1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended JUNE 30, 1997 OR [x] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to ______________ Commission file number 0-8527 ------ DIALYSIS CORPORATION OF AMERICA ------------------------------------------------------ (Exact name of registrant as specified in its charter) FLORIDA 59-1757642 ---------------------------- --------------- (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 2337 WEST 76TH STREET, HIALEAH, FLORIDA 33016 - --------------------------------------- --------- (Address of principal executive offices) (Zip Code) (305) 364-1308 --------------------------------------------------------------- (Registrant's telephone number, including area code) NOT APPLICABLE --------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) 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] or No [ ] Common Stock Outstanding Common Stock, $.01 par value -- 3,488,844 shares as of July 31, 1997. 2 DIALYSIS CORPORATION OF AMERICA AND SUBSIDIARIES INDEX PART I -- FINANCIAL INFORMATION The Consolidated Condensed Statements of Operations (Unaudited) for the three months and six months ended June 30, 1997 and June 30, 1996 include the accounts of the Registrant and its subsidiaries. ITEM 1. FINANCIAL STATEMENTS 1) Consolidated Condensed Statements of Operations for the three months and six months ended June 30, 1997 and June 30, 1996. 2) Consolidated Condensed Balance Sheets as of June 30, 1997 and December 31, 1996. 3) Consolidated Condensed Statements of Cash Flows for the six months ended June 30, 1997 and June 31, 1996. 4) Notes to Consolidated Condensed Financial Statements as of June 30, 1997. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS PART II -- OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 3 PART I -- FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS DIALYSIS CORPORATION OF AMERICA AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended Six Months Ended June 30, June 30, ---------------------------- ---------------------------- 1997 1996 1997 1996 ----------- ----------- ----------- ----------- Revenues: Medical service revenue $ 1,045,966 $ 977,946 $ 2,080,454 $ 1,871,025 Interest and other income 87,638 68,673 167,521 106,495 ----------- ----------- ----------- ----------- 1,133,604 1,046,619 2,247,975 1,977,520 Cost and expenses: Cost of medical services 662,091 604,586 1,288,698 1,233,500 Selling, general and administrative expenses 413,808 386,553 857,192 759,641 Interest expense 19,585 23,162 42,079 41,855 ----------- ----------- ----------- ----------- 1,095,484 1,014,301 2,187,969 2,034,996 ----------- ----------- ----------- ----------- Income (loss) before income taxes and minority interest 38,120 32,318 60,006 (57,476) Income tax provision 14,000 14,000 ----------- ----------- ----------- ----------- Income before minority interest 24,120 32,318 46,006 (57,476) Minority interest in earnings (loss) of consolidated subsidiaries 3,940 2,734 3,621 (2,411) ----------- ----------- ----------- ----------- Net income (loss) $ 20,180 $ 29,584 $ 42,385 $ (55,065) =========== =========== =========== =========== Income (loss) per common share $ .01 $ .01 $ .01 $ (.02) =========== =========== =========== =========== See notes to consolidated condensed financial statements. 4 DIALYSIS CORPORATION OF AMERICA AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS June 30, December 31, 1997 1996(A) ----------- ----------- (Unaudited) ASSETS Current Assets: Cash and cash equivalents $ 3,826,028 $ 4,579,273 Restricted cash 141,035 137,896 Accounts receivable, less allowances of $133,000 at June 30, 1997 and $154,000 at December 31, 1996 552,976 461,269 Inventories 136,693 156,648 Prepaid expenses and other current assets 68,997 85,278 ----------- ----------- Total current assets 4,725,729 5,420,364 Property and Equipment: Land 168,358 168,358 Buildings and improvements 1,372,397 1,221,531 Machinery and equipment 1,254,321 1,144,191 Leasehold improvements 463,361 265,556 ----------- ----------- 3,258,437 2,799,636 Less accumulated depreciation 826,562 716,728 ----------- ----------- 2,431,875 2,082,908 Deferred expenses and other assets 39,205 49,017 ----------- ----------- $ 7,196,809 $ 7,552,289 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 205,691 $ 148,660 Accrued expenses 167,922 182,986 Current portion of long-term debt 543,586 560,120 Income taxes payable 14,000 ----------- ----------- Total current liabilities 931,199 891,766 Long-term debt, less current portion 236,032 215,466 Advances from parent 117,310 369,547 Minority interest