UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended December 31, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to___________
Commission file number 0-5186
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OCG TECHNOLOGY, INC.
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(Exact name of small business issuer as specified in its charter)
DELAWARE 13-2643655
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
450 West 31st Street, New York, New York 10001
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(Address of principal executive offices)
(212) 967-3079
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(Issuer's telephone number)
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(Former name, 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. [X] Yes [ ] No
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
Class Shares Outstanding at February 1, 2000
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Common Stock ($.01 par value) 31,471,557 Shares
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
INDEX
PAGE NUMBER
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PART I. - FINANCIAL INFORMATION
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Item 1. Financial Statements
Consolidated Condensed Balance Sheets
December 31, 1999 and June 30, 1999 1
Consolidated Condensed Statements of Loss for
the Three Months and Six Months Ended
December 31, 1999 and 1998 2
Consolidated Condensed Statements of Cash Flow for
the Six Months Ended December 31, 1999 and 1998 3
Notes to Consolidated Condensed Financial Statements 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6
PART II. - OTHER INFORMATION
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Item 4. Submission of Matters to a Vote of Security Holders 12
Item 6. Exhibits and Reports on Form 8-K 12
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
DECEMBER 31, 1999 JUNE 30, 1999
ASSETS (UNAUDITED) (AUDITED)
Current Assets:
Cash $ 71,310 $ 103,408
Receivables, trade 18,908 8,468
Receivable, Sale of business 112,557 -
Other current assets 144,661 193,979
Net assets held for sale - 30,421
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Total current assets 347,436 336,276
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Property and equipment, net of accumulated depreciation of
($511,559) ($482,020) 103,225 123,023
Other assets 31,850 3,180
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Total assets $ 482,511 $ 462,479
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 27,952 $ 53,591
Notes Payable 10,500 21,844
Due to Shareholder (non-interest bearing) - 15,121
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Total current liabilities 38,452 90,556
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Shareholders' equity: (Note 4)
Preferred stock $.10 par value, Series E 10,000 10,000
Common stock $.01 par value 313,115 305,815
Additional paid-in capital 24,168,338 23,951,577
Deficit (23,623,894) (23,471,969)
Subscription receivable (361,000) (361,000)
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506,559 434,423
Less treasury stock, at cost (62,500) (62,500)
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Total shareholders' equity 444,059 371,923
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Total liabilities and shareholders' equity $ 482,511 $ 462,479
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See accompanying notes to consolidated condensed financial statements
-1-
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED DECEMBER 31, SIX MONTHS ENDED DECEMBER 31,
1999 1998 1999 1998
Revenue:
Sales $ 25,500 $ 7,485 $ 30,000 $ 10,485
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Costs and expenses:
Marketing, general and
administrative 132,295 232,362 306,110 501,680
Depreciation and
amortization 14,625 39,239 29,539 67,924
Product development costs 103,382 - 215,379 -
Interest - net (534) (1,906) (1,065) (5,222)
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Total Expenses 249,768 269,695 549,963 564,382
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Loss from continuing
operations (224,268) (262,210) (519,963) (553,897)
Profit from discontinued
operations - 12,953 16,707 62,597
Income from sale of buiness - - 351,328 -
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Net loss $ (224,268) $ (249,257) $ (151,928) $ (491,300)
========== ========== ========== ==========
Weighted average number of
shares outstanding
during period 30,870,898 29,828,224 30,784,453 29,828,224
========== ========== ========== ==========
Loss per Common Share $(0.01) $(0.01) $(0.01) $(0.02)
========== ========== ========== ==========
See accompanying notes to consolidated condensed financial statements
-2-
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED DECEMBER 31,
1999 1998
Cash flows from operating activities:
Net income (loss) $(151,928) $ (491,300)
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Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization 29,539 67,924
Issuance of stock and warrants for services 91,687 4,000
Amortization of Black Scholes valuation 102,035 21,548
