<PAGE>
FORM 10-Q/A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) Quarterly Report pursuant to Section 13 or 15(d) of The
Securities Exchange Act of 1934
For Quarter Ended
June 30, 1996
-------------
( ) 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
0-26488
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R.F. Management Corp.
-----------------------------------------------------------------
(exact name of registrant as specified in its charter)
New York # 22-3318886
-------------------------------- --------------------------
(state or other jurisdiction of I.R.S.Employer I.D.#)
incorporation or organization)
95 Madison Avenue, Suite 301 Morristown, N.J. 07960
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(address of principal executive offices) (zip code)
(201) 292-2833
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Registrant's telephone number, including area code
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
----------- ---------
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the most recent
practicable date.
Common Stock - Par Value $.0001 3,327,500
------------------------------- --------------------------------
Outstanding Shares At
June 30, 1996
<PAGE>
R.F. MANAGEMENT CORP.
Table of Contents
Part I. Financial Information PAGE
Item 1 - Financial Statements
Report of Independent Accountants 3
Consolidated Balance Sheets as of June 30,
1996 (unaudited) and September 30, 1995 4 - 5
Consolidated Statements of Operations for the
Three and Nine Months Ended June 30, 1996
and 1995 (unaudited) 6
Consolidated Statements of Cash Flows for
the Nine Months Ended June 30, 1996 and 1995
(unaudited) 7
Notes to Interim Consolidated Financial
Statements (unaudited) 8 - 11
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of
Operations 12 - 14
Part II. Other Information
Item 1 - Legal Proceedings 15
Item 2 - Changes in Securities 15
Item 3 - Defaults upon Senior Securities 15
Item 4 - Submission of Matters to a Vote of Security
Holders 15
Item 5 - Other Information 15
Item 6 - Exhibits and Reports on Form 8-K 15
Signatures 16
Exhibit 11.1 Computation of per Share Earnings 17
Exhibit 27.1 - Financial Data Schedule 18
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
To the Board of Directors,
R.F. Management Corp.
We have made a review of the consolidated balance sheet of R.F.
Management Corp. as of June 30, 1996, the related consolidated statements of
operations for the three and nine month periods ended June 30, 1996 and 1995,
and the related consolidated statements of cash flows for the nine month
periods ended June 30, 1996 and 1995, in accordance with standards
established by the American Institute of Certified Public Accountants.
A review of interim financial information consists principally of obtaining
an understanding of the system for the preparation of interim financial
information, applying analytical review procedures to financial data, and
making inquiries of persons responsible for financial and accounting matters.
It is substantially less in scope than an audit in accordance with generally
accepted auditing standards, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole. Accordingly, we
do not express such an opinion.
We did not review the financial statements of Northern New Jersey Medical
Management, Inc., a wholly-owned subsidiary, which statements reflected total
assets of $227,788 and $159,871 as of June 30, 1996 and September 30, 1995,
and total revenues of $73,617 and $247,828 for the three and nine month
periods ended June 30, 1996 and total revenues of $70,590 and $266,833 for
the three and nine month periods ended June 30, 1995. Those statements were
reviewed by other accountants whose report has been furnished to us, and our
report, insofar as it relates to amounts included for Northern New Jersey
Medical Management, Inc. is based solely on the report of the other
accountants.
Based on our review, we are not aware of any material modifications that
should be made to the consolidated financial statements referred to above
for them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of R.F. Management Corp. as of
September 30, 1995, and the related consolidated statements of operations and
cash flows for the year then ended not presented herein; and in our report,
dated November 20, 1995, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth
in the accompanying consolidated balance sheet as of September 30, 1995, is
fairly presented, in all material respects, in relation to the consolidated
balance sheet from which it has been derived.
New York, New York
July 19, 1996
3
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R.F. MANAGEMENT CORP.
