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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________________________
FORM 10-QSB
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
for the quarterly period ended June 30, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
for the period from ___________________ to _________________
Commission file number 0-25344
________________________________________
NATIONAL MEDICAL FINANCIAL SERVICES CORPORATION
(Exact name of small business issuer as specified in its charter)
NEVADA 25-1741216
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1315 GREG STREET, SUITE 103
SPARKS, NEVADA 89431
(Address of principal (Zip Code)
executive offices)
(702) 356-2315
(Issuer's telephone number, including area code)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Act of 1934 during the past 12 months (or
such shorter period that the issuer was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No ___.
-----
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practical date: Common Stock, par value $.01
per share, 7,456,844 shares outstanding as of July 31, 1996.
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NATIONAL MEDICAL FINANCIAL SERVICES CORPORATION
BALANCE SHEETS
June 30, December 31,
1996 1995
----------- -----------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $3,002,966 $6,580,223
Accounts receivable 3,759,339 2,282,051
Notes receivable 3,200,000 --
Other assets and prepaid expenses 44,328 5,218
----------- -----------
Total current assets 10,006,633 8,867,492
----------- -----------
Deposit on software license 700,000 700,000
Property and equipment, net 19,767 14,232
Client lists, net 4,310,708 2,376,195
Deferred costs and other assets 30,746 20,810
----------- -----------
Total assets $15,067,854 $11,978,729
----------- -----------
----------- -----------
LIABILITIES
Current liabilities:
Accrued subcontract fees $1,521,511 $1,051,895
Accounts payable and accrued expenses 18,394 572,252
Federal income taxes payable 56,302 135,612
----------- -----------
Total current liabilities 1,596,207 1,759,759
----------- -----------
Deferred income taxes 5,422 --
Commitments and contingent liabilities -- --
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value,
1,000,000 shares authorized,
none outstanding -- --
Common stock, $.01 par value,
20,000,000 shares authorized,
7,456,844 and 7,119,167 shares
issued and outstanding 74,568 71,192
Paid-in capital 11,392,133 8,952,880
Retained earnings 1,999,524 1,194,898
----------- -----------
Total stockholders' equity 13,466,225 10,218,970
----------- -----------
Total liabilities and
stockholders' equity $15,067,854 $11,978,729
----------- -----------
----------- -----------
See accompanying notes to financial statements.
2
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NATIONAL MEDICAL FINANCIAL SERVICES CORPORATION
INCOME STATEMENTS
For the Three Month Periods Ended June 30, 1996 and 1995
1996 1995
----------- -----------
(unaudited) (unaudited)
Revenues $2,273,872 $1,235,212
Subcontract expense 1,549,584 864,649
----------- -----------
Operating Income 724,288 370,563
Selling, general and administrative
expense 259,597 123,749
Interest expense (income) (89,053) (1,700)
----------- -----------
Income before income taxes 553,744 248,514
----------- -----------
Provision for income taxes:
Current 179,789 84,300
Deferred -- --
-------- --------
179,789 84,300
----------- -----------
Net income $373,955 $164,214
----------- -----------
----------- -----------
Primary net income per share $0.05 $0.04
----------- -----------
----------- -----------
Weighted average number of shares
outstanding used in primary
calculation 7,920,562 4,666,667
----------- -----------
----------- -----------
Fully diluted net income per share $0.05 $0.04
----------- -----------
----------- -----------
Weighted average number of shares
outstanding used in fully diluted
calculation 7,920,562 4,666,667
----------- -----------
----------- -----------
See accompanying notes to financial statements.
3
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NATIONAL MEDICAL FINANCIAL SERVICES CORPORATION
INCOME STATEMENTS
For the Six Month Periods Ended June 30, 1996 and 1995
1996 1995
----------- -----------
(unaudited) (unaudited)
Revenues $4,408,633 $2,444,681
Subcontract expense 2,929,534 1,711,277
----------- -----------
Operating Income 1,479,099 733,404
Selling, general and administrative expense 363,929 240,171
Interest expense (income) (140,967) (1,700)
----------- -----------
Income before income taxes 1,256,137 494,933
----------- -----------
Provision for income taxes:
Current 446,089 168,100
Deferred 5,422 --
----------- -----------
451,511 168,100
----------- -----------
Net income $804,626 $326,833
----------- -----------
----------- -----------
Primary net income per share $0.10 $0.07
----------- -----------
----------- -----------
Weighted average number of shares
outstanding used in primary calculation 7,838,261 4,666,667
----------- -----------
----------- -----------
Fully diluted net income per share $0.10 $0.07
----------- -----------
----------- -----------
Weighted average number of shares
outstanding used in fully diluted
calculation 7,838,261 4,666,667
----------- -----------
----------- -----------
See accompanying notes to financial statements.