Changes in assets and liabilities
(Increase) decrease in receivables (122,997) (47,412)
(Increase) decrease in demand notes - 110,000
(Increase) decrease in other current assets
less Black Sholes value (11,384) 106,325
(Increase) decrease in property and equipment (9,741) (18,886)
(Increase) decrease in Proprietary Technology - (97,352)
(Increase) decrease in other assets less
Black Scholes value (28,670) (31,293)
(Decrease) in accounts payable and accrued expenses (25,639) (42,261)
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Total adjustments 24,830 72,593
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Net cash used in operating activities (127,098) (418,707)
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Cash flows from financing activities:
(Increase) decrease in subscription receivable - 62,500
Proceeds from issuance of common stock 95,000 -
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Net cash changes from financing activities (95,000) 62,500
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Net increase (decrease) in cash (32,098) (356,207)
Cash, beginning of period 103,408 475,323
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Cash, end of period $ 71,310 $ 119,116
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See accompanying notes to consolidated condensed financial statements
-3-
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. In the opinion of the Company, (which, together with its subsidiaries,
unless the context otherwise requires, is referred to as "OCGT"), the
accompanying unaudited consolidated condensed financial statements contain all
adjustments (consisting of only normal recurring adjustments) necessary to
present fairly the financial position as of December 31, 1999 and the results
of operations for the three and six months ended December 31, 1999 and 1998
and the statements of cash flows for the six months ended December 31, 1999
and 1998. The June 30, 1999 balance sheet has been derived from OCGT's audited
financial statements.
The results of operations for the six months ended December 31, 1999 are
not necessarily indicative of the results to be expected for the full year.
While OCGT believes that the disclosures presented are adequate to make
the information not misleading, it is suggested that these condensed financial
statements be read in conjunction with the financial statements and the notes
thereto included in OCGT's latest annual report on Form 10-KSB.
The accompanying consolidated financial statements have been prepared on
a going concern basis which contemplates continuity of operations and
realization of assets and liquidation of liabilities in the ordinary course of
business. Because of significant operating losses, OCGT's ability to continue
as a going concern is dependent upon its ability to obtain sufficient
additional financing and, ultimately, upon future profitable operations. The
financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the amounts and
classification of liabilities that might be necessary should OCGT be unable to
continue in existence.
2. Earnings per share is computed using the weighted average number of
shares outstanding during the periods. The effect of warrants outstanding
would be anti-dilutive.
3. Other assets decreased due primarily to the amortization of the value
previously assigned under a Black Scholes calculation to warrants issued for
marketing and corporate services to be rendered and rent and other services.
This value continues to be amortized over the life of the services rendered.
4. Capital Changes:
During the six months ended December 31, 1999, for services rendered in
accord with the terms of a consulting agreement, warrants were issued to
purchase a total of 30,000 shares of OCGT's common stock at exercise prices
ranging between $0.40 to $0.42 per share with exercise dates of said warrants
expiring between July 1, to September 1, 2002. OCGT reflected a total expense
of $12,000 for the three month period ending December 31, 1999.
During the six months ended December 31, 1999, 380,000 shares of OCGT's
common stock were sold for $95,000 ($0.25 per share).
During the three months ended December 31, 1999, 100,000 shares of
OCGT's common stock were issued as compensation for services to be performed
pursuant to an Internet services agreement during the course of calendar year
2000. OCGT recorded a prepaid asset for $42,187 (based on the market price at
date of issue) which will be amortized over the term of the estimated service
benefit.
During the three months ended December 31, 1999, 100,000 shares of
OCGT's common stock were issued as compensation for services to be performed
during the course of calendar year 2000 pursuant to a financial services
agreement. OCGT recorded a prepaid asset for $37,500 (based on the market
price at date of issue) which will be amortized over the term of the estimated
service benefit.
During the three months ended December 31, 1999, 150,000 shares of
OCGT's common stock were issued to retire debt in the amount of $37,374. The
creditor is the son of OCGTs President.
