consisting primarily of
legal and accounting expenses relating to the merger.
As of the date of termination, the Company had loaned a total of
$1,027,000 to TelaLink and its affiliates to provide working capital pursuant to
promissory notes. The notes bore interest at a rate of 12% per annum and were
due and payable on April 30, 2000.
In addition to amounts loaned to TelaLink, the Company also entered
into a Stock Purchase Agreement (the "Stock Purchase Agreement") by and among
the Company, Pine Tree Telephone and Telegraph Company ("PTTC") and the
principal (95%) stockholder of PTTC, whereby the Company agreed to purchase not
less than 95% of PTTC's issued and outstanding capital stock. PTTC is a
telecommunication services provider to areas near Lewiston and Portland, Maine.
To secure the Company's rights under the Stock Purchase Agreement, the Company
deposited the sum of $915,000 in an escrow account. The deposit was to be
treated as a non-refundable deposit against the purchase price to be paid by the
Company at closing, or otherwise in accordance with the Stock Purchase
Agreement.
At a closing on January 19, 2000, the Company received $1,463,800 and
subsequent payment of $1,538 pursuant to the terms of an Inter-Party Agreement
by and among the Company, Quorum Communications, Inc., TelaLink, Country Road
Communications, Inc. ("Country Road"), Prudential Insurance Company of America
and various other third parties. Under the terms of the agreement, the Company
sold its interest in the various TelaLink notes totaling $1,027,000 to Country
Road for a purchase price of up to $1,100,000 of which $500,000 was paid at
closing and the balance paid in the form of a promissory note. The note bears
interest at a rate of 6.5% per annum and matures January 19, 2005. Interest is
due and payable in annual installments on January 19, 2001 and on each
anniversary thereafter up to and including the maturity date. Country Road has
the right to prepay the note. If Country Road makes aggregate payments equal to
$500,000 plus accrued and unpaid interest thereon prior to the second
anniversary of the note date, then the obligation will be deemed satisfied in
full. Under certain conditions, Country Road may be required to prepay a
principal amount of $500,000 plus accrued and unpaid interest.
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At the closing, the Company also received reimbursement of the $915,000
PTTC deposit plus accrued interest of $50,338 in exchange for the Company
assigning all of its rights and obligations under the PTTC Stock Purchase
Agreement.
In connection with the closing and as part of a separate settlement
agreement, the Company became obligated at the time of closing to issue 100,000
shares of the Company's common stock to a third party equity investor of
TelaLink Network, Ltd. in exchange for the release of any and all claims and
liens that it may have the right to assert against TelaLink and the Company. The
100,000 shares of common stock were issued by the Company on April 21, 2000 and
valued at $325,000 based on the fair market value of the common stock issued.
(5) ALLIANCE WITH ALLIANT TECHNOLOGIES, INC.
On March 22, 2000, the Company executed a letter of intent to form a
strategic alliance with Alliant Technologies, Inc. ("Alliant"). Through this
proposed alliance, the Company expects to invest in early stage Internet
companies. Alliant is a provider of Internet technology solutions for business
that offers a complete range of services, including strategic business
consulting, e-commerce application development, business process engineering and
infrastructure engineering. Under the terms of the letter of intent, the Company
would obtain 25% of the outstanding securities of Little Universe, LLC, ("LU") a
start-up Internet Portal.
On April 24, 2000, the Company completed its investment resulting in
the acquisition of 25% of the equity of LU. The all cash purchase price for the
Company's interest was $250,000. LU is a web resource which allows people,
business, civic and government organizations to interact with and participate in
their communities. It ties municipal governments, public safety, planning and
zoning agencies, libraries, schools and other civic organizations to local
merchants, clubs, sports teams, religious groups, baby sitting co-ops and
residents. Revenues are generated by selling advertising space ranging from
single page sites through banner advertisements to the local community and in
contiguous communities.
(6) OTHER MATTERS
On January 3, 2000, the Company granted a warrant to purchase up to an
aggregate of 100,000 shares of its common stock to a financial services provider
in which the Chairman is a founding partner at an exercise price of $2.00, which
was the fair market value on the date of grant. The warrant has an estimated
value of $62,000 based upon a Black Scholes valuation.
On March 22, 2000, the Company granted a warrant to purchase up to an
aggregate of 50,000 shares of its common stock to Alliant, at an exercise price
of $3.00. The warrant has an estimated value of $176,000 based upon a Black
Scholes valuation.
During the first quarter of 2000, the Company issued 158,151 shares in
connection with the cashless exercise of stock options issued under the
Company's 1994 Long-Term Incentive Award Plan and the 1997 Equity Incentive Plan
as well as 53,393 shares in connection with the exercise of warrants issued to a
professional services provider in 1997. The Company recorded $1,003,500 in stock
option compensation expense relating to the issuance of these shares in the
accompanying Consolidated Statement of Operations.
