<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
__X__ Quarterly report under Section 13 or 15 (d) of the Securities Exchange Act
of 1934 For the quarterly period ended June 30, 1999
-------------
_____ Transition report under Section 13 or 15 (d) of the Securities Exchange
Act of 1934 For the transition period from _____________ to _____________
Commission file number 0-24640
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COMMUNITY MEDICAL TRANSPORT, INC.
------------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in its Charter)
Delaware 13-3507464
------------------------------- -------------------
(State or other Jurisdiction of (I.R.S. Employer)
Incorporation or Organization) Identification No.)
4 Gannett Drive
White Plains, NY 10604
----------------------------------------
(Address of Principal Executives Offices)
(914) 697-9233
---------------------------
(Issuer's Telephone Number)
--------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
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 (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
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.
Yes __________ No __________
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 1,015,124 shares of common
stock as of August 6, 1998 --------------------------
- --------------------------
Transitional Small Business Disclosure Format (check one):
Yes __________ No ____X______
<PAGE>
COMMUNITY MEDICAL TRANSPORT, INC. AND SUBSIDIARIES
INDEX
Page
----
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets at June 30, 1999
(unaudited) and December 31, 1998 2
Consolidated Statements of Operations
for the Six and Three Months Ended June 30,
1999 (unaudited) and 1998 (unaudited) 3
Consolidated Statements of Cash Flows for the Six
Months Ended June 30, 1999 (unaudited)
and 1998 (unaudited) 4
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6-8
Part II. Other Information
Item 2. Changes in Securities 9
Item 6. Exhibits and reports on Form 8-K 9
<PAGE>
COMMUNITY MEDICAL TRANSPORT, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
<TABLE>
<CAPTION>
ASSETS
June 30, 1999 December 31, 1998
------------- -----------------
(Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents................................... $ 463,000 $ 92,000
Short-term Investments...................................... 72,000 824,000
Accounts receivable, trade, less allowance for
doubtful accounts......................................... 4,320,000 3,587,000
Prepaid insurance........................................... 647,000 513,000
Prepaid and refundable income taxes......................... 63,000 199,000
Other current assets........................................ 575,000 418,000
Deferred tax assets......................................... 474,000 474,000
----------- -----------
Total Current Assets................................. 6,614,000 6,107,000
Property, equipment and leasehold
improvements - net........................................ 3,165,000 3,535,000
Licenses - net.............................................. 663,000 677,000
Customer lists - net........................................ 1,167,000 1,249,000
Other assets................................................ 720,000 247,000
Goodwill - net.............................................. 2,509,000 2,549,000
Covenant not to compete, net................................ 0 33,000
Deferred tax assets......................................... 659,000 42,000
----------- -----------
Total Assets......................................... $15,497,000 $14,439,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt........................... $ 5,794,000 $ 1,701,000
Accounts payable & Accrued expenses......................... 2,786,000 2,529,000
----------- -----------
Total Current Liabilities............................ 8,580,000 4,230,000
Long-term Debt:
Long-term debt - net of current portion..................... 1,015,000 4,540,000
----------- -----------
Total Liabilities.................................... 9,595,000 8,770,000
----------- -----------
Stockholders' Equity:
Preferred stock, 4% cumulative, $.001 par value, 1,000,000 shares
authorized
Common stock, $.001 par value, 5,000,000 shares authorized, 1,015,124 and
998,942 shares issued and outstanding at
June 30, 1999 and December 31, 1998 ..................... 1,000 1,000
Capital in excess of par value.............................. 14,054,000 14,054,000
Accumulated deficit......................................... (8,153,000) (8,386,000)
----------- -----------
Total Stockholders' Equity........................... 5,902,000 5,669,000
----------- -----------
Total Liabilities and Stockholders' Equity........... $15,497,000 $14,439,000
=========== ===========
</TABLE>
Page 2
<PAGE>
COMMUNITY MEDICAL TRANSPORT, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
- Unaudited -
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
-------------------------- -----------------------------
1999 1998 1999 1998
------------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
Net revenue............................................... $8,185,000 $ 9,604,000 $4,140,000 $ 4,732,000
---------- ------------ ---------- -----------
Operating expenses:
