-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, A/TOSIV1aIjGL3otD7+HrW9xeRnWYFFYq9Td7sRJrMgGwbYhSOg99fqHJ/acTxvU A/e6Uc9RtcnzhoP0R+s+mQ== 0000771252-99-000011.txt : 19990914 0000771252-99-000011.hdr.sgml : 19990914 ACCESSION NUMBER: 0000771252-99-000011 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990731 FILED AS OF DATE: 19990913 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDICAL ADVISORY SYSTEMS INC CENTRAL INDEX KEY: 0000771252 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HOME HEALTH CARE SERVICES [8082] IRS NUMBER: 521233960 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 001-15177 FILM NUMBER: 99709986 BUSINESS ADDRESS: STREET 1: 8050 SOUTHERN MARYLAND BLVD CITY: OWINGS STATE: MD ZIP: 20736 BUSINESS PHONE: 3018558070 MAIL ADDRESS: STREET 1: 8050 SOUTHERN MARYLAND BLVD CITY: OWINGS STATE: MD ZIP: 20736 10QSB 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-QSB QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended July 31, 1999 Commission File No. 2-98314-W MEDICAL ADVISORY SYSTEMS, INC. (Exact name of registrant as specified in its charter) Delaware 52-1233960 (State of other Jurisdiction of (I.R.S. Employer Identification No.) incorporated or organization) 8050 Southern Maryland Boulevard, Owings, Maryland 20736 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (301) 855-8070 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 latest practicable date. 4,411,060 shares of Common Stock ($0.005 par value per share) outstanding at July 31, 1999 INDEX MEDICAL ADVISORY SYSTEMS, INC. PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements (Unaudited) Balance Sheet - July 31, 1999 and October 31, 1998 Statement of Operations - Three and Nine months ended July 31, 1999 and 1998 Statement of Cash Flow - Nine months ended July 31, 1999 and 1998 Notes of Condensed Financial Statements: July 31, 1999 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. PART II. OTHER INFORMATION Item 1. Legal Proceedings Item 2. Changes in Securities Item 3. Defaults from Senior Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Reports on Form 8-K and Exhibits. SIGNATURES MEDICAL ADVISORY SYSTEMS, INC. CONSOLIDATED BALANCE SHEET July 31 October 31 1999 1998 -------------------------- UNAUDITED ASSETS CURRENT ASSETS Cash $ 1,239,944 $ 579,331 Receivables, net 424,006 907,720 Inventory 38,204 26,745 Prepaid expenses and other 22,012 6,802 Current deferred tax asset 37,015 37,015 ---------- ----------- TOTAL CURRENT ASSETS 1,761,181 1,557,613 PROPERTY AND EQUIPMENT, NET 958,569 1,015,055 OTHER ASSETS Investments 3,116,731 660,000 Deferred assets 387,739 387,739 ---------- ----------- TOTAL OTHER ASSETS 3,504,470 1,047,739 TOTAL ASSETS $ 6,224,220 $ 3,620,407 =========== =========== The accompanying notes are an integral part of these statements. MEDICAL ADVISORY SYSTEMS, INC. CONSOLIDATED BALANCE SHEET - CONTINUED July 31 October 31 1999 1998 -------------------------- UNAUDITED LIABILITIES AND SHAREHOLDER'S EQUITY CURRENT LIABILITIES Current Maturities LT Debt $ 3,323 $ 315,617 Accounts payable & accrued expenses 283,228 437,249 Deferred income 21,517 327,565 ----------- ----------- TOTAL CURRENT LIABILITIES 308,069 1,080,431 Long-term liabilities to Banks and Others 131,534 134,069 ----------- ----------- TOTAL LIABILITIES $ 439,603 $ 1,214,500 ----------- ----------- JOINT VENTURER'S INTEREST (24,706) SHAREHOLDER'S EQUITY Convertible Preferred Stock, $1.75 par value Authorized: 1,000,000 shares, Issued and Outstanding at October 31, 1998: 0 and Issued and Outstanding at April 30, 1999: 0 Common Stock, $0.005 par value - Authorized: 10,000,000 shares Issued and Outstanding October 31, 1998: 3,819,938; 2,722,676 19,415 Issued and Outstanding at July 31, 1999: 4,411,060 Convertible Preferred Stock, Dividends Paid (48,950) Additional capital 4,066,331 3,824,778 Accumulated deficit (795,593) (1,369,997) Treasury Stock at Cost (159,846) (43,583) ----------- ----------- NET SHAREHOLDERS EQUITY $ 5,784,617 $ 2,430,613 ----------- ----------- TOTAL LIABILITIES AND EQUITY $ 6,224,220 $ 3,620,407 =========== =========== The accompanying notes are an integral part of these statements MEDICAL ADVISORY SYSTEMS, INC. CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) Three Months Nine Months Ended July 31 Ended July 31 1999 1998 1999 1998 ------------------------ ------------------------ Revenues: Program Services $ 238,196 $ 206,980 $ 702,186 $ 600,211 Assistance Services 79,085 246,993 427,598 789,807 Pharmaceutical Sales 128,589 120,921 357,142 375,823 Chat Center Revenue 1,249,920 2,802,057 Training Services 19,476 18,435 57,218 83,259 Option Revenue 66,149 330,822 132,299 Other Income 2,637 11,258 62,532 Interest Revenue 15,654 13,044 37,895 45,624 ----------- ----------- ----------- ---------- Total Revenue 1,733,557 672,522 4,726,176 2,089,555 ----------- ----------- ----------- ----------- Cost and Expenses: Program & Assistance Medical Services $ 55,440 $ 81,284 $ 174,895 $ 241,795 Pharmaceutical Cost of Goods 69,781 53,196 179,380 190,827 Chat Center Medical Services 913,592 2,051,864 Other Chat Center Costs 19,296 65,233 Cost of Training Services 8,216 6,590 18,802 19,472 Salaries and Wages 295,841 246,359 915,028 726,052 Other selling, general and Administrative expenses 259,692 256,575 686,287 660,190 Depreciation and Amortization 21,586 25,405 57,561 74,216 Interest expense 2,871 3,232 64,696 13,803 ----------- ----------- ----------- ----------- 1,646,315 672,641 4,213,746 1,926,355 Operating Income 87,242 (119) 512,430 163,200 Income Tax benefit (expense) ----------- ----------- ----------- ----------- Profit (loss) before joint ventures's interest 87,242 (119) 512,430 163,200 Joint venturer's interest 34,890 34,025 ----------- ----------- ----------- ----------- Net Profit $ 87,242 $ 34,771 $ 512,430 $ 197,225 =========== =========== =========== =========== Earnings per share: Basic $0.02 $0.01 $0.13 $0.05 Diluted $0.02 $0.01 $0.12 $0.05 Weighted average shares outstanding: Basic 4,397,010 3,885,878 4,035,677 3,885,878 Diluted 4,670,820 3,885,878 4,395,544 3,885,878 MEDICAL ADVISORY SYSTEMS, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) Nine Months Ended July 31 1999 1998 Cash flows from operating activities: Net earnings from period $ 512,430 $ 197,225 Adjustment to reconcile net earning to net cash provided by operating activities: Depreciation and amortization 57,561 74,216 Equity interest in joint venture income (losses) 0 (34,025) (Increase) decrease in : Accounts Receivable 267,207 521,642 Inventory (11,459) (1,057) Prepaid expenses and other (16,669) 4,912 Increase (decrease) in : Accounts payable and accrued expenses 35,415 (286,599) Deferred income 7,886 (34,372) Net cash provided by (used for) operating activities $ 852,372 $ 441,942 Cash flows from investing activities: Purchase of Investment (2,432,019) 8,499 (Purchase) disposal of property and equipment, net (69,108) (126,213) ----------- ----------- Net cash provided by (used in) investing activities (2,501,127) (117,714) Cash Flows from financing activities Proceeds from Sale of Common Stock, net of costs 2,703,246 - Proceeds from Paid in Capital in Excess of Par 241,568 - Dividends Paid - Preferred Stock (48,950) - Purchase of Treasury Stock (116,263) - Repayment of loans to banks and related parties (315,035) (126,824) ----------- ----------- Net cash provided by (used in) financing activities 2,464,565 (126,824) Net increase (decrease) in cash 815,809 197,404 Cash at beginning of period 424,135 729,609 ----------- ----------- Cash at end of the period $ 1,239,944 $ 927,013 =========== =========== Supplemental disclosure of Cash Flow information Cash paid during period for interest $ 64,696 $ 14,778 =========== =========== MEDICAL ADVISORY SYSTEMS, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) NOTE A - Basis of Presentation The accompanying unaudited condensed financial statements have been prepared in accordance with the instructions to SEC Form 10-QSB, and therefore, do not include all information necessary for a fair presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles. In the opinion of management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months period ended July 31, 1999 are not necessarily indicative of the results that may be expected for the year ended October 31, 1999. The unaudited consolidated financial statement should be read in connection with the consolidated financial statements and footnotes thereto included in the Company's annual report on 10-KSB for the year ended October 31, 1998. NOTE B - Consolidated Statements The consolidated financial statements include the accounts of Medical Advisory Systems, Inc. (MAS) and its wholly-owned subsidiaries MAS