4
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NATIONAL MEDICAL FINANCIAL SERVICES CORPORATION
STATEMENTS OF CASH FLOWS
For the Six Month Periods Ended June 30, 1996 and 1995
1996 1995
----------- -----------
(unaudited) (unaudited)
Cash flow from operating activities:
Net income $804,626 $326,833
Adjustments to reconcile net
income to cash
provided by operating activities:
Depreciation and amortization
expense 135,153 594
Deferred income taxes 5,422 --
Changes in assets and liabilities:
Increase in receivables (1,115,402) (1,523,847)
Increase in other assets (39,110) (300)
Increase in accounts payable
and accrued expenses 415,758 1,769,856
Decrease in payable to
stockholder -- 52,062
Increase (decrease) in
income taxes payable (79,310) 168,100
----------- -----------
Net cash provided by operations 127,137 793,298
----------- -----------
Cash flow from investing activities:
Receivables acquired in acquisitions (361,886) (231,000)
Origination of notes receivable (5,200,000) --
Principal collections of notes
receivable 2,000,000 --
Deferred costs-contract acquisitions 943 --
Purchase of property and equipment (7,496) (6,215)
Deposit on software license -- (700,000)
Client lists (117,706) (682,087)
Other assets (10,879) --
----------- -----------
Net cash used in investing
activities (3,697,024) (1,619,302)
----------- -----------
Cash flow from financing activities:
Initial public offering costs (7,370) (123,942)
Collection of stockholder's
receivables -- 231,250
----------- -----------
Net cash provided by
(used in) financing
activities (7,370) 107,308
----------- -----------
Net decrease in cash (3,577,257) (718,696)
Cash balance, Beginning balance 6,580,223 718,825
----------- -----------
Cash balance, Ending balance $3,002,966 $ 129
----------- -----------
----------- -----------
See accompanying notes to financial statements.
5
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NATIONAL MEDICAL FINANCIAL SERVICES CORPORATION
STATEMENTS OF CASH FLOWS
For the Six Month Periods Ended June 30, 1996 and 1995
1996 1995
---- ----
(unaudited) (unaudited)
Supplemental data:
Cash paid for income taxes $513,128 $ --
----------- -----------
----------- -----------
Non-cash items:
Stock issued for business and
contract acquisitions $2,450,000 $ --
----------- -----------
----------- -----------
Stock payable for business and
contract acquisitions $ -- $600,000
----------- -----------
----------- -----------
See accompanying notes to financial statements.
6
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NATIONAL MEDICAL FINANCIAL SERVICES CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
1. Basis of Presentation:
The accompanying unaudited statements of National Medical Financial
Services Corporation (the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial information.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial information.
In the opinion of management, all adjustments considered necessary for a fair
presentation have been included. Operating results for the three month and six
month periods ended June 30, 1996 are not necessarily indicative of the results
of operations that may be expected for the year ending December 31, 1996.
2. Accounts Receivable:
Accounts receivables consisted of the following at June 30, 1996 and
December 31, 1995:
June 30, December 31,
1996 1995
---- ----
Accounts receivable - billed $3,049,566 $3,115,214
Accounts receivable - unbilled 592,886 231,000
Accounts receivable - principal stockholders 50,000 -
Miscellaneous receivable 66,887 1,700
---------- ----------
Total $3,759,339 $3,347,914
---------- ----------
---------- ----------
3. Notes Receivable:
On May 1, 1996, the Company entered into a transaction with First
United Equities Corporation ("First United"), a broker-dealer registered with
the Securities and Exchange Commission (the "SEC") under the Securities
Exchange Act of 1934, as amended. First United is the principal market maker
in the Company's Common Stock. The Company loaned $5,200,000 in a series of
advances evidenced by a promissory note bearing interest at the rate of 10%
per annum. Such note was due and payable on demand with seven days notice.
