<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 September 30, 2000
/ / 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.
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(Exact Name of Small Business Issuer as Specified in its Charter)
Delaware 13-3507464
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(State or other Jurisdiction of (I.R.S. Employer)
Incorporation or Organization) Identification No.)
4 Gannett Drive
White Plains, NY 10604
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(Address of Principal Executives Offices)
(914) 697-9233
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(Issuer's Telephone Number)
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(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
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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
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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: 1,437,687 shares of
common stock as of November 20, 2000
Transitional Small Business Disclosure Format (check one):
Yes No X
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COMMUNITY MEDICAL TRANSPORT, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page
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<S> <C>
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets at September 30, 2000
(unaudited) and December 31, 1999 2
Consolidated Statements of Operations
for the Nine and Three Months Ended September 30,
2000 (unaudited) and 1999 (unaudited) 3
Consolidated Statements of Cash Flows for the Nine
Months Ended September 30, 2000 (unaudited)
and 1999 (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 6. Exhibits and reports on Form 8-K 9
</TABLE>
<PAGE>
COMMUNITY MEDICAL TRANSPORT, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
<TABLE>
<CAPTION>
September 30, 2000 December 31, 1999
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(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents .................................................... $ 22,000 $ 152,000
Accounts receivable, trade, less allowance for
doubtful accounts .......................................................... 2,711,000 3,183,000
Prepaid insurance ............................................................ 334,000 285,000
Other current assets ......................................................... 189,000 213,000
Preferred Stock Subscription Receivable....................................... 2,800,000 0
Deferred tax assets .......................................................... 0 472,000
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Total Current Assets .................................................. 6,056,000 4,305,000
Property, equipment and leasehold
improvements - net ......................................................... 1,568,000 2,657,000
Licenses - net ............................................................... 630,000 650,000
Customer lists - net ......................................................... 906,000 1,044,000
Other assets ................................................................. 528,000 624,000
Goodwill - net ............................................................... 1,931,000 2,435,000
Deferred tax assets .......................................................... 796,000 684,000
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Total Assets .......................................................... $ 12,415,000 $ 12,399,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Cash overdraft ............................................................... $ 0 $ 233,000
Current portion of long-term debt ............................................ 5,359,000 5,988,000
Accounts payable & Accrued expenses .......................................... 2,725,000 2,032,000
------------ ------------
Total Current Liabilities ............................................. 8,084,000 8,253,000
Long-term Debt:
Long-term debt - net of current portion ...................................... 87,000 234,000
------------ ------------
Total Liabilities ..................................................... 8,171,000 8,487,000
Stockholders' Equity:
Preferred stock, 3,000,000 shares authorized ................................. 3,000,000 0
Common stock, $.001 par value, 5,000,000 shares
authorized, 1,437,687 and 998,942 shares issued
and outstanding at September 30, 2000 and December 31, 1999 .................. 1,000 1,000
Capital in excess of par value ............................................... 14,622,000 14,084,000
Accumulated deficit .......................................................... (13,379,000) (10,173,000)
------------ ------------
Total Stockholders' Equity ............................................ 4,244,000 3,912,000
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Total Liabilities and Stockholders' Equity ............................ $ 12,415,000 $ 12,399,000
============ ============
</TABLE>
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COMMUNITY MEDICAL TRANSPORT, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
- Unaudited -
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
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2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net revenue ............................................ $ 8,417,000 $ 12,243,000 $ 2,534,000 $ 4,058,000
------------ ------------ ------------ ------------
Operating expenses:
Salaries and benefits ................................ 5,147,000 6,711,000 1,592,000 2,247,000
Fleet Maintenance .................................... 634,000 828,000 193,000 310,000
Insurance ............................................ 295,000 442,000 20,000 144,000
Rent ................................................. 221,000 242,000 63,000 79,000
Depreciation and amortization ........................ 849,000 854,000 282,000 286,000
------------ ------------ ------------ ------------
Total operating expenses ........................... 7,146,000 9,077,000 2,150,000 3,066,000
------------ ------------ ------------ ------------
Gross profit ....................................... 1,271,000 3,166,000 384,000 992,000
Selling, general and administrative .................... (3,234,000) (3,445,000) (936,000) (1,135,000)