Consolidated Balance Sheets
June 30, September 30,
1996 1995
------------- ----------------
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 2,631,724 $ 4,620,520
Certificate of deposit 403,275 -
Accounts receivable 178,891 90,618
Due from affiliate 19,743 19,743
Deferred income taxes 150,378 451
Other current assets 93,425 16,424
------------- ------------
Total current assets 3,477,436 4,747,756
------------- ------------
Other assets
Equipment (net of accumulated
depreciation of $17,817 and $2,201,
respectively) 127,449 30,142
Investment in limited partnership 11,399 10,985
Investment in joint venture 350,000 -
Note receivable - 20,000
Security deposits 28,930 5,030
Organization costs (net of
accumulated amortization of $64 and $27,
respectively) 204 241
------------- ------------
Total other assets 517,982 66,398
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TOTAL ASSETS $ 3,995,418 $ 4,814,154
------------- ------------
------------- ------------
See Report of Independent Accountants and Notes to Interim Consolidated
Financial Statements.
4
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R.F. MANAGEMENT CORP.
Consolidated Balance Sheets (Continued)
June 30, September 30,
1996 1995
---------- ---------------
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Line of credit $ 42,700 $ -
Accounts payable 34,306 29,500
Accrued expenses 19,465 50,435
Income taxes payable - 3,825
Notes payable - stockholders 150,000 150,000
---------- -------------
Total current liabilities 246,471 233,760
Other liabilities
Notes payable - stockholders 300,000 450,000
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TOTAL LIABILITIES 546,471 683,760
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Commitments and contingencies
Stockholders' equity
Common stock, $0.0001 par value,
15,000,000 shares authorized,
3,327,500 and 3,327,500 shares
issued 333 333
and outstanding
Additional paid-in capital 4,123,641 4,123,641
Retained earnings (deficit) (675,027) 6,420
---------- -------------
TOTAL STOCKHOLDERS' EQUITY 3,448,947 4,130,394
---------- -------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $3,995,418 $ 4,814,154
---------- -------------
---------- -------------
See Report of Independent Accountants and Notes to Interim Consolidated
Financial Statements.
5
<PAGE>
R.F. MANAGEMENT CORP.
Consolidated Statements of Operations
(Unaudited)
For the Nine Months For the Three Months
Ended June 30, Ended June 30,
---------------------- ---------------------
1996 1995 1996 1995
---------- --------- --------- ----------
REVENUES
Management fees $ 249,415 $ 266,833 $ 74,990 $ 70,590
---------- ---------- --------- ----------
COSTS AND EXPENSES
Operating expenses 1,017,747 310,740 301,445 107,831
Interest 43,498 - 10,680 -
Depreciation and 15,653 2,082 6,815 1,890
amortization
Interest income (136,856) (5,575) (31,982) (2,852)
---------- --------- --------- ----------
TOTAL COSTS AND 940,042 307,247 286,958 106,869
---------- --------- --------- ----------
EXPENSES
LOSS FROM CONTINUING
OPERATIONS BEFORE
PROVISION FOR (RECOVERY
OF) INCOME TAXES (690,627) (40,414) (211,968) (36,279)
Provision for (recovery of)
income taxes (8,935) (15,993) (10,368) (14,856)
---------- --------- --------- ----------
LOSS FROM CONTINUING
OPERATIONS BEFORE
PARTNERSHIP INCOME (681,692) (24,421) (201,600) (21,423)
Loss from a limited
partnership - net of
income taxes 245 1,210 (341) 42
---------- --------- --------- ----------
NET LOSS $ (681,447) $ (23,211) $(201,941) $ (21,381)
---------- --------- --------- ----------
---------- --------- --------- ----------
PRIMARY
Weighted average shares
outstanding 3,347,127 2,350,000 3,327,500 2,350,000
---------- --------- --------- ----------
---------- --------- --------- ----------
Loss per share amounts $ (0.20) $ (0.01) $ (0.06) $ (0.01)
---------- --------- --------- ----------
---------- --------- --------- ----------
FULLY DILUTED
Weighted average shares
outstanding 5,282,500 $2,350,000 5,282,500 $ 2,350,000
---------- --------- --------- ----------
---------- --------- --------- ----------
Loss per share amounts $ (0.13) $ (0.01) $ (0.04) $ (0.01)
---------- --------- --------- ----------
---------- --------- --------- ----------
See Report of Independent Accountants and Notes to Interim Consolidated
Financial Statements.