in subsidiaries 76,095 75,472 Commitments and Contingencies Stockholder's Equity Common stock, $.01 par value, authorized 20,000,000 shares; June 30, 1997 - 3,588,844 shares issued, 3,488,844 shares outstanding; December 31, 1996 - 3,588,844 shares issued and outstanding 35,888 35,888 Capital in excess of par value 3,748,595 3,748,595 Retained earnings 2,257,940 2,215,555 Treasury stock at cost; 100,000 shares at June 30, 1997 (206,250) ----------- ----------- Total stockholders' equity 5,836,173 6,000,038 ----------- ----------- $ 7,196,809 $ 7,552,289 =========== =========== (A) Reference is made to the Company's Annual Report on Form 10-K for the year ended December 31, 1996 filed with the Securities and Exchange Commission in March 1997. See notes to consolidated condensed financial statements. 5 DIALYSIS CORPORATION OF AMERICA AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) Six Months Ended June 30, ----------------------------- 1997 1996 ----------- ----------- Operating activities: Net income (loss) $ 42,385 $ (55,065) Adjustments to reconcile net income (loss) to net cash used in by operating activities: Depreciation 124,312 95,607 Amortization 6,359 4,595 Bad debt expense 23,854 66,768 Minority interest 3,621 (2,411) Increase (decrease) relating to operating activities from: Accounts receivable (115,561) (89,381) Inventories 19,955 (23,221) Prepaid expenses and other current assets 16,281 (57,065) Accounts payable 57,031 (165,454) Accrued expenses (15,064) (39,184) Income taxes payable 14,000 ----------- ----------- Net cash provided by (used in) operating activities 177,173 (264,811) Investing activities: Additions to property and equipment, net of minor disposals (408,279) (27,186) Proceeds from restricted cash 207,251 198,421 Restricted cash (210,390) (201,425) Deferred expenses and other assets 3,453 128,524 ----------- ----------- Net cash (used in) provided by investing activities (407,965) 98,334 Financing activities: Net proceeds from securities offering 3,445,158 (Decrease) increase in advances from parent (252,237) 344,546 Repurchase of stock (206,250) Payments on long-term debt (60,968) (52,051) Dividend payments to minority shareholder (2,998) ----------- ----------- Net cash (used in) provided by financing activities (522,453) 3,737,653 ----------- ----------- (Decrease) increase in cash and cash equivalents (753,245) 3,571,176 Cash and cash equivalents at beginning of period 4,579,273 1,061,351 ----------- ----------- Cash and cash equivalents at end of period $ 3,826,028 $ 4,632,527 =========== =========== See notes to consolidated condensed financial statements. 6 DIALYSIS CORPORATION OF AMERICA AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS JUNE 30, 1997 (UNAUDITED) NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONSOLIDATION The consolidated financial statements include the accounts of Dialysis Corporation of America ("DCA") and its subsidiaries, collectively referred to as the "Company". All material intercompany accounts and transactions have been eliminated in consolidation. The Company is a 69.1% owned subsidiary of Medicore, Inc. (the "Parent"). INTEREST AND OTHER INCOME Interest and other income is comprised as follows: Three Months Ended Six Months Ended June 30, June 30, ---------------------- ---------------------- 1997 1996 1997 1996 -------- -------- -------- -------- Rental income $ 31,725 $ 24,461 $ 56,867 $ 49,007 Interest income 48,568 43,335 99,640 54,174 Other income 7,345 877 11,014 3,314 -------- -------- -------- -------- $ 87,638 $ 68,673 $167,521 $106,495 ======== ======== ======== ======== INCOME PER COMMON SHARE Income (loss) per share has been computed on the basis of the weighted average number of shares outstanding plus dilutive common equivalent shares using the modified treasury stock method for 1997 and on the basis of weighted average shares outstanding for 1996. RECLASSIFICATIONS Certain reclassifications have been made to the 1996 financial statements to conform to the 1997 presentation. NOTE 2--INTERIM ADJUSTMENTS The financial summaries for the three months and six months ended June 30, 1997 and June 30, 1996 are unaudited and include, in the opinion of management of the Company, all adjustments (consisting of normal recurring accruals) necessary to present fairly the earnings for such periods. Operating results for the three months and six months ended June 30, 1997 are not necessarily indicative of the results that may be expected for the entire year ending December 31, 1997. While the Company believes that the disclosures presented are