1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
(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
[ ] 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: 1-12529
NETMED, INC.
(Exact name of Registrant as specified in its charter)
OHIO 31-1282391
(State of incorporation (I.R.S. Employer
or organization) Identification No.)
425 METRO PLACE NORTH, SUITE 140, DUBLIN, OHIO
43017 (Address of principal executive offices, including zip code)
(614) 793-9356
(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 report(s), and (2) has been subject to such
filing requirement for the past 90 days.
YES X NO
--- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: 10,947,114 common
shares, without par value, on June 30, 1997.
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TABLE OF CONTENTS
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PAGE NO.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Balance Sheets December 31, 1996 1
and June 30, 1997
Statements of Operations For the Three Months Ended
and the Six Months Ended June 30, 1997 and 1996 2
Statements of Cash Flows For the Six Months Ended
June 30, 1997 and 1996 3
Notes to Financial Statements -
June 30, 1997 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 5
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. N/A
Item 2. Changes in Securities. N/A
Item 3. Defaults Upon Senior Securities. N/A
Item 4. Submission of Matters to a Vote of Security Holders. N/A
Item 5. Other Information. N/A
Item 6. Exhibits and Reports on Form 8-K. 9
Signatures 10
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NETMED, INC.
Balance Sheets
June 30, December 31,
1997 1996
(Unaudited)
-----------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 213,948 $ 142,074
Accounts receivable 319,526 175,512
Investment in NSI--available for sale 3,165,138 9,238,503
Prepaid assets 20,766 28,394
----------------------------
Total current assets 3,719,378 9,584,483
Notes receivable - NSI 21,443 21,443
Furniture and equipment (net of
accumulated depreciation) 27,620 28,034
Deferred taxes 628,703 744,162
Deposits and other assets 6,467 1,468
----------------------------
Total assets $ 4,403,611 $10,379,590
============================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 120,365 $ 97,625
Accrued expenses 294,847 223,536
Loan payable 140,913 96,909
Other liabilities 40,000 29,844
----------------------------
Total current liabilities 596,125 447,914
Deferred taxes 628,703 2,896,609
Stockholders' equity:
Common stock 4,012,884 3,881,605
Unrealized gains on available-for-sale
securities net of deferred taxes 552,905 3,954,764
Retained deficit (1,387,006) (801,302)
----------------------------
Total stockholders' equity 3,178,783 7,035,067
----------------------------
Total liabilities and stockholders' equity $ 4,403,611 $10,379,590
============================
See accompanying notes.
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NETMED, INC.
Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
--------------------------- ---------------------------
Royalty revenue $ 214,255 $ 13,546 $ 339,608 $ 27,099
Operating expenses:
Salaries and benefits 428,477 76,663 762,557 146,733
Sales and marketing 224,482 35,349 376,657 52,533
General and administrative 216,594 31,882 351,095 57,741
Business development 15,684 -- 59,345 --
Merger (Note 8) -- 97,837 -- 134,450
------------------------------------------------------------
Total operating expense 885,237 241,731 1,549,654 391,457
------------------------------------------------------------
Operating loss (670,982) (228,185) (1,210,046) (364,358)
Other income (expense):
Interest income 2,061 4,861 2,099 10,871
Interest expense (624) -- (4,884) --
Gain on available-for-sale securities 433,007 -- 745,056 --
Equity loss in partnerships -- (2,816) -- (4,091)
------------------------------------------------------------
Total other income 434,444 2,045 742,271 6,780
------------------------------------------------------------
Loss before income taxes (236,538) (226,140) (467,775) (357,578)
Income tax expense (benefit) 202,419 (69,426) 117,419 (122,001)
------------------------------------------------------------
Net loss $ (438,957) $ (156,714) $ (585,194) $ (235,577)
============================================================
Net loss per share ($0.04) ($0.03) ($0.05) ($0.04)
============================================================
Shares used in computation 10,947,114 6,072,936 10,946,316 6,072,936
============================================================
See accompanying notes.
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NETMED, INC.