6
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R.F. MANAGEMENT CORP.
Consolidated Statements of Cash Flows
(Unaudited)
For the Nine Months
Ended June 30,
-------------------------------
1996 1995
---------------- -------------
Operating Activities
Net loss $ (681,447) $ (23,211)
Adjustments to reconcile net loss to
net cash used in operating activities
Depreciation and amortization 15,653 2,082
Deferred income taxes (149,927) (15,234)
Changes in operating assets and
liabilities
Accounts receivable (88,273) 29,448
Other receivables - (20,000)
Other current assets (77,001) -
Accounts payable and accrued expenses (26,164) 26,915
Income taxes payable (3,825) 466
---------------- -------------
Net cash used in operating
activities (1,010,984) 466
---------------- -------------
Investing Activities
Fixed assets additions (112,923) (28,500)
Investment in limited partnership (350,000) (2,018)
Acquisition of subsidiary - (150,000)
Investment in joint venture (414) -
Investment in certificate of deposit (403,275) -
Note receivable 20,000 -
Security deposits (23,900) -
---------------- -------------
Net cash used in investing activities (870,512) (180,518)
---------------- -------------
Financing Activities
Organization costs - (268)
Deferred offering costs - (350,017)
Repayments to stockholders (150,000) (15,000)
Sale of common stock - 618,875
Advances from line of credit 42,700 -
---------------- -------------
Net cash provided by (used in)
financing activities (107,300) 253,590
---------------- -------------
Net increase (decrease) in cash and cash
equivalents (1,988,796) 73,538
Cash and cash equivalents - beginning 4,620,520 5,084
---------------- -------------
Cash and cash equivalents - end $ 2,631,724 $ 78,622
---------------- -------------
---------------- -------------
Supplemental disclosures of cash flow
information
Income taxes paid $ - $ 466
Interest paid $ 39,745 $ -
Noncash Transactions
Issuance of notes payable to stockholders
in connection with the acquisition of
subsidiary $ - $ 600,000
See Report of Independent Accountants and Notes to Interim Consolidated
Financial Statements.
7
<PAGE>
R.F. MANAGEMENT CORP.
Notes to Interim Consolidated Financial Statements
June 30, 1996 (unaudited)
1 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND POLICIES
The consolidated balance sheet as of June 30, 1996 and the consolidated
statements of operations for the three and nine month periods ended June
30, 1996 and 1995 and the consolidated statements of cash flows for the
nine month periods ended June 30, 1996 and 1995 have been prepared by the
Company without audit.
In the opinion of management, the accompanying financial statements
referred to above contain all necessary adjustments, consisting of normal
accruals and recurring entries only, which are necessary to present fairly
the Company's consolidated results for the interim periods being presented.
The accounting policies followed by the Company are set forth in Note 2 to
the Company's financial statements included in its Annual Financial
Statement filed on Form 10- K for the year ended September 30, 1995, which
is incorporated herein by reference. Specific reference is made to this
report for a description of the Company's securities and the notes to
financial statements included therein.
The September 30, 1995 financial statements have been reclassified to
conform to the 1996 presentation. Such reclassifications had no effect on
net income (loss).
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
The carrying amounts of cash and cash equivalents, accounts receivable,
accounts payable and short-term debt approximate fair value due to the
short maturity of the instruments and the provision for what management
believes to be adequate reserves for potential losses. It was not
practicable to estimate the fair value of long-term debt because quoted
market prices do not exist and an estimate could not be made through other
means without incurring excessive costs. The results of operations for the
three and nine month periods ended June 30, 1996 and 1995 are not
necessarily indicative of the results to be expected for the full year.
2 - INCOME (LOSS) PER COMMON SHARE
Income (loss) per common share is computed by dividing the net income
(loss) by the weighted average number of common shares and common
equivalent shares outstanding during each period.