adequate to make the information not misleading, it is suggested that these Consolidated Condensed Financial Statements be read in conjunction with the financial statements and notes included in the Company's audited financial statements for the year ended December 31, 1996. NOTE 3--LONG TERM DEBT The remaining combined principal balance under the Company's mortgages on its buildings in Pennsylvania and Maryland amounted to approximately $468,000 and $504,000 at June 30, 1997 and December 31, 1996, respectively. The bank has the right to demand repayment on the outstanding balance of the borrowings under these mortgages which have accordingly been classified as current liabilities. At December 31, 1996, the Company was in violation of certain covenants under these loans principally relating to net worth and debt service ratio requirements. The lender waived compliance with these covenants through December 31, 1997. 7 DIALYSIS CORPORATION OF AMERICA AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS-(CONTINUED) JUNE 30, 1997 (UNAUDITED) NOTE 3--LONG TERM DEBT--CONTINUED The Company has an equipment purchase agreement for kidney dialysis machines for its facilities in Pennsylvania and Florida. Monthly payments were originally $4,435 commencing September 1995, including principal and interest, through June 2000 with additional monthly payments of $2,750 on 1996 financing commencing December 1996, including principal and interest through September 2001 with interest at 12%. Additional monthly payments of $344 commenced March 1997 on new financing, including principal and interest through February 2002, with interest at 8% with additional monthly payments of $975 commencing June 1997, including principal and interest through May 2002, with interest at 8%. The initial principal balance of $195,130, additional financing of $124,096 in 1996, $17,000 in March 1997 and $48,000 in June 1997, net of down payments, represent noncash financing activities which is a supplemental disclosure required by FAS 95. The remaining principal balance under this agreement amounted to approximately $312,000 and $272,000 at June 30, 1997 and December 31, 1996, respectively. The prime rate was 8.5 % as of June 30, 1997 and 8.25% as of December 31, 1996. Interest payments on long-term debt above amounted to approximately $18,000 and $37,000 for the three months and six months ended June 30, 1997 for the same periods of the preceding year. NOTE 4--INCOME TAXES The Company was included in the consolidated federal and state income tax returns of the Parent until the completion of its public offering in April 1996. Subsequent to the completion of the Company's public offering, the Company files separate federal and state income tax returns with the income tax liability reflected on a separate return basis with its previously available net operating loss carryforwards having been utilized prior to completion of its public offering. Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. There were no income tax payments for the three months and six months ended June 30, 1997 or for the same periods of the preceding year. NOTE 5--TRANSACTIONS WITH PARENT The Parent provides certain administrative services to the Company including office space and general accounting assistance. These expenses and all other central operating costs are charged on the basis of direct usage, when identifiable, or on the basis of time spent. In the opinion of management, this method of allocation is reasonable. The amount of expenses allocated by the Parent totaled approximately $60,000 and $120,000 for the three months and six months ended June 30, 1997, and for the same periods of the preceding year. The Company has an intercompany advance payable to the Parent of approximately $117,000 and $370,000 at June 30, 1997 and December 31, 1996, respectively, which bears interest at the short-term Treasury Bill rate. Interest on this intercompany advance amounted to approximately $1,000 and $4,000 for the three months and six months ended June 30, 1997, and $5,000 for the three months and six months ended June 30, 1996, which is included in the intercompany advance payable. The Parent has agreed not to require repayment of the intercompany advances prior to July 1, 1998 and therefore, the advances have been classified as long-term at June 30, 1997. 