Statements of Cash Flows
(Unaudited)
Six Months Ended
June 30,
--------------------------
1997 1996
--------------------------
OPERATING ACTIVITIES
Net loss $ (585,194) $(235,577)
Adjustments to reconcile net loss to net
cash provided by (used for) operating activities:
Depreciation and amortization 7,200 3,000
Change in deferred tax assets 115,459 (122,001)
Gain on available-for-sale securities (745,056) --
Deferred compensation 131,275 --
Equity (income) loss in partnership -- 4,091
Changes in operating assets and liabilities:
Accounts receivable (144,014) (95,638)
Prepaid assets 7,628 --
Deposits and other assets (4,999)
Accounts payable 22,740 159,741
Accrued expenses and other liabilities 71,311 (107,247)
Due from related entities -- (227,206)
Other liabilities 10,156 --
--------------------------
Net cash used in operating activities (1,113,494) (620,837)
--------------------------
INVESTING ACTIVITIES
Sale of NSI stock 1,148,106 --
Notes receivable-NSI -- 29,637
Purchase of furniture and equipment (6,742) --
--------------------------
Net cash provided by investing activities 1,141,364 29,637
--------------------------
FINANCING ACTIVITIES
Proceeds from margin account 44,004 --
--------------------------
Net cash provided by financing activities 44,004 --
--------------------------
Net increase (decrease) in cash 71,874 (591,200)
Cash and cash equivalents at beginning of period 142,074 811,359
--------------------------
Cash and cash equivalents at end of period $ 213,948 $ 220,159
==========================
See accompanying notes.
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NETMED, INC.
Notes to Financial Statements
(Unaudited)
June 30, 1997
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the six month period ended June 30, 1997
are not necessarily indicative of the results that may be expected for the year
ended December 31, 1997. For further information, refer to the financial
statements and footnotes thereto included in the NetMed, Inc. Form 10-K for the
year ended December 31, 1996 as filed with the Securities and Exchange
Commission.
NOTE B-MERGER
On December 5, 1996 the Company shareholders approved an Agreement and Plan of
Merger with Cytology Indiana, Inc., Indiana Cytology Review Company, ER Group,
Inc., CCWP Partners, Inc., and Carolina Cytology, Inc. On December 16, 1996 the
merger was declared effective and the Company changed its name to NetMed, Inc.
NetMed, Inc. has the rights to market the PAPNET(R) System and PAPNET(R) Service
in Ohio, Kentucky, Missouri, Georgia, North Carolina and the Consolidated
Statistical Area of Chicago. Unaudited pro forma results of operations for the
six months ended June 30, 1996, assuming the merger had occurred as of January
1, 1996, are presented below. The pro forma amounts include adjustments that the
Company believes are reasonable.
1996
---------
Royalty revenue $ 50,312
Operating loss (643,247)
Net loss (478,958)
Net loss per share (.04)
NOTE C-NET LOSS PER SHARE
The net loss per share has been calculated based on the weighted average number
of common shares outstanding. In February 1997, the Financial Accounting
Standards Board issued Statement No. 128, "Earnings Per Share" (SFAS 128). SFAS
128 requires adoption for periods ending after December 15, 1997. Until that
time, the Company is required to continue calculating earnings per share (EPS)
in accordance with Accounting Principles Board Opinion No. 15. The Company has
calculated "Basic EPS" and "Diluted EPS" for the three month and six month
period ended June 30, 1997 in accordance with SFAS 128 and the amounts would not
differ from that disclosed in the accompanying statement of operations for net
loss per share.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
NetMed, Inc., formerly known as Papnet of Ohio, Inc., (the "Company"),
is an Ohio corporation engaged in the business of acquiring, developing and
marketing medical and health-related technologies. The Company's revenues are
currently derived principally from the marketing of the PAPNET(R) Testing System
and Service, which are proprietary products of Neuromedical Systems, Inc.,
("NSI"). The Company is also currently engaged in the development of an oxygen
concentration device which it plans to manufacture and sell in the home
healthcare market.
The PAPNET(R) Testing System is a semi-automated cancer detection
system for the review of cell, tissue or body fluid specimens, including but not
limited to cervical cytology specimens. The PAPNET(R) Service permits
laboratories to submit slides containing such specimens ("Slides") to one of
NSI's central facilities for image processing employing NSI's patented neural
network technology. NSI returns the Slides and digital tape or CD-ROM containing
processed images for evaluation by NSI-trained cytotechnologists.
