UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
AMENDMENT NO. 1
(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, 2003
[ ] 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)
56 Harrison Street, New Rochelle, New York 10801
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(Address of principal executive offices)
(914) 576- 8457
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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 14, 2003
- ----------------------------- ----------------------------------
Common Stock ($.01 par value) 41,273,614 Shares
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
INDEX
PART I. - FINANCIAL INFORMATION PAGE NUMBER
- -------------------------------- -----------
Item 1. Financial Information
Consolidated Condensed Balance Sheets
March 31, 2003 and June 30, 2002 ........................... 1
Consolidated Condensed Statements of Loss for the
Three and Nine Months Ended March 31, 2003 and 2002 ........ 2
Consolidated Condensed Statements of Cash Flow for
the Nine Months Ended March 31, 2003 and 2002 .............. 3
Notes to Consolidated Condensed Financial Statements ....... 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations .............. 5
PART II. - OTHER INFORMATION
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Item 6. Exhibits and Reports on Form 8-K ........................... 10
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
March 31, 2003 June 30, 2002
-------------- --------------
ASSETS (UNAUDITED) (AUDITED)
Current Assets:
Cash $ 20,703 $ 37,191
Accounts receivable, trade 835 326
Inventory 16,737 14,531
Notes receivable 334,500 325,000
Other current assets 6,189 44,877
Interest receivable 34,680 8,362
-------------- --------------
Total current assets 413,644 430,287
Property and equipment, net of accumulated depreciation of
($623,486) ($616,654) 23,578 27,061
Capitalized software costs, net of accumulated amortization
($300,806) ($264,799) 461,078 426,826
Other assets 4,972 4,972
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Total assets $ 903,272 $ 889,146
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses 46,463 52,599
Notes Payable 376,771 239,500
Bank loans payable 14,343
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Total current liabilities 437,577 292,099
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Shareholders' equity: (Note 4)
Preferred stock $.10 par value, Series C 6,000 6,000
Preferred stock $.10 par value, Series E 3,333 3,333
Common stock $.01 par value 412,736 391,736
Additional paid_in capital 25,693,759 25,486,759
Accumulated deficit (25,457,633) (25,163,281)
Stock subscriptions receivable (130,000) (65,000)
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528,195 659,547
Less: treasury stock, at cost (12,500 shares) (62,500) (62,500)
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Total shareholders' equity 465,695 724,547
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Total liabilities and shareholders' equity $ 903,272 $ 889,146
============== ==============
See accompanying notes to consolidated condensed financial statements
1
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended March 31, Nine Months Ended March 31,
2003 2002 2003 2002
------------ ------------ ------------ ------------
Revenue:
Sales $ 76,973 $ 58,141 $ 173,896 $ 97,249
------------ ------------ ------------ ------------
Costs and expenses:
Cost of sales 43,767 32,510 92,521 49,829
Marketing, general and administrative 57,101 99,576 150,457 341,155
Depreciation and amortization 42,838 32,963 122,762 95,388
Other product costs 39,490 40,106 127,603 121,575
Interest - net (12,569) 0 (25,095) 34
------------ ------------ ------------ ------------
Total costs and expenses 170,626 205,155 468,248 607,981
------------ ------------ ------------ ------------
Net profit (loss) (93,653) (147,014) (294,352) (510,732)
============ ============ ============ ============
Weighted average number of shares
outstanding during the period 40,289,989 35,767,873 40,289,989 35,767,873
============ ============ ============ ============
Loss per Common Share ($ 0.01) ($ 0.01) ($ 0.01) ($ 0.01)
============ ============ ============ ============
See accompanying notes to consolidated condensed financial statements
2
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended March 31,
2003 2002
----------- -----------
Cash flows from operating activities:
Net income (loss) ($ 294,352) ($ 510,732)
----------- -----------
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization 122,762 95,388
Issuance of stock and warrants for services 18,000 33,000
Changes in assets and liabilities:
(Increase) decrease in receivables (26,827) 7,724
(Increase) decrease in notes receivable (9,500) (325,000)
(Increase) decrease in other current assets 38,688 236,262
(Increase) decrease in inventory (2,207) (12,339)
(Decrease) in accounts payable and accrued expenses (6,136) (30,036)
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Total adjustments 134,780 4,999
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Net cash used in operating activities (159,572) (505,733)
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Cash flows from investing activities:
Capitalized software development costs (135,119) (110,586)
(Increase) decrease in property & equipment (18,412)
Cash flows from financing activities:
Increase (decrease) in bank loans 137,271 4,110
Proceeds from issuance of Series C Preferred Stock 14,343 450,000
Increase (decrease) in notes payable 210,000 (60,817)
Proceeds from issuance of common stock 65,000 230,000
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Net cash changes from investing & financing 143,083 512,707
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Net increase (decrease) in cash (16,489) 6,974
Cash, beginning of period 37,191 7,774
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Cash, end of period $ 20,703 $ 14,748
=========== ===========
See accompanying notes to consolidated condensed financial statements
3
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. In the opinion of the Company, (which, together with its subsidiaries,
unless the context otherwise requires, is referred to as "OCGT"), the
accompanying unaudited consolidated condensed financial statements contain all
adjustments (consisting of only normal recurring adjustments) necessary to
present fairly the financial position as of March 31, 2003 and the results of
operations for the three and nine months ended March 31, 2003 and 2002 and the
statements of cash flows for the nine months ended March 31, 2003 and 2002. The
June 30, 2002 balance sheet has been derived from OCGT's audited financial
statements.