7
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(7) SUBSEQUENT EVENTS
On May 3, 2000, the Company received an additional payment of $415,082
from Upper Manhattan Dialyis Center, Inc.("UMDC"), a New York corporation to
which the Company provided consulting and administrative services. The Company
recorded such amount as of March 31, 2000 as additional revenues from UMDC, not
previously recorded due to realization uncertainties. Such amount has been
included in income from discontinued operations in the accompanying Consolidated
Statements of Operations and Accumulated Deficit.
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Three Months Ended March 31, 2000 Compared with Three Months Ended
March 31, 1999.
On October 8, 1997, the Company completed the sale of substantially all
its New Jersey, New York, Connecticut and Pennsylvania dialysis business assets
to IHS of New York, a New York corporation ("IHS"). Following the IHS closing,
the Company's sources of revenue included amounts payable for consulting
services to be provided to IHS through October 2000, at a rate of $27,777 per
month. For the three months ended March 31, 2000 and 1999, respectively, the
Company recognized a total of $83,331 each year for consulting services under
this agreement.
Beginning in May 1998, the Company began acquiring dry cleaning
businesses through a newly formed subsidiary, United Dry Cleaning, L.L.C.
("United") in the Phoenix, Arizona area. This area was selected for its rapid
growth in construction and development and increase in population, which
provided United with growth potential. United's objective was to capitalize on
the trend toward consolidation of small closely held companies where critical
mass could be achieved with limited capital expenditure.
During the first three quarters of 1999, United closed six of the
eleven retail facilities it had acquired or formed during 1998. During the same
period, United sold three retail facilities back to the original sellers. The
sales were made in consideration of the release of United's obligations under
the purchase price promissory notes executed in connection with the original
purchases. On November 16, 1999, the Company sold its majority interest in
United to UDC Acquisition Corp., Inc., pursuant to terms of a Stock Purchase
Agreement.
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In November 1999, the Company formed a new subsidiary, Valet-USA, Inc.
("Valet"), to provide dry cleaning services to focus primarily on the
hospitality industry in the Phoenix, Arizona area. As of May 4, 2000, Valet
provides guest, drapery and linen dry cleaning services to approximately 133
hotel customers in the Phoenix area. The Company believes that it can generate
higher revenues from the hospitality business than it derived from the retail
business. Further, management believes the Company will benefit due to a
reduction in personnel, supplies, capital equipment lease obligations and real
property leases as a result of the sale of the retail business. Valet currently
operates a single plant and drop store from a leased location.
REVENUES
The Company's dry cleaning operation recognized revenues of $315,917
and $430,248 in 2000 and 1999, respectively. Revenues in 2000 are lower than in
1999 due to the Company divesting itself of the retail dry cleaning business
during the first three quarters of 1999. Of these amounts, approximately $56,675
and $213,381 or 18% and 50% in 2000 and 1999, respectively, related to dry
cleaning services provided relating to the retail operation. The remaining
$259,242 and $216,867 related to dry cleaning services provided to hotel
customers. The Company anticipates that hotels will continue to be the major
source of revenue. Valet continues to target additional businesses in the
Phoenix, Arizona area to maximize plant capacity as well as broaden the
Company's revenue base.
In 2000, the Company recorded $415,082 in additional revenues related
to payments from UMDC, not previously recorded due to realization uncertainties.
Such amount has been included in income from discontinued operations in the
accompanying Consolidated Statements of Operations and Accumulated Deficit.
COST OF SERVICES
Cost of services was $225,295 and $321,608 or 71% and 75% of revenues
attributable to the Company's dry cleaning business in 2000 and 1999,
respectively. Expenses in 2000 are lower than in 1999, due to the Company
divesting itself of the retail dry cleaning business during the first three
quarters of 1999. Cost of services is mostly comprised of $159,859 and $253,761
in salaries and other payroll expenses as well as $35,840 and $51,211 for
supplies in 2000 and 1999, respectively. Management continues to seek ways to
reduce Valet's costs and to increase revenues.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses totaled $655,083 in 2000, as
compared with $756,283 for the three months ended March 31, 1999. The net
decrease of $101,200 is primarily comprised of a decrease of $177,838 related to
the Company's closing and sale of dry cleaning businesses in the first three
quarters of 1999, a reduction of $40,594 in salaries and other office expenses
due to a reduction in corporate staff resulting from the IHS transaction, offset
by the issuance of 30,000 shares of common stock valued at $180,000 to an
outside consultant (See Note 3 to the Consolidated Financial Statements).