The PAPNET(R) Testing System was approved by the FDA for commercial use
in the United States on November 8, 1995. Prior to that time, it was permitted
to be utilized in the United States on an investigational basis only, and NSI
was permitted to derive revenue with respect thereto only to recover certain of
its costs. Beginning January 1, 1996, the Company and NSI began the task of
building a sales force and familiarizing doctors and laboratories with the
benefits of the PAPNET(R) Testing System and service. Beginning in September of
1996, the commercial launch of the product was initiated with a national
advertising campaign.
On December 5, 1996, the Company's shareholders approved an Agreement
and Plan of Merger (the "Merger Agreement") whereby Cytology Indiana, Inc.,
Indiana Cytology Review Company, ER Group, Inc., CCWP Partners, Inc., and
Carolina Cytology, Inc. (the "Predecessor Companies") were merged with and into
Papnet of Ohio, Inc. (the "Merger"). The Merger was effective on December 16,
1996, and the Company issued 4,849,988 common shares, without par value, in
exchange for the issued and outstanding shares of the Predecessor Companies.
Pursuant to the Merger Agreement, the Company changed its name to NetMed, Inc.,
and its common shares began trading on the American Stock Exchange on December
18, 1996 under the symbol "NMD".
As a result of the Merger, the Company has the marketing rights to the
PAPNET(R) Testing System and Service in Ohio, Kentucky, Missouri, Georgia, North
Carolina and the Consolidated Statistical Area of Chicago. The Company's
marketing rights are exclusive within these territories, subject to the right of
NSI to conduct marketing and sales activities therein. However, because the
royalties paid to the Company by NSI are based on revenues recognized by NSI
from activities (including any sales by NSI) in the licensed territories, NSI's
sales activities therein benefit the Company.
While the Company's primary focus has been, and will continue to be,
exploiting its rights under the NSI license, the Company will also consider the
acquisition of other healthcare related technologies in the future. On March 3,
1997, the Company announced that it had entered an agreement with CeramPhysics,
Inc. of Westerville, Ohio ("Ceram"), pursuant to which the Company has the right
to acquire control of a newly-organized corporation holding a world-wide license
to Ceram's patented oxygen generation technology, which is exclusive as to all
applications except oxygen sensors and fuel cells.
This report contains forward-looking statements which involve risks and
uncertainties. The Company's actual results may differ materially from the
results discussed in the forward-looking statements. Factors that might cause
such a difference include, but are not limited to, those discussed in Item I of
the Company's Form 10-K as filed with the United States Securities and Exchange
Commission, File No. 1-12529, in the section titled "Business Risks".
For accounting purposes, the financial statements of the Company for
1996 and prior years are those of Papnet of Ohio, Inc. The results of operations
for the merged entities are reported on a prospective basis commencing
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December 16, 1996. The following discussion therefore includes the operations of
Papnet of Ohio, Inc. from January 1, 1996 through June 30, 1996, and the
consolidated operations of all entities from January 1, 1997 through June 30,
1997.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1997 AND 1996
As a result of the FDA approval mentioned above, the commercial launch
of the product in September 1996 and an increase in the number of sales
representatives, the number of Slides processed in the Company's territories
increased to 26,100 Slides for the three months ended June 30, 1997, from 15,202
Slides for the quarter ended March 31, 1997 and from 2,626 Slides for the three
months ended June 30, 1996. On a proforma basis, 4,440 Slides were processed for
NetMed and the Predecessor Companies for the quarter ended June 30, 1996.
Royalty revenue was $214,255 for the three months ended June 30, 1997, an
increase from $13,546 for the three months ended June 30, 1996.
In February 1997, the Company entered into an agreement with Blue Cross
Blue Shield Mutual of Ohio, now known as Medical Mutual of Ohio ("MMO"), whereby
MMO agreed to cover the cost of the PAPNET(R) test for all members. In addition,
MMO has agreed to strongly recommend to its clinicians and laboratories that all
negative Pap smears covered by its benefit plans be examined using PAPNET(R)
testing. MMO is one of the largest third party payers for health care in the
State of Ohio, with approximately 1.5 million covered members. While management
believes that this agreement will eventually increase the number of Slides
processed during 1997, the Company is unable to quantify the impact of the
agreement on Slide volume for the three months ended June 30, 1997, although it
believes such impact was minimal.