The results of operations for the nine months ended March 31, 2003 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. Capital Changes:
During the nine months ended March 31, 2003, for services rendered in
accord with the terms of a consulting agreement, warrants were issued to
purchase a total of 45,000 shares of the Company's common stock at the exercise
price of $0.15 per share with exercise dates of said warrants expiring between
July 1 to December 1, 2003. The Company reflected a total expense of $18,000 for
the nine month period ending March 31, 2003.
During the nine months ended March 31, 2003, warrants were exercised to
purchase an aggregate of 2,100,000 shares of the Company's common stock at an
exercise price of $0.10 per share.
4
OCG TECHNOLOGY, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
A SUMMARY OF INCREASES (DECREASES) IN THE ITEMS INCLUDED IN
THE CONSOLIDATED STATEMENTS OF LOSS IS SHOWN BELOW:
General
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The following discussion and analysis should be read in conjunction with the
Consolidated Financial Statements and Notes thereto appearing elsewhere herein.
The following discussion contains certain forward_looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934 and OCGT intends that such forward_looking
statements be subject to the safe harbors created thereby. These forward_looking
statements include predictions, estimates and other statements that involve a
number of risks and uncertainties. While this outlook represents OCGT's current
judgment on the future direction of the business, such risks and uncertainties
could cause actual results to differ materially from any future performance
suggested herein.
OCGT has experienced recurring losses from operations and has relied on the sale
of equity interests in OCGT to fund its operations. If necessary, OCGT intends
to provide additional working capital through the sale of equity interests in
OCGT. Although, in the past, OCGT has been able to provide working capital
through the sale of equity interests in OCGT, there can be no assurances that
OCGT will succeed in its efforts, which creates a doubt about its ability to
continue as a going concern. The results of operations for prior periods is
based on OCGT's continuing operations.
Critical accounting policies and estimates
- ------------------------------------------
The discussion and analysis of OCGT's financial condition and results of
operations following are based upon OCGT's consolidated financial statements,
which have been prepared in accordance with generally accepted accounting
principles. The preparation of these financial statements requires OCGT to make
estimates and judgements that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets
and liabilities. OCGT believes that the estimates, assumptions and judgements
involved in the accounting policies described below have the greatest potential
impact on OCGT's financial statements, therefore OCGT considers these to be its
critical accounting policies. Because of the uncertainty inherent in these
matters, actual results could differ from the estimates used in applying the
critical accounting policies. Within the context of these critical accounting
policies, OCGT is not currently aware of any reasonably likely events or
circumstances which would result in materially different amounts being reported.
Capitalized Software Costs
- --------------------------
Pursuant to SFAS No. 86, after the technological feasibility is established for
a software development project, OCGT capitalizes the costs. Capitalized software
costs are amortized over the estimated useful life using the straight-line
method in accord with paragraph 8 of SFAS No. 86. Although SFAS No. 86 provides
that amortization of capitalized software costs shall begin when the product is
completed and marketed, OCGT commences amortization of capitalized costs before
completion, and starts amortization of capitalized costs in the quarter after it
is booked. It is felt that this procedure is more conservative. Changes in
circumstances (such as technological advances or shortfalls in marketing
estimates) can result in differences between the actual and estimated useful
life. In that case, OCGT re-estimates the value and useful life of this
long-lived asset and make the necessary adjustments to reflect the asset at its
proper estimated value and amortizes it over the remaining estimated useful
life. Amortization of "Capitalized software costs" is included in "Depreciation
and amortization". This is due to the fact that PrimeCare Version 9 was not
completed and no revenues were therefore derived from its use. When revenues are
realized it will be charged to cost of sales.