On May 29, 1996, First United paid $2,000,000 to the Company, leaving a
balance of $3,261,280, including interest at June 30, 1996. The note is
secured by the guarantees of the principals of First United. The Company is
in the process of renegotiating the terms of the loan to First United,
including the interest rate, payment schedule and appropriate security for
the loan and the Company's Chairman and principal stockholder has agreed to
pay to the Company any amount due to the Company which has not been paid by
First United.
7
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4. Business Acquisition:
In June 1995, the Company acquired the cash, accounts receivable and
client contracts of a billing and collection company that provides services to
medical service providers. The total consideration paid for the aforementioned
assets was $1,050,000 in cash plus 250,000 shares of the Company's Common Stock
based on a value of $4.00 per share. An additional 2,500 shares in lieu of
interest were issued on October 1, 1995 in connection with this transaction.
The terms of the transaction allow for an adjustment in the purchase
price based upon the monthly average of the actual client fees collected during
the three-month period immediately preceding the first anniversary of the
closing date. The transaction was accounted for by the purchase method of
accounting.
Subsequent to the asset acquisition by the Company, the Chairman and
principal stockholder of the Company acquired the stock of the billing and
collection company for $1.00. The fair market value of the billing and
collection company was negligible at that time.
The pro forma unaudited results of operations for the six months
ended June 30, 1995, assuming the consummation of the purchase described above,
as of January 1, 1995, are as follows:
Six Months Ended
and Year to Date
June 30, 1995
Revenues $3,260,229
Net income 450,939
Net income per share $0.09
5. Contract Acquisitions:
On February 13, 1996, the Company acquired the accounts receivable and
client contracts to provide billing and collection services to medical service
providers in Nevada. The total consideration paid was $1,800,000, consisting of
$150,000 in cash and 194,118 shares of Common Stock based on a value of $8.50
per share. The Common Stock has been placed into escrow and is subject to
forfeiture if the contracts do not maintain prescribed amounts of revenue.
On April 1, 1996, the Company acquired the accounts receivable and client
contracts to provide billing and collection services to medical service
providers in Nevada. The total consideration paid was $550,000, consisting of
$250,000 in cash and 30,000 shares of Common Stock based on a value of $10.00
per share. The Common Stock has been placed into escrow and is subject to
forfeiture if the contracts do not maintain prescribed amounts of revenue.
6. Software License:
In January 1995, the Company made a refundable deposit of $700,000 for an
unlimited site software license for a maximization of reimbursement program
currently being developed.
8
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Management expects that the program will be completed during 1996. The software
company is owned and controlled by the Company's Chairman and principal
stockholder.
7. Common Stock:
Effective February 12, 1996, the Company registered 4,666,667 shares of
Common Stock, which are owned by certain stockholders of the Company, including
3,670,833 shares which are owned by the Company's Chairman.
On May 10, 1996 (the "Effective Date"), the Board of Directors approved a
Stock Option Plan for Non-Employee Directors (the "Plan"). The Plan provides
for options to purchase up to 500,000 shares of common stock, which may be
granted to non-employee directors. Under the terms of the Plan each non-
employee director of the Company will automatically be granted, on the date of
the Company's annual meeting of stockholders each year during the term of the
plan, options to purchase 25,000 shares. The option exercise price will be the
fair market value of a share of the Company's Common Stock on the date of grant.
The options will become exercisable six months after the date of grant and will
expire ten years after the date of grant. In addition, on the Effective Date of
the Plan, each of the three eligible directors (other than the Chairman) were
granted stock options to purchase 50,000 shares of Common Stock at an exercise
price equal to 85% of the fair market value on the day of grant (or $10.20).
The Plan was presented to the stockholders for their approval at the Company's
1996 Annual Meeting of Stockholders. The stockholders voted in favor of its
adoption. On June 25, 1996, each of the four eligible directors (including the
Chairman) were granted stock options to purchase 25,000 shares of Common Stock
at the fair market value on the day of grant (or $8.565).