The number of employees of the Company increased to 15 during the three
months ended June 30, 1997, an increase of 10 employees from the same period the
previous year. The increase consisted of an additional six sales representatives
and four administrative employees. As a result of granting options to certain
employees and directors, the Company recognized compensation expense of $53,787
for the three months ended June 30, 1997. This amount has been included in
salaries and benefits. As a result of the headcount increases mentioned above
and the expense for the grant of options, salary and benefit expense increased
to $428,477 for the three months ended June 30, 1997 from $76,663 for the three
months ended June 30, 1996.
Sales and marketing expense other than salaries and benefits increased
to $224,482 for the three months ended June 30, 1997 from $35,349 for the three
months ended June 30, 1996. In addition to the direct expenses of the sales
representatives in developing their respective sales territories, the Company
incurred expenses for advertising, promotional materials and sales literature of
$142,503 for the quarter ended June 30,1997.
General and administrative expenses increased to $216,594 for the three
months ended June 30, 1997 compared to $31,882 for the three months ended June
30, 1996. The increase in general and administrative expense is primarily due to
an increase in accounting and legal costs as well as the increase in headcount
from two to six administrative employees.
Business development expenses of $15,684 were incurred during the three
months ended June 30, 1997 as the Company continued its development of an oxygen
device, that if successfully developed, will be sold to the home healthcare
market.
During 1995, the Company began discussions with the Predecessor
Companies that resulted in the Merger that was effective December 16, 1996. For
the three months ended June 30, 1996, the Company incurred one time merger
expenses of $97,837. No such expenses were incurred in the three months ended
June 30, 1997, and no further expenses are anticipated for the remainder of 1997
related to this transaction.
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The Company recognized a gain on available-for-sale securities of
$433,007 for the three months ended June 30, 1997, resulting from the sale of
80,000 shares of NSI common stock held by the Company at net prices ranging from
$5.07 to $10.13 per share. There were no sales of securities during the three
months ended June 30, 1996.
Interest income for the three months ended June 30, 1997 was $2,061
compared to $4,861 for the same period the prior year. The decrease was a result
of lower available cash balances to invest, as cash balances have been utilized
to fund the negative cash flow from operations.
The Company has incurred loans payable of $140,913 as of June 30, 1997.
The loans are the result of opening margin accounts utilizing NSI common stock
for collateral. Interest expense as a result of these loans was $624 for the
three months ended June 30, 1997.
The Company recognized income tax expense of $202,419 for the three
months ended June 30, 1997, compared to an income tax benefit of $69,426 for the
three months ended June 30, 1996. The expense for the second quarter of 1997 is
the result of recording a valuation allowance against the deferred tax asset by
$288,000. The deferred tax liability was reduced during the quarter as a result
of the decline in market value of the NSI common stock. Since the deferred tax
liability is subject to the fluctuations in market price of the NSI common
stock, the Company may recognize additional expense or benefit in future
periods.
The equity in income or loss in partnerships reported for the second
quarter of 1996 is the Company's percentage of income or loss in Carolina
Cytology Licensing Company and Carolina Cytology Warrant Partnership. Both
entities were Predecessor Companies and were merged into the Company on the
effective date of the Merger, and consequently no similar item is reported for
the same period in 1997.
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
As a result of the FDA approval mentioned above, the commercial launch
of the product in September 1996 and an increase in the number of sales
representatives, the number of Slides processed in the Company's territories
increased to 41,302 Slides for the six months ended June 30, 1997 from 4,216
Slides for the six months ended June 30, 1996. On a proforma basis, 6,469 Slides
were processed for NetMed and the Predecessor Companies for the six months ended
June 30, 1996. Royalty revenue was $339,608 for the six months ended June 30,
1997, an increase from $27,099 for the six months ended June 30, 1996.
