UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X]QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 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 May 11, 1999
- ----------------------------- ----------------------------------
Common Stock ($.01 par value) 29,878,224 Shares
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
INDEX
PART I. - FINANCIAL INFORMATION PAGE NUMBER
Consolidated Condensed Balance Sheets
March 31, 1999 and June 30, 1998 1
Consolidated Condensed Statements of Loss for
the Three and Nine Months Ended March 31, 1999 and 1998 2
Consolidated Condensed Statements of Cash Flow
for the Nine Months Ended March 31, 1999 and 1998 3
Notes to Consolidated Condensed Financial Statements 4
Management's Discussion and Analysis of
Financial Condition and Results of Operations 6
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
MARCH 31, 1999 JUNE 30, 1998
ASSETS (UNAUDITED) (AUDITED)
Current Assets:
Cash $ 128,660 $ 475,323
Receivables, trade 82,106 44,380
Demand notes receivable 19,500 177,500
Other current assets 3,376 109,701
------------ ------------
Total current assets 233,642 806,904
Property and equipment, net of accumulated
depreciation of ($507,338) ($459,941) 132,920 156,078
Proprietary technology, net of accumulated
amortization of ($3,108,896) ($3,051,806) 374,038 280,552
Other assets
130,541 115,115
------------ ------------
Total assets $ 871,140 $ 1,358,649
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $107,443 $151,740
Notes Payable 86,344 11,344
Due to Officer (non-interest bearing) 15,121 15,121
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Total current liabilities 208,908 178,205
Shareholders' equity: (Note 4)
Preferred stock $.10 par value, Series E 10,000 10,000
Common stock $.01 par value 298,782 298,282
Additional paid-in capital 23,570,486 23,542,486
Deficit (22,771,036) (22,078,074)
Subscription receivable (383,500) (529,750)
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724,732 1,242,944
Less treasury stock, at cost (62,500) (62,500)
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Total shareholders' equity 662,232 1,180,444
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Total liabilities and shareholders' equity $ 871,140 $ 1,358,649
============ ============
See accompanying notes to consolidated condensed financial statements
1
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
1999 1998 1999 1998
Revenue:
Sales $ 254,246 $ 207,328 $ 792,921 $ 609,002
----------- ----------- ----------- -----------
Costs and expenses:
Cost of sales 130,563 114,413 389,100 237,554
Marketing, general and administrative 325,355 629,028 1,101,993 1,521,824
Interest - net 13 (3,219) (5,209) (3,289)
----------- ----------- ----------- -----------
Total Expenses 455,931 740,222 1,485,884 1,756,089
----------- ----------- ----------- -----------
Net Income (Loss) $ (201,685) $ 532,894) (692,963) (1,147,087)
=========== =========== =========== ===========
Weighted average number of shares
outstanding during period 29,871,002 27,171,620 29,842,275 25,602,390
=========== =========== =========== ===========
Loss per Common Share $ (0.01) $ (0.02) $ (0.02) $ (0.04)
=========== =========== =========== ===========
See accompanying notes to consolidated condensed financial statements
2
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED MARCH 31,
1999 1998
Cash flows from operating activities:
Net income (loss) $ (692,963) $(1,147,088)
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Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization 105,547 562,673
Issuance of stock and warrants for services 28,500 93,000
Amortization of Black Scholes valuation 18,510 114,754
Changes in assets and liabilities
(Increase) decrease in receivables (37,726) 43,320
(Increase) decrease in demand notes 158,000 123,500
(Increase) decrease in other current assets 106,325 4,811
(Increase) decrease in property and equipment (24,239) (21,112)
(Increase) decrease in Proprietary Technology (150,575) (101,092)
(Increase) decrease in other assets less
Black Scholes value (34,995) (77,907)
(Decrease) in accounts payable and accrued expenses (44,297) (69,994)
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Total adjustments 125,050 671,953
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Net cash used in operating activities (567,913) (475,135)
Cash flows from financing activities:
Increase (decrease) in due to shareholders 75,000 0
(Increase) decrease in subscription receivable 146,250 (205,500)
Proceeds from issuance of common stock 0 1,228,900
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Net cash changes from financing activities 221,250 1,023,400
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Net increase (decrease) in cash (346,663) 548,265
Cash, beginning of period 475,323 167,996
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Cash, end of period $ 128,660 $ 716,261
========== ===========
See accompanying notes to consolidated condensed financial statements
3
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. In the opinion of OCG Technology, Inc. (which, together with its
subsidiaries, unless the context otherwise requires, is referred to
as the "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 March 31, 1999 and the results of
operations for the three and nine months ended March 31, 1999 and
1998 and the statements of cash flows for the nine months ended
March 31, 1999 and 1998. The June 30, 1998 balance sheet has been
derived from OCGT's audited financial statements.