8 DIALYSIS CORPORATION OF AMERICA AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS-(CONTINUED) JUNE 30, 1997 (UNAUDITED) NOTE 6--STOCK OPTIONS In November, 1995, the Company adopted a stock option plan for up to 250,000 options. Pursuant to this plan, in November, 1995, the Board of Directors granted 210,000 options to certain of its officers, directors, employees and consultants of which 191,500 options were outstanding at June 30, 1997. These options are exercisable for a period of five years through November 9, 2000 at $1.50 per share. In August 1996, the Board of Directors granted 15,000 options to the medical directors at its three kidney dialysis centers. These options are exercisable for a period of 3 years through August 18, 1999 at $4.75 per share. NOTE 7--COMMON STOCK In June 1997, the Company reacquired 100,000 shares of its common stock at a cost of $206,250 with these shares reflected as treasury stock in the balance sheet. NOTE 8--COMMITMENTS AND CONTINGENCIES Effective January 1, 1997 the Company established a 401(k) savings plan (salary deferral plan) with an eligibility requirement of 1 year of service and 21 year old age requirement. 9 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The statements contained in this Quarterly Report on Form 10-Q that are not historical are forward looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"), including statements regarding the Company's expectations, intentions, beliefs, or strategies regarding the future. Forward looking statements include the Company's statements regarding liquidity, anticipated cash needs and availability, and anticipated expense levels in "Management's Discussion and Analysis of Financial Condition and Results of Operations" including anticipated development and acquisition of dialysis centers, new facility completions and related anticipated costs. All forward looking statements included in this document are based on information available to the Company on the date hereof, and the Company assumes no obligation to update any such forward looking statement. It is important to note that the Company's actual results could differ materially from those in such forward looking statements. Among the factors that could cause actual results to differ materially are the factors detailed in the risks discussed in the "Risk Factors" section included in the Company's Registration Statement Form SB-2, as filed with the Securities and Exchange Commission (effective on April 17, 1996). The dialysis industry is highly competitive and subject to extensive regulation, including the limitation on fees for dialysis treatment and services. Significant competitive factors include quality of care and service, convenience of location and pleasant environment. Additionally, there is intense competition for retaining qualified nephrologists who normally are the sole source of patient referrals and are responsible for the supervision of the dialysis centers. There is also substantial competition for obtaining qualified nurses and technical staff. Major companies, some of which are public companies or divisions of public companies, have many more centers, physicians and financial resources than does the Company, and by virtue of such have a significant advantage in competing for acquisitions of dialysis facilities in areas targeted by the Company. The Company's future growth depends primarily on the availability of suitable dialysis centers for acquisition or development in appropriate and acceptable areas, and the Company's ability to compete with larger companies with greater personnel and financial resources to develop these new potential dialysis centers at costs within the budget of the Company. Its ability to retain qualified nephrologists, nursing and technical staff at reasonable rates is also a significant factor. Management continues in negotiations with nephrologists for the acquisition or development of new dialysis facilities, as well as with hospitals and other health care maintenance entities. The Company has recently opened its fourth center in Carlisle, Pennsylvania. A lease has been completed for a fifth center located in Manahawkin, New Jersey and the Company is seeking certain regulatory approvals from the state which if not granted will result in further delays in opening that new dialysis facility. Several agreements for acute inpatient services are under review but there is no assurance that such agreements will be completed. There is no certainty as to when any new centers or service contracts will be implemented, or the number of stations, or patient treatments such may involve, or if such will ultimately be profitable. As noted below, newly established dialysis centers, although contributing to increased revenues, also adversely affect results of operations due to start-up costs