Laboratories, Inc., Doc-Talk, LLC and TLC, Inc. Significant intercompany transactions have been eliminated in consolidation. The consolidated financial statements as of October 31, 1998 and for the nine months ended July 31, 1998 also include 100% of the assets, liabilities and operating results of Assistance Services of America, Inc. (ASA). The Joint Venturer's Interest reflected on the October 31, 1998 consolidated balance sheet and the consolidated statements of operations for the nine months ended July 31, 1998 represent the other joint venturer's share (50%) of ASA's equity (deficit) and results of operations. In March, 1999, the Company sold 100% of its equity interest in ASA to ASA's remaining shareholder, SACNAS International. The terms of the sale agreement included SACNAS International assuming all responsibilities for operations of ASA effective November 1, 1998. The accompanying July 31, 1999 financial statements include certain adjustments to reflect the Company discontinuing operating ASA. Accordingly, the accompanying consolidated balance sheet at July 31, 1999 and the statement of operations for the nine months ended July 31, 1999 do not include the assets, liabilities and operating results of ASA. NOTE C - Use of Estimates The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date (s) of the financial statements and the reported amounts of revenues and expenses during the reporting period (s). Actual results could differ from those estimates. MEDICAL ADVISORY SYSTEMS, INC. PART I. FINANCIAL INFORMATION Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS For the first nine months of FY 1999 sales were $4,726,176. For the first nine months of last year sales were $2,089,555. Sales for the first nine months of FY 1999 reflect deleted business from the sale of ASA (see NOTE-B). Deleting ASA sales from the first nine months of FY 1998, results in sales of $1,794,079 for comparison to the first nine months of FY 1999. Therefore, sales for the first nine months of FY 1999 comparatively increased by 263%. For the three months ended July 31, 1999 sales where $1,733,557 compared to the same period of FY 1998 with sales of $672,522. Deleting ASA sales from the third quarter of 1998 resulted in sales of $584,529, an increase of 337%. The increase resulted primarily from chat center revenues, a new business segment launched in the forth quarter of FY 1998. Chat Center revenues totaled $1,249,520 during the third quarter and $2,802,057 during the first nine months of 1999. These revenues were derived from a new business segment launched in the forth quarter of FY 1998. The Company provides professional medical information "chats" via the internet to internet service providers and internet users on behalf of AmericasDoctor.Com. The Company anticipates continuing increases in revenues from this business segment. The Company has been informed by AmericasDoctor.com that there is a dispute over the term of the Call Center Service Agreement between the companies. AmericasDoctor.com believes it was the intent of the parties that AmericasDoctor.com could elect not to renew the agreement for the period July 2, 2001 through July 2, 2003. The Company believes only the Company has the right to elect not to renew the contract for that period. Revenues from Program Services were $702,186 for the first nine months of FY 1999 compared to $600,211 for the same period in FY 1998, an increase of 17.0%. Revenues for the third quarter of FY 1999 were $238,196 compared to $206,979 for the same period of FY 1998. This increase resulted from the stabilization of the size of the U.S. merchant marine fleet along with expanded marketing efforts, plus the addition of outpatient clinical services at the Company's headquarters building. The Company had assistance service revenues of $427,598 during the first nine months of FY 1999. First nine months sales for last year were $789,807. Sales for the first nine months reflect deleted business from the sale of ASA (see NOTE-B). Deleting ASA sales from the first nine months of FY 1998, results in sales of $161,013 for comparison to the first nine months of FY 1999. Sales for the first nine months of FY 1999 comparatively increased by 266%, resulting primarily from a one-time transition fee of $164,500 paid by SACNAS International related to its purchase of the Company's interest in Assistance