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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10-QSB/A
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000 COMMISSION FILE NO. 0-28379
HEALTHCOMP EVALUATION SERVICES CORPORATION
NEVADA 88-0395372
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2001 SIESTA DRIVE, SUITE 302
SARASOTA, FLORIDA 34239
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(Address and zip code of principal executive offices
941-925-2625
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. [X] YES [ ] NO
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date.
COMMON STOCK 39,705,171 SHARES OUTSTANDING
$0.001 PAR VALUE AS OF NOVEMBER 10, 2000
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Table of Contents
This Form 10-QSB/A is filed for the sole purposes of amending Note 1 to the
financial statements contained in Part I. Item 1: "Notes to consolidated
financial statements" and the cautionary statement contained in Part I. Item 2:
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" of the Company's Form 10-QSB, for the quarter ended September 30,
2000, originally filed on November 14, 2000.
Part I. Financial Information
Item 1. Financial Statements
Notes to consolidated financial statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
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HEALTHCOMP EVALUATION SERVICES CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
QUARTER ENDED SEPTEMBER 30, 2000
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-QSB. Therefore, they do not include
all information and footnotes necessary for a complete presentation of
financial position, results of operations, and cash flows, in conformity with
generally accepted accounting principles. In the opinion of management, all
adjustments considered necessary for a fair presentation of the results of
operations and financial position have been included and all such adjustments
are of a normal recurring nature. Operating results for the quarter ended
September 30, 2000 are not necessarily indicative of the results that can be
expected for the entire year.
The Company filed a Form-10SB on December 8, 1999 which became
effective on February 8, 2000, pursuant to which the Company is subject to the
reporting requirements of the Securities Exchange Act of 1934. These statements
should be read in conjunction with information provided in the Form 10-SB
filing and related amendments thereto.
The accompanying unaudited financial statements have not been reviewed
by our independent auditors in accordance with SAS No. 71 as required by SEC
Regulation S-X, Rule 10-01(d). In addition, the Company has previously filed
amendments to its Form 10SB that included unaudited financial statements for
the year ended December 31, 1999. Our independent auditors have not completed
an audit of the Company's financial statements for the year ended December 31,
1999, nor have they issued any report thereon.
Basic earnings per share ("EPS") are computed based on the weighted
average number of shares of the Company's common stock outstanding. Since the
impact of the Company's common equivalent shares from stock options, warrants
and convertible securities is antidilutive, they are not included in the
computation of diluted EPS.
Comprehensive income includes all changes in a company's equity during
the period that result from transactions and other economic events other than
transactions with its stockholders. For the Company, comprehensive income
(loss) equals net income (loss).
NOTE 2 - BUSINESS COMBINATIONS
On March 15, 1999, the Company acquired all of the outstanding shares
of Afton, Inc. ("Afton") in a reverse merger transaction accomplished through
the issuance of 5.4 million shares of the Company's $0.001 par value common
stock in exchange for all of Afton's outstanding common stock. In addition, the
Company issued 4.1 million warrants to purchase its common stock in exchange
for all of Afton's outstanding warrants to purchase common stock. Until its
acquisition of Afton, the Company had no operating activities; accordingly, all
comments concerning the Company's operating activities prior to March 15, 1999
included in these notes and the related consolidated financial statements
included herein pertain to the operating activities of Afton.
On April 1, 1999, the Company acquired the assets of Health Services
of Florida, Inc., a Clearwater, Florida-based wellness testing firm, for a
purchase price of $187,000, which included the assumption of liabilities of
$4,000. The excess of the purchase price over the fair value of the
identifiable assets acquired of $110,000 has been recorded as an intangible and
is being amortized on a straight-line
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basis over 20 years. The allocation of the purchase price to the assets
acquired and liabilities assumed has been recorded based on the fair value, as
follows:
Working capital, net $ 31,000
Property and equipment 50,000
Intangibles 110,000
Liabilities assumed (4,000)
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$ 187,000
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On June 1, 1999, the Company acquired certain mobile health testing
services assets from UPMC Diversified Health Services, Inc., a unit of the
University of Pittsburgh health system, for a purchase price of $814,000. The
excess of the purchase price over the fair value of the identifiable assets
acquired of $251,000 has been recorded as an intangible and is being amortized
on a straight-line basis over 20 years. The allocation of the purchase price to
the assets acquired and liabilities assumed has been recorded based on the fair
value, as follows:
Working capital, net $ 125,000
Property and equipment 439,000
Intangibles 250,000
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$ 814,000
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As of September 15, 2000, the Company acquired the Preventive Services
Division of U.S. HealthWorks, Inc., a leading provider of clinic-based
occupational health services, for total consideration of $3.0 million, of which
$2.0 million was paid in cash at closing on September 21, 2000 with the balance
to be paid in quarterly installments over the next twelve months. Funds used to
complete the acquisition were provided under the terms of a financing
arrangement between the Company and Diligenti, Inc. (see Note 3. "Debt" below).
The excess of the purchase price over the fair value of the identifiable assets
acquired of $1,440,000 has been recorded as an intangible and is being
amortized on a straight-line basis over 20 years. The allocation of the
purchase price to the assets acquired and liabilities assumed has been recorded
based on the fair value, as follows:
Working capital, net $ 340,000
Property and equipment 1,100,000
Intangibles 1,560,000
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$ 3,000,000
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The Preventive Services Division ("PSD") provides mobile audiometric
and respiratory testing services, industrial hygiene and safety consulting and
data processing and health evaluation services to a national client base. The
assets acquired by the Company will be integrated into the Company's worksite
medical surveillance business to service existing clients of the Company and of
PSD.