and expenses with a smaller developing patient base. RESULTS OF OPERATIONS Medical service revenue increased approximately $68,000 (7%) and $209,000 (11%) for the three months and six months ended June 30, 1997 compared to the same periods of the preceding year. This increase was largely attributable to increased revenues of approximately $134,000 (43%) and $317,000 (56%) compared to the same periods of the preceding year at the Company's dialysis center in Lemoyne, Pennsylvania which commenced treatments in June 1995. Revenues attributable to the Company's center in Wellsboro, Pennsylvania which commenced treatments in October 1995 decreased approximately $24,000 (19%) and $41,000 (17%) compared to the preceding year. Revenues attributable to the Company's Florida dialysis center decreased $42,000 (8%) and $65,000 (6%) compared to the preceding year. Interest and other income increased approximately $19,000 and $61,000 for the three months and six months ended June 30, 1997 compared to the same periods of the preceding year largely due to interest earned on proceeds invested from the Company's security offering completed in the second quarter of 1996. 10 RESULTS OF OPERATIONS-CONTINUED Cost of medical services sales, although increasing to 63% from 62% during the second quarter of 1997 compared to the preceding year, largely as a result of increases in supply costs, decreased to 62% for the six months ended June 30, 1997 compared to 66% for the same period of the preceding year, largely as a result of a decrease in healthcare salaries as a percentage of sales due to the increased sales revenues generated by the Company's Lemoyne, Pennsylvania facility with salaries at that facility remaining approximately the same. Selling, general and administrative expenses increased approximately $27,000 and $98,000 for the three months and six months ended June 30, 1997 compared to the same periods of the preceding year reflecting increases associated with the new Pennsylvania dialysis centers. Selling general and administrative expenses as a percentage of medical service revenues remained relatively stable amounting to 40% and 41% for the three months and six months ended June 30, 1997 and for the same periods of the preceding year. Interest expense decreased approximately $4,000 for the three months ended June 30, 1997 compared to the same period of the preceding year with interest expense for the six months ended June 30 being approximately the same for both years. Included was interest of $1,000 and $4,000 on the advances payable to the Parent for the three months and six months ended June 30, 1997 compared to $5,000 for the same periods of the preceding year with this interest computed at the short-term Treasury Bill rate. Other interest including interest on mortgages and equipment purchase agreements for dialysis machines was approximately the same for the three months and six months ended June 30, 1997 compared to the same periods of the preceding year. The prime rate was 8.5% at June 31, 1997 and 8.25% at December 31, 1996. LIQUIDITY AND CAPITAL RESOURCES Working capital totaled $3,795,000 at June 30, 1997, which reflected a decrease of approximately $734,000 during the six months ended June 30, 1997. Included in the changes in components of working capital was a decrease in cash and cash equivalents of $753,000, which included net cash provided by operating activities of $177,000, net cash used in investing activities of $408,000 relating to additions to property and equipment (of which $193,000 are for the new Carlisle, Pennsylvania facility and $134,000 are for renovations and improvements to the Company building in Lemoyne, Pennsylvania) and net cash used in financing activities of $522,000 (including a decrease in the advances from the Parent of $252,000, repurchase of stock of $206,000 and debt repayments of $61,000). During 1988, the Company obtained mortgages totaling $1,080,000 on its two buildings, one in Lemoyne, Pennsylvania and the other in Easton, Maryland. The mortgages had a combined remaining balance of $468,000 and $504,000 at June 30, 1997 and December 31, 1996, respectively. The bank has liens on the real and personal property of the Company, including a lien on all rents due and security deposits from the rental of these properties. At December 31, 1996, the Company was in default of certain covenants principally relating to net worth and debt service ratio requirements under these loan agreements for which the lender has waived compliance through December 31, 1997. See Note 3 to "Notes to Consolidated Condensed