Salaries and benefits................................... 4,464,000 5,148,000 2,268,000 2,462,000
Fleet Maintenance....................................... 518,000 601,000 272,000 295,000
Insurance............................................... 298,000 319,000 147,000 159,000
Rent.................................................... 163,000 228,000 79,000 108,000
Depreciation and amortization........................... 568,000 538,000 293,000 292,000
---------- ------------ ---------- -----------
Total operating expenses.............................. 6,011,000 6,834,000 3,059,000 3,316,000
---------- ------------ ---------- -----------
Gross profit.......................................... 2,174,000 2,770,000 1,081,000 1,416,000
Selling, general and administrative....................... (2,310,000) (2,682,000) (1,178,000) (1,299,000)
---------- ------------ ---------- -----------
Income (loss) from operations............................. (136,000) 88,000 (97,000) 117,000
Interest income........................................... 5,000 33,000 4,000 14,000
Interest expense ......................................... (245,000) (358,000) (119,000) (178,000)
---------- ------------ ---------- -----------
Income (loss) before provision for income taxes........... (376,000) (237,000) (212,000) (47,000)
(Benefit) for income taxes................................ (609,000) 0 0 0
---------- ------------ ---------- -----------
NET INCOME ........................................... $ 233,000 $ (237,000) $ (212,000) $ (47,000)
========== ============ =========== ===========
Net income (loss) per share - basic and diluted........... $ .23 $ (.24) $ (.21) $ (.05)
========== ============ ========== ===========
Weighted average number of common shares
outstanding - basic and diluted......................... 1,015,124 1,000,317 1,015,124 1,002,050
========== ============ ========== ===========
</TABLE>
Page 3
<PAGE>
COMMUNITY MEDICAL TRANSPORT, INC, AND SUBSIDIARIES
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------
1999 1998
---- ----
(Unaudited)
<S> <C> <C>
Cash flow from operating activities:
Net income (loss)............................................................ $ 233,000 $ (237,000)
Adjustments to reconcile net income (loss) to cash (used in)
provided by operating activities:
Depreciation and amortization expense...................................... 815,000 798,000
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable-trade net..................... (733,000) 876,000
(Increase) decrease in prepaid expenses and other current assets......... 0 579,000
(Increase) decrease in other assets...................................... (628,000) 78,000
Increase (decrease) in accounts payable and accrued expenses............ 257,000 (1,042,000)
(Increase) decrease in deferred tax assets .............................. (617,000) 0
-------- ------------
Net cash (used in) provided by operating activities.......................... (673,000) 1,052,000
------------ ------------
Cash used in investing activities:
Acquisition of equipment-net of disposals.................................... (276,000) (178,000)
Decrease in short term investments........................................... 752,000 28,000
------------ --------------
Net cash provided by (used in) investing activities.......................... 476,000 (150,000)
------------ --------------
Cash flow from financing activities:
Proceeds from bank borrowings................................................ 1,241,000 55,000
Principal payments on debt................................................... (263,000) (1,011,000)
Principal payments on capital lease obligations.............................. (410,000) (115,000)
------------- -----------
Net cash provided by (used in) financing activities.......................... 568,000 (1,071,000)
------------- -------------
NET INCREASE (DECREASE) IN CASH.............................................. 371,000 (169,000)
CASH - BEGINNING OF PERIOD................................................... 92,000 925,000
-------------- ------------
CASH - END OF PERIOD......................................................... $ 463,000 $ 756,000
============ ===========
Supplementary disclosure of cash flow information: Cash paid during the period:
Interest................................................................... $ 202,000 $ 289,000
============ ============
Taxes...................................................................... $ 1,000 $ 8,000
============ ============
</TABLE>
Page 4
<PAGE>
COMMUNITY MEDICAL TRANSPORT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Note A) - Organization and Basis of Presentation:
- --------------------------------------------------
The accompanying financial statements include the accounts of Community
Medical Transport, Inc. (the "Company") and its five wholly owned operating
subsidiaries, Community Ambulette Service, Inc. ("Ambulette"), First Help
Ambulance and Ambulette, Inc. ("First Help"), Empire Ambulance and Ambulette
Inc. ("Empire"), Century Ambulance and Ambulette Inc. ("Century") and Elite
Ambulance and Medical Coach, Inc., ("Elite") (collectively the "Companies"). All
intercompany balances and transactions have been eliminated in consolidation.