------------ ------------ ------------ ------------
(Loss) from operations ................................. (1,963,000) (279,000) (552,000) (143,000)
Loss on Impairment Goodwill ............................ 432,000 0 0 0
Interest income ........................................ 0 5,000 0 0
Interest expense ....................................... (477,000) (433,000) (132,000) (188,000)
------------ ------------ ------------ ------------
Income (loss) before provision for income taxes ........ (2,872,000) (707,000) (684,000) (331,000)
Income taxes expense (Benefit) ......................... 333,000 (609,000) (42,000) 0
------------ ------------ ------------ ------------
NET INCOME ......................................... $ (3,205,000) $ (98,000) $ (642,000) $ (331,000)
============ ============ ============ ============
Net income (loss) per share - basic and diluted ........ $ (2.65) $ (.10) $ (0.53) $ (.33)
============ ============ ============ ============
Weighted average number of common shares
outstanding - basic and diluted ...................... 1,208,979 1,015,947 1,208,979 1,015,947
============ ============ ============ ============
</TABLE>
Page 3
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COMMUNITY MEDICAL TRANSPORT, INC, AND SUBSIDIARIES
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
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2000 1999
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(Unaudited)
<S> <C> <C>
Cash flow from operating activities:
Net income (loss) ............................................................................ $(3,206,000) $ (98,000)
Adjustments to reconcile net income (loss) to cash (used in)
provided by operating activities:
Depreciation and amortization expense ...................................................... 1,129,000 1,204,000
Loss on sale of Fixed Assets ............................................................... 52,000 0
Loss on Impairment of Goodwill ............................................................. 432,000 0
Deferred tax (benefit) ..................................................................... 360,000 (640,000)
Changes in operating assets and liabilities:
Decrease (Increase) in accounts receivable-trade net ..................................... 472,000 (673,000)
Decrease (Increase) in prepaid expenses and other current assets ......................... (25,000) 60,000
Decrease (Increase) in other assets ...................................................... 96,000 (485,000)
Increase in accounts payable and accrued expenses ........................................ 693,000 170,000
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Net cash provided by (used in) operating activities .......................................... 3,000 (462,000)
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Cash used in investing activities:
Acquisition of equipment-net of disposals .................................................... 0 (295,000)
Proceeds from sale of Fixed Assets ........................................................... 138,000 0
Decrease in short term investments ........................................................... 0 824,000
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Net cash provided by investing activities .................................................... 138,000 529,000
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Cash flow from financing activities:
Cash overdraft ............................................................................... (233,000) 0
Proceeds from bank borrowings ................................................................ 0 995,000
Net proceeds from exercise of stock warrants ................................................. 0 30,000
Principal payments on debt ................................................................... (728,000) (460,000)
Principal payments on capital lease obligations .............................................. (48,000) (455,000)
Preferred stock subscription receivable ...................................................... (2,800,000) 0
Issuance of preferred stock .................................................................. 3,000,000) 0
Issuance of common stock .................................................................... 538,000 0
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Net cash (used in) provided by financing activities .......................................... (271,000) 110,000
NET (DECREASE) INCREASE IN CASH .............................................................. (130,000) 177,000
CASH - BEGINNING OF PERIOD ................................................................... 152,000 92,000
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CASH - END OF PERIOD ......................................................................... $ 22,000 $ 269,000
=========== ===========
Supplementary disclosure of cash flow information: Cash paid during the period:
Interest ................................................................................... $ 477,000 $ 387,000
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Taxes ...................................................................................... $ 1,000 $ 1,000
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</TABLE>
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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 nine month period ended September 30, 2000 are not necessarily
indicative of the results that may be expected for the year ending December 31,
2000. 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, 1999 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.
(Note C):
Goodwill
The decline in the financial results of the operations of its Community
Ambulette Service, Inc. ("CAS") subsidiary in Yonkers, New York has led the
company to re-evaluate the carrying value of its goodwill. The underlying
factors contributing to the decline in financial results include reductions in
service revenue and increased competition. Based upon the foregoing, the company
determined that a write-down of approximately $432,000 for impairment of
goodwill should be charged to operations. The company determined the fair value
of the assets, based upon the discounted expected future cash flows.