Financial Statements". The Company has an equipment purchase agreement for kidney dialysis machines for its Florida and Pennsylvania dialysis facilities which had a remaining balance of $312,000 and $272,000 at June 30, 1997 and December 31, 1996, respectively, which included additional equipment financing of approximately $17,000 in the first quarter of 1997 and $48,000 in the second quarter of 1997. See Note 3 to "Notes to Consolidated Condensed Financial Statements". The Company believes that current levels of working capital, including the proceeds of its 1996 securities offering, will enable it to successfully meet its liquidity demands for at least the next twelve months. The Company, having operated on a larger scale in the past, is seeking to expand its outpatient dialysis treatment facilities and inpatient dialysis care. Such expansion, whether through acquisitions of existing centers, or the development of its own dialysis centers, requires capital, which was the basis for the Company's 1996 security offering. No assurance can be given that the Company will be successful in implementing its growth strategy or that the funds from its securities offering will be adequate to finance such expansion. In June 1997, the Company repurchased 100,000 shares of its common stock for $206,250. See Note 7 to "Notes to Consolidated Condensed Financial Statements". The Company commenced operations at its newly established dialysis center in Carlisle, Pennsylvania in July 1997 and has entered into an agreement with a medical director, and intends to establish another new dialysis center, in New Jersey. Establishment of the New Jersey center is subject to meeting various regulatory requirements. 11 IMPACT OF INFLATION Inflationary factors have not had a significant effect on the Company's operations, although the Company has experienced increased costs of supplies, salaries and general and administrative expenses. A substantial portion of the Company's revenue is subject to reimbursement rates established and regulated by the federal government. These rates do not automatically adjust for inflation. Any rate adjustments relate to legislation and executive and Congressional budget demands, and have little to do with the actual cost of doing business. Therefore, dialysis services revenues cannot be voluntarily increased to keep pace with increases in nursing and other patient care costs. 12 PART II-OTHER INFORMATION ITEM 4. Submission of Matters to a Vote of Security Holders On June 11, 1997, the Company held its annual meeting of shareholders to elect its three member Board of directors to serve until the next annual meeting in 1998. Each director, Messrs. Thomas K. Langbein, Bart Pelstring and Michael Duke, was elected by a vote of 2,410,622 shares for and no votes against. There were no abstentions and no broker non-votes due to the meeting being called pursuant to an Information Statement under Regulation 14C of the Securities and Exchange Act of 1934 with no proxy solicitation since the Parent owned 67% of the voting equity of the Company. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits Part I Exhibits (11) Statement re: computation of per share earnings. (27) Financial Data Schedule (for SEC use only) Part II Exhibits (10) Material contracts (i) Schedule of Leased Equipment 0597 commencing June 1, 1997 to Master Lease BC-105 dated November 22, 1996 between the Company and B. Braun Medical, Inc. (ii) Schedule of Leased Equipment 0697 commencing July 1, 1997 to Master Lease BC-105 dated November 22, 1996 between the Company and B Braun Medical, Inc. (b) Reports on Form 8-K The Company filed a Current Report on Form 8-K on June 19, 1997 with respect to Item 5, "Other Events" relating to certain agreements for In-Hospital Dialysis Service; there were no financial statements filed. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DIALYSIS CORPORATION OF AMERICA By: /s/ DANIEL R. OUZTS ------------------------------------------ DANIEL R. OUZTS, Vice President/Finance Controller and Principal Financial Officer Dated: August 13, 1997 13 EXHIBIT INDEX Exhibit No. Part I Exhibits (11) Statement re: computation of per share earnings (loss) (27) Financial Data Schedule (for SEC use only) Part II Exhibits (10) Material contracts (i) Schedule of Leased Equipment 0597 commencing June 1, 1997 to Master Lease BC-105 dated November 22, 1996 between the Company and B. Braun Medical, Inc. (ii) Schedule of Leased Equipment 0697 commencing July 1, 1997 to Master Lease BC-105 dated November 22, 1996 between the Company and B Braun Medical, Inc.