The Company provides specialized medical emergency and non-emergency ambulance
transportation, as well as ambulette transportation services in the New York -
New Jersey Metropolitan area. Ambulettes are specialized vans that contain
wheelchair lifts or ramps for the transportation of the handicapped and
disabled, mentally retarded, elderly and chronically ill to and from day
treatment centers, day care programs, hospitals, nursing homes and other health
care facilities.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the six month period ended June 30, 1999 are not necessarily
indicative of the results that may be expected for the year ending December 31,
1999. The information contained in the interim financial statements should be
read in conjunction with the Company's audited financial statements and
footnotes thereto included in the Company's Form 10-KSB for the year ended
December 31, 1998 filed with the Securities and Exchange Commission.
(Note B) - Reclassification:
- ----------------------------
Certain items in the prior period have been reclassified to conform to
the current period's presentation.
Page 5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Six Months Ended June 30, 1999 Compared to Six Months Ended June 30, 1998 Three
Months Ended June 30, 1999 Compared to Three Months Ended June 30, 1998
Overview
For all periods presented, the following financial information includes
the accounts of all operating subsidiaries of the Company.
The Company's total revenue, which is comprised primarily of ambulette
and ambulance service fees charged to Medicare, Medicaid, other third party
payers such as private insurance carriers and health maintenance organizations,
and directly to patients, is presented net of contractual and other adjustments.
Forward Looking Statements
Except for the historical information contained herein, the following
statements and certain other statements contained herein are based on current
expectations. Such statements are forward looking statements that involve a
number of risks and uncertainties. Factors that could cause actual results to
differ materially include, but are not limited to the following (I) general
economic conditions, (ii) competitive market influences, (iii) third party
reimbursement rate changes or changes in criteria of coverage, (iv) substantial
changes in the Company's costs including labor, insurance, supplies and other
costs, (v) customer relations and (vi) increased competition.
Results of Operations
The Company's total revenue amounted to $8,185,000 for the six months
ended June 30, 1999, as compared with $9,604,000 for the six months ended June
30, 1998, a decrease of $1,419,000 or 14.8%. The Company's total revenue
amounted to $4,140,000 for the three months ended June 30, 1999, as compared
with $4,732,000 for the three months ended June 30, 1998, a decrease of $592,000
or 12.5%. The decrease is due to the Company declining certain trips due to the
Company's stricter interpretations of the reimbursement regulations, and
reductions in the reimbursement rates.
Operating expenses decreased by $823,000 or 12.0% to $6,011,000 for the
six months ended June 30, 1999 from $6,834,000 for the six months ended June 30,
1998. Operating expenses decreased by $257,000 or 7.8% to $3,059,000 for the
three months ended June 30, 1999 from $3,316,000 for the three months ended June
30, 1998. The Company has made significant cost reductions in connection the
foregoing reduction in revenues, in particular to salaries and benefits and
fleet maintenance. However these reductions were outweighed by the reductions in
revenues, and as a result, the percentage decreases in operating expenses were
lower than the percentage decreases in revenues. As a result of the foregoing,
gross profit as a percentage of revenues decreased to (i) 26.6% for the six
months ended June 30, 1999 from 28.8 % for the six months ended June 30, 1998,
and (ii) 26.1% for the three months ended June 30, 1999 from 29.9% for the three
months ended June 30, 1998.
