-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JRCPF1ouRUFksejbtIUBIRlAkSysqrVzdLTjwt2lJXvBJHPGdWXVRCKJJGskNIMC pi0srLlPKPraS4tyQa6u4w== 0000073779-96-000004.txt : 19960216 0000073779-96-000004.hdr.sgml : 19960216 ACCESSION NUMBER: 0000073779-96-000004 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960214 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: OCG TECHNOLOGY INC CENTRAL INDEX KEY: 0000073779 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 132643655 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-05186 FILM NUMBER: 96519237 BUSINESS ADDRESS: STREET 1: 450 WEST 31ST ST STREET 2: 11TH FL CITY: NEW YORK STATE: NY ZIP: 10001 BUSINESS PHONE: 2129673079 MAIL ADDRESS: STREET 1: 450 WEST 31ST STREET 11TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10001 FORMER COMPANY: FORMER CONFORMED NAME: OCG TECHNOLOGIES INC DATE OF NAME CHANGE: 19851217 FORMER COMPANY: FORMER CONFORMED NAME: DATA DISPLAY SYSTEMS INC DATE OF NAME CHANGE: 19730422 10QSB 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 1995 ----------------- [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from __________ to___________ Commission file number 0-5186 --------------- OCG TECHNOLOGY, INC. ------------------------------------------------------------------- (Exact name of small business issuer as specified in its charter) DELAWARE 13-2643655 - ------------------------------- -------------------------------- State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 450 West 31st Street, New York, New York 10001 ----------------------------------------------- (Address of principal executive offices) (212) 967-3079 -------------- (Issuer's telephone number) - --------------------------------------------------------------------------- (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 November 10, 1995 - ----------------------------- --------------------------------------- Common Stock ($.01 par value) 21,210,759 Shares OCG TECHNOLOGY, INC. AND SUBSIDIARIES INDEX PART I. FINANCIAL INFORMATION PAGE NUMBER - ------------------------------------- ----------- Consolidated Condensed Balance Sheets December 31, 1995 and June 30, 1995 1 Consolidated Condensed Statements of Loss for the Three Months Ended December 31, 1995 and 1994 2 Consolidated Condensed Statements of Cash Flow for the Three Months Ended December 31, 1995 and 1994 3 Notes to Consolidated Condensed Financial Statements 4 Management's Discussion and Analysis of Financial Condition and Results of Operations 5 PART II. OTHER INFORMATION - ----------------------------- Item 6. Exhibits and Reports on Form 8-K 7 PART I - FINANCIAL INFORMATION OCG TECHNOLOGY, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS
DECEMBER 31, 1995 JUNE 30, 1995 (UNAUDITED) ASSETS Current Assets: Cash $ 73,505 $ 51,645 Receivables, trade 42,243 33,598 Other current assets 24,446 21,946 ---------- --------- Total current assets 140,194 107,189 Property and equipment, net of accumulated depreciation of $219,737 $180,398 230,153 242,732 Proprietary Technology, net of accumulated amortization of $975,000 $675,000 2,025,000 2,325,000 Covenant not to compete, net of accumulated amortization of $175,000 $150,000 75,000 100,000 Other assets 32,754 33,054 ---------- ---------- Total assets $2,503,101 $2,807,975 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Due to shareholders $101,344 $11,344 Accounts payable and accrued expenses 153,034 163,359 ---------- ---------- Total current liabilities 254,378 174,703 Shareholders' equity: (Note 4) Preferred stock $.10 par value, Series B 10,000 10,000 Preferred stock $.10 par value, Series E 10,000 10,000 Common stock $.01 par value 212,107 205,107 Additional paid-in capital 18,559,695 18,421,695 Deficit (16,455,264) (15,912,591) Unearned compensation (Note 3) (25,315) (38,439) ------------ ------------ 2,311,223 2,695,772 Less treasury stock, at cost (62,500) (62,500) ----------- ----------- Total shareholders' equity 2,248,723 2,633,272 Total liabilities and shareholders' equity: $2,503,101 $2,807,975 ========== ========== See accompanying notes to consolidated condensed financial statements