Income Taxes
As a result of the increased losses incurred during the three months ended June
30, 2000,the company re-evaluated its ability to realize the net carrying value
of its deferred tax asset. Based upon the foregoing, management increased the
deferred tax asset by $832,000 and the valuation allowance by $1,183,000. The
deferred tax asset and the related valuation allowance at September 30, 2000 is
as follows:
Deferred tax assets $ 2,736,000
Valuation allowance (1,940,000)
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$ 796,000
Common Stock
On June 5, 2000, the company issued 193,032 shares of common stock at $1 per
share to ServiceWorld Inc. On June 29, 2000, the company entered into an
agreement providing for the issuance of 229,708 of its common shares at $1.50
per share to 3034930 Nova Scotia Limited. The total consideration for the two
transactions amounted to $536,595. They also entered into a Preferred Stock
subscription in September 2000. The Subscription is for 3,000,000 shares at $1
per share. $200,000 of the subscription was paid prior to September 30, 2000.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Nine Months Ended September 30, 2000 Compared to Nine Months Ended September 30,
1999
Three Months Ended September 30, 2000 Compared to Three Months Ended
September 30, 1999
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.
Community Medical Transport is continuing to work toward successfully completing
its merger with ServiceWorld Inc. In preparation for the merger the Company is
required to undertake a restructuring of its operation and a refocusing of its
business in order to eliminate the operating losses and return it to
profitability within the next and subsequent quarters. This has included a
consolidation of its operating facilities, a review and reduction of its
organization and payrolls and a significantly increased effort in the marketing
of the Company's medical transport services.
Results of Operations
The Company's total revenue amounted to $8,417,000 for the nine months
ended September 30, 2000, as compared with $12,243,000 for the nine months ended
September 30, 1999, a decrease of $3,826,000 or 31.2%. The Company's total
revenue amounted to $2,534,000 for the three months ended September 30, 2000, as
compared with $4,058,000 for the three months ended September 30, 1999, a
decrease of $1,524,000 or 37.6%. The decrease is due to the Company's lack of
capital and an increase in competition.
Operating expenses decreased by $1,931,000 or 21.3% to $7,146,000 for
the nine months ended September 30, 2000 from $9,077,000 for the nine months
ended September 30, 1999. Operating expenses decreased by $916,000 or 29.9% to
$2,524,000 for the three months ended September 30, 2000 from $3,066,000 for the
three months ended September 30, 1999. 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) 15.1% for the nine months ended September 30, 2000 from 25.9 %
for the nine months ended September 30, 1999, and (ii)15.2% for the three months
ended September 30, 2000 from 24.4% for the three months ended September 30,
1999.
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Selling, general and administrative expenses decreased by $211,000 or
6.1% to $3,234,000 for the nine months ended September 30, 2000, from $3,445,000
for the nine months ended September 30, 1999. Selling, general and
administrative expenses decreased by $199,000 or 17.5% to $936,000 for the three
months ended September 30, 2000, from $1,135,000 for the three months ended
September 30, 1999. The decrease in costs was a direct result of decreases
primarily in administrative operating costs. Such expenses as a percentage of
revenues increased by 10.3 and 8.9% to 38.4% and 36.9% for the nine and three
months ended September 30, 2000, respectively, from 28.1% and 28.0% for the
corresponding periods in 1999.
The Company recorded a loss for impairment of Goodwill. For an
explanation See Note C.
Interest expense increased by $44,000 or 10.2% to $477,000 for the nine
months ended September 30, 2000, compared to $433,000 for the nine months ended
September 30, 1999. Interest expense decreased by $56,000 or 29.8% to $132,000
for the three months ended September 30, 2000, compared to $188,000 for the
three months ended September 30, 1999. This decrease is primarily due to the
reductions for the period in revolver borrowings.
Interest income decreased by $5,000 and $0 or 100.0% and 100.0% to $0
and $0 for the nine and three months ended September 30, 2000 respectively,
compared to $5,000 and $0 for the nine and three months ended September 30, 1999
respectively. The reduction in interest income is primarily due to significant
expenditures in connection with the reduction of debt and cash used in
operation.