8. Subsequent Event:
On August 1, 1996, the Company acquired seven additional contracts to
provide billing, collection and accounts receivable management services to
medical service providers in Massachusetts and New Hampshire. The total
consideration paid was $945,000, consisting of $750,000 in cash and 21,370
shares of Common Stock, based on a value of $9.125 per share. The Common Stock
will be placed in escrow and is subject to forfeiture if the contracts do not
maintain prescribed amounts of revenues.
9
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the attached
financial statements and notes thereto, and with the Company's audited financial
statements and notes thereto for the fiscal year ended December 31, 1995.
IMPORTANT FACTORS REGARDING FORWARD LOOKING STATEMENTS
Some of the information presented in this report constitutes forward
looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Although the Company believes that its expectations are
based on reasonable assumptions within the bounds of its knowledge of its
business and operations, there can be no assurance that actual results of
operations or the result of the Company's marketing and acquisition activities
and will not differ materially from its expectations. Factors which could cause
actual results to differ from expectations include, among others, uncertainty of
whether the Company's marketing activities will result in an expansion of its
client base or lead to additional acquisitions of contracts and entities,
uncertainties related to state and federal governmental regulation of the
Company's business, uncertainties related to the demand for the services
provided by the Company, uncertainties related to the completion of the
reimbursement software program, and the uncertainty of whether the combination
of operating cash flows and the proceeds of the Company's initial public
offering will be sufficient to fund its growth and operations over the next
twelve months. Specific reference is made to risks and uncertainties described
in the Company's Registration Statement on Form SB-2, Registration No. 333-804,
and the Company's Registration Statement on Form SB-2, Registration No.
33-87266-LA.
RESULTS OF OPERATIONS
QUARTERS ENDED JUNE 30, 1996 AND JUNE 30, 1995
Total revenues for the quarters ended June 30, 1996 and 1995 were
$2,273,872 and $1,235,212, respectively. Approximately 51% of the 1996
revenues, as compared to 100% of the 1995 revenues, were derived from the
Company's contracts with Medical Service Providers owned, controlled by, or
affiliated with the Company's Chairman and principal stockholder. The
acquisitions made by the Company during the second and fourth quarters of 1995
and acquisitions made in the first and second quarters of 1996 are the primary
reasons for the increased volumes. Revenues earned for the quarter ended June
30, 1996 consisted of $2,076,477, or 91.3% of revenues, for billing and
collection services, $144,039, or 6.3% of revenues, for accounting services,
and $53,356, or 2.4% of revenues, for late charges and consulting services.
Revenues earned for the quarter ended June 30, 1995 consisted of $1,054,313, or
85.4% of revenues, for billing and collection services, and $180,899, or 14.6%
of revenues, for accounting services.
During the quarters ended June 30, 1996 and 1995, the Company paid Russell
Data Services, Inc., a Nevada corporation which is owned by the Company's
Chairman and principal stockholder ("Russell Data"), $1,549,584 and $846,649,
respectively, for services rendered. The Company reported operating income of
$724,288, income before taxes of $553,744, net income of $373,955, and primary
earnings per share of $0.05 for the quarter ended June 30, 1996. The
10
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Company reported operating income of $370,563, income before taxes of $248,514,
net income of $164,214 and primary earnings per share of $0.04 for the quarter
ended June 30, 1995.
The Company incurred selling, general and administrative expenses of
$259,597 and $123,749 for the quarters ended June 30, 1996 and 1995,
respectively. The expenses for 1996 consisted primarily of amortization related
to acquisition costs of client contracts and salaries and related benefits and
professional fees, while the expenses for 1995 consisted primarily of salaries
and related employee benefits and professional fees.
The Company's effective tax rate was 38.2% and 34.0% for the quarters ended
June 30, 1996 and 1995, respectively.