3 - INITIAL PUBLIC OFFERING
In December 1994, the Board of Directors of the Company passed a resolution
authorizing the management of the Company to initiate steps to make an
initial public offering (IPO) of the Company's securities in order to raise
capital. Management had been granted authority to file a registration
statement (on Form S-1) with the United States Securities and Exchange
Commission (SEC) pursuant to the Securities Act of 1933 (as amended) and to
register the securities in any state jurisdiction that management felt was
required and appropriate.
continued . . .
8
<PAGE>
R.F. MANAGEMENT CORP.
Notes to Interim Consolidated Financial Statements
June 30, 1996 (unaudited)
3 - INITIAL PUBLIC OFFERING (Continued)
The initial public offering called for the Company to offer up to 850,000
shares (977,500 shares if the underwriter's over-allotment is exercised) of
common stock (the "Common Stock") at $5.50 per share, 850,000 (977,500, if
the underwriter's over-allotment is exercised) Class A Redeemable Common
Stock Purchase Warrants (the "A warrants") at $0.10 per warrant and 850,000
(977,500 if the underwriter's over-allotment is exercised) Class B
Redeemable Common Stock Purchase Warrants (the "B Warrants") at $0.10 per
warrant. Each A Warrant entitles the holder to purchase one (1) share of
Common Stock for a period of eighteen (18) months from the effective date
of the offering at a price of $5.50. Each B Warrant entitles the holder to
purchase one (1) share of Common Stock for a period of thirty-six (36)
months from the effective date of the offering at a price of $7.00.
The offering was declared effective by the United States Securities and
Exchange Commission on July 21, 1995, and closed on July 27, 1995 with the
sale of 977,500 shares of Common Stock, 977,500 A Warrants and 977,500 B
Warrants, and raised an aggregate of $4,205,899, net of expenses of
$1,365,851, for the Company.
4 - RELATED PARTY TRANSACTIONS
The Company maintains an office at 95 Madison Avenue, Suite 301,
Morristown, New Jersey. Expenses incurred in the operation of the
Company's office facility including rent, telephone and office expenses are
allocated to numerous businesses which share the facility. The allocations
are based on usage and revenues. Included in other current assets at June
30, 1996 is a receivable from an affiliated company aggregating
approximately $20,000. In addition, during the nine month period, the
Company paid $60,000 for consulting services to this affiliated company.
Furthermore, during the nine month period, the Company acquired software
from another related party at an approximate cost of $25,000.
The Company entered into an agreement with an affiliated company to provide
marketing services to the Company. For the nine months ended June 30,
1996, compensation for services totalled approximately $47,000.
The Company has entered into an agreement with an affiliated company to
finance a portion of the affiliate's accounts receivable. At June 30,
1996, there was no balance outstanding of this financing agreement.
5 - INVESTMENT IN A LIMITED PARTNERSHIP
The Company has a one percent (1%) ownership in Union Diagnostic Facilities
Group, L.P. The investment is recorded on the equity method since the
Company is the only general partner. The Company's duties include contract
negotiations, site selection, equipment procurement, construction, office
personnel and physician staffing, office management and marketing. The
Company records its investment in the limited partnership and its income
from the limited partnership monthly.
The following is a summary of condensed financial data from the financial
statements of the limited partnership in which the Company has an
investment at June 30, 1996 (unaudited) and September 30, 1995:
continued . . .
9
<PAGE>
R.F. MANAGEMENT CORP.