The results of operations for the nine months ended March 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:
On January 13, 1999, OCGT issued 50,000 shares of its common stock
in lieu of cash for the early termination of an employment
agreement. Based on a closing market price of $0.37 per share, OCGT
recorded an expense of $18,500.
During the nine months ended March 31, 1999, for services rendered
in accord with the terms of a consulting agreement, warrants were
issued to purchase a total of 35,000 shares of the OCGT's common
stock at exercise prices of $0.26 to $0.39 per share with exercise
dates of said warrants expiring November 30, 2001 to March 31, 2002.
OCGT reflected a total expense of $4,000 for the three month period
ended December 31, 1998 and $6,000 for the three month period ended
March 31, 1999.
During the three months ended December 31, 1998 OCGT issued
warrants to acquire 150,000 shares of OCGT's common stock at an
exercise price of $0.65 which expire December 10, 2001. These
warrants were issued to an Officer and Director of OCGT. On the
date of issue the quoted market price of the OCGT's common stock was
less than the per share exercise price of the warrants.
On December 9, 1998 OCGT's Board of Directors reduced the exercise
price of previously issued warrants to $0.65 as follows: 1,217,000
warrants exercisable on or before July 25,1999 were reduced from an
exercise price of $1.09; 475,000 warrants exercisable on or before
January 14, 2000 were reduced from an exercise price of $1.00;
447,000 warrants exercisable on or before October 24,1999 were
reduced from an exercise price of $0.75; 50,000 warrants exercisable
on or before April 1, 1999 were reduced from an exercise price of
4
$1.00; and 140,000 warrants expiring between May 31,1999 and June
30, 2000 were reduced from exercise prices ranging between $0.84
and $1.69. A significant portion of these warrants are issued to
Officers and Directors of OCGT.
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:
Results of Operations
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Total revenues increased $46,918 and $183,919 for the three and nine
months ended March 31, 1999 as compared to the same periods for 1998
primarily as a result of changes in revenues of Mooney-Edwards
Enterprises, Inc. ("MIS"), a subsidiary of OCGT. Cost of sales
increased by $16,150 and $151,546 for the three and nine months
ended March 31, 1999 as compared to the same periods for 1998. The
sales of OCG Technology, Inc. ("OCGT"), Prime Care Systems, Inc.
("PSI") and MIS were $0, $13,110 and $779,811 respectively, for the
nine months ended March 31, 1999.
Marketing, general and administrative expenses decreased $303,673
and $419,831 for the three and nine months ended March 31, 1999 as
compared to the same periods for 1998. OCGT's expenses decreased in
the three months ended March 31, 1999 as compared to the same period
in 1998 due to decreased amortization of Black Scholes valuations
partially offset by increased marketing salaries. OCGT's expenses
increased in the nine months ended March 31, 1999 as compared to the
same period in 1998 due to increased marketing salaries offset by
decreased amortization of Black Scholes valuations. PSI's expenses
decreased in the three and nine months ended March 31, 1999 as
compared to the same period in 1998 due to decreased marketing
salaries and a reduction in amortization as a result of the
completion of write off of the value of the DOS version of the
PrimeCare Patient Management System.