During the three months ended December 31, 1999, OCGT's Board of
Directors approved the issuance of warrants to acquire 50,000 shares of
OCGT's common stock at an exercise price of $0.40 which expire December 31,
2002. These warrants were issued to an employee of OCGT. On the date of issue
the quoted market price of OCGT's common stock was less than the per share
exercise price of the warrants.
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5. Material Subsequent Event:
On January 25, 2000, 160,000 shares of OCGT's common stock were sold
for $40,000 ($0.25 per share).
-5-
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
A SUMMARY OF INCREASES (DECREASES) IN THE ITEMS INCLUDED IN
THE CONSOLIDATED STATEMENTS OF LOSS IS SHOWN BELOW:
General
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The following discussion and analysis should be read in conjunction with the
Consolidated Financial Statements and Notes thereto appearing elsewhere
herein. The following discussion contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934 and OCGT intends that such
forward-looking statements be subject to the safe harbors created thereby.
These forward-looking statements include predictions, estimates and other
statements that involve a number of risks and uncertainties. While this
outlook represents OCGT's current judgment on the future direction of the
business, such risks and uncertainties could cause actual results to differ
materially from any future performance suggested herein.
OCGT has experienced recurring losses from operations and has relied on the
sale of equity interests in OCGT to fund its operations. If necessary, OCGT
intends to provide additional working capital through the sale of equity
interests in OCGT. Although, in the past, OCGT has been able to provide
working capital through the sale of equity interests in OCGT, there can be no
assurances that OCGT will succeed in its efforts, which creates a doubt about
its ability to continue as a going concern. The results of operations for
prior periods is based on OCGT's continuing operations.
Results of Operations
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Total revenues increased $18,015 and $19,515 for the three and six months ended
December 31, 1999, as compared to the same period for 1998, primarily as a
result of Internet revenues. The sales of OCGT and PSI were $100 and $29,900
respectively, for the six months ended December 31, 1999.
Marketing, general and administrative expenses decreased $66,671 and $162,173
for the three and six months ended December 31, 1999, as compared to the same
period for 1998, due to a reduction in marketing expenses resulting from a
shift in marketing emphasis to Internet products and a change both in
presentation and in the accounting procedures. In prior years, expenditures
for Product Development were accounted for as an asset and amortized over its
estimated useful life. As of June 30, 1999, the policy was changed and
thereafter, the cost of Product Development was charged as an expense and
appears as a separate item on the Statements of Operations.
Liquidity and Capital Resources
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At December 31, 1999, OCGT had a current ratio of 9.0 to 1 compared to 8.7 to
1 as of December 31,1998. The net loss from operations for the six months
ended December 31, 1999, was $519,963, of which $143,574 or 28% were non-cash
charges. OCGT has experienced recurring losses from operations and has been
unable to provide sufficient working capital from operations and has relied
significantly on the sale of equity interests in OCGT, and the exercise of
warrants and loans from shareholders to fund its operations. OCGT's auditors
have included an explanatory paragraph regarding the ability of OCGT to
continue as a "going concern".
Cash on hand and accounts receivable were $202,775 at December 31, 1999. OCGT
also has $361,000 of collateralized demand notes receivable related to the
purchase of OCGT's common stock through the exercise of warrants. In the past,
OCGT's principal means of overcoming its cash shortfalls from operations was
from the sale of OCGT's common stock. During the six months ended December
31, 1999, 380,000 shares of OCGT's common stock were sold for $95,000 ($0.25
per share). Although, in the past, OCGT has been able to provide working
capital through the sale of equity interests in OCGT and through the exercise
of warrants, there can be no assurances that OCGT will succeed in its efforts.
Disposition of Assets. On August 2, 1999, pursuant to the terms of an Asset
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Purchase Agreement, Mooney-Edwards Enterprises, Inc.("MIS"), a wholly owned
subsidiary of OCGT, sold substantially all of the assets, as of July 28, 1999,
to Medical Manager Southeast, Inc.("MM") and MM assumed substantially all of
the liabilities related to operations as of July 28, 1999 for a purchase price
equal to Three Hundred Fifty Thousand Dollars and 00/100 ($350,000) plus an
amount equal to the value of the net assets as of July 28, 1999, which is
approximately $96,262. The sale has been completed. The unpaid portion of the
sales price, $112,557 is reflected as a receivable.