Notes to Interim Consolidated Financial Statements
June 30, 1996 (unaudited)
<TABLE>
<CAPTION>
5 - INVESTMENT IN A LIMITED PARTNERSHIP (Continued)
Total Long-Term Total Total
Assets Debt Liabilities Capital
---------- --------- ----------- -----------
<S> <C> <C> <C> <C>
June 30, 1996
(unaudited) $ 853,635 $ 116,045 $ 366,105 $ 487,530
September 30, 1995 703,809 56,175 251,117 452,692
Assets Liabilities
-------------------------- -------------------------------------
Current Non-Current Current Non-Current
----------- ----------- -------------- -----------
June 30, 1996
(unaudited) $ 496,720 $ 356,915 $ 250,060 $ 116,045
September 30, 1995 445,849 257,960 194,942 56,175
Net Net Allocation
Revenues Income of Income
-------------- ------------- ----------
For the nine months ended
June 30, 1996 (unaudited) $ 1,303,053 $ 41,463 $ 414
For the year ended
September 30, 1995 1,243,165 169,285 1,693
</TABLE>
Gross profit and income from continuing operations does not differ from net
income. The partnership has no redeemable securities or minority interest.
6 - ACQUISITIONS
On May 31, 1995, R.F. Management Corp. (R.F.) acquired one hundred percent
(100%) of the outstanding shares (one hundred [100] shares of no par value
common stock) of Northern New Jersey Medical Management, Inc. ("Northern"),
a New Jersey Corporation, engaged in the management of a medical diagnostic
facility in Union, New Jersey. The terms of the agreement call for a
payment of one hundred and fifty thousand dollars ($150,000) and a six
hundred thousand dollar ($600,000) note, which bears interest at prime plus
one percent (1%) and requires principal payments of one hundred and fifty
thousand dollars ($150,000), plus accrued interest, on January 30, 1996,
1997, 1998 and 1999. The annual principal payments are subject to a
one-third (1/3) reduction in the event that the gross revenues of Northern
fall below two hundred thousand dollars ($200,000) per annum. The Company
accounted for the business combination in a manner similar to a pooling of
interests due to the stockholders' common control of both R.F. and
Northern.
On December 27, 1995, R.F. acquired forty percent (40%) of the outstanding
shares of Mobile Medical Services Limited ("Mobile"), a privately held
Company incorporated in Ireland, and a fifty one percent (51%) interest in
the property owned or leased by its subsidiaries for $350,000. The payment
terms call for the Company to make payments directly to designated
creditors on behalf of Mobile. As of June 30, 1996, $350,000 is reflected
as an investment in joint venture. Through June 30, 1996, the Company made
payments to creditors of Mobile aggregating $341,511. The balance of
$8,489 is being reflected in accounts payable.
10
<PAGE>
R.F. MANAGEMENT CORP.
Notes to Interim Consolidated Financial Statements
June 30, 1996 (unaudited)
7 - LINE OF CREDIT
On April 30, 1996, the Company entered into a one year $400,000 Line of
Credit agreement with a bank. Interest is payable on a quarterly basis at
prime plus one percent (9.25%). The line is collateralized by a
certificate of deposit which matures on April 30, 1997. As of June 30,
1996, the amount outstanding under this line of credit aggregated
approximately $43,000 with accrued interest aggregating $255.
8 - COMMITMENTS
On March 20, 1996, the Company formed a wholly-owned subsidiary, RF
Management Corp. of Toms River "RFTR", a New Jersey corporation. In April
1996, RFTR entered into an agreement to lease a 9,000 square foot facility
for five years with a base annual rental cost of $117,000.
In July 1996, RFTR entered into a lease and management service agreement
with Surgical Associates, P.A. to provide space, equipment and
nonprofessional services, including management and billing and collection
functions to a newly formed Surgical Center.
On May 30, 1996, the Company entered into a five-year lease and management
Service Agreement with Associates in Otolaryngology of New Jersey, P.A. to
provide management, administrative marketing, operational and related
services to the physicians office in addition to providing the necessary
fixtures and equipment to be utilized in the practice. The Company has
also guaranteed the rental payments on the facility for the term of the
management service agreement. The five year term of this agreement
commences with the completion of the new facility construction.
11
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
INTRODUCTION
R.F. Management Corp. ("the Company") was formed in August 1994, for the
purpose of establishing, administrating and managing free-standing
outpatient ambulatory surgical centers. In 1995, the Company acquired 100%
of the outstanding shares of Northern New Jersey Medical Management, Inc.
