-----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, LnZIgDCdLh+TpIdcGoI+0AbVYoxu6vCZor98OwenyfSkuJm3vxSyFU5K17sY2jE0 4zDXpe5fjw8Xw23JXz+byw== 0000950144-97-013116.txt : 19971208 0000950144-97-013116.hdr.sgml : 19971208 ACCESSION NUMBER: 0000950144-97-013116 CONFORMED SUBMISSION TYPE: 10-K405/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970831 FILED AS OF DATE: 19971205 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: VIROGROUP INC CENTRAL INDEX KEY: 0000875044 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ENGINEERING SERVICES [8711] IRS NUMBER: 591671036 STATE OF INCORPORATION: FL FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-K405/A SEC ACT: SEC FILE NUMBER: 000-19350 FILM NUMBER: 97733240 BUSINESS ADDRESS: STREET 1: 428 PINE ISLAND RD SW CITY: CAPE CORAL STATE: FL ZIP: 33990 BUSINESS PHONE: 9145741919 MAIL ADDRESS: STREET 1: 428 PINE ISLAND RD CITY: CAPE CORAL STATE: FL ZIP: 33990 FORMER COMPANY: FORMER CONFORMED NAME: MISSIMER & ASSOCIATES INC DATE OF NAME CHANGE: 19600201 10-K405/A 1 VIROGROUP INC. FORM 10-K405/A 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A --------------------- [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended August 31, 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 0-19350 ViroGroup, Inc. Exact name of Registrant as specified in its charter FLORIDA 59-1671036 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 5217 Linbar Drive, Suite 309 Nashville, TN 37211 (Address of principal executive offices) Registrant's telephone number: (615) 832-0081 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class on which registered ------------------- ------------------- NONE SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: Common Stock, $.01 par value 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] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] As of November 17, 1997 the aggregate market value of the voting stock of the Registrant held by non-affiliates of the Registrant was $225,060. As of November 17, 1997, the number of outstanding shares of Common Stock, par value $.01 per share, of the Registrant was 795,214. Information required by Part III is incorporated by reference to portions of the Registrant's 1998 Proxy Statement for the Annual Meeting of Shareholders which will be filed with the Securities and Exchange Commission within 120 days after the close of the 1997 fiscal year. ================================================================================ 2 operational in the Fall of 1997, to finance the unpaid backlog. This non-profit corporation is charged with financing the estimated backlog of 9,500 claims totaling over $556 million. Payment of claims will be on a first-come, first-served methodology based on application filing date and an assumed annual allocation rate of $100 million. Claims paid will be subject to a 3.5% annual discount in consideration of the anticipated accelerated payment as compared to the previously expected period of 4 to 5 years. Based upon information received from the State of Florida, it is currently anticipated that payment of the initial portion of the claims (approximately $213 million) should begin in the first quarter of calendar 1998; however, no assurance of that timetable can be given. The Company in prior fiscal years recorded valuation allowances on the amounts due to reflect the State mandated discount and potential denied costs. At August 31, 1996 allowances totaled $931,665 with $889,937 applied as a valuation allowance to the amounts due, resulting in a net amount of $2,812,737 shown as the Amounts Due from State Agency, net, in the accompanying consolidated balance sheet. At August 31, 1997 allowances totaled $913,918 with $166,623 applied as a valuation allowance to the amounts due, resulting in a net of $512,927 shown as the Amounts Due From State Agency, net, in the accompanying consolidated balance sheet. The balance sheet also includes $747,295 which is included in Accrued liabilities to reflect the Company's liability to pay discounts and denied costs on receivables sold to third-parties. All of the approximately $3.1 million in reimbursement applications which were unfiled at August 31, 1996, have been sold to third party financing entities at August 31, 1997. The Company used third-party funding to obtain the cash from the financing entities to avoid the long payout period by the State. In addition to selling the previously mentioned claims, the Company filed approximately $703,000 directly with the State. Specifically, the Company entered into several arrangements to sell substantially all the claims filed with the State for reimbursement. These arrangements required prepayment of a 3 - 4% prepaid fee to cover administrative and other costs for up to the first