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ALLOWANCE FOR DOUBTFUL ACCOUNTS
A provision for doubtful accounts was recorded to the extent deemed to
be adequate to absorb possible losses resulting from uncollectible receivables.
The Company reviews individual accounts and a reserve is established to reflect
any amounts considered doubtful of collection based on the Company's knowledge
of specific payors, an analysis of the aging of the accounts, as well as past
experience with the accounts under review. As of March 31, 2000, the allowance
for doubtful accounts was $10,993 as compared with $13,543 at December 31, 1999.
As of March 31, 2000 and December 31, 1999, the Company's dry cleaning
business had accounts receivable of $125,648 and $96,581, respectively. As a
percentage of receivables outstanding, such allowance was 9% at March 31, 2000
and 14% at December 31, 1999, respectively. Management continues to evaluate the
collectibility of all accounts and believes the stated allowance as of March 31,
2000 is adequate to absorb possible losses resulting from uncollectible
receivables.
DEPRECIATION AND AMORTIZATION EXPENSE
Depreciation and amortization expense for 2000 and 1999 totaled $16,692
and $62,229. The decrease of $45,537 from 1999 resulted from the sale of assets
in connection with the sale of dry cleaning stores and plants to their original
owners in 1999, as well as the sale of the Company's majority interest in United
to UDC Acquisition in November, 1999.
INTEREST INCOME AND INTEREST EXPENSE
Net interest income was $28,620 and $25,164 for the three months ended
March 31, 2000 and 1999, respectively.
INCOME TAXES
All of the Company's deferred tax assets as of March 31, 2000 have been
offset by a valuation allowance as a result of the Company's operating results.
LIQUIDITY AND CAPITAL RESOURCES
The Company experienced a positive net cash flow of $2,487,523 in 2000.
Net cash used in operating activities of $440,712 related primarily to corporate
general and administrative expenses. Net cash provided by investing activities
of $2,889,485 reflects the proceeds from the sale of U.S. Government securities
as well as repayments of amounts loaned to TelaLink and amounts held in escrow
relating to the Pine Tree Stock Purchase Agreement. Net cash provided by
financing activities of $38,750 related primarily to net proceeds from
borrowings on Valet's line of credit.
The Company has made advances to certain affiliates and consulting
customers. As of December 31, 1999, the Company had advanced $504,567 to
TechTron. During 2000, the Company advanced an additional $15,541 to TechTron.
The Company has obtained demand promissory notes from TechTron for all of the
advances, of which the majority of notes issued bear an 8% rate of interest.
Interest of approximately $84,000 has accrued through March 31, 2000, but has
not been recorded due to TechTron's lack of sufficient revenues to make payment.
Payments on the notes are not anticipated in 2000 due to the fact that TechTron
does not expect to earn sufficient revenue to make payment. All amounts due from
TechTron are unsecured and are guaranteed by Certain Executive Officers.
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The Company expects that its cash, cash equivalents and investments in U.S.
Government securities will be sufficient to fund the Company's operations
through March 31, 2001.
In 1998, the Company committed an aggregate of $1,000,000 to fund
United's initial operations. During 1999, the Company arranged for a $200,000
line of credit with a bank to provide additional financing. This line was
primarily secured by all of United's assets and further secured by assets of a
company in which the Chairman of the Company is a founding partner. In 1999, all
amounts due under the line of credit were repaid by the liquidation of the
assets underlying the guarantee which secured the line. In 1999, the Company
arranged for a $100,000 line of credit to fund the daily operations. The line
bore interest at a rate of 8% per annum and was payable on demand. The line of
credit was with a company owned by the Chairman of the Company and had $70,000
of debt availability remaining at the time of United's sale to UDC. In 1999, the
Company arranged for a $250,000 line of credit for Valet to fund the daily
operations. The line bears interest at a rate of 8% per annum and is payable on
demand. The line of credit is also with a company owned by the Chairman of the
Company. As of March 31, 2000, $147,500 of debt availability remained on the
line.
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PART II
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
No exhibits are filed with this report or are incorporated herein by
reference.
(b) No reports on Form 8-K were filed by the Company during the
fiscal quarter of the Company ending March 31, 2000.
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SIGNATURES
In accordance with the requirements of Section 13 or 15(d) of the Exchange Act,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
CONTINENTAL CHOICE CARE, INC.
Date:________, 2000 By: /s/Steven L. Trenk
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Steven L. Trenk
President, and Chief
Operating Officer
Date:_________, 2000 /s/ Mark N. Raab
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Mark N. Raab
Chief Financial Officer
Principal Financial Officer