("Northern") in a business combination accounted for in a manner similar to
a pooling of interests. Northern, a New Jersey Corporation formed in 1986,
is engaged in the management of a diagnostic imaging center located in
Union, New Jersey. All references to the Company's prior operating history
relates to the operations of Northern.
The Company presently administers and manages one outpatient diagnostic
center located in Union, New Jersey. The Company is responsible for the
day to day management of the site, including hiring and selection of
non-medical employees, marketing and the responsibility for all computer
operations at the site. Medical professionals employed at the Center
provide all medical and diagnostic services at the site. The Company is
not engaged in the practice of medicine.
All contract negotiation by the Company to manage two (2) outpatient
surgical sites for St. Mary's Hospital in Passaic, New Jersey, have been
terminated after failure to reach satisfactory terms. The Company has
entered into letters of intent to administer free standing ambulatory
surgical centers with the following: Ambulatory Surgery Center of Morris
County, Inc. D/B/A Ridgedale Surgery Center on February 24, 1996, Middlesex
Ambulatory Surgical Center (East Brunswick, New Jersey) on March 26, 1996,
Ocean OB\GYN Associates (Toms River, New Jersey) on July 15, 1995, Michael
Schalet, D.O. (Morristown, New Jersey) on June 21, 1995, Monica Mehta, M.D.
and H. Shah, M.D. (Jersey City, New Jersey) on October 4, 1995, M. Fateh,
M.D. (Millburn, New Jersey) on July 13, 1995, N.S. Botros, M.D. (Bayonne,
New Jersey) on October 25, 1995, and Rameth Tandom M.D. (Montville, New
Jersey) on April 10, 1996. The Company has also entered into a letter of
intent with Luther W. Brady. M.D. Associates P.C., to administer three
Radiation Therapy Centers.
On December 27, 1995, R.F. acquired forty percent (40%) of the outstanding
shares of Mobile Medical Services Limited ("Mobile"), a privately held
Company incorporated in Ireland, and a fifty one percent (51%) interest in
the property owned or leased by its subsidiaries for $350,000. Mobile
Medical Services Limited provides mobile MRI, CT, Lithotripsy and Cardiac
Catheterization services in the Netherlands, United Kingdom, Italy and
Germany. The payment terms call for the Company to make payments directly
to designated creditors on behalf of Mobile. As of June 30, 1996, $350,000
is reflected as an investment in joint venture. Through June 30, 1996, the
Company made payment to creditors of Mobile aggregating $341,511. The
balance of $8,489 is being reflected in accounts payable.
On March 20, 1996 the Company formed a wholly-owned subsidiary, RF
Management Corp of Toms River 'RFTR", a New Jersey corporation, who in July
1996 entered into a lease and management service agreement with Surgical
Associates, PA. This agreement is to commence upon the completion of the
construction of a one room surgical suite.
On May 30, 1996, the Company entered into a five year lease and management
service agreement with Associates in Otolaryngology of New Jersey, PA.
This agreement is to commence upon the completion of the construction of a
one room surgical suite.
12
<PAGE>
RESULTS OF OPERATIONS
For the nine months ended June 30, 1996, as compared to the corresponding
period of the previous year, management fees decreased to $249,415 from
$266,833, a decrease of $17,418 or 6.5%. For the quarter ended June 30,
1996 as compared to the corresponding period of the previous year
management fees increased to $74,990 from $70,590 an increase of $4,400 or
6.2%. Both the increase in management fees for the quarter and the
decrease for the nine months resulted from an increase in patient services
at the diagnostic imaging center it manages and a decrease in the
realization under third party reimbursement agreements.
Operating expenses for the nine months ended June 30, 1996 were $1,017,747
as compared to $310,740 for the nine month ended June 30, 1995. Operating
expenses for the quarter ended June 30, 1996 were $301,445 as compared to
$107,831 for the quarter ended June 30, 1995. These increases in operating
expenses of $707,007 and $193,614 for the nine months and the quarter ended
June 30, 1996 are attributed to increases in payroll, professional and
consulting fees and travel expense incurred by the Company in the
development of new business.