Results of Operations
- ---------------------
Total revenues increased $11,257 and $76,647 for the three and nine months ended
March 31, 2003, as compared to the same period for 2002. The sales of OCGT and
PSI were $0 and $173,896 respectively, for the nine months ended March 31, 2003.
5
Cost of sales for the nine months ended March 31, 2003, as compared to the same
period for 2002, increased from $49,829 to $92,521 as a result of changing the
method of operation on Internet sales of certain items, from receiving
commissions on sales to selling from inventory.
Prior to September, 2002, OCGT's income consisted of fees and commissions. OCGT
acted as a commissioned broker to sell various items of merchandise on its Web
sites. In those instances, when a consumer indicated a desire to purchase an
item, the order was collected through the Web site and processed by the third
party seller and OCGT received a commission on such sale after it was
consumated. OCGT still receives and reports "commissions" on a "net" basis in
compliance with EITF 99-19. Although OCGT continued to be a commission broker
for certain merchandise, in September 2001, it also became a direct seller of
one of the category of items it was previously selling as a commissioned broker.
To accomplish this end, OCGT purchased merchandise and maintains an inventory
for sale on one of its Web sites. OCGT is almost always paid by credit card at
the time of purchase and ships the item from its inventory. This type of revenue
stream is reported on a "gross" basis in compliance with EITF 99-19, because
OCGT purchases the merchandise from the source it selects; is at risk for the
purchaser's credit; and it ships the merchandise. OCGT reports the gross sales
price as revenue and expense the cost of the merchandise and the shipping costs
as "cost of goods sold". As a result, the major cause for the increase in
revenues is that revenues now reflect the total sales price, not just a
commission. The gross profit from sales (revenues less cost of sales) for the
nine months ended March 31, 2003, as compared to the same period for 2002,
increased from $47,420 to 81,375. This results from basically two reasons: (1)
the increased profit per sale resulting from the increased mark-up from selling
from inventory rather than receiving a commission; and (2) an increase in the
number of units sold as a result of an increase in the number of visitors to our
Web site.
Marketing, general and administrative expenses decreased $42,475 and $190,698
for the three and nine months ended March 31, 2003, as compared to the same
period for 2002, primarily from the decrease of approximately: $37,000 in legal
fees, as a result of the successful completion of a law suit; $31,000 in reduced
expenditures for financial public relations; and $122,000 reduction consultant
fees for business development.
Other product costs increased $6,018 for the nine months ended March 31, 2003,
as compared to the same period for 2002. This is a marginal increase of less
than 5%.
Liquidity and Capital Resources
- -------------------------------
At March 31, 2003, OCGT had a current ratio of .95 to 1 compared to 1.82 to 1 as
of March 31, 20032. The decrease in current ratio is due to the increase of
approximately $182,000 in borrowing needed to meet expenses. The net loss from
operations for the nine months ended March 31, 2003, was $294,352 compared to
$510,732 for the prior year. The reduction in the net loss from operations was
primarily due to the decrease in "marketing, general and administrative
expenses" during the current year (see "marketing, general and administrative
expenses" above). $179,450 or 61% of the net loss from operations for the nine
months, were non-cash charges consisting of Depreciation and Amortization in the
amount of $122,762; Consulting Services in the amount of $18,000 paid through
the issuance of 45,000 warrants and amortization of prepaid expenses in the
amount of $38,688 paid through the issuance of shares of common stock. OCGT has
experienced recurring losses from operations and has been unable to provide
sufficient working capital from operations and has relied significantly on the
sale of equity interests in OCGT, and the exercise of warrants and loans from
shareholders to fund its operations. OCGT's auditors have included an
explanatory paragraph regarding the ability of OCGT to continue as a "going
concern".
Cash on hand, inventory, accounts receivable, and notes receivable were $372,775
at March 31, 2003. As of that date, OCGT also has $130,000 of collateralized
demand notes receivable related to the purchase of OCGT's common stock through
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 these
efforts in the future.
6
Notes receivable
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OCGT has advanced funds totaling $334,500, plus accrued interest at 7% per
annum, pursuant to a grid note, dated February 4, 2002. In consideration for
these advances, OCGT received warrants to purchase common stock of the borrower,
exercisable over a period of three years from the date of issuance, at a price
of $0.25 per share. OCGT received a security interest in accounts receivable of
the borrower anticipated to be generated under certain sales contracts which
provide for borrower to install and maintain the healthcare system for certain
countries. OCGT is also a subcontractor of the borrower. The borrower has
recently announced that it has received the first of these contracts. See
"Revenue Sources and Marketing Strategy".