Liquidity and Capital Resources
- -------------------------------
At March 31, 1999 OCGT had a current ratio of 1.12 to 1 compared to
6.20 to 1 as of March 31, 1998. The net loss from operations for the
nine months ended March 31, 1999 was $692,963 of which loss non-cash
charges of $152,557, accounted for 22% of the total loss from
operations. 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 to fund its
operations. OCGT's auditors have included an explanatory paragraph
in OCGT's Audited Financial Statements regarding the ability of OCGT
to continue as a "going concern".
Cash on hand and accounts receivable were $210,766 at March 31,
1999. OCGT also has $403,000 of demand notes due principally from
officers and directors related to their exercise of warrants;
$19,500 of these notes were paid in cash to OCGT subsequent to March
31, 1999. During the three months ended March 31, 1999, OCGT
borrowed $75,000 and subsequent to March 31, 1999, OCGT borrowed an
additional $25,000 and agreed to issue 333,333 unregistered common
shares ( $.30 per share) to retire the debt. The market price at
the date of agreement was $.35 per share. In the past, OCGT's
principal means of overcoming its cash shortfalls from operations
was from the sale of OCGT's common stock and the exercise of
warrants. 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.
PrimeCare Systems, Inc.(" PSI"), a Delaware corporation, was
acquired by OCGT as of May 16, 1994. PSI owns all right, title and
interest in the PrimeCareTM System, which is protected by
copyrights. The PrimeCareTM 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.
Patients are seated at a computer and answer 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
questionnaire is completed, the PrimeCareTM System creates a
6
preliminary report for the physician to review before examining the
patient. The preliminary report contains the patient's current
problems, medications and allergies, all positive and significant
negative subjective responses, vital signs and a list of the
diagnostic considerations triggered by the patient's responses. By
freeing up the time physicians would normally have to spend asking
patient history questions and recording responses, PrimeCareTM
permits physicians to see more patients in less time. The
PrimeCareTM System is also easy for the physician to understand and
use. The same simple key stroke process lets the physician document:
his physical findings, his assessment, the treatment plan, the
prescribed medications and select patient education materials. At
the conclusion of the encounter a final report of the visit, patient
educational materials, and prescriptions are printed for the patient.
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: 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 requires continual: (1) updates of medical
content; (2) additions and enhancements to expand the scope of the
system; and (3) incorporation of advances in both hardware and
software technology to maintain a "state of the art" system. On
September 15, 1995, PSI entered into an agreement with the Mount
Sinai School of Medicine ("MSSM") which provides for the MSSM to
review the medical content of the PrimeCare(TM) System. OCGT has
completed development of the Windows 95/NT version of the
PrimeCare(TM) System and has also completed an interface which
enables the PrimeCare(TM) System to communicate with other 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. OCGT has also completed its
side of interface capabilities to enable the PrimeCare(TM) System
to transfer information (such as billing information including E&M
codes, ICD9 codes and CPT codes) to these other systems. OCGT has
ceased supporting its DOS version of the PrimeCare(TM) System.
OCGT has also completed other enhancements and features to the
operation of the PrimeCare(TM) System which include:
(1) The addition of 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) As an additional option, 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 can now use Microsoft's SQL Server, in
addition to 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.
(4) OCGT has introduced PrimeCareTM on the Web, which is a secure
Internet enhanced version of the PrimeCareTM System. PrimeCareTM on
the Web enables the patient to complete one, or more, detailed
medical history questionnaires that relate to the patient's chief
complaint, as selected by their physician. The patient, using a
unique ID and password, can securely and anonymously complete the
questionnaire(s) from the comfort of their home, workplace, school,
vacation site or even while waiting to see their physician, if
Internet capability is available. The medical report generated for
the physician contains the patient's responses, and a list of
differential diagnoses associated with the patient's responses. The
report highlights the significant diagnoses and enables the
physician to choose an appropriate preliminary course of action.