nine months at the time the financing entity paid the Company. Because the State did not pay the funding entities by September 30, 1997, the Company will begin to pay indemnification costs at a monthly rate of 0.6875% in October 1997. Under the agreement with the funders, the monthly rate increases such that if the applications are not paid by the State prior to the 20th month after funding, the Company will have paid indemnification costs at the rate of 0.6875% for 18 months. If the applications are not paid within 20 months, the Company must indemnify the funders at the rate which would have otherwise been received by the funders from the State program if interest were being paid by the State. These indemnification costs are being charged against the reserve account at the present time. In the event the State does not meet the projected payment schedule beginning in the first quarter of calendar year 1998, the reserves will not be adequate to absorb all of the indemnification costs. 6 3 VIROGROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY FOR THE YEARS ENDED AUGUST 31, 1995, 1996 AND 1997
Number of Number of Paid-In (Accumulated Shares Amount Shares Amount Capital Deficit) BALANCE, August 31, 1994.......................... 800,000 $ 8,000 397,607 $ 3,976 18,178,560 $(10,860,644) Conversion of preferred stock into common stock... (800,000) (8,000) 397,607 3,976 154,973 -- Net loss for the year............................. -- -- -- -- -- (2,586,737) Dividends on preferred stock...................... -- -- -- -- -- (460,445) ------- ------- ------- ------- ----------- ------------ BALANCE, August 31, 1995.......................... -- 795,214 7,952 18,333,533 (13,907,826) Net loss for the year............................. -- -- -- -- -- (1,375,645) ------- ------- ------- ----------- ------------ BALANCE, August 31, 1996.......................... -- -- 795,214 7,952 18,333,533 (15,283,471) Net loss for the year............................. -- -- -- -- -- (2,892,716) BALANCE, August 31, 1997.......................... -- 795,214 $ 7,952 $18,333,533 $(18,176,187) ======= ======= ======= ======= =========== =============
The accompanying notes to consolidated financial statements are an integral part of these statements. F-5 4 CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from sell of receivables to third party funders ............................................... -- -- 3,020,989 Proceeds from current notes payable........................... 14,847,778 9,448,098 5,814,599 Repayment of notes payable.................................... (14,821,775) (8,046,374) (7,145,083) Repayment of long-term debt................................... (15,243) (109,228) -- Repayment of capitalized lease obligations.................... (57,142) (25,936) (9,447) Cash paid to issue common stock............................... (29,497) -- -- Proceeds from long-term notes payable......................... 99,437 -- -- Payment of preferred stock dividends.......................... (280,000) -- -- ---------- ---------- ---------- Net cash provided by (used in) financing activities.................................... (256,442) 1,266,560 1,681,058 ---------- ---------- ----------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (21,872) 86,208 (191,001) CASH AND CASH EQUIVALENTS, Beginning of year............................................. 126,665 104,793 191,001 --------- ---------- ----------- CASH AND CASH EQUIVALENTS, End of year ............................................... $ 104,793 $ 191,001 $ 0 ========= ========== =========== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid for- Income taxes................................................ $ 12,586 $ 15,840 $ 8 ========= ========== =========== Interest ............................................... $ 88,667 $ 164,345 $ 92,040 ========= ========== ===========
The accompanying notes to consolidated financial statements are an integral part of these statements. F-7 5 VIROGROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) AUGUST 31, 1995, 1996 AND 1997 (b) Options and Warrants- In May 1991, the Company's Board of Directors adopted the 1991 Long-Term Incentive Plan (the "Incentive Plan") which permits the granting of stock options, stock appreciation rights and other awards. The Board has reserved 37,500 shares of unissued common stock under the Incentive Plan. The Incentive Plan is administered by the Compensation Committee of the Board of Directors which is authorized to determine, from time to time, the term, exercise price, settlement terms, forfeiture provisions and other terms and conditions of each of the types of awards. The following tables set forth the status of the Incentive Plan at August 31, 1997, after giving effect to the one for eight reverse stock split.