Products and Competition.
- ------------------------
OCGT's revenues are primarily derived through its wholly owned subsidiary
PrimeCare Systems, Inc.("PSI"), which developed, owns and maintains the,
copyright protected, PrimeCareTM Patient Management System ("the PrimeCareTM
System"), and several Web sites. (Hereafter "OCGT" shall mean OCGT and/or PSI as
the context requires).
OCGT markets Internet enhanced versions of parts of the PrimeCareTM System on
the following Web sites (1)YourOwnHealth.com, (2) PrimeCareOnTheWeb.com and (3)
YourOwnDoctor.com. OCGT also created, maintains and markets a Web site known as
DeniseAustin.com. OCGT completed and has started to market the PrimeCare(TM)
System Version Nine ("PrimeCareTM Version Nine"). PrimeCareTM Version Nine is a
complete, ground-up redesign and re-write of the entire PrimeCareTM System
undertaken during this past fiscal year. The original PrimeCareTM System is
still in use but is no longer supported by OCGT.
PrimeCare's Version Nine reduces installation and maintenance costs associated
with the PrimeCareTM System, and has great flexibility which enables it to be
adapted to a wide variety of health care organizational uses, i.e., national and
local health care systems, military organizations, correctional facilities,
HMOs, hospitals with outpatient services, clinics, group practices and solo
practitioners.
OCGT products are unique and are of significant benefit to healthcare providers
and their patients, consumers, pharmaceutical companies and other companies in
the healthcare industry and fitness field. Physicians agree that the most
important and time consuming part of any medical encounter is the collection of
the patient's detailed history of present illness ("HPI"). Most physicians agree
that in as many as eight of every ten patients, the diagnosis can be obtained
from a detailed HPI. Amongst many other benefits, the PrimeCareTM System is of
great aid to the physician in obtaining the HPI.
Products:
- --------
PrimeCareTM Patient Management System Version Nine ("PrimeCareTM
Version Nine") is a multi-tier, user friendly patient management system. It is
also uniquely patient interactive, as well as physician and staff interactive.
PrimeCareTM Version Nine: (i) creates an electronic medical record documenting
the patient/physician encounter; (ii) is compatible with practice management and
billing systems; (iii) is Health Insurance Portability Accountability Act
("HIPAA") compliant; (iv) is designed for use in ambulatory clinics, group and
individual practices; (v) uses an authoritative and comprehensive knowledge
database of approximately 280 symptom and problem oriented patient
questionnaires (the "Questionnaires") used to obtain the patient's history of
present illness ("HPI") for diagnostic and follow-up visits; (vi) collectively
contains over 100,000 complaint and disease state questions, over 1,600
diagnoses, 1,250 physician reference articles, 1,700 patient education articles;
(vii) allows the staff to schedule the appropriate Questionnaire and enter the
vital signs; (viii) interacts directly with the patient by having the patient
select the answers that apply to their problem from the Questionnaire, in
English, Spanish (or other selected alternative languages), without requiring
physician or staff time; (ix) does not require the patient to have computer or
typing skills; (x) allows the physician to interact directly with the
PrimeCareTM System to select and document the normal and abnormal physical
findings, assessments, tests, prescriptions and treatment plan for the patient;
(xi) automatic (real time) calculation of HCFA's Evaluation and Management code,
with full audit trail, used for determining the reimbursement level by Medicare
and other third party payors for the office visit; (xii) encrypts all medical
data for transmission; (xiii) eliminates dictation and transcription costs;
(xiv) reduces risk of malpractice liability due to errors of omission and
"failure to consider"; and (xv) allows staff to schedule Questionnaires for
patient interview via the Internet.
7
The PrimeCareTM System: standardizes the patient record; assures consistency in
patient care; creates a patient database for clinical and outcomes research;
offers, both local and remote, means for utilization review and quality
assurance audits; improves the quality of care; increases efficiency and
productivity of the physician's practice; automatically generates a problem
list; incorporates patient care algorithms and clinical practice guidelines;
permits, both local and remote, on-line electronic retrieval of patient record
and hard copy print out with appropriate security controls; enables rapid access
to important patient data for clinical care; contains and provides patient
education, complaint oriented and medication specific; provides physician
reference materials.
