-----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, DgE8jmBdIvMoiWPE8EMXbEoijB/Z3OWg0zaL/Bed0DOqSIYSAo0kT8P7X8cRuBBe Clw5G9d8f7w18cuK7MUjcw== 0001014060-96-000046.txt : 19961118 0001014060-96-000046.hdr.sgml : 19961118 ACCESSION NUMBER: 0001014060-96-000046 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONAL SPECIALTY NETWORKS INC CENTRAL INDEX KEY: 0000895521 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HEALTH SERVICES [8000] IRS NUMBER: 330403505 STATE OF INCORPORATION: CA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 033-55862-LA FILM NUMBER: 96666255 BUSINESS ADDRESS: STREET 1: 451 WEST LAMBERT RD STREET 2: STE 216 CITY: BREA STATE: CA ZIP: 92621 BUSINESS PHONE: 7142569654 10QSB 1 10-QSB U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the period ended September 30, 1996 [ ] 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 33-80944-LA NATIONAL SPECIALTY NETWORKS, INC. (Name of small business issuer in its charter) California 33-0403505 (State or other jurisdiction of (IRS Employer ID No.) incorporation or organization) 451 W. Lambert Rd., Suite 216 Brea, California 92821-3920 (Address of principal executive offices) Registrant's telephone number including area code (714) 256 9654 Indicate by check mark whether the registrant (1) has filed reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act 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 the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of October 31, 1996 - 1,225,534 shares of common stock. DOCUMENTS INCORPORATED BY REFERENCE None PART I - Financial Information Item 1. Financial Statements INDEX TO FINANCIAL STATEMENTS Page Balance Sheets ............................................................F-2 Statements of Operations ...................................................F-3 Statements of Stockholders' Equity .........................................F-4 Statements of Cash Flows ..................................................F-5 Notes to Financial Statements ..............................................F-6 F-1 NATIONAL SPECIALTY NETWORKS, INC. (A Development Stage Enterprise) Balance Sheets
June 30, 1996 Sept 30, 1996 ---------- ---------- ASSETS (Unaudited) CURRENT ASSETS Cash ...................................................................... $ 2,043 1,149 ---------- ---------- Total current assets .................................................... 2,043 1,149 ---------- ---------- OTHER ASSETS Deferred income tax asset (note 3) ........................................ 0 0 ---------- ---------- Total other assets ...................................................... 0 0 ---------- ---------- Total Assets ................................................................ $ 2,043 1,149 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Notes payable (notes 4, 6) ................................................ $ 50,215 58,676 Accrued interest ........................................................... 7,336 8,378 ---------- ---------- Total liabilities ....................................................... 57,551 67,054 ---------- ---------- STOCKHOLDERS' EQUITY Common stock, no par value, authorized 15,000,000 shares; 1,225,534 issued and outstanding. (note 5) ...................... 23,693 23,693 Preferred stock, Series A, no par value ($1 stated value); authorized 2,000,000 shares; 915,714 shares issued and outstanding. (note 4) ................................................... 915,714 915,714 Treasury stock (note 6) ................................................... (1,633) (1,633) Deficit accumulated during the development stage .......................... (993,282) (1,003,679) ---------- ---------- Total Stockholders' Equity .................................................. (55,508) (65,905) ---------- ---------- Total Liabilities and Stockholders' Equity .................................. $ 2,043 1,149 ========== ==========
The accompanying notes are an integral part of the financial statements. F-2 NATIONAL SPECIALTY NETWORKS, INC. (A Development Stage Enterprise) Statements of Operations (Unaudited)
Period from July 14, 1989 3 Months ended September 30, (Inception) to 1995 1996 Sept 30, 1996 REVENUE Expense re-imbursement $ 0 0 848 Interest 0 0 1,315 --------------- -------------- ----------------- Total revenue 0 0 2,163 --------------- -------------- ----------------- EXPENSES Human resources: NSN officers (note 5) 0 0 340,178 RMG employees 0 0 97,014 Others 0 0 40,550 Consultants: NSN officers 0 0 109,167 Others 0 0 19,638 Professional fees 0 0 66,690 Bad debt 0 0 454 Bank charges 18 0 71 Communications 0 0 17,485 Office rent and overhead 0 0 120,089 Office expenses 0 1,204 19,406 Public offering expense 0 7,950 10,135 Travel 0 0 133,952 Interest 832 1,043 24,752 Miscellaneous 0 200 6,261 --------------- -------------- ----------------- Total expenses 850 10,397 1,005,842 --------------- -------------- ----------------- Net loss before tax benefit (850) (10,397) (1,003,679) --------------- -------------- ----------------- Income tax benefit (note 3) 0 0 0 --------------- -------------- ----------------- Net loss $ (850) (10,397) (1,003,679) =============== ============== ================= Weighted average number of shares outstanding 1,225,534 1,225,534 1,225,534 =============== ============== ================= Net loss per share $ (0.01) (0.01) (0.82) =============== ============== =================