Selling, general and administrative expenses decreased by $372,000 or
13.9% to $2,310,000 for the six months ended June 30, 1999, from $2,682,000 for
the six months ended June 30, 1998. Selling, general and administrative expenses
decreased by $121,000 or 9.3% to $1,178,000 for the three months ended June 30,
1999, from $1,299,000 for the three months ended June 30, 1998. The decrease in
costs was a direct result of reductions primarily in administrative operating
costs, marketing salaries and benefits, and administrative salaries and
benefits. . Such expenses as a percentage of revenues increased by 0.3% and 1.0%
to 28.2% and 28.5% for the six and three months ended June 30, 1999,
respectively, from 27.9% and 27.5% for the corresponding periods in 1998.
Page 6
<PAGE>
Interest expense decreased by $113,000 or 31.6% to $245,000 for the six
months ended June 30, 1999, compared to $358,000 for the six months ended June
30, 1998. Interest expense decreased by $59,000 or 33.1% to $119,000 for the
three months ended June 30, 1999, compared to $178,000 for the three months
ended June 30, 1998. This decrease is primarily due to the reduction in
borrowings and the pay down of debt.
Interest income decreased by $28,000 and $10,000 or 84.8% and 71.4% to
$5,000 and $4,000 for the six and three months ended June 30, 1999 respectively,
compared to $33,000 and $14,000 for the six and three months ended June 30, 1998
respectively. The reduction in interest income is primarily due to significant
expenditures in connection with the reduction of debt, capital expenditures and
cash used in operation.
The Company's income taxes amounted to a benefit of $609,000 for the
six and three months ended June 30, 1999 compared with no tax benefit being
recognized for the six and three months ended June 30, 1998, respectively. The
1999 tax benefit resulted from the recognition of deferred tax assets. The
deferred tax assets were recognized for the six and three months ended June 30,
1999, based on management's belief that there is a strong likelihood that such
amounts will be realized based upon their assessment of expected future
operations and the resulting taxability.
The Company's net income (loss) amounted to $233,000 and $(212,000) or
$.23 and $(.21) per share (basic and diluted) for the six and three months ended
June 30, 1999, respectively, as compared to a net loss of $237,000 and $47,000
or $.24 and $.05 per share (basic and diluted) for the six and three months
ended June 30, 1998, respectively. This increase in net income and earnings per
share is attributable to the factors described above, primarily the recognition
of the deferred tax asset.
Acquisition
On March 29, 1999 the Company announced that it has signed a letter of
intent with Lifestar Response Corporation ("Lifestar") for a merger of Lifestar
and the Company. The letter of intent has expired at this time.
Liquidity and Capital Resources
Cash used in operating activities amounted to $673,000 for the six
months ended June 30, 1999 as compared with cash provided by operating
activities of $1,052,000 for the six months ended June 30, 1998. The increase in
cash used in operating activities was largely the result of an increase in
accounts receivable due mainly to a reduction in collections in the current
period
Cash provided by investing activities amounted to $476,000 for the six
months ended June 30, 1999 as compared to cash used in investing activities of
$150,000 for the same period in 1998. The increase in cash provided by investing
activities was primarily the result of a reduction in short-term investments.
Cash provided by financing activities amounted to $568,000 for the six
months ended June 30, 1999 as compared with cash used in financing activities of
$1,071,000 for the same period in 1998. The decrease in cash used in by
financing activities was largely the result of additional bank borrowings as a
result of the recently completed financial agreement with Finova Capital
Corporation and decreased principle payments in 1999 as compared to 1998 for the
same period.