Number of Number of Number of Shares of Shares of Exercise Shares of Common Common Shares Price Common Stock Stock Out- Per Share Stock Exercised Forfeited standing Date of Grant --------- Granted --------- --------- -------- - ------------- ------- December 1991 $56.00 19,281 (106) (18,350) 825 June 1992 72.00 6,125 (6,125) 0 March 1993 70.00 10,063 (6,000) 4,063 August 1993 32.00 250 250 December 1993 20.00 6,000 (6,000) 0 October 1994 14.00 1,250 (1,250) 0 November 1994 12.00 4,375 (4,375) 0 July 1995 8.00 313 (313) 0 July 1995 7.52 313 (313) 0 January 1996 4.48 6,750 6,750 November 1996 2.56 15,000 (3,125) 11,875 January 1997 2.00 6,250 6,250 March 1997 1.12 3,500 3,500 ------- ------- ------- Balance August 31, 1997 79,470 (106) (45,851) 33,513 ======= ==== ======= =======
F-18 6 VIROGROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) AUGUST 31, 1995, 1996 AND 1997 1996. Also, the 1996 Act created a non-profit public benefit corporation, which became operational in the Fall of 1997, to finance the unpaid backlog. This non-profit corporation is charged with financing the estimated backlog of 9,500 claims totaling over $556 million. Payment of claims will be on a first-come, first-served methodology based on application filing date and an assumed annual allocation rate of $100 million. Claims paid will be subject to a 3.5% annual discount in consideration of the anticipated accelerated payment as compared to the previously expected period of 4 to 5 years. Based upon information obtained from the State of Florida, it is currently anticipated that payment of the initial portion of the claims (approximately $213 million) should begin in the first quarter of calendar 1998; however, no assurance of that timetable can be given. The Company in prior fiscal years recorded valuation allowances on the amounts due to reflect the State mandated discount and potential denied costs. At August 31, 1996 these allowances totaled $931,665 with $889,937 applied as a valuation allowance to the amounts due, resulting in a net amount of $2,812,737 shown as the Amounts Due from State Agency, net, in the accompanying consolidated balance sheet. At August 31, 1997 these allowances totaled $913,918 with $166,623 applied as a valuation allowance to the amounts due, resulting in a net of $512,927 shown as the Amounts Due From State Agency, net, in the accompanying consolidated balance sheet. The balance sheet also includes $747,295 which is included as an accrued liability to reflect the Company's liability to pay discounts and denied costs on receivables sold to third-parties. All of the approximately $3.1 million in reimbursement applications at August 31, 1996, have been sold to third party entities at August 31, 1997. The Company used third-party funding to obtain the cash from the buyers to avoid the long payout period by the State. In addition to selling the previously mentioned claims, the Company filed approximately $703,000 directly with the State. Specifically, the Company entered into several arrangements to sell substantially all the claims filed with the State for reimbursement. These arrangements required the Company to pay a 3 - 4% prepaid fee at the time the buyers paid the Company. Because the State did not pay the funding entities by September 30, 1997, the Company will begin to pay indemnification costs at a monthly rate of 0.6875% in October 1997. Under the agreement with the funders, the monthly rate increases such that if the applications are not paid by the State prior to the 20th month after funding, the Company will have paid indemnification costs at the rate of 0.6875% for 18 months. If the applications are not paid within 20 months, the Company must indemnify the funders at the rate which would have otherwise been received by the funders from the State program if interest were F-25 7 VIROGROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) AUGUST 31, 1995, 1996 AND 1997 being paid by the State. These indemnification costs are being charged against the reserve account at the present time. In the event the State does not meet the projected payment schedule beginning in the first quarter of calendar year 1998, the reserves will not be adequate to absorb all of the indemnification costs. In addition, the Company has placed 13% of the amounts sold in an interest bearing escrow account to provide for potential state denied costs and state mandated interest discount. The interest earned on the escrowed amounts accrues to the Company's benefit and is recorded as interest income in the period earned. The escrow balance at August 31, 1997, is $596,408 and is included in restricted cash on the accompanying Consolidated Balance Sheet. The Company filed all amounts due from the State prior to the state mandated filing deadline of December 31, 1996. (f) Segment Information The Company operates in one industry segment, as contemplated by Financial Accounting Standards Board Statement No. 14. Laidlaw and its affiliates accounted for approximately 21%, 20% and 8% of consolidated gross revenues for the years ended August 31, 1995, 1996, and 1997, respectively. Included in accounts receivable, net in the accompanying consolidated balance sheets as of August 31, 1996 and 1997 are amounts due from Laidlaw and its affiliates of $432,700 and $128,373, respectively. A Laidlaw affiliate owns 50% of the Company's outstanding common stock and three officers of Laidlaw affiliates are Directors of the Company. F-26 8 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. VIROGROUP, INC. /s/ CHARLES S. HIGGINS, JR., PRESIDENT ------------------------------------------- Charles S. Higgins, Jr., Chairman, President and Chief Executive Officer Dated: December 5, 1997 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
SIGNATURE AND CAPACITY DATE - ---------------------- ---- /s/ DEWAYNE BASKETTE December 5, 1997 - ------------------------------- DeWayne Baskette Chief Financial Officer /s/ A. DENNY ELLERMAN December 5, 1997 - ------------------------------- A. Denny Ellerman, Director /s/JAMES J. HATTLER December 5, 1997 - ------------------------------- James J. Hattler, Director /s/ RICK L. MCEWEN December 5, 1997 - ------------------------------- Rick L. McEwen, Director /s/ SYLVESTER O. OGDEN December 5, 1997 - ------------------------------- Sylvester O. Ogden, Director /s/ KENNETH W. WINGER December 5, 1997 - ------------------------------- Kenneth W. Winger, Director
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