The accompanying notes are an integral part of the financial statements. F-3 NATIONAL SPECIALTY NETWORKS, INC. (A Development Stage Enterprise) Statements of Stockholder's Equity (Unaudited)
Total Common Preferred Treasury Accumulated Stockholders' Stock Stock Stock Deficit Equity BALANCE, June 30, 1996 $ 9,900 0 0 (920,511) (910,611) Net loss 0 0 0 (10,397) (10,397) -------------- ------------- ------------- ----------------- ------------------ BALANCE, Sept 30, 1996 $ 23,693 915,714 (1,633) (1,003,679) (65,905) ============== ============= ============= ================= ==================
The accompanying notes are an integral part of the financial statements. F-4 NATIONAL SPECIALTY NETWORKS, INC. (A Development Stage Enterprise) Statements of Cash Flows (Unaudited)
Period from July 14, 1989 3 Months ended September 30, (Inception) to 1995 1996 Sept 30, 1996 CASH FLOWS FROM DEVELOPMENT ACTIVITIES: Net loss ...................................................... $ (850) (10,397) (1,003,679 Adjustments to reconcile net loss to net cash used for development activities: Stock issued for services rendered ........................ 0 0 23,000 Increase in interest payable .............................. 832 1,043 8,379 (Increase) decrease in interest receivable ................ 0 0 0 ---------- ---------- ---------- Net cash used for development activities ...................... (18) (9,354) (972,300) ---------- ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Sale of fixed assets .......................................... 0 0 6,000 ---------- ---------- ---------- Net cash provided by investing activities ..................... 0 0 6,000 ---------- ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Common stock issued for cash .................................. 0 0 693 Notes payable under third-party development agreements (note 2) ..................................................... 0 0 899,315 Cash received for notes payable ............................... 0 8,460 71,188 Cash used to reduce notes payable ............................. 0 0 (3,747) ---------- ---------- ---------- Net cash provided by financing activities ..................... 0 8,460 967,449 ---------- ---------- ---------- (Decrease) increase in cash ................................... (18) (894) 1,149 ---------- ---------- ---------- CASH, beginning of period ..................................... 143 2,043 0 ---------- ---------- ---------- CASH, end of period ........................................... $ 125 1,149 1,149 ========== ========== ========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Interest paid in cash ......................................... $ 0 0 837 ========== ========== ========== Preferred stock issued for notes payable ...................... $ 0 0 915,714 ========== ========== ==========
The accompanying notes are an integral part of the financial statements. F-5 NATIONAL SPECIALTY NETWORKS, INC. (A Development Stage Enterprise) Notes to Financial Statements (Unaudited) (1) Summary of Significant Accounting Policies The Company. National Specialty Networks, Inc. is a California chartered development stage corporation which conducts business from its headquarters in Brea, California and was incorporated on July 14, 1989. The financial statements have been prepared in conformity with generally accepted accounting principles. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the dates of the statements of financial condition and revenues and expenses for the years then ended. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change in the near-term relate to the book-tax difference of accounting for the development expenses (see note 3 ). The financial statements for the three months ended September 30, 1995 and 1996 include all adjustments which in the opinion of management are necessary for fair presentation. The following summarize the more significant accounting and reporting policies and practices of the Company: a) Furniture and equipment Furniture and equipment was carried at cost during the development process. In March 1992 NSN sold all of its furniture and equipment. At that time the cost was removed from the accounts and the resulting loss reflected in the development expenses. The Company expects that future expenditures for furniture and equipment will be capitalized, and depreciated over the estimated useful life of the assets. Expenditures for maintenance and repairs will be charged to operations as incurred. b) Notes payable The Company issued notes payable to various parties pursuant to third-party development agreements (note 2). Interest on the notes was capitalized into the principal balance of the notes during the development process pursuant to the third-party development agreements. c) Net loss per share Net loss per share is computed by dividing the net loss by the number of shares outstanding during the period. (2) Development expenses The Company entered into third-party agreements with two companies and two individuals in January 1990 for the development of its Standard Treatment Protocols (STP) concept, the Specialty Preferred Provider Organization (SPPO) concept and the search for funding from independent third parties. The two contracted companies (whose principals are founders and stockholders of NSN) are independent health care consulting companies which are currently expected to remain in their primary businesses subsequent to the initial public offering. The principals of one of the companies, Ronning Management Group, Inc. (RMG), will be involved in the operations of NSN on a part-time basis. The principal of the other company, Medworth Futures, Inc., and the two individuals will be involved in the operations of NSN full-time upon funding of the company. Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards 2 (SFAS 2) requires that all internally generated development costs be charged to expense when incurred. SFAS 68 requires that a company which is obligated to repay another for development costs under a funding agreement must record a liability to the extent of its obligation and charge the costs to expense as incurred. Accordingly, NSN charged its development costs to expense as incurred, and recorded the liability incurred under the third- party agreements. 100% of the cumulative total development expenses relate to the development of the STP concept, the development of the SPPO concept and NSN's search for funding from independent third parties to allow NSN to begin marketing both the STP and SPPO concepts. F-6 NATIONAL SPECIALTY NETWORKS, INC. (A Development Stage Enterprise) Notes to Financial Statements (3) Income taxes The Company recorded the development costs as expenses in the period when incurred for financial statement purposes, per note 2 above. However, for state income tax purposes, the development costs were recorded as an intangible asset to be amortized over future years. The primary purpose for this treatment for tax purposes is to retain the tax benefit of the development costs. California tax law does not recognize operating loss carry-forwards as the Federal tax code does. Therefore, by capitalizing and amortizing these costs, the tax benefit of the development costs is retained for state tax purposes rather than being lost forever, (which immediate expensing would cause). This treatment will require a longer time before the tax benefit of the costs is realized, but will increase the tax benefit realized over time. California tax law was changed for tax years beginning after January 1, 1994. California tax law now recognizes net operating loss carryforwards on the same basis as the federal tax code. The amounts recorded as deferred income tax assets at September 30, 1995 and 1996, $295,354 and $301,104 respectively, represent the amount of tax benefit of loss carry-forwards. The Company has established a $301,104 valuation allowance against this asset, as currently it is not more likely than not to be realized through the generation of sufficient future taxable income within the carry-forward period. (4) Exchange of notes payable for preferred stock On September 30, 1992, the board of directors of the Company authorized the Company to issue 2,000,000 shares of no par value preferred stock. The Company then entered into an agreement with the parties holding the notes payable to exchange the balance of the notes for an equal amount of preferred stock of the Company. This issuance of preferred is referred to as Series A, carries a $1 per share stated value and a cumulative dividend rate of 6%, payable from earnings on or after January 1, 1995, to the extent cash is available and the board of directors declare such payment. The remaining balance of preferred shares are to remain unissued for possible future use. (5) Stockholders' equity The Company has authorized 1,666,666 shares of no par value common stock. In December 1990, the Company issued 11,000 shares to the founders in exchange for $198 in cash. In April 1991, the Company issued 27,500 shares to the founders in exchange for $495 in cash. In June 1991, the Company issued 511,500 shares to the founders in exchange for services valued at $9,207. These services were valued at 50% of current full-time employment consideration. On September 30, 1992, the board of directors authorized an increase of authorized shares from 100,000 shares to 1,666,666 by splitting the existing shares 1 share for 16.66666 shares. On October 2, 1992, the board of directors authorized the issuance of 533,333 additional shares of the Company's common stock to the founding shareholders in consideration of past services to the corporation with the same basis as their previously held shares, or 1.8 cents per share. On December 20, 1993, the board of directors and stockholders of the Company voted to increase the authorized number of shares of common stock of the Company to 2,000,000 shares. On December 31, 1993, the board of directors authorized the issuance of 130,000 additional shares of the Company's common stock to the founding shareholders in consideration of past services to the corporation with the same basis as their previously held shares, or 1.8 cents per share. In February 1994, the Company sold 102,939 shares of the Company's common stock for $1,853 in services rendered to the