The Company's income taxes amounted to $333,000 for the nine months
ended September 30, 2000 compared with a tax benefit of $609,000 being
recognized for the nine months ended September 30, 1999. The 1999 tax benefit
resulted from the recognition of deferred tax assets. The deferred tax assets
were recognized for the nine months ended September 30, 1999, based on
management's belief that there was a strong likelihood that such amounts will be
realized based upon their assessment of expected future operations and the
resulting taxability. The write down of this asset resulted in income tax
expense recognition within the June 30, 2000 period.
The Company's net loss amounted to $3,205,000 and $642,000 or $(2.65)
and $(.53) per share (basic and diluted) for the nine and three months ended
September 30, 2000, respectively, as compared to a net loss of $98,000 and
$331,000 or $(.0.10) and $(0.33) per share (basic and diluted) for the nine and
three months ended September 30, 1999, respectively. This decrease in net income
and earnings per share is attributable to the factors described above, the
recognition of less revenue without a corresponding decline in expenses. Also
contributing to the increase loss in 2000 is the extraordinary write down of
Goodwill and the write down of the company's deferred tax asset, which accounted
for $1,374,000 of the loss.
Liquidity and Capital Resources
Cash provided by operating activities amounted to $3,000 for the nine
months ended September 30, 2000 as compared with cash used in by operating
activities of $462,000 for the nine months ended September 30, 1999. The
increase in cash provided by operating activities was largely the result of cash
provided by a decrease in accounts receivables and increase in accounts payable
and accrued expenses.
Cash provided by for investing activities amounted to $138,000 for the
nine months ended September 30, 2000 as compared to cash used in investing
activities of $529,000 for the same period in 1999. The decrease in cash used in
investing activities was primarily the result of a reduction in short-term
investments in 1999.
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Cash used in financing activities amounted to $271,000 for the nine
months ended September 30, 2000 as compared with cash provided by financing
activities of $110,000 for the same period in 1999. The increase in cash used in
by financing activities was largely the result of a reduction in borrowing in
2000 as compared to 1999 offset s partially by sale of the company's stock in
2000.
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 $2.2 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. Since July of 1999 the company has been in
default of the Finova loan. The default relates to certain financial covenants.
The company remains current on its debt service payments.
At September 30, 2000, the Company had a working capital deficit of
$2,028,000 as compared to a working capital deficit of $3,948,000 at
September 30, 1999. The decrease in the working capital deficit is primarily due
to the issuance of the preferred stock subscription.
The Company expects the proceed from the stock subscription
receivable will enable it to meet it's 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 and selling of certain operations during the
remainder of the year. The Company has recently implemented a cost reduction
plan, which has decreased the overhead of the corporation. The Company has a
signed contract relating to the sale of its New York City Ambulance license for
$1,000,000 and expects to close on the sale in the near future.
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.
Part II. Other Information
On October 5th, 2000 Dean Sloane resigned as Chief Executive Officer. Ross
Tuddenham immediately filled the position of Chief Executive Officer.
Item 1. Legal Proceedings
John Bondra v. Community Medical Transport, Inc. et al is an action
brought by John Bondra, a former employee of Community Transport, Inc., seeking
damages under the theories of breach of contract, failure to provide a contract
of employment, quantum, meruit, unjust enrichment and Labor Law Section
198(1-a). A default judgment in the amount of $50,000 was awarded the plaintiff.
The company will seek to have the judgment vacated.
Shrag, Inc., Ayers and Hays v. Community Medical Transport, Inc. is an
action brought about by the default on notes relating to the purchase of assets
of an ambulette business. Judgments have been entered against the company of
approximately $170,000.
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Item 6 - Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K - not applicable
Page 9
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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 on the 20th day of November 2000.
Community Medical Transport, Inc.
---------------------------------
(Registrant)
/s/ Carey Rolfe
-----------------------------------------
Director, Treasurer & Secretary
/s/ Steven Brecher
-----------------------------------------
Steven Brecher, Controller