NOTE 3 - DEBT
During the quarter, the Company received $500,000 in short-term bridge
financing from one of its customers, the proceeds of which were applied to meet
short-term working capital requirements of the Company. That note bears
interest at 12.5 % per annum and was due on September 11, 2000. The
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Company is negotiating with the lender to restructure this note; however, while
the Company believes that discussions are proceeding satisfactorily, there can
be no assurance that an acceptable resolution will be achieved.
In addition, as of September 15, 2000, the Company entered into a
strategic relationship with Diligenti, a global life sciences group, through
its US subsidiary, Diligenti, Inc. (collectively, "Diligenti"). Pursuant to the
terms of an Amended and Restated Loan Agreement, dated as of October 3, 2000
(the "Loan Agreement"), between the Company and Diligenti, Inc., $3.75 million
was loaned to the Company on September 21, 2000 in exchange for a convertible
note, the proceeds of which were used to finance the acquisition of the
Preventive Services Division of U.S. HealthWorks, Inc. (See Note 2. "Business
Combinations" above). Under the terms of the Loan Agreement, Diligenti has the
option, subject to satisfaction of certain conditions, to make an additional
investment of $1.25 million in HESc's common stock in the future. The
combination of those shares of stock issuable on conversion of the note,
together with the shares of stock issuable in connection with the additional
$1.25 million investment that Diligenti has the option to make, would result in
Diligenti owning shares of common stock representing 51% of HESc's fully
diluted common stock.
Subsequent to September 30, 2000, Diligenti converted the note and
invested the additional $1.25 million in exchange for approximately 24.9
million shares of the Company's common stock. Interest accrued on the note has
been cancelled.
NOTE 4 - OPERATING SEGMENTS
SFAS No. 131, "Disclosures About Segments of an Enterprise and Related
Information," requires that an enterprise disclose certain information about
operating segments. The Company operates in two segments Substance Abuse
Screening Services and Mobile Health Screening Services. In evaluating
financial performance, management focuses on a segment's earnings before
interest, taxes, depreciation and amortization ("EBITDA").
Segment Information
(In thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
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2000 1999 2000 1999
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SEGMENT REVENUES
Substance Abuse $ 1,690 $ 1,445 $ 5,346 $ 4,240
Mobile Screening 1,743 1,230 4,940 3,011
Corporate items and eliminations (20) (37) (106) (106)
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CONSOLIDATED REVENUES $ 3,413 $ 2,638 $ 10,180 $ 7,146
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SEGMENT EARNINGS (LOSS) (EBITDA)
Substance Abuse $ (70) $ 153 $ 509 $ 367
Mobile Screening (513) 185 (122) 440
Corporate items and eliminations (743) (436) (1,765) (997)
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CONSOLIDATED EARNINGS (LOSS) (EBITDA) $(1,325) $ (98) $ (1,378) $ (190)
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Cautionary Statement Identifying Important Factors
That Could Cause the Company's Actual Results to Differ
From Those Projected in Forward Looking Statements
In connection with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, readers of this document and any
document incorporated by reference herein, are advised that this document and
documents incorporated by reference into this document contain both statements
of historical facts and forward looking statements. Forward looking statements
are subject to certain risks and uncertainties which could cause actual results
to differ materially from those indicated by the forward looking statements.
Examples of forward looking statements include, but are not limited to (i)
projections of revenues, income or loss, earnings or loss per share, capital
expenditures, dividends, capital structure and other financial items, (ii)
statements of the plans and objectives of the Company or its management or
Board of Directors, including the introduction of new products, or estimates or
predictions of actions by customers, suppliers, competitors or regulatory
authorities, (iii) statements of future economic performance and (iv)
statements of assumptions underlying other statements and statements about the
Company or its business.
The "safe harbor" provisions described in the previous paragraph
notwithstanding, Section 27A(b)(2)(D) of the Securities Act of 1933 and Section
21E(b)(2)(D) of the Securities Exchange Act of 1934 expressly state that the
safe harbor for forward looking statements does not apply to statements made
with respect to the business or operations of issuers that issue penny stock.
This document and any documents incorporated by reference herein also
identify important factors which could cause actual results to differ
materially from those indicated by the forward looking statements. These risks
and uncertainties include price competition, the decisions of customers, the
actions of competitors, the effects of government regulation, possible delays
in the introduction of new products, customers acceptance of products and
services, the possible effects of acquisitions and related financings and other
factors which are described herein and/or in documents incorporated by
reference herein.
The cautionary statements made above and elsewhere by the Company
should not be construed as exhaustive or as any admission regarding the
adequacy of disclosures made by the Company. Forward looking statements are
beyond the ability of the Company to control and in many cases the Company
cannot predict what factors would cause results to differ materially from those
indicated by the forward looking statements.
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Healthcomp Evaluation Services Corporation
(Registrant)
Date: February 26, 2001
/s/ Martin J. Clegg
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Martin J. Clegg, CEO
Date: February 26, 2001
/s/ Thomas M. Hartnett
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Thomas M. Hartnett, Executive Vice President