Company. These shares were valued by the board at 1.8 cents per share. On May 31, 1994, the board of directors and stockholders of the Company increased the authorized number of shares of the Company to 15,000,000 shares. (6) Repurchase of a founders stock for a note payable In August 1993, the Company entered into an agreement to repurchase all the common stock held by one of the founders pursuant to the Company's Founders Shareholder Agreement. The 90,738 shares were repurchased as treasury stock at a price of $0.018 per share, for a total of $1,633.28. The Company issued a note payable to the stockholder for this sum. This note carries a stated interest rate of 5.23%. F-7 NATIONAL SPECIALTY NETWORKS, INC. (A Development Stage Enterprise) Notes to Financial Statements (7) Common stock public offering The board of directors authorized the Company to sell up to 500,000 shares of the Company's common stock in a "self-underwritten" public offering pursuant to a Registration Statement on Form SB-2 under the Securities Act of 1933. This offering is being made with a 90,000 share minimum, and is effective for one year from the effective date of the registration, August 16, 1996. On December 31, 1993 the board of directors voted to increase the number of shares to be sold to the public from 500,000 to 675,000. On October 13, 1995, the Department of Corporations of the State of California issued an effective order for the sale of the Company's securities in the State of California. This order imposes certain financial qualifications on California resident purchasers of the Company's securities. (8) Completion of Concept Development The Company completed the development stages of the STP and SPPO concepts and RMG completed the beta site testing of the STP concept as of September 30, 1992. The Company is still classified as a development stage enterprise as it is still in the process of raising the funds to begin operations, and it has not yet begun its intended operations. The Company has entered into an agreement with Ronning Management Group, Inc. (RMG) whereby RMG has begun the marketing of STPs. RMG has entered into and completed several contracts for STP development for third parties. The major provisions of this agreement are: a) As soon as NSN receives at least the minimum proceeds under the common stock public offering (see note 7) RMG will transfer the STP technology (i.e., methodologies, processes, data base, charge cost model, etc.) and the rights to develop STPs to NSN. NSN expects to extend employment offers to those RMG staff members currently working on STPs. b) RMG will also assign any existing STP contracts in progress to NSN. Should any third party to an existing STP contract refuse to allow RMG to assign such contract to NSN, RMG will subcontract the completion of the contract to NSN, and remit 80% of the remaining contract revenue to NSN. c) NSN will pay RMG a marketing royalty of 20% of NSN's receipts on any STP contract assigned under b) above, as well as on the first 7 contracts NSN enters into. d) The three principals of RMG will become part-time consultants to NSN for a period of 5 years. RMG will bill NSN for the hours worked by these individuals for NSN at approximately 80% of RMG's normal billing rates. Annual billings by RMG to NSN for these services are limited to the lesser of $420,000 or 33% of NSN's STP contract revenues. e) RMG and its principals agree not to compete with NSN in the provision of consulting services to develop STPs for third parties. f) The Company and RMG have developed cross-referral fee schedules, as well as cross right of first refusal agreements pursuant to medical consulting services requested by third parties during other engagements. The minimum cross referral fees are set at 10% of revenues received by the other company. g) NSN expects to develop a sales commission schedule for employees as well as a separate schedule for third party brokers for the sale of STP contracts. RMG and its employees will be covered by the schedule developed for third party brokers. The Company has also entered into an agreement with Medworth Futures, Inc. which provides the following: F-8 NATIONAL SPECIALTY NETWORKS, INC. (A Development Stage Enterprise) Notes to Financial Statements (8) Completion of Concept Development, continued a) MFI and its principal agree not to compete with NSN in either the provision of specialty managed care or consulting services to develop STPs. b) NSN expects to develop a sales commission schedule for employees as well as a separate schedule for third party brokers for the sale of STP contracts. NSN and its employees will be covered by the schedule developed for third party brokers. (9) Related party transactions The Company currently occupies office space in MFI's offices on a rent-free basis. MFI allows this because the President and sole stockholder of MFI is a stockholder in the Company, and the Company's current principal activities at this stage are primarily related to its common stock public offering. F-9 Item 2. Management's Discussion and Analysis or Plan of Operation. After the completion of its Offering, management intends to begin hiring employees necessary to establish a STP consulting division, and to hire