7
(5) On April 15, 1999, OCGT announced that it has gone "live"
online with its innovative website YourOwnHealth.com. This Internet
site facilitates consumer access to quality medical information
helping its users become more knowledgeable about medical conditions
and be better informed healthcare consumers. The website hosts
Internet versions of two sections of OCGT's PrimeCareTM Patient
Management System, a sophisticated software program designed for
physicians to electronically document the physician/patient
encounter. One of these sections, "Patient History Questionnaires",
permits the consumer to select and answer complaint-specific medical
questionnaires. Based on the consumer's responses to questions, a
detailed report, which includes possible diagnoses, is created. The
second section, "Patient Education Materials", provides articles
relating to diseases, disease management and common medications,
enabling the consumer to better understand medical problems and
conditions. Although YourOwnHealth.com is free to the consumer, it
is designed to generate revenues from three specific advertising
opportunities: (a) banner advertising on every page (average
questionnaire consists of approximately 20 page views); (b)
geographical sponsorships by hospitals and medical providers based
on exclusive zip code defined areas; and (c) topical sponsorships
by pharmaceutical and medical product manufacturers that will target
complaint-specific questionnaires.
OCGT believes that the Internet is the emerging technology and that
access to the PrimeCareTM System by physicians via the Internet will
be necessary to remain competitive. It was with this thought in
mind that we commenced development of PrimeCareTM on the Web and
thereafter, YourOwnHealth.com. Shortly, the Physician Reference
Materials contained in the PrimeCareTM System will be available on
PrimeCareTM on the Web. We believe that during the first quarter of
the year 2000, physicians will be able to access the entire
PrimeCareTM System via the Internet and securely conduct and store
the entire patient encounter. All data will be encrypted and all
communications will use secure digital certificates.
OCGT has commenced marketing the Windows 95/NT version of the
PrimeCareTM System. The marketing of the PrimeCareTM System was
initiated in the northwest Florida area. Installations were limited
to two sites to enable PSI to review and evaluate the procedures
established for installation and training. These initial commercial
installations of the PrimeCareTM System confirmed OCGT's belief in
the benefits and efficiencies that a medical practice would gain
through the use of the PrimeCareTM System. The number of patients
seen during normal office hours increased through use of the
PrimeCareTM System. At the same time, the documentation of the
patient record and the quality of care greatly improved. This was
substantiated during a periodic review of the medical records of one
of these medical practices, conducted by a large nationally known
managed health care plan (the "Plan"), an insurance carrier with
whom the physician has contracted. The Plan's reviewer evaluated the
medical records maintained by this medical practice and gave a score
of 100, based on a scale of 0 to 100. The reviewer's comments
stated: "There has been a recent improved documentation product
called PrimeCare that will greatly improve the quality of care and
continuity of care for the patients." Based on information and
experience gained during the initial marketing program, OCGT made
modifications and improvements to enhance the PrimeCareTM System.
Thereafter, a program was commenced to recruit distributors to
market the PrimeCare(TM) System. The type of distributors sought by
OCGT are those who currently sell, install and service medical
office and billing systems to medical facilities. MIS (see "Medical
Information Systems" below) is the first of such dealers to be
recruited and has licensed and installed the Windows 95/NT version
of the PrimeCare(TM) System in medical facilities on a pay per use
basis. Having reached the point in product development where a full
marketing effort was desirable, OCGT during January 1998 engaged an
experienced healthcare professional whose primary responsibility was
to review existing plans and to modify and enhance these plans to
develop a comprehensive sales and marketing program and thereafter
carry-out this program. This marketing and sales program has been
completed, including creation and printing of new product
literature, and a new exhibit booth. The completed plans call for
the PrimeCareTM System to be marketed primarily through the
following business models:
(a) recruitment of value added resellers ("VARs") and authorized dealers
(b) direct sales to large at-risk healthcare entities
(c) private labeling opportunities
8
Full product roll-out commenced in the end of May, 1998, at a
medical conference in San Antonio where OCGT participated as an
exhibitor. Exhibiting OCGT's products at selected health care
industry conventions is a component of the marketing and sales
program. OCGT appeared as an exhibitor at two health care industry
conventions in the month of October. Several VARs, who sell,
install, and service, billing systems to medical facilities, have
agreed to market the PrimeCareTM System. However, no assurances can
be given that OCGT's marketing plan will succeed.