Product and Marketing Overview. OCGT's revenues are primarily derived from
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marketing the products of its wholly owned subsidiary, PrimeCare Systems,
Inc.(" PSI"), a Delaware corporation. (Hereafter "OCGT" shall mean OCGT and/or
PSI as the context requires). OCGT, through PSI, has developed, markets,
updates and expands the PrimeCareTM Patient Management System (the "PrimeCareTM
System"), PrimeCareOnTheWeb.com, YourOwnHealth.com, YourOwnDoctor.com and
DeniseAustin.com, all of which are protected by copyrights.
Substantially all of PSI's Web products are centered on parts of the
PrimeCareTM System. The PrimeCareTM System, an in-office PC based system, is a
patient-centered, interactive, computer program that brings efficiencies to
the patient/physician encounter while improving the standard of care and
reducing costs. Patients interact directly with the PrimeCareTM System, during
what is usually waiting time. A detailed patient history is obtained without
taking any of the physician's time. The designated staff member selects the
appropriate Questionnaire based upon the patient's chief complaint and/or
symptom and enters the patient's vital signs. The patient is then seated at a
computer and answers complaint-specific questions by using just the number
keys to indicate answers that apply to them; no typing or computer skills are
required. The software also has bilingual capabilities, allowing
Spanish-speaking patients to interact in their preferred language. When the
patient has completed the Questionnaire, the PrimeCareTM System creates a
Preliminary Report (the "Report") for the physician to review before examining
the patient. The Report contains the patient's current problems, medications
and allergies, all positive and significant negative subjective responses,
vital signs and an alphabetical list of the diagnostic possibilities with the
patient's responses that triggered each diagnostic possibility. By freeing up
the time physicians would normally have to spend asking patient history
questions and recording responses, the PrimeCareTM System permits physicians
to see more patients and to spend more quality time with them. The
PrimeCareTM System is also easy for physicians to understand and use . The
same simple key stroke process lets the physician document the: physical
findings (normal and abnormal), assessment, treatment plan, prescribed
medications and patient education materials distributed. At the conclusion of
the encounter a final report of the visit, patient educational materials, and
prescriptions are printed for the patient.
The PrimeCareTM System: standardizes the patient record; assures consistency
in patient care; creates a patient database for clinical and outcomes
research; offers, both local and remote, means for utilization review and
quality assurance audits; improves the quality of care; increases efficiency
and productivity of the physician's practice; automatically generates a
problem list; incorporates patient care algorithms and clinical practice
guidelines; permits, both local and remote, on-line electronic retrieval of
patient record and hard copy print out with appropriate security controls;
enables rapid access to important patient data for clinical care; contains and
provides patient education, complaint oriented and medication specific;
provides physician reference materials.
The PrimeCare(TM) System uses the Windows 95/98/NT platforms. PSI's interfaces
enable the PrimeCare(TM) System to communicate with other practice management
systems used in medical facilities. This provides a method for these systems
to transfer information to the PrimeCare(TM) System, such as patient
demographics and appointment scheduling, and the PrimeCare(TM) System to
transfer information (such as billing information including E&M codes, ICD9
codes and CPT codes) to these other systems.
The PrimeCare(TM) System has other enhancements and features which include:
(1) voice command recognition capability to enable physicians to use voice
commands instead of keystrokes or mouse clicks to document normal & abnormal
physical findings, the assessment, select tests, treatment plan,
prescriptions, drug interaction checks, patient education materials to be
dispensed and schedule follow-up visits. (2) a touch screen may be used by
the patient and physician instead of the key board, mouse or voice command
recognition. All keystrokes, mouse clicks or voice commands are duplicated by
the touch screen hardware and software. (3) The PrimeCareTM System uses
either Microsoft's SQL Server or Interbase, as a database. This expands the
flexibility of the PrimeCareTM System since it enables medical facilities that
are using MS SQL Server database for practice management systems and other
software to add PrimeCareTM without purchasing an additional database. Both
databases support distributed processing in local and wide area networks.