The PrimeCare System is fully functional in current Windows operating
environments including Windows 98, ME, and Windows NT, Windows 2000 and Windows
XP. PSI's interfaces enable the PrimeCareTM System to communicate with other
practice management systems used in medical facilities. This provides a method
for these systems to transfer information to the PrimeCareTM System, such as
patient demographics and appointment scheduling, and the PrimeCareTM System to
transfer information (such as billing information including E&M codes, ICD9
codes and CPT codes) to these other systems.
Code ComplierTM: OCGT has also developed Code ComplierTM an application
software program that was designed to be used in conjunction with the
PrimeCareTM System, PrimeCareTM Version Nine and PrimeCareOnTheWeb.com. As each
item of information is entered into and collected by the PrimeCareTM System
during the patient encounter, the CodeComplierTM organizes the data in the
proper classification and using the 1997 HCFA guidelines, automatically
calculates HCFA's Evaluation and Management code level, with full audit trail,
used for determining the reimbursement level by Medicare and other third party
payors for the History, Physical Findings and Decision Making sections the
office visit. It totally eliminates the time and effort which would otherwise be
required by physician office personnel to complete this task. CodeComplierTM
takes the guess work out of E&M compliance.
PrimeCareOnTheWeb.com (the "PCW Site"): The PCW Site is a unique
physician and patient interactive Site that enables physicians to obtain their
patient's detailed HPI by having the patient answer Questionnaires via the
Internet. Like the PrimeCareTM System, PCW produces an extremely comprehensive
HPI that includes all of the "yes" answers, pertinent negatives and a list of
the diagnostic possibilities with the answers that support each diagnostic
consideration. It is HIPAA compliant and protects the confidentiality rights of
every user through a unique user ID and password and the use of secure digital
certificates from VeriSignTM.. All data is encrypted for transmission. PCW
automatically provides its registered physicians individual Web sites on
YourOwnDoctorTM.com.
YourOwnDoctor.com (the "YOD Site"): The YOD Site is a web community
created that: (i) provides free individual Web sites for physicians, physician
groups, and other healthcare providers that register for PrimeCareOnTheWebTM;
(ii) enables physicians to promote their services through displaying
credentials, including photos of each physician and staff in the office, listing
specialities, office hours, directions, maps, phone numbers, e-mail addresses,
and accepted insurance plans; (iii) provides useful links to other medical
sites; (iv) provides a direct link from physician site to PCW that enables
patient to access and complete appropriate Questionnaires; and (v) provides
direct link to YourOwnHealth.comTM for use by patients.
YourOwnHealth.com (the "YOH Site"): The YOH Site is a unique, free
online health and wellness site that empowers healthcare consumers to be better
prepared for their next visit to the doctor. The YOH Site offers: (1) the
"Medical Interview" that: (i) enables visitors to securely and anonymously
select and complete from 110 of the 280 diagnostic problem specific
Questionnaires contained in the PrimeCareTM System; (ii) generates and makes
available to the site visitor a detailed HPI report based upon their responses;
(iii) permits the visitor to answer the Questionnaires in either English or
Spanish; (iv) encrypts all medical data and uses digital certificates from
VeriSignTM for Internet communication; (v) provides banner links to the YOD Site
and www.DeniseAustin.com. (2) "YourOwnHealthTM Notebook": (i) is a secure
8
depository for storage of personal and family medical data for Registered
Members; (ii) can be accessed only through the use of registered IDs and
Passwords; (iv) provides a convenient way to keep track of personal health
issues such as allergies, immunizations, medications and others that can be kept
and edited on designated lists; (v) allows the Member to save the completed
Questionnaire HPI report and to add personal notes and reminders to the record.
(3) "YourOwnHealthTM Reference" provides extensive healthcare consumer education
material relating to diseases, disease management, medical procedures and
prescription and common over the counter medications, including drug
interaction.
Competition:
- -----------
OCGT has not identified any competitive patient management system which embodies
all the features of the PrimeCareTM System, in particular the complaint
specific, interactive Questionnaires completed by the patient and the report
generated by the patient's responses. OCGT believes that it has the only
in-office patient management system and Web sites that enable physicians to
obtain the patient's detailed HPI by having the patient answer problem-specific
HPI Questionnaires on a PC in the office or via the Internet. However, other
companies market systems which may have some of the features of the PrimeCareTM
System and some companies market medical office products which perform different
functions than those performed by the PrimeCareTM System. To date, market
penetration by both OCGT and its competitors has been limited.