1 OCG TECHNOLOGY, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS SIX MONTHS ENDED DECEMBER 31, ENDED DECEMBER 31, 1995 1994 1995 1994 Revenue: Sales $ 197,814 $ 109,363 $ 359,140 $ 281,886 ---------- ---------- ---------- ---------- Costs and expenses: Cost of sales 75,456 34,036 123,635 92,836 Marketing, general and administrative 395,349 188,565 778,055 368,748 --------- --------- --------- --------- Total Expenses 470,805 222,601 901,816 461,584 Net Income (Loss) (272,991) (113,238) (542,676) (179,698) ========== ========= ========= ========= Weighted average number of shares outstanding during period 21,177,063 18,716,370 20,848,802 18,716,370 ========== ========== ========== =========== Loss per Common Share ($0.01) (*) ($0.03) ($0.01) =========== ========== =========== =========== * Less than ($.01) per share See accompanying notes to consolidated condensed financial statements
2 OCG TECHNOLOGY, INC. AND SUBSIDIARIES STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED DECEMBER 31, 1995 1994 Cash flows from operating activities: Net income (loss) $(542,676) $(179,698) ---------- ---------- Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation and amortization 364,339 25,466 Issuance of stock for services 781 Amortization of unearned compensation 13,124 13,124 Changes in assets and liabilities (Increase) decrease in receivables (8,645) 3,231 (Increase) decrease in other current assets (2,500) (1,736) (Increase) decrease in property and equipment (26,757) (30,665) (Increase) decrease in other assets 300 1,136 (Decrease) in accounts payable and accrued expenses (10,325) (11,343) ---------- --------- Total adjustments 329,536 (6) ---------- --------- Net cash used in operating activities (213,140) (179,704) ---------- --------- Cash flows from investing activities: Purchase of fixed assets (16,282) Cash flows from financing activities: Due to Shareholders 90,000 Proceeds from issuance of common stock 145,000 215,000 ---------- --------- Net cash changes from investing and financing activities 235,000 198,718 ---------- --------- Net increase (decrease) in cash 21,860 19,014 Cash, beginning of period 51,645 104,867 ---------- --------- Cash, end of period $73,505 $123,881 ========== ========= 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, 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 December 31, 1995 and the results of operations for the three and six months ended December 31, 1995 and 1994 and the statements of cash flows for the six months ended December 31, 1995 and 1994. The June 30, 1995 balance sheet has been derived from the Company's audited financial statements. The results of operations for the six months ended December 31, 1995 are not necessarily indicative of the results to be expected for the full year. While the Company 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 the Company'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, the Company'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 the Company be unable to continue in existence. 2. Earnings per share data is computed using the weighted average number of shares outstanding during the periods. The effect of warrants outstanding and convertible debt, during the period it was outstanding, would be anti-dilutive. 3. Unearned compensation decreased as a result of amortizing the cost arising from the issuance of shares of the Company's common stock, par value $.01 per share, for services. 4. Capital Changes: During each of the three month periods, ended September 30, 1995 and ended December 31, 1995, warrants were issued to purchase 150,000 shares of the Company's Common Stock, par value $.01 per share (in total warrants to purchase 300,000 shares). Exercise of these warrants by the holders thereof is subject to the occurrence of an increase in the number of the Corporation's authorized shares of Common Stock, par value $.01 per share, from twenty-five million to fifty million. During the three months ended September 30, 1995, and the three months ended December 31, 1995, 450,000 shares and 150,000 shares (for a total of 600,000 shares), of the Company's Common Stock, par value $.01 per share, were sold for $0.20 per share, the gross proceeds of which were $120,000. During the three months ended December 31, 1995, warrants were exercised to purchase 100,000 shares of the Company's Common Stock, par value $.01 per share for the sum of $25,000 and the shares of stock were issued. 