The number of employees of the Company increased to 15 during the six
months ended June 30, 1997, an increase of 10 employees from the same period the
previous year. The increase consisted of an additional six sales representatives
and four administrative employees. As a result of granting options to certain
employees and directors during the six months ended June 30, 1997, the Company
incurred compensation expense of $131,275. This amount has been included in
salaries and benefits. As a result of the headcount increases mentioned above
and the expense for the grant of options, salary and benefit expense increased
to $762,557 for the six months ended June 30, 1997 from $146,733 for the six
months ended June 30, 1996.
Sales and marketing expense other than salaries and benefits increased
to $376,657 for the six months ended June 30, 1997 from $52,533 for the six
months ended June 30, 1996. In addition to the direct expenses of the sales
representatives in developing their respective sales territories, the Company
incurred expenses for advertising, promotional materials and sales literature of
$183,182. The Company incurred a total of $47,500 for professional services in
its efforts to expand the reimbursement of the cost of the PAPNET(R) test by
healthcare providers and for employment agency fees for the additional sales
representatives hired during the six months ended June 30, 1997.
General and administrative expenses increased to $351,095 for the six
months ended June 30, 1997 compared to $57,741 for the six months ended June 30,
1996. The increase in general and administrative expense is primarily due to an
increase in accounting, legal and stock exchange costs as well as the increase
in headcount from two to six administrative employees.
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Consistent with the Company's plan to acquire compatible business
technologies, the Company incurred costs of $59,345 for the six months ended
June 30, 1997 in the negotiation and evaluation of additional opportunities in
medical technology. On March 3, 1997, the Company announced that it had entered
an agreement with CeramPhysics, Inc. of Westerville, Ohio ("Ceram"), pursuant to
which the Company has the right to acquire control of a newly-organized
corporation holding a world-wide license to Ceram's patented oxygen generation
technology, which is exclusive as to all applications except oxygen sensors and
fuel cells.
During 1995, the Company began discussions with the Predecessor
Companies that resulted in the Merger that was effective December 16, 1996. For
the six months ended June 30, 1996, the Company incurred one time merger
expenses of $134,450. No expenses related to this transaction were incurred in
the six months ended June 30, 1997.
The Company recognized a gain on available-for-sale securities of
$745,056 for the six months ended June 30, 1997. There were no sales of
securities during the three months ended June 30, 1996. The increase is due to
the gain on the sale of 125,000 shares of NSI common stock held by the Company
at net prices ranging from $5.07 to $10.13 per share.
Interest income for the six months ended June 30, 1997 was $2,099
compared to $10,871 for the same period the prior year. The decrease was a
result of lower available cash balances to invest, as cash balances have been
utilized to fund the negative cash flow from operations.
The Company has incurred loans payable of $140,913 as of June 30, 1997.
The loans are the result of opening margin accounts utilizing NSI common stock
for collateral. Interest expense as a result of these loans was $4,884 for the
six months ended June 30, 1997.
The Company recognized income tax expense of $117,419 for the six
months ended June 30, 1997, compared to an income tax benefit of $122,001 for
the six months ended June 30, 1996. The expense for the first half of 1997 is
the result of recording a valuation allowance against the deferred tax asset by
$288,000. The deferred tax liability was reduced during the period as a result
of the decline in market value of the NSI common stock. Since the deferred tax
liability is subject to the fluctuations in market price of the NSI common
stock, the Company may recognize additional expense or benefit in future
periods.
The equity in income or loss in partnerships reported for the six
months ended June 30, 1996 is the Company's percentage of income or loss in
Carolina Cytology Licensing Company and Carolina Cytology Warrant Partnership.
Both entities were Predecessor Companies and were merged into the Company on the
effective date of the Merger, and consequently no similar item is reported for
the same period in 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations primarily by the sale of NSI
common stock owned by the Company. The Company's combined cash and cash
equivalents totaled $213,948 at June 30, 1997, an increase of $71,874 from
December 31, 1996. The Company owns 572,246 unrestricted shares of NSI common
stock which can be liquidated in an orderly fashion to fund future operations.
NSI common stock closed trading at $5.53 per share on June 30, 1997 and at
$3.625 on July 23, 1997.