qualified personnel for marketing, provider development, accounting, and systems and administration. NSN does not currently employ any paid staff. In addition to the current non-paid employees receiving appropriate salaries once the Company is funded, management intends to initially hire approximately ten or fifteen new employees to fill the required positions. NSN has already developed systems for the operations of the Company, and after the closing of its Offering, NSN plans to promptly complete the final development of the financial systems and administrative procedures which will be needed to operate the Company on the scale envisioned. Management believes that should NSN realize at least the minimum proceeds from its Offering, the Company will not need to seek any further funding for the twelve-month period following the completion of its Offering. NSN believes that the Company will meet future financial requirements through revenue from operations. NSN does not anticipate the need for any immediate further research regarding of the basic STP program or SPPO networks. Management believes that the STP program is sufficiently developed to commence STP operations immediately without any further development. Once the Company is funded, one of its principal objectives is the development of its initial SPPO networks, which are not yet developed. NSN does not intend to purchase any operating facilities for at least twelve months after the completion of its Offering. NSN currently uses office space free of charge pursuant to an informal month-to-month lease arrangement with Medworth Futures, Inc., an affiliate of the Company. The Company intends to lease new, larger facilities once full operations have commenced. NSN also intends to purchase or lease a computer system and other office equipment should the Company receive the maximum proceeds from its Offering. Once the required personnel are hired and other initial objectives are attained, management intends to notify the California hospitals which previously responded to NSN's Request for Proposal program, and which indicated an interest in becoming Centers of Excellence, that NSN has completed its Offering and will be contacting them soon regarding the development of NSN's California SPPO network. NSN then intends to notify the HMOs, PPOs, insurance companies and large self-insured employers which have previously expressed an interest in the NSN model that NSN will contact them in the near future regarding possible participation in NSN's California SPPO network. NSN intends to concurrently contact similar West Michigan organizations regarding the future development of a West Michigan SPPO network. Management anticipates that the Company will then complete the selection process for the Centers of Excellence in California. Once Centers of Excellence have been contracted, NSN will begin STP development at those COE hospitals and will commence negotiations between COEs, payers and NSN to form the California SPPO network. NSN also anticipates beginning similar activities with respect to the establishment and development of the West Michigan SPPO network. Using a carefully designed and rigorous selection process, NSN intends to identify the highest quality hospital in each community for each of fifteen high-cost services experienced by employers and insurers, to designate each such hospital as a Center of Excellence (COE), and to require each COE to implement at least one STP in order to cut costs and avoid cost shifting. NSN will then contract with each hospital at rates lower than the hospital currently offers in conventional HMOs and PPOs, enabled by the hospital's improved profit margin afforded by its STP development and implementation. 11 Providers will pay a $120,000 fee for assistance in developing and implementing STPs for a major medical specialty (such as coronary bypass surgery) and a $1,500 monthly fee for ongoing network support. NSN will receive a one-time fee of $75,000 from payers (such as HMOs, PPOs, and large self-insured companies) for membership in, and the development of, each SPPO network, and the Company will also receive a monthly access fee calculated on either a per-employee-per-month basis or a twenty-five-percent-of-savings basis. For example, using the per-employee- per-month basis, at a per-employee cost of $2.20, a payer with 10,000 employees would pay NSN a total monthly access fee of $22,000. Management estimates that there are at least 15,000 companies and other payers which are suitable prospects for joining NSN's SPPOs in the next four years. This estimate is based on the number of employers with over 1,000 employees, as reported in Ward's Business Directory of U.S. Private and Public Companies 1993 and in the Statistical Abstract of the United States 1992. Management based these estimated fees on the actual experience of certain Officers of NSN with respect to SPPOs, and also from actual statistics and the results of the performance of contracted services by Ronning Management Group, Inc. (RMG), an affiliate of NSN, which will fully transfer its STP business to NSN once the Company commences operations. NSN's plan of operation for the next several years includes the development of SPPO networks for