The Market:
- ----------
OCGT's domestic and international markets for: (a) the PrimeCare System, the PCW
Site and the YOD Site are ambulatory/outpatient medical facilities, such as,
primary care physicians, medical clinics, group practices, health maintenance
organizations, and in general, healthcare providers other than those providing
care to patients confined to hospital beds; and (b) the YOH Site is for the use
of the general public.
Revenue Sources and Marketing Strategy:
- --------------------------------------
During the prior fiscal year, OCGT's marketing efforts had been concentrated on
its Web products. However, during the fiscal year ended June 30, 2002, the
PrimeCareTM System was selected to be part of a major international healthcare
information management program anticipated to be installed in a number of
countries as their healthcare system. See "Notes Receivable" above. The first of
these country contracts was recently announced. A five year, three-phase
contract was awarded to create a healthcare information infrastructure for a
nation of 11 million people. During phase one of the contract, the current
healthcare infrastructure of the country will be assessed to determine the final
specifications for the new system. Phase one is scheduled to take 12 to 14 weeks
to complete. After approval of the final specifications by the country's
Ministry of Health the second phase will commence. The second phase consists of
the installation and operation of a comprehensive healthcare information system
throughout the country. Upon commencement of phase two, PrimeCare(TM) Version
Nine will be an integral part of the country's comprehensive healthcare
information system. PrimeCare(TM) Version Nine will provide healthcare personnel
and patients a simple, effective means of entering medical data into this
healthcare information management system for processing and analysis. Successful
completion of these contracts will produce very significant revenues for OCGT.
Outcomes Research. Potentially, OCGT could receive fees for conducting outcomes
research for pharmaceutical companies and teaching hospitals. OCGT anonymizes,
encrypts and stores both the completed diagnostic and follow-up Questionnaires.
This ever-growing medical database can be analyzed in various ways to determine
the effectiveness of treatment plans, medications, etc.
Licensing Fees: OCGT believes that annual licensing fees from large fixed
population groups, which includes, but is not limited to, labor unions, medical
insurance companies, HMOs, military forces and correctional facilities, may be a
potential source of revenues.
The Company has entered into an agreement with Hackensack University Medical
Center ("HUMC"). The agreement provides for the use of the Company's Web sites
by HUMC's medical services organization ("MSO"), North Jersey Medical Management
Services, L.L.C. This MSO has over 1,000 physicians. HUMC, and its Physicians
9
Hospital Organization, have created www.HUMCMD.net , the only complete
Physician/Patient Internet Service Provider ("ISP") providing top quality
Internet connectivity to members of its physician network, plus access to key
internal HUMC applications.
The HUMCMD site has both a "Physician Portal" and "Patient Portal". The site
currently contains the OCGT's PCW Site and YOH Site. The Company's revenues are
dependent upon HUMC's marketing efforts to its Staff Physicians and patients.
Fitness Web Site: OCGT designed, created, operates, maintains and markets a
fitness and wellness Web site known as www.DeniseAustin.com. Through a revenue
sharing agreement with Denise Austin, a nationally known fitness expert who has
had a daily fitness show on television for over 14 years, OCGT promotes and
markets a variety of Denise Austin products on the Web site. Visitors and fans
are able to shop online for their favorite Denise Austin signature exercise
videos, books, equipment, gear, and private label apparel and nutraceuticals
(when available), as well as sign up for her monthly news letter, enjoy fitness
tips, exercises, motivation messages, and some of her favorite healthy recipes.
Marketing: OCGT has expanded the comprehensive shopping area on the DA
Web site which offers a broad range of noncompeting products within the fitness
industry. OCGT will share income from two sources - advertising revenues and
e-commerce. YourOwnHealth(TM) is currently positioned at the Denise Austin Web
Site with banners and sponsorship of the monthly newsletter which directs
traffic to YourOwnHealth(TM). YourOwnHealth(TM) intends to take advantage of the
opportunity to position its interactive tools directly from www.DeniseAustin.com
to facilitate a greater increase of traffic.
Competition: Denise Austin's Daily Workout is reputed to be the number
one fitness show on television with over one million viewers each weekday
morning. Her videos have sold over 4 million copies.
OCGT believes that it could obtain sufficient working capital from operations
through marketing its Internet products, the PrimeCareTM Version Nine.
Currently, OCGT has no lines of credit and has no material commitments for
capital expenditures outstanding.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K
No Report on Form 8-K, was filed during the quarter ended March 31,
2003.
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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
(PRINCIPAL FINANCIAL OFFICER)
DATED: May 15, 2003
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