SIX MONTHS ENDED JUNE 30, 1996 AND JUNE 30, 1995
Total revenues for the six months ended June 30, 1996 and 1995 were
$4,408,633 and $2,444,681, respectively. Approximately 52% of the 1996
revenues, as compared to 100% of the 1995 revenues, were derived from the
Company's contracts with Medical Service Providers owned, controlled by, or
affiliated with the Company's Chairman and principal stockholder. The
acquisitions made by the Company during the second and fourth quarters of 1995
and acquisitions made in the first and second quarters of 1996 are the primary
reasons for the increased volumes. Revenues earned for the six months ended
June 30, 1996 consisted of $3,904,496, or 88.6% of revenues, for billing and
collection services, $282,062, or 6.4% of revenues, for accounting services,
$106,459, or 2.4% of revenues, for late charges, and $115,616, or 2.6% of
revenues, for consulting services. Revenues earned for the six months ended
June 30, 1995 consisted of $2,102,884, or 86.0% of revenues, for billing and
collection services, and $341,797, or 14.0% of revenues, for accounting
services.
During the six months ended June 30, 1996 and 1995, the Company paid
Russell Data, $2,929,534 and $1,711,277, respectively, for services rendered.
The Company reported operating income of $1,479,099, income before taxes of
$1,256,137, net income of $804,626, and primary earnings per share of $0.10 for
the six months ended June 30, 1996. The Company reported operating income of
$733,404, income before taxes of $494,933, net income of $326,833 and primary
earnings per share of $0.07 for the six months ended June 30, 1995.
The Company incurred selling, general and administrative expenses of
$363,929 and $240,171 for the six months ended June 30, 1996 and 1995,
respectively. The expenses for 1996 consisted primarily of amortization related
to acquisition costs of client contracts and salaries and related benefits,
while the expenses for 1995 consisted primarily of salaries and related employee
benefits and professional fees.
The Company's effective tax rate was 38.2% and 34.0% for the six months
ended June 30, 1996 and 1995, respectively.
11
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LIQUIDITY AND CAPITAL RESOURCES
At inception, the Company's operations were funded by $1,000,000 in capital
contributions in the form of notes received from the Company's stockholders. As
of June 30, 1995, the Company received $1,000,000 from the stockholders as
payment against the notes. In addition, the Company realized net income from
operations of $804,626 and $326,833 for the six months ended June 30, 1996 and
1995, respectively.
In June 1995, the Company acquired the cash, accounts receivable and the
client contracts of Asterino & Associates, Inc. ("Asterino"), a billing and
collection company located in Schenectady, New York that provided services to
approximately 20 Medical Service Providers who were not affiliated with Asterino
or the Company's Chairman and principal stockholder. The total consideration
paid for the acquisition was $1,050,000 in cash and $600,000 in Common Stock
valued at the Company's initial public offering price, or 150,000 shares. These
shares are freely tradable, subject to a lock-up agreement expiring January 1,
1997. An additional 2,500 shares in lieu of interest were issued on October 1,
1995 in connection with this transaction. The Company placed an additional
100,000 shares of Common Stock into escrow pursuant to the purchase agreement.
Fewer shares will ultimately be released from escrow if certain revenue levels
are not maintained.
On August 9, 1995, the Company completed its initial public offering (the
"Offering") of 2,000,000 shares of Common Stock at $4.00 per share. In
addition, the underwriters exercised their over-allotment of 300,000 shares in
full on August 21, 1995. The net proceeds to the Company of the Offering and
the exercise of the over-allotment option was approximately $7,550,000.
On December 1, 1995, the Company acquired a billing contract between Rapier
Investments Ltd. ("Rapier") and University Emergency Medical Foundation, Inc.
The total consideration paid for the contract was $750,000 consisting of
$650,000 in cash and 13,559 shares of Common Stock valued at $7.375 per share,
the price of the Common Stock on December 1, 1995. In accordance with the
purchase agreement, the Company placed these shares into escrow. Fewer shares
may be released from escrow if certain revenue levels are not maintained.
On August 1, 1996, the Company acquired from Rapier seven additional
contracts to provide billing, collection and accounts receivable management
services to medical service providers in Massachusetts and New Hampshire. The
total consideration paid was $945,000, consisting of $750,000 in cash and 21,370
shares of Common Stock, based on a value of $9.125 per share. The Common Stock
will be placed in escrow and is subject to forfeiture if the contracts do not
maintain prescribed amounts of revenues.