The principal markets for the PrimeCare(TM) System are ambulatory/outpatient
medical facilities, such as, primary care physicians, medical clinics and
staff health maintenance organizations.
The PrimeCare(TM) System is marketed through value added resellers
("VARs"), authorized dealers and direct sales. In addition, the
PrimeCareTM System and CodeComplierTM have been exhibited at selected health
care industry conventions as a component of the marketing and sales program.
However, no assurances can be given that the marketing plan will succeed.
The PrimeCareTM System is marketed as a service, on a pay for use basis,
with a maximum charge of $2.00 per patient visit. This marketing method
eliminates a significant financial commitment to purchase the software, plus
monthly maintenance charges for updates, and ties the cost directly to use.
Physician users have stated that the financial benefits derived by the
physician from use of the PrimeCareTM System exceeds the cost per patient
visit. According to the American Medical Association, there are over 650,000
physicians in the U.S. creating a very large potential market for the System.
OCGT estimates that as many as 250,000 of these physicians could use the
PrimeCareTM System routinely.
OCGT has not identified any competitive patient management system which
embodies all the features of the PrimeCare(TM) System. However, other companies
market systems which may have some of the features of the PrimeCare(TM) System
and some companies market medical office products which perform different
functions than those performed by the PrimeCare(TM) System. To date, market
penetration by both PSI and its competitors has been very small.
OCGT has also developed software which computes the E&M code. Designed to be
used in conjunction with the PrimeCareTM System, CodeComplierTM takes the guess
work out of E&M compliance. As each item of information is entered into and
collected by the PrimeCareTM System during the patient encounter, the
CodeComplierTM organizes the data in the proper classification and using the
1997 HCFA guidelines, automatically calculates the applicable E&M code. It
totally eliminates the time and effort which would otherwise be required by
physician office personnel to complete this task. However, no assurances can
be given that OCGT's marketing plan will succeed.
PrimeCareTM Web Sites and activities
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In response to the opportunities created by the development and growing
consumer acceptance of secure Internet communications, PSI now makes
enhanced and targeted components of its PrimeCare(TM) System available to
physicians and health-conscious consumers via the Web (e.g.
www.PrimeCareOnTheWeb.com and www.YourOwnHealth.com). OCGT has also expanded
into Web Site design and hosting (e.g. www.DeniseAustin.com ;
www.YourOwnDoctor.com) and business-to-business Internet licensing agreements
which permit other sites to use selected portions of the PrimeCare System via
PSI's new dynamically generated Interactive Medical Interview System. A
description of these products, their financial potential and cross promotional
opportunities follows.
Internet Products Overview
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A very significant number of visitors to the Internet are consumers seeking
information concerning their health and fitness. As a result OCGT, through
PSI, now enables consumers to communicate with their physicians through its
creation of Internet products based on its PrimeCare(TM)System. The Internet
products are designed for both patient/consumer use and medical practice use.
OCGT maintains and operates four Web Sites: a Site for consumers,
www.YourOwnHealth.com ; a Site accessible only by registered physicians
through use of a unique password, www.PrimeCareOnTheWeb.com ; a Web Site which
is accessible by both registered physicians and consumers,
www.YourOwnDoctor.com; and a fitness Web Site www.DeniseAustin.com. All of the
Web Sites are structured to create advertising revenues.
Consumer Web Site
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www.YourOwnHealth.com is a unique, free online health and wellness Site.
YourOwnHealth.com enables visitors to become more informed about their medical
conditions and better prepared for their next visit to the doctor.