OCGT markets the PrimeCareTM System as a service, on a pay for use
basis, with a maximum charge of $2.00 per patient visit. This charge
per patient visit has been increased from $1.50. 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 $2.00 cost per patient visit. One
such benefit is the elimination of the need to dictate, transcribe
and then review the transcription of the entire patient record.
Transcribing costs range between $4 and $7 per page.
The CodeComplierTM
- ------------------
OCGT has completed development of software which computes the Health
Care Financing Administration's ("HCFA") Evaluation & Management
("E&M") code. Designed to be used in conjunction with OCGT's
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 HCFA guidelines, automatically calculates the applicable
E&M code.
Since the CodeComplierTM automatically calculates the applicable
E&M code from data collected by the PrimeCareTM System during the
patient encounter, it totally eliminates the time and effort which
would otherwise be required by physician office personnel to
complete this task. The marketing strategy is to offer the
CodeComplierTM to medical facilities interested in the PrimeCareTM
System. OCGT markets the CodeComplierTM as a service, on a pay for
use basis, with a maximum charge of $1.00 per patient visit. This
pricing method conforms to OCGT's philosophy of tying the product's
cost directly to its use. OCGT believes that the saving in labor
costs and other financial benefits derived by the physician from use
of the CodeComplierTM far exceeds the $1.00 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 System routinely. It is estimated
that the average number of patient visits per month for a primary
care physician is between 500 and 600. Assuming 500 patient visits
per month at a combined total fee for the PrimeCareTM System and the
CodeComplierTM of $2.00 per visit, each 100 physicians using the
System could generate revenues of $1,200,000 per year for OCGT.
However, no assurances can be given that a significant number of
physicians will contract for and use the PrimeCareTM System and the
CodeComplierTM.
OCGT's wholly owned subsidiary, Mooney-Edwards Enterprises, Inc.
d/b/a Medical Information Systems ("MIS"), a Florida corporation was
acquired by OCGT on June 25, 1992. MIS markets computer systems to
providers of medical services. The packages include hardware,
software, staff training and provides for an annual service
contract. In addition to the basic accounts receivable and insurance
billing applications, MIS can provide the offices with appointment
scheduling, accounts payable, general ledger, payroll and word
processing programs. The service contracts provide for ongoing
software upgrades, continuing education and system maintenance.
The turnkey packages sold by MIS primarily use the "Medical Manager"
("MM") software program. MIS is the area dealer for MM which is
reputed to be the most widely used software package in the medical
industry. As stated above MIS is now also marketing the
PrimeCare(TM) System to its current customers and other medical
facilities.
In the past, OCGT sold its Cardiointegraph ("CIG"), a proprietary
heart diagnostic instrument for the early detection of coronary
heart disease, through medical distributors, a sales and marketing
method employed by other medical equipment manufacturers. Although
Cardiointegraphs were sold for ten consecutive fiscal years and the
9
end user purchasers (i.e., physicians and corporate and governmental
medical departments) appear to find the unit useful, the CIG
business segment has been unable to generate sufficient revenues to
fund its operations or to operate at a profit. OCGT believes that
lack of universal reimbursement for the CIG has hindered its attempt
to sell the CIG. OCGT believes that marketing the CIG technology as
a service, with a minimal fee charged to the physician per CIG
generated, may free the physician from the general reluctance of
physicians to purchase medical diagnostic equipment not reimbursed
by Medicare.
OCGT believes that it could provide sufficient working capital from
operations through marketing the Windows 95/NT version of the
PrimeCareTM System, CodeComplierTM, PrimeCareTM on the Web and
expanding the operations of MIS.
Currently, OCGT has no lines of credit and has no material
commitments for capital expenditures outstanding.
10
PART II - OTHER INFORMATION
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.
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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
BY /s/Erich W. Augustin
----------------------
ERICH W. AUGUSTIN,
EXECUTIVE VICE PRESIDENT
(PRINCIPAL FINANCIAL OFFICER)
DATED: May 13, 1999
12