On February 13, 1996, the Company acquired the accounts receivable and
client contracts from Doctors Medical Billing Services, A Limited Liability
Corporation. The client contracts related to this acquisition provide billing
and collection services to approximately 25 Medical Service Providers in the Las
Vegas, Nevada area. The total consideration paid for this acquisition was
$1,800,000, consisting of $150,000 in cash and 194,118 shares of Common Stock
valued at $8.50 per share. In accordance with the purchase agreement, the
Company placed these shares
12
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into escrow. Fewer shares will ultimately be released from escrow if certain
revenue levels are not maintained.
On April 1, 1996, the Company acquired the accounts receivable and client
contracts from National Medical Services, Inc. The client contracts related to
this acquisition provide billing and collection services to approximately 19
Medical Service Providers in the Las Vegas, Nevada area. The total
consideration paid for this acquisition was $550,000, consisting of $250,000 in
cash and 30,000 shares of Common Stock valued at $10.00 per share. In
accordance with the purchase agreement, the Company placed these shares into
escrow. Fewer shares will ultimately be released if certain revenue levels are
not maintained.
On May 1, 1996, the Company entered into a transaction with First United
Equities Corporation ("First United"), a broker-dealer registered with the
Securities and Exchange Commission (the "SEC") under the Securities Exchange
Act of 1934, as amended. First United is the principal market maker in the
Company's common stock. The Company loaned $5,200,000 in a series of
advances evidenced by a promissory note bearing interest at the rate of 10%
per annum. Such note was due and payable on demand with seven days notice.
On May 29, 1996, First United paid $2,000,000 to the Company, leaving a
balance of $3,261,280, including interest as of June 30, 1996. The note is
secured by the guarantees of the principals of First United. The Company is
in the process of renegotiating the terms of the loan to First United,
including the interest rate, payment schedule and appropriate security for
the loan and the Company's Chairman and principal stockholder has agreed to
pay to the Company any amount due to the Company which has not been paid by
First United.
As of June 30, 1996, certain of the Medical Service Providers which are
owned, controlled by, or affiliated with the Company's Chairman and principal
stockholder, owed the Company approximately $2.6 million in fees for
services. Of this amount, approximately $1,453,000 is past due 90 days or
more as of June 30, 1996. In accordance with the client contracts between
the Company and these Medical Service Providers, the Company has assessed
late fees to these Medical Service Providers. The late fees charged for the
six months ended June 30, 1996 were approximately $106,000. As of August 12,
1996, the Company received approximately $1,961,000 related to the amounts
which were due to the Company by these entities. As of August 12, 1996,
approximately $200,000 has been prepaid to Russell Data.
The Company's principal sources of liquidity are anticipated to be cash
flows from operations and the remaining proceeds of the Offering. The Company
expects to fund future acquisitions of contracts and future acquisitions of
businesses by a combination of funds available through the proceeds of the
Offering, cash from operations and the issuance of Common Stock and promissory
notes. A similar funding strategy is anticipated to be used in its future
business growth. The Company anticipates that cash flow from operations and the
proceeds of the Offering will be adequate to fund its operations for the next
twelve months, although there can be no assurance to that effect.
13
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PART II - OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
(No response required)
ITEM 2: CHANGES IN SECURITIES
(No response required)
ITEM 3: DEFAULTS UPON SENIOR SECURITIES
(No response required)
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Stockholders was held on June 25, 1996.
At the Annual Meeting, Alan H. L. Carr-Locke and Jude J. Spak were each
re-elected as Class II directors receiving votes representing 82% of the
Company's 7,456,844 shares of Common Stock outstanding and 99% of the votes
cast at the meeting. Additionally, the Company's Stock Option Plan for
Non-Employee Directors, which provides for the automatic grant of stock
options to non-employee directors, was approved by 67.7% of the Company's
Common Stock outstanding and 82.5% of the votes cast at the meeting.
ITEM 5: OTHER INFORMATION
At the time of the Offering, the holders of all of the shares of the
Common Stock outstanding immediately prior to the Offering and the holders of
substantially all options and warrants to purchase Common Stock outstanding
agreed that, for a period of 24 months after the date of the Offering, such
holders would not offer, sell, contract to sell or otherwise dispose of any
of the shares of Common Stock acquired prior to the Offering or purchasable
or exercisable under any option, warrant or convertible debt owned by them
prior to the Offering without the prior written consent of the managing
underwriter for the Offering. On August 12, 1996, the underwriter agreed to
amend this agreement to allow such holders to offer, sell, contract to sell
or otherwise dispose of up to 50% of their shares of Common Stock acquired
prior to the Offering or purchasable or exercisable under any option, warrant
or convertible debt owned by them prior to the Offering.