YourOwnHealth.com offers:
Medical Interview- The Site enables visitors to securely and anonymously
select and complete detailed medical history Questionnaires (see above). Based
upon the responses, the software generates and makes available to the visitor
the detailed Report (see above). At the consumer's option, the Questionnaires
appear in either English or Spanish and range from a general patient history
to problem-specific Questionnaires covering hundreds of medical conditions.
All medical data are encrypted for storage and Internet communications are
protected by secure digital certificates from VeriSign to protect the
confidentiality rights of every user.
YourOwnHealth(TM)Notebook - A secure depository for storage of personal and
family medical data that can be accessed only through registered IDs and
passwords. "YourOwnHealth Notebook" provides a convenient way to keep track
of personal health issues for Registered Members. Members can create and edit
lists for health conditions, allergies, immunizations, medications and more.
Members can also elect to save the interviews completed on YourOwnHealth.com
and add personal notes and reminders to the record.
YourOwnHealth(TM)Reference- The site also provides extensive Patient Education
Materials which are articles relating to diseases, disease management,
medical procedures and common medications including drug interactions.
Physician Web Sites
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www.PrimeCareOnTheWeb.com enables physicians to select problem specific
medical history Questionnaires for their patients to complete, via the
Internet. When patients call their doctor's office with a medical complaint,
they are assigned a unique set of pass-codes to access a special Web Site and
answer the Questionnaire(s). The Questionnaires are selected by their
physician or a staff member. When the patient has completed the Questionnaire,
the Report is generated. CodeComplierTM computes the E&M code for the medical
history and it is included with the Report. The Report is sent by encrypted
electronic mail to the physician's office. The physician can also print or
review the Report directly from www.PrimeCareOnTheWeb.com. The patient can be
told to seek immediate medical help or be scheduled for an office appointment.
In case of emergency, the history can be forwarded to the appropriate Hospital
Emergency Room. When the patient arrives for an appointment, the detailed
medical history and Report are already completed, without taking any physician
time.
YourOwnDoctor.com
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Although, in general, physicians compete for the healthcare consumer, most
physicians in private practice do not yet have Web Sites to promote their
services. OCGT has created and maintains www.YourOwnDoctor.com , a Web
Community that hosts a Web Site, at no charge, for any physician that
registers. The Site enables registered physicians to: display credentials,
including photos of each physician in the office; list specialties; provide
office information: hours of operation, directions, photos, maps; list contact
information (phone numbers, e-mail addresses); list accepted insurance plans;
provide useful medical links. It helps consumers to locate a physician in
their neighborhood. Consumers can select from National Map and sort by name,
practice name, specialty or city. It provides a direct tie-in to
YourOwnHealth and PrimeCareOnTheWeb . A physician's registration for a Web
Site at YourOwnDoctor.com automatically registers the physician in
PrimeCareOnTheWebTM and creates a link to YourOwnHealth , thus promoting usage
of these sites.
OCGT will offer Medical Societies, Hospitals, Healthcare Systems and
distributors of medical software products, who register physicians for a Web
Site, a share of OCGT's advertising revenues derived from the use of
PrimeCareOnTheWeb(TM)and YourOwnHealth(TM)by each of the healthcare providers
they cause to register on www.YourOwnDoctor.com.
Fitness Web Site: www.deniseAustin.com
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Denise Austin's Daily Workout is the number one fitness show on television
with over one million viewers each weekday morning. Her top-selling videos
have sold over 4 million copies, capturing 28% of the fitness video market.
She has six videos in the top ten and has authored three best selling books on
fitness. Under the terms of an Agreement, OCGT is responsible to design,
create, host, operate, manage and maintain www.DeniseAustin.com, Denise
Austin's Web Site. DeniseAustin.com currently sends out a bi-monthly
newsletter with sponsorship to an opt-in list from the site. Visitors to the
site are able to shop for their favorite Denise Austin videos, exercise
equipment and gear. Visitors also have access to Denise's favorite healthy
recipes, targeted exercises and motivational content. In developing
www.DeniseAustin.com, OCGT intends to continue to expand the comprehensive
shopping area which offers a broad range of products within the fitness
industry. OCGT will share income from two sources - advertising revenues and
e-commerce. YourOwnHealth is currently positioned at the Denise Austin Web
Site with banners and sponsorship of the monthly newsletter which directs
traffic to YourOwnHealth(TM). YourOwnHealth(TM)will take full advantage of the
opportunity to position its interactive tools directly from
www.DeniseAustin.com to facilitate a greater increase of traffic over the
existing flow.