While the Company anticipates that its cash requirements will be
substantial for the immediate future, it believes its existing investments will
be adequate to meet those requirements. The cash requirements relate
specifically to the accounts and loan payable and accrued expenses at June 30,
1997 of approximately $600,000, the continuing negative cash flow generated from
operations on a monthly basis and the costs associated with the sales and
marketing efforts to healthcare providers, doctors, laboratories and direct to
the consumer during 1997 and potentially 1998. The sales and marketing expenses
include, but are not limited to, the cost of expanding the sales force, direct
advertising to consumers, advertising and promotion expense associated with the
implementation of the MMO contract and professional fees associated with
marketing to healthcare providers. The professional fees associated with
marketing
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to healthcare providers is necessary as the current sales force is responsible
for marketing primarily to doctors and laboratories. While management believes
that the above strategies will increase Slide volume, there can be no guarantee
as to the timing and the amount of increase, if any.
In addition to exploiting its rights under the license agreement with
NSI, the corporate mission of the Company is to become a well diversified health
care technology company founded upon proprietary products that offer a distinct
market advantage. The Company's intention is to follow the example of the
initial investment, the PAPNET(R) technology, in pursuing other opportunities in
healthcare technology. Specifically, the Company intends to make early
investments and applying the management and marketing resources of the Company
to develop and implement strategies which will substantially increase the value
of the investment over a period of two to four years. As opportunities become
available, the Company will require substantial funds in making the initial
investment and/or commercializing new healthcare products.
In pursuit of that strategy, the Company has recently embarked upon the
development of an oxygen generation/concentration device for use in home
healthcare, based upon technology acquired from Ceram. Pursuant to the
agreement, the Company will work with and loan up to $200,000 to Ceram to
complete the fabrication and testing of a ceramic element incorporating the
licensed technology, which will be capable of generating oxygen of a purity and
in quantities suitable for medical use. It is the Company's intention to
incorporate the element into an oxygen generation device which the Company will
manufacture and market for the home health care market. If the device is
acceptable to the Company, it has the right to acquire 95% of the capital stock
of the licensee for an additional $200,000 investment, with the remaining 5% to
be held by Ceram.
Thereafter, the Company would complete the development of a commercial
version of the device, proceed with obtaining appropriate regulatory approvals,
and commence manufacturing, marketing and distribution of the product. Such
activities are likely to require substantial expenditures in late 1997 and
during 1998, and depending upon the ultimate methods of manufacture, marketing
and distribution chosen by the Company, may require it to seek additional
capital in 1998.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995
Except for the historical information contained herein, the matters
discussed in this Form 10-Q include forward-looking statements that involve
risks and uncertainties, including, but not limited to, the Company's reliance
on a single product marketed under license from NSI, the corresponding
dependence on NSI's patents and proprietary technology, government regulation,
continuing losses from operations and negative operating cash flow, limited
marketing and sales history, the impact of third-party reimbursement decisions,
and other risks detailed in the Company's maost recent Annual Report on Form
10-K/A No. 1 and other Securities and Exchange Commission filings.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
Exhibit Exhibit Description
------- -------------------
10(a) Employment Agreement between the
Registrant and David J. Richards, dated as of
April 1, 1997.
27 Financial Data Schedule.
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(b) REPORTS ON FORM 8-K.
The Company did not file any reports on Form 8-K during the
period for which this report is filed.
PART II. OTHER INFORMATION
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this Form 10-Q for the quarterly
period ended March 31, 1997 to be signed on its behalf by the undersigned,
thereto duly authorized.
NETMED, INC.
By: /s/ David J. Richards
-----------------------------------
David J. Richards, President*
By: /s/ Kenneth B. Leachman
-----------------------------------
Kenneth B. Leachman, Vice President
of Finance*
Dated: July 24, 1997
* In his capacity as President of the Registrant, Mr. Richards is
duly authorized to sign this Report on behalf of the Registrant.
In his capacity as Vice President of Finance, Mr. Leachman is the
Registrant's principal financial officer.
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EXHIBIT INDEX
EXHIBIT EXHIBIT EXHIBIT INDEX
NUMBER DESCRIPTION PAGE NUMBER
------ ----------- -----------
10(a) Employment Agreement
between the Registrant and
David J. Richards, dated as
of April 1, 1997.
27 Financial Data Schedule.
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