Services of America, Inc. (See Sale of the Company's Affiliate, Assistance Services of America, Inc. below). The third quarter of FY 1999 had revenues of $79,085 as compared to $246,993 for FY 1998. Deleting ASA sales from the third quarter of FY 1998 resulted in revenues of $71,184, an increase of 11%. SACNAS has now purchased the Company's shares in ASA and the Company is now providing leased office space and case handling services under a new services agreement. Management therefore anticipates continuing revenues from this business line for the remainder of fiscal year 1999. Revenues from pharmaceutical sales were $357,142 for the first nine months of FY 1999 reflecting a decrease in revenues of $18,681 or 5.2% when compared to the same period of 1998. This decrease reflects the loss of a pharmaceutical contract with a major customer. The third quarter of FY 1999 had sales of $128,589 as compared to the same period of FY 1998 revenues of $120,921, an increase for the third quarter of $7,668 or 6.3%. The Company has recently obtained additional contracts that are expected to bring pharmaceutical revenues back in line with the previous fiscal year. The Company's training program provided revenues of $ 57,218 for the nine months, a 31.3% decrease compared to training revenues of $ 83,259 in the first nine months of FY 1998. The third quarter of FY 1999 had revenues of $19,476, compared to FY 1998 third quarter sales of $18,435, an increase of 5.6%. Sale of the Company's affiliate, Assistance Services of America, Inc. (ASA) On March 9, 1999 the Company entered into an agreement to sell all of its interest in Assistance Services of America, Inc. (ASA) to SACNAS International (SACNAS). SACNAS paid $189,500 in cash, forgave an outstanding note payable of $250,000 and sold back to the Company 295,378 shares of the Company's common stock for $116,248. The Company paid SACNAS $57,000 to settle accrued interest on the note payable. Agreement with Assistance Services of America, Inc. (ASA) In conjunction with the final sale by the Company of all of its interests in ASA to SACNAS, the Company entered into a lease and service agreement with ASA and SACNAS. Under this agreement ASA is renting office space in the Company's headquarters building in Owings, Maryland and continuing to use the Company to service its US medical and travel cases. The lease and service agreement has a 1-year term with automatic renewals, and may be cancelled by either party upon 90 days notice. Additionally, the Company and SACNAS have agreed to pursue the international expansion of the Company's core medical information programs through the call centers operated by SACNAS in 19 countries. MEDICAL ADVISORY SYSTEMS, INC. PART II - OTHER INFORMATION Item 1. Legal Proceedings None. Item 2. Changes in Securities In February, 1999 the Company sold 500,000 shares of a Series A Redeemable Convertible Preferred Stock in a private placement. On May 01, 1999 all of the preferred shareholders elected to convert these shares into MAS common stock. Item 3. Defaults from Senior Securities None. Item 4. Submission of Matters to a Vote of Security Holders On June 4,1999 the Company issued a Proxy Statement to all shareholders that on June 25, 1999 the Company will hold its annual shareholders meeting. Item 5. Other Information In 1986 the Company filed an S-1 registration under the Securities Act of 1933. The Company has previously filed 10-KSB and 10-QSB reports on a voluntary basis. On August 13, 1999 the Company filed with the Securities and Exchange Commission form 8A/A subjecting the Company to the Exchange Act of 1934. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. None (b) Reports on Form 8-K. On file MEDICAL ADVISORY SYSTEMS, INC. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, and the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MEDICAL ADVISORY SYSTEMS, INC. (Registrant) Date: September 10, 1999 /s/ Thomas M. Hall, M.D., M.I.M. ___________________________________ Thomas M. Hall, M.D. M.I.M. Chief Executive Officer EX-27 2 ARTICLE 5 FIN. DATA SCHEDULE FOR 3RD QTR 10QSB
5 3-MOS Oct-31-1999 May-01-1999 Jul-31-1999 1239944 3116731 424006 0 38204 1761181 1623537 664967 6224220 308069 0 2722676 0 0 3061941 6224220 4346201 4726176 179380 4213746 4034366 0 64696 512430 0 512430 0 0 0 512430 .13 .12
-----END PRIVACY-ENHANCED MESSAGE-----