Ms. Austin has begun actively promoting the site and is scheduled to appear in
two magazine articles in early 2000. She has already participated in a chat at
Yahoo to help brand and position the DeniseAustin.com site. She is both
enthusiastic and driven to build up her online presence and positioning
throughout the Internet.
Revenue Opportunities
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The Financial Potential of the PrimeCare on the Web
Assumptions:
On average, a primary care physician sees between 25 and 30 patients per day.
Assuming 25 patient visits per day, a primary care physician, practicing 20
days per month, conducts between 500 and 600 patient visits per month. Thus,
assuming 500 patients visits per month, estimated annual use of PrimeCare on
the Web per physician is 6,000 patient visits.
Although each page has been designed with space for seven advertisements, OCGT
has conservatively projected only 3 ads per page. Assuming advertising per
page to consist of a Banner @ $.04, a Sponsor @ $.04, and a Focused ad @ $.05,
for a total of $.13 per page. Questionnaires average 20 pages. Total revenue
per questionnaire would be $2.60 ($.13 x 20).
Assuming that advertising revenues per completed Questionnaire average $2.60,
it is estimated that each 1,000 medical providers that routinely use
PrimeCareOnTheWeb(TM)on 75% of their patients could result in annual advertising
revenues in excess of $10,000,000.(4,500 patients x $2.60 x 1,000). However
there are no assurances as to the level of usage that can be attained.
OCGT projects that the annual advertising revenues derived from use of
www.YourOwnHealth.com for each 50,000 completed patient Questionnaires per
month would exceed $1,500,000. However there are no assurances as to the level
of usage that can be attained.
In an effort to stimulate usage of OCGT's Web Sites the following programs
have been initiated. OCGT has entered into agreements with other businesses
that desire to use OCGT's content on their Web Sites. There are several
different types of arrangements that OCGT has entered into.
Business to Business Internet Services Agreements - Under this type of
agreement, OCGT grants a license to a business (the "User") to link to one or
more OCCT's Web Sites. The User markets OCGT's Web Sites to its visitors and
shares in advertising revenues earned by OCGT from use of the Sites by the
User's visitors.
The first of this type of Agreement was made with VantageMed Corporation
("VMC"),whose corporate Web Site is www.vantagemed.net. On its master Web
Site, www.vantagemed.com, VMC is creating and hosting individual customer Web
Sites for each of its more than 10,000 health care customer installations.
These health care installations collectively represent nearly 50,000 health
care providers. VMC selects and provides the content for the individual
customer sites and will educate their customers in the use of these new
tools. The Internet Services Agreement provides that each VMC customer Web
Site will be seamlessly linked directly to both www.YourOwnHealth.com, a
consumer interactive health care Web Site, and to www.PrimeCareOnTheWeb.com,
a Web Site for physicians and their staffs.
Business to Business License Agreements - PSI has developed a dynamically
generated Interactive Medical Interview System ("IMIS"). The new IMIS
technology allows OCGT to license access to the core interview engine of PSI's
PrimeCareTM System in a tailored, customized environment that shares the look
and feel of the Licensee's web application. This licensed product is
configured to enable the Licensee to include any or all of PrimeCare's unique
medical Questionnaires and Reports, as content on their Web Site without any
of OCGT's third party advertisements. This gives the Licensee access to the
core interview engine of PrimeCare's unique interactive medical interviews for
use within their own system. OCGT retains complete control of the content and
the responsibility of maintaining the interview delivery system on a server
located at OCGT's facility. The Licensee pays OCGT a setup fee plus an annual
license fee.