4 OCG TECHNOLOGY, INC. AND SUBSIDIARIES MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS A SUMMARY OF INCREASES (DECREASES) IN THE ITEMS INCLUDED IN THE CONSOLIDATED STATEMENTS OF LOSS IS SHOWN BELOW: Results of Operations Total revenues increased $88,451 and $77,254 for the three months and six months ended December 31, 1995 as compared to the same periods for 1994 primarily as a result of an increase in revenues of Mooney-Edwards Enterprises, Inc. ("MIS"), a subsidiary of the Company. Cost of sales increased $41,420 and $30,799 for the three and six months ended December 31, 1995, as compared to the same periods for 1994. The sales of OCG Technology, Inc. ("OCGT"), PrimeCare Systems, Inc. ("PSI") and MIS were $5,556, $10,681 and $342,752 respectively for the six months ended December 31, 1995. Marketing, general and administrative expenses increased $206,784 and $409,433 for the three and six months ended December 31, 1995 as compared to the same periods for 1994. The increases are primarily due to the charge of $150,000 per quarter for the amortization of Proprietary Technology resulting from the acquisition of PSI by the Company in May of the 1994 fiscal year, which charges were not recorded in the corresponding quarters of the three and six months ended December 31, 1994. Liquidity and Capital Resources At December 31, 1995 the Company had a current ratio of .55 to 1 compared to 1.83 to 1 as of December 31, 1994. The decrease primarily resulted from the operating losses. Although the net loss from operations for the six months ended December 31, 1995 was $542,676 most of the loss resulted from non-cash charges of $364,339, which accounted for 67% of the total loss from operations. The Company has experienced recurring losses fom operations and has been unable to provide sufficient working capital from operations and has relied significantly on the sale of equity interests in the Company and loans from officers and shareholders to fund its operations. The Company's auditors have included an explanatory paragraph regarding the ability of the Company to continue as a "going concern". Cash on hand and accounts receivable were $115,748 at December 31, 1995. In addition, the Company has equipment, in the final stages of manufacture, which will be available to lease on a fee for service basis. In the past, the Company's principal means of overcoming its cash shortfalls from operations was from the sale of the Company's common stock. During the six months ended December 31, 1995, the Company raised $145,000 through the sale of equity interests and the exercise of warrants. The Company raised an additional $90,000 through borrowings from Shareholders. The Company intends to provide additional working capital through the sale of equity interests in the Company. Although, in the past, the Company has been able to provide working capital through the sale of equity interests in the Company, there can be no assurances that the Company will succeed in its efforts. As of May 16, 1994, PrimeCare Systems, Inc. ("PSI") was acquired by the Company. At that time, PSI owned a sole and exclusive worldwide license to use, market, sell, manufacture and otherwise commercialize on the PrimeCare(TM) Patient Management System. PSI also received an assignment of the PrimeCare(TM) Patient Management System which was to become effective in June 1996. On September 21, 1995, the assignment to PSI was accelerated and became effective as of that date. 5 The System comprises a patient-centered integrated medical interview, encounter documentation, patient and physician education, and chart creation system which, in turn, provides an uncomplicated, standardized mechanism for collecting and documenting all relevant clinical encounter data at minimal cost and time. The System also provides a data base and means for clinical and outcomes research as well as a means for utilization review and quality assurance audits. The Company has decided to market the System as a service, on a pay for use basis, with a charge of $1.50 per patient visit. This marketing method eliminates a significant financial commitment to purchase the software, plus monthly maintenance charges for updates, and ties the cost directly to use. The financial benefits derived by the physician from use of the PrimeCare(TM) System exceed $1.50 cost per patient visit. The Company intends to interface MIS's proprietary medical billing software with the PrimeCare(TM) System. The Company intends to charge an additional fee of $.50 per bill. According to the American Medical Association, there are over 650,000 physicians in the U.S., creating a very large potential market for the