Interest expense for the nine months and the quarter ended June 30, 1996
was $43,498 and $10,680. This is attributed to the unpaid principal
pertaining to the acquisition of Northern which accrues interest at the
rate of prime plus one percent (1%).
Interest income was $136,856 and $31,982 for the nine and three month
periods ended June 30, 1996 and $5,575 and $2,852 for the nine and three
month periods ended June 30, 1995. The increase is due to the depositing
of monies raised from the Company's private placement and initial public
offering into insured money market accounts.
Net loss increased to $681,447 or $0.20 per share, for the nine months
ended June 30, 1996 as compared to $23,211 or $0.01 per share for the
corresponding period of the prior year. for the corresponding period of the
prior year. Net loss for the quarter ended June 30, 1996 was $201,941 or
$0.06 per share, as compared to $21,381 or $0.01 per share for the same
period of the prior year. The increase in the net losses are due to the
increases in operating expenses incurred by the Company in the development
of new business.
The healthcare dollar for the past few years has been earmarked for
reductions. Although third party payors are shrinking the amount of
healthcare payments, quality care and highly technological equipment is
still a priority. With increases in the cost of highly technological
equipment and the cost to borrow money, profit margins will be reduced. It
is the Company's aim to address the effects of lower healthcare
reimbursement and increased equipment costs by handling a larger volume of
patients at its newly acquired centers and at its future centers through a
managed care network.
LIQUIDITY AND CAPITAL RESOURCES
On December 15, 1994, the Company completed a Private Placement offering of
its $0.0001 par value Common Stock. The offering, which raised for the
Company $700,000 before expenses, called for the sale of up to 400,000
shares at a price of $2.00 per share (giving effect to the 4-for-1 stock
split on December 22, 1994). The Company closed the offering upon the sale
of 350,000 shares (giving effect to the 4- for-1 stock split on December
22, 1994), which raised for the Company $615,995, net of expenses.
continued . . .
13
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES (Continued)
On July 21, 1995, the Company's Initial Public Offering was declared
effective by the United States Securities and Exchange Commission and
closed on July 27, 1995. The offering included the sale of 977,500 shares
of common stock, 977,500 A Warrants and 977,500 B Warrants. The Company
received proceeds of $4,205,899, net of expenses of $1,365,851.
The Company experienced a net decrease in cash and equivalents aggregating
approximately $1,986,000 for the nine months ended June 30, 1996. This
decrease is the result of the net loss and other operating activities
aggregating approximately $1,011,000, the investment in a joint venture
certificate of deposit and fixed assets aggregating approximately $870,000
and the repayment of $150,000 of notes payable stockholders.
On April 30, 1996, the Company entered into a one year $400,000 line of
credit agreement with a bank which bears interest on the unpaid principal
at prime plus one percent (9.25%). The line is collateralized by a one
year certificate of deposit. As of June 30, 1996, the amount outstanding
under the line of credit aggregated approximately $43,000.
The Company has a working capital surplus of $3,230,965 at June 30, 1996
when compared to a working capital surplus of $4,513,996 at September 30,
1995. This decrease is primarily the result of expenditures incurred in
the expansion and development of new business.
The Company believes that it has sufficient resources to support the
operations of Northern and begin its proposed surgical center operations
and it has working capital to administer and manage the centers for the
next twelve months. The Company believes that the net proceeds from the
Initial Public Offering will be sufficient to meet its plans with respect
to the management and the administration of sites in the next twelve months
and its working capital needs for the foreseeable future. It is the belief
of the Company that the normal cash flow generated from the administration
and management from its future Centers will provide excess cash (capital)
which will be used for expenses and future capital needs.
The Company further believes that the operations of Northern will provide
sufficient capital (net of expenses) and cash flows to repay the annual
installments of $150,000 for the loan payable, plus interest due to
Northern's former shareholders. If funds from Northern's operations are
not sufficient for repayment of the annual installments, the installments
will be reduced to $100,000 if the gross annual revenues fall below
$200,000 and the amount left unpaid by reason of such adjustment shall be
forfeited.