selected population centers throughout the United States for fifteen high-cost tertiary healthcare services, and to sell access to these SPPO networks to HMOs, PPOs and employer-sponsored managed care programs for integration with their existing networks. However, only four entities (and a benefits consulting company) have expressed any interest in membership in the Company's SPPO networks since the Company was found in 1989. One of the Company's priorities in the future will most certainly be its need to sell access to its SPPOs to payers. Management projects that NSN's potential for market acceptance and success will be based on the Company's ability to convince its target customers, employers who self insure or purchase healthcare benefits that are managed by HMOs or PPOs that : (1) the conventional HMO/PPO approach to encouraging all hospital networks to generalize and provide the full spectrum of services, including high-cost tertiary services, breeds wasteful duplication, mediocrity of performance in the services which are most difficult to perform, and minimal opportunity to generate constructive competition on a service-by-service basis; (2) its SPPOs, when integrated with conventional HMO/PPO networks, will reduce duplication and unnecessary capacity by using fewer hospitals to perform each specialty service; (3) its SPPOs will improve the quality of specialty care by selecting Centers of Excellence based on demonstrated excellence; (4) its SPPOs will improve specialty service cost performance beyond the reduction of duplication noted above through implementing STPs in each COE hospital; and (5) its SPPOs, when integrated with conventional HMO/PPO networks, will provide lower prices, less cost-shifting, and overall reduced healthcare costs. Management projects that the key capabilities NSN will need to develop and sell SPPOs are (1) an experienced managed care and provider relations staff; (2) an experienced managed care marketing/sales staff; (3) an efficacious process for selecting COEs which is respected by both employers and providers; (4) a process for developing STPS that is proven to reduce costs; (5) a means of providing assistance to employers, HMOs and PPOs in conveniently directing patients to COEs and in modifying their existing networks to accommodate SPPOs; (6) a means of providing assistance to COE hospitals in developing patient friendly administrative and clinical service so that patients learn to accept some travel inconvenience; (7) management information systems that enable the effective collection of payer and provider data and (8) the administrative support of staff in the field and in main office; and an effective management team. The following chart describes the extent to which the above listed capabilities have been developed as of the date of this report: 12
Capability Extent Developed Comments/Basis 1. Managed care and Partial. Remainder to be recruited CEO, Senior Vice President are provider relations staff after receipt of proceeds. experienced (see "Management"). 2. Managed care Need to be recruited. Will commence hiring upon receipt marketing/sales staff of proceeds. 3. COE selection process RFP document with selection RFP was generally well received criteria have been developed. by hospitals. Process will be Selection process initiated in continued upon receipt of proceeds. California and terminated (midway) in 1991 due to lack of funding. 4. STP process Fully developed and tested in 21 Initial cost reduction results hospital programs. indicate that STP are successful in reducing costs. 5. Assistance to employers Fully developed. Available for review upon request. 6. Assistance to providers Fully Developed Available for review upon request. 7. Information systems Not developed. Will be acquired after receipt of proceeds. 8. Management team Partially hired. Remainder to be recruited after receipt of proceeds.
PART II - Other Information Item 1. Legal Proceedings. The Company is not a party to any pending legal proceedings. Item 2. Changes in Securities None to report. Item 3. Defaults Upon Senior Securities None to report. Item 4. Submission of Matters to a Vote of Security Holders. The Company did not submit any matters to a vote of security holders during the first quarter. Item 5. Other Information None to report. Item 6. Exhibits and Reports on Form 8-K and 8-K/A. During the first quarter the Company did not file any reports on Form 8-K. 13 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. Date: November 14, 1996 NATIONAL SPECIALTY NETWORKS, INC. a California Corporation By: /s/ Ronald D. Osborne Ronald D. Osborne President, CEO and Chairman of the Board By: /s/ Douglas E. Wells Douglas E. Wells Senior Vice President and Chief Financial Officer 14 EX-27 2 FDS --
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE UNAUDITED FINANCIAL STATEMENTS OF NATIONAL SPECIALTY NETWORKS, INC. FOR SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000895521 National Specialty Networks, Inc. 1 U.S. Dollars 3-MOS JUN-30-1997 JUL-01-1996 SEP-30-1996 1 1,149 0 0 0 0 1,149 0 0 1,149 67,054 0 0 915,714 23,693 1,005,312 1,149 0 0 0 10,397 0 0 1,043 10,397 0 10,397 0 0 0 10,397 0.01 0.01
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