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
11.1 Statement Regarding Computation of Per Share Earnings
(Three Months)
11.2 Statement Regarding Computation of Per Share Earnings (Six
Months)
27.1 Financial Data Schedule
b. Forms 8-K
1. No reports on Form 8-K were filed during the quarter for
which this report is filed.
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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.
NATIONAL MEDICAL FINANCIAL SERVICES CORPORATION
-----------------------------------------------
(Registrant)
By: /s/ Robert W. Horner, Jr.
---------------------------------------------
Robert W. Horner, Jr.
Chief Financial Officer, Secretary
and Treasurer
Signing on behalf of the Registrant
and as Principal Accounting Officer
Date: August 13, 1996
15
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Exhibit 11.1
Computation of Per Share Earnings
For the Three Month Periods Ended June 30, 1996 and 1995
1996 1995
---- ----
PRIMARY NET INCOME PER SHARE
Average shares outstanding 7,456,844 4,666,667
Net effect of dilutive stock options and
warrants based on the treasury stock
method using average market price 463,718 --
--------- ---------
Total 7,920,562 4,666,667
--------- ---------
Net income $373,955 $164,214
--------- ---------
--------- ---------
Primary net income per share $0.05 $0.04
--------- ---------
--------- ---------
FULLY DILUTED NET INCOME PER SHARE
Average shares outstanding 7,456,844 4,666,667
Net effect of dilutive stock options and
warrants based on the treasury stock
method using ending market price 463,718 --
--------- ---------
Total 7,920,562 4,666,667
--------- ---------
Net income $373,955 $164,214
--------- ---------
--------- ---------
Fully diluted net income per share $0.05 $0.04
--------- ---------
--------- ---------
16
<PAGE>
Exhibit 11.2
Computation of Per Share Earnings
For the Six Month Periods Ended June 30, 1996 and 1995
1996 1995
---- ----
PRIMARY NET INCOME PER SHARE
Average shares outstanding 7,395,981 4,666,667
Net effect of dilutive stock options and
warrants based on the treasury stock
method using average market price 442,280 --
Effect of shares payable in connection
with acquisitions -- --
--------- ---------
Total 7,838,261 4,666,667
--------- ---------
Net income $804,626 $326,833
--------- ---------
--------- ---------
Primary net income per share $0.10 $0.07
--------- ---------
--------- ---------
FULLY DILUTED NET INCOME PER SHARE
Average shares outstanding 7,395,981 4,666,667
Net effect of dilutive stock options and
warrants based on the treasury stock
method using ending market price 442,280 --
Effect of shares payable in connection
with acquisitions -- --
--------- ---------
Total 7,838,261 4,666,667
--------- ---------
Net income $804,626 $326,833
--------- ---------
--------- ---------
Fully diluted net income per share $0.10 $0.07
--------- ---------
--------- ---------
17
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-1-1996
<PERIOD-END> JUN-30-1996
<CASH> 3,002,966
<SECURITIES> 0
<RECEIVABLES> 6,959,339
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,006,633
<PP&E> 23,005
<DEPRECIATION> 3,238
<TOTAL-ASSETS> 15,067,854
<CURRENT-LIABILITIES> 1,589,207
<BONDS> 0
0
0
<COMMON> 74,568
<OTHER-SE> 13,466,225
<TOTAL-LIABILITY-AND-EQUITY> 15,067,854
<SALES> 4,408,633
<TOTAL-REVENUES> 4,408,633
<CGS> 0
<TOTAL-COSTS> 2,929,534
<OTHER-EXPENSES> 363,929
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (140,967)
<INCOME-PRETAX> 1,256,137
<INCOME-TAX> 451,511
<INCOME-CONTINUING> 804,626
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 804,626
<EPS-PRIMARY> 0.10
<EPS-DILUTED> 0.10
</TABLE>