Medical Selfcare, Inc., an e-commerce company whose Web Site is
www.selfcare.com, is the first Licensee to use PSI's unique content on their
site. OCGT intends to use this model to develop additional content Licensee
arrangements. The integration is complete and OCGT's software appears on
www.selfcare.com.
Advertising Revenue Sharing Agreements - Strategic alliances have been created
to increase the "unique visits" to YourOwnHealth.com to generate increased
advertising revenues. Under these arrangements a portal or search engine links
to YourOwnHealth.com to provide their visitors with PrimeCare's interactive
medical Questionnaires.
One such strategic alliance is with www.GoToWorld.com ("GTW"). GTW is a global
communication super portal YourOwnHealth(TM)will be integrated into the health
center at GTW titled "Personal Health", which links directly back to a co-
branded page between GTW and YourOwnHealth.com. Each day visitors at GTW will
see a different medical Questionnaire being highlighted such as, "Are you
suffering from the Flu?" The agreement with GTW also provides for
www.GoToWorld.uk and www.GoToWorld.au to be linked to YourOwnHealth in the
same way.
A similar agreement has been entered into with Cyber Networks, Inc., the owner
of www.C4.com. C4 is a TotalSearch technology search tool. Under the
agreement, C4 will create targeted campaigns that will link YourOwnHealth 's
interactive medical history Questionnaires to specific banners or buttons on
their site which will drive traffic from C4's heavily visited site to
YourOwnHealth . C4 has grown to register over 15,000,000 page impressions per
month and is growing rapidly.
Regional Sponsorships
- ---------------------
A regional sponsor is generally a hospital that links to YourOwnHealth.com.
When a visitor logs on to YourOwnHealth.com from a zip code allocated to a
Sponsor Hospital, each page displays the logo and name of the Hospital as the
Sponsor. To date, the following Hospitals are Sponsors in their geographical
areas:
http://www.riverside-online.com.
http://www.chwbay.com. (A group of seven hospitals that form Catholic
Hospital West Bay).
http://www.btmh.com (Burdett Tomlin Memorial Hospital).
http://www.dunnmemorial.org.
This type of arrangement affords two possible revenue sources. The link from
the Sponsor's Web Site generates visitors to YourOwnHealth.com. Additionally,
revenues can be generated through Sponsor fees.
OCGT is currently in discussions with portals, search engines and healthcare
Web Site to arrange linking and cross linking agreements all of which should
increase visits to the OCGT Sites and generate advertising revenues.
In addition to the Consumer Web Sites and Business to Business Agreements,
OCGT continues to market the PrimeCareTM Patient Management System and the
CodeComplierTM as turnkey systems within a physician's office.
OCGT believes that it could provide sufficient working capital from operations
through marketing the Window 95/NT version of the PrimeCareTM System,
CodeComplierTM, and its Internet products.
Currently, OCGT has no lines of credit and has no material commitments for
capital expenditures outstanding.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of the Stockholders, of record on October 29, 1999,
of OCG Technology, Inc. (the "Stockholders", was held on December 14, 1999,
for the following purposes:
1. Election of Directors. The following three Directors, consisting
of all of the Directors of the Company, were elected to serve until the next
Annual Meeting of the Stockholders and thereafter, until their successors
are elected and qualified:
Name Votes "FOR" Votes "WITHHELD"
- ----------------- ---------- ----------------
Edward C. Levine 25,261,437 508,759
Jeffrey P. Nelson 25,262,437 507,759
Jarema S. Rakoczy 25,262,437 507,759
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27. - Financial Data Schedule
(b) Reports on Form 8-K
No Reports on Form 8-K were filed during the quarter for which
this report is filed.
-12-
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned duly authorized.
OCG TECHNOLOGY, INC.
BY: /s/Edward C. Levine
----------------------
EDWARD C. LEVINE,
PRESIDENT
(PRINCIPAL FINANCIAL OFFICER)
DATED: February 18, 2000