There are no other known trends, demands, commitments or events that will
impact the Company's results of operations, liquidity and/or capital
resources.
14
<PAGE>
PART II-OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Not applicable.
Item 2. CHANGES IN SECURITIES
Not applicable.
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable
Item 5. OTHER INFORMATION
Not applicable.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
11. See notes to interim consolidated statements, Note 2,
regarding computation of per share earnings
11.1 Computation of per share earnings
27.1 Financial data schedule
(b) Reports on Form 8-K:
No reports on Form 8-K were filed by the Registrant
during the quarterly period ended June 30, 1996.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
R.F. Management Corp.
---------------------
(Registrant)
Date: November 27, 1996 /s/Roger Findlay
---------------------------
Roger Findlay, President
Chief Executive Officer
Date: November 27, 1996 /s/Louis D'Esposito
---------------------------
Louis D'Esposito
Chief Financial Officer
16
<PAGE>
R.F. MANAGEMENT CORP.
COMPUTATION OF PER SHARE EARNINGS
(Unaudited)
Exhibit 11.1
<TABLE>
<CAPTION>
For the Nine Months For the Three Months
Ended June 30, Ended June 30,
---------------------------- ---------------------------------
1996 1995 1996 1995
--------------- ----------- --------------- ----------------
<S> <C> <C> <C> <C>
NET LOSS $ (681,447) $ (23,211) $ (201,941) $ (21,381)
=============== =========== =============== ================
PRIMARY
Weighted average shares 3,327,500 2,350,000 3,327,500 2,350,000
Assumed conversions
A warrants and B warrants 19,627 - - -
--------------- ----------- --------------- ----------------
Total weighted average
shares outstanding 3,347,127 2,350,000 3,327,500 2,350,000
=============== =========== =============== ================
Earnings (loss) per share
amounts $ (0.20) $ (0.01) $ (0.06) $ (0.01)
=============== =========== =============== ================
FULLY DILUTED
Weighted average shares 3,327,500 2,350,000 3,327,500 2,350,000
Assumed conversions
A warrants and B warrants 1,955,000 - 1,955,000 -
--------------- ----------- --------------- ----------------
Total weighted average
shares outstanding 5,282,500 2,350,000 5,282,500 2,350,000
=============== =========== =============== ================
Earnings (loss) per share
amounts $ (0.13) $ (0.01) $ (0.04) $ (0.01)
=============== =========== =============== ================
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
BALANCE SHEETS, AND CONSOLIDATED STATEMENTS OF INCOME OF THE COMPANY IN THE
COMPANY'S FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 9-MOS
<FISCAL-YEAR-END> JUN-30-1996 JUN-30-1995
<PERIOD-END> JUN-30-1996 JUN-30-1995
<CASH> 2,631,724 2,631,724
<SECURITIES> 0 0
<RECEIVABLES> 178,891 178,891
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 3,477,436 3,477,436
<PP&E> 145,266 145,266
<DEPRECIATION> 17,817 17,817
<TOTAL-ASSETS> 3,995,418 3,995,418
<CURRENT-LIABILITIES> 246,471 246,471
<BONDS> 300,000 300,000
0 0
0 0
<COMMON> 333 333
<OTHER-SE> 3,448,614 3,448,614
<TOTAL-LIABILITY-AND-EQUITY> 3,995,418 3,995,418
<SALES> 249,415 266,833
<TOTAL-REVENUES> 249,415 266,833
<CGS> 0 0
<TOTAL-COSTS> 940,042 307,247
<OTHER-EXPENSES> 245 1,210
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (690,627) (40,414)
<INCOME-TAX> (8,935) (15,993)
<INCOME-CONTINUING> (681,692) (24,421)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (681,447) (23,211)
<EPS-PRIMARY> (0.20) (0.01)
<EPS-DILUTED> (0.13) (0.04)
</TABLE>