System. The Company estimates that as many as 250,000 of these physicians could use the system routinely. It is estimated that the average number of patient visits per month for a primary care physician is between 500 and 600. Assuming 500 patients per month at $1.50 per patient, use by 100 physicians could generate revenues of $75,000 per month. The medical content of the System is continually updated. During 1994, the System had ten updates. On September 15, 1995, the Company entered into an agreement with the Mount Sinai School of Medicine ("MSSM") which provides for the MSSM to assume the task of updating and enhancing the medical content of the PrimeCare(TM) System. Having concluded this agreement, the Company commenced marketing the PrimeCare(TM) System. The Company currently has arrangements with several dealers to sell the PrimeCare(TM) System and is in the process of establishing a network of independent dealers. However, no assurances can be given that the physician population will contract for and use the PrimeCare(TM) System nor does the Company know the interest of dealers in selling the PrimeCare(TM) System. In the past, the Company sold its Cardiointegraph ("CIG"), a proprietary heart diagnostic instrument for the early detection of coronary heart disease, through medical distributors, a sales and marketing method employed by other medical equipment manufacturers. Although Cardiointegraphs were sold for ten consecutive fiscal years and the end user purchasers, (i.e., physicians and corporate and governmental medical departments), appear to find the unit useful, the Company has been unable to generate sufficient revenues to fund its operations or to operate at a profit. The Company believes that lack of universal reimbursement for the CIG has hindered its attempt to sell the CIG. The Company believes that marketing the CIG technology as a service, with a minimal fee charged to the physician per CIG generated, may overcome the reluctance of physicians to purchase medical diagnostic equipment not reimbursed by Medicare. During the 1993 fiscal year, the Company commenced its plan to market the Cardiointegraph as a service. The program is being focused in the following directions. The Company licensed its CIG technology to Compumed, Inc. ("CMPD") to enable CMPD to offer the CIG as a service to CMPD's customers who subscribe to CMPD's service which interprets electrocardiographic (EKG) signals transmitted telephonically to CMPD's central computer. During March 1994, CMPD commenced offering the CIG service to CMPD's customers. To date, the Company has not received significant revenues from CMPD for the service. The Company is totally dependant upon CMPD for the marketing effort to CMPD's customers. There can be no assurance that the service can be marketed successfully. 6 The Company, together with its wholly owned subsidiary, MIS, has taken steps to develop a dealer network to market the CIG as a service. Although there is interest in the service, the marketing effort will not commence until the manufacture of the units to be leased has been completed. Therefore, at this time, there can be no assurance that a dealer network can be established or that if it is established, the network will successfully place the CIG service in physicians' offices. The Company believes that it could provide sufficient working capital from operations through marketing the PrimeCare(TM) System, the MIS billing system after interfacing it with the PrimeCare(TM) System, and marketing the CIG as a service and expanding the operations of MIS. Currently, the Company 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 (a) Exhibits Exhibit 27. Financial Data Schedule (b) Reports on Form 8-K No reports on form 8-K were filed during the quarter for which this report is filed. 7 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned duly authorized. OCG TECHNOLOGY, INC. BY: /s/ Edward C. Levine --------------------------- EDWARD C. LEVINE, PRESIDENT BY: /s/ Erich W. Augustin ---------------------------- ERICH W. AUGUSTIN, EXECUTIVE VICE PRESIDENT (PRINCIPAL FINANCIAL OFFICER) DATED: February 13, 1996 8 EX-27 2
5 6-MOS JUN-30-1996 DEC-31-1995 73,505 0 42243 0 0 140,194 230,153 219,737 2,503,101 254,378 0 0 20,000 212,107 2,016,616 2,503,101 359,140 359,140 123,635 901,816 0 0 0 (542,676) 0 (542,676) 0 0 0 (542,676) (.03) (.03)
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