Page 7
<PAGE>
In December 1996, the Company entered into a $10,000,000 credit
facility to replace its previously existing $3,200,000 credit facility for
working capital and capital expenditures. A portion of the $10,000,000 credit
facility consists of a $6,500,000 revolving credit arrangement, which may only
be drawn down if the Company has sufficient qualified accounts receivable. The
balance of the credit facility was to be available under term notes. The Company
at times was unable to drawn down desired amounts because of slow payment by
reimbursements agencies and as a result of delays in collection. In addition,
the Company may be required from time to time to repay a portion of this
facility under the provision of the credit agreement. At March 31, 1998, there
was $5,663,000 outstanding under this facility consisting of $3,000,000 under
the revolving credit agreement and $1,863,000 under the term notes. At December
31, 1997, the Company was not in compliance with several financial covenants of
its credit facility. The credit facility was amended on April 14, 1998 pursuant
to which the lenders waived past non-compliance and amended certain financial
covenants at future measurement dates to accommodate the Company's then current
financial status. Further, the lenders have extended the maturity date of the
revolving credit arrangement to January 18, 1999 and in conjunction with such
revisions, reduced the amount under the revolving credit arrangement from
$6,500,000 to $3,500,000. In February 1999 the Company entered into a new
financing agreement with Finova Capital Corporation. The Company obtained a term
loan of $3,950,000, a revolving a credit line of $4,000,000 and availability of
$1,000,000 for future equipment acquisitions. Under the Revolver, the Company
has approximately a $2.5 million available line of credit, which the Company may
use subject to the availability of eligible accounts receivable. The prior loan
was satisfied with the proceeds of the Finova Loan.
At June 30, 1999, the Company had a working capital deficit of
$1,966,000 as compared to a working capital deficit of $1,619,000 at June 30,
1998.
The Company expects that the combination of existing cash balances and
cash generated from operations based on present projections, will provide
sufficient liquidity and enable it to meet its currently foreseeable working
capital requirements for existing operations for the balance of the year. The
Company expects to reduce the net cash used in operating activities by
intensifying its billing and collection efforts in the second part of the year.
The Company is not in compliance with certain financial covenants
pertaining to the Finova Capital Corporations loan Agreement. Waivers from the
lender of the foregoing covenants are forthcoming.
Inflation
The Company believes that the relatively moderate rates of inflation in
recent years have not had a significant impact on its net revenues or its
profitability.
Page 8
<PAGE>
Item 2 - Changes in Securities.
The following sets forth information relating to all securities of the
Company sold from January 1, 1998 through June 30, 1998 without registering the
securities under the Securities Act of 1933, as amended (the "Securities Act"):
During January and February 1998, the Company issued 222,392 shares of
Common Stock to two non-affiliate entities upon conversions of 778.4 shares of
Series BB Convertible Preferred Stock. Exemption from registration under the
Securities Act is claimed for such issuance upon the exemption afforded by
Section 3(9) of the Securities Act.
Item 6 - Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
(1) The Company filed a Current Report on Forms 8-K and 8-K/A-1, dated
May 18, 1998, relating to items 4 and 7 of Form 8-K. Such Current Report
includes the termination of Richard A. Eisner & Company, LLP ("Eisner") as the
Company's independent auditors, and Eisner's response agreeing to the
disclosures in such filing.
(2) The Company filed a Current Report on Form 8-K, dated June 29,
1998, relating to items 4 and 7 of Form 8-K. Such Current Report includes the
appointment of Edward Isaacs and Company, LLP ("Isaacs") as the Company's
independent auditors to succeed Eisner.
Page 9
<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 on the 16th day of August, 1999.
Community Medical Transport, Inc.
---------------------------------
(registrant)
/s/ Dean L. Sloane
-------------------------------------
Dean L. Sloane
President and Chief Executive Officer
/s/ Nicholas M. Puglisi
-------------------------------------
Nicholas M. Puglisi
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> APR-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 463,000
<SECURITIES> 72,000
<RECEIVABLES> 5,796,000
<ALLOWANCES> 1,476,000
<INVENTORY> 0
<CURRENT-ASSETS> 6,614,000
<PP&E> 7,325,000
<DEPRECIATION> 1,160,000
<TOTAL-ASSETS> 15,497,000
<CURRENT-LIABILITIES> 8,580,000
<BONDS> 0
0
0
<COMMON> 1,000
<OTHER-SE> 5,901,000
<TOTAL-LIABILITY-AND-EQUITY> 5,902,000
<SALES> 4,140,000
<TOTAL-REVENUES> 1,140,000
<CGS> 0
<TOTAL-COSTS> 3,059,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 119,000
<INCOME-PRETAX> (212,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (212,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (212,000)
<EPS-BASIC> (.21)
<EPS-DILUTED> (.21)
</TABLE>
