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EXCEL - IDEA: XBRL DOCUMENT - First Physicians Capital Group, Inc. | Financial_Report.xls |
EX-31.1 - EX-31.1 - First Physicians Capital Group, Inc. | d681198dex311.htm |
EX-31.2 - EX-31.2 - First Physicians Capital Group, Inc. | d681198dex312.htm |
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2011
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: 000-30326
FIRST PHYSICIANS CAPITAL GROUP, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE | 77-0557617 | |
(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) | |
433 North Camden Drive #810 Beverly Hills, California |
90210 | |
(Address of principal executive offices) | (Zip Code) |
(310) 860-2501
(Registrants Telephone Number, Including Area Code)
N/A
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes ¨ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer | ¨ | Accelerated filer | ¨ | |||
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes x No
Number of shares of common stock outstanding as of March 28, 2014 |
23,909,507 |
Table of Contents
EXPLANATORY NOTE
The last periodic report of First Physicians Capital Group, Inc. (the Registrant) filed with the Securities and Exchange Commission was the Form 10-Q for the Fiscal Quarter Ended December 31, 2010, filed February 22, 2011. In order to become current with all required quarterly and annual reports under the Section 13(a) of the Securities Exchange Act of 1934, the Registrant is filing this Form 10-Q for the Fiscal Quarter Ended June 30, 2011 concurrently with Form 10-Qs for the Fiscal Quarters Ended March 31, 2011, December 31, 2011, March 31, 2012, June 30, 2012, December 31, 2012, March 31, 2013, June 30, 2013 and December 31, 2013, and Form 10-Ks for the Fiscal Years Ended September 30, 2011, September 30, 2012 and September 30, 2013.
Page | ||||
1 | ||||
1 | ||||
1 | ||||
Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
16 | |||
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
20 | |||
21 | ||||
22 | ||||
22 | ||||
22 | ||||
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
22 | |||
22 | ||||
22 | ||||
22 | ||||
22 | ||||
23 | ||||
24 | ||||
Exhibit 31.1 |
i
Table of Contents
FIRST PHYSICIANS CAPITAL GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except shares and per share data)
June 30, 2011 |
September 30, 2010 |
|||||||
(Unaudited) | ||||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 743 | $ | 535 | ||||
Accounts receivable, net of allowance for uncollectible accounts |
1,630 | 38 | ||||||
Prepaid expenses |
225 | 47 | ||||||
Other current assets |
33 | 186 | ||||||
Assets of discontinued operations |
2,130 | 5,738 | ||||||
|
|
|
|
|||||
Total current assets |
4,761 | 6,544 | ||||||
Property and equipment, net |
37 | 58 | ||||||
Notes receivable |
24,493 | | ||||||
Other assets |
325 | 332 | ||||||
Non-current assets from discontinued operations |
1,534 | 18,796 | ||||||
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|
|
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Total assets |
$ | 31,150 | $ | 25,730 | ||||
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LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS DEFICIT |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 691 | $ | 418 | ||||
Accrued expenses |
1,876 | 1,150 | ||||||
Current maturities of long term debt |
2,972 | 1,022 | ||||||
Liabilities of discontinued operations |
1,396 | 7,671 | ||||||
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|
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Total current liabilities |
6,935 | 10,261 | ||||||
Long term debt, net of current portion |
7,982 | 9,391 | ||||||
Deferred gain |
18,100 | | ||||||
Non-current liabilities of discontinued operations |
871 | 10,056 | ||||||
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|
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Total liabilities |
33,888 | 29,708 | ||||||
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Commitments and contingencies |
||||||||
Non-redeemable preferred stock: |
||||||||
Preferred stock Series 1-A ($0.01 par value, 2,802,000 shares authorized; 67,600 shares issued and outstanding as of June 30, 2011 and September 30, 2010) |
166 | 166 | ||||||
Preferred stock Series 2-A ($0.01 par value, 1,672,328 shares authorized; 3,900 shares issued and outstanding as June 30, 2011 and September 30, 2010) |
25 | 25 | ||||||
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Total non-redeemable preferred stock |
191 | 191 | ||||||
Redeemable preferred stock: |
||||||||
Preferred stock Series 5-A ($0.01 par value, 5,000,000 shares authorized; 9,000 shares issued and outstanding as of June 30, 2011 and September 30, 2010) |
7,832 | 7,832 | ||||||
Preferred stock Series 6-A ($0.01 par value, 5,000 shares authorized; 4,875 shares issued and outstanding as of June 30, 2011 and September 30, 2010) |
4,381 | 4,381 | ||||||
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|
|
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Total redeemable preferred stock |
12,213 | 12,213 | ||||||
Stockholders deficit: |
||||||||
Common stock ($0.01 par value, 100,000,000 shares authorized; 15,049,507 shares issued and outstanding as of June 30, 2011 and September 30, 2010) |
153 | 153 | ||||||
Additional paid-in-capital |
79,945 | 79,235 | ||||||
Accumulated deficit |
(95,136 | ) | (95,666 | ) | ||||
Treasury stock, at cost (149,744 shares as of June 30, 2011 and September 30, 2010) |
(104 | ) | (104 | ) | ||||
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Total stockholders deficit: |
(15,142 | ) | (16,382 | ) | ||||
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Total liabilities, preferred stock and stockholders deficit |
$ | 31,150 | $ | 25,730 | ||||
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1
Table of Contents
FIRST PHYSICIANS CAPITAL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except share and per share data)
(Unaudited)
Three months ended | ||||||||
June 30, | June 30, | |||||||
2011 | 2010 | |||||||
Net revenue from services |
$ | 2,773 | $ | 280 | ||||
Cost and expenses: |
||||||||
Selling, general and administrative expenses |
3,114 | 1,768 | ||||||
Depreciation and amortization |
8 | 7 | ||||||
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|
|
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Total costs and expenses |
3,122 | 1,775 | ||||||
|
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|
|
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Operating loss |
(349 | ) | (1,495 | ) | ||||
Other income (expense): |
||||||||
Other income |
22 | 4 | ||||||
Interest expense |
(198 | ) | (152 | ) | ||||
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|
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Total other expense |
(176 | ) | (148 | ) | ||||
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Net loss from continuing operations |
$ | (525 | ) | $ | (1,643 | ) | ||
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|
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Net income (loss) from discontinued operations, net of income taxes (including net gain from disposal of assets of $3,791 and $0 in 2011 and 2010, respectively. See Note 2. Discontinued Operations) |
3,825 | (416 | ) | |||||
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Net income (loss) |
$ | 3,300 | (2,059 | ) | ||||
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Basic and diluted earnings (loss) per share of common stock: |
||||||||
Continuing operations |
$ | (0.03 | ) | $ | (0.11 | ) | ||
Discontinued operations |
0.25 | (0.03 | ) | |||||
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Total basic and diluted earnings (loss) per share of common stock |
$ | 0.22 | $ | (0.14 | ) | |||
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
Table of Contents
FIRST PHYSICIANS CAPITAL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except share and per share data)
(Unaudited)
Nine months ended | ||||||||
June 30, | June 30, | |||||||
2011 | 2010 | |||||||
Net revenue from services |
$ | 3,314 | $ | 801 | ||||
Cost and expenses: |
||||||||
Selling, general and administrative expenses |
5,696 | 5,445 | ||||||
Depreciation and amortization |
21 | 21 | ||||||
|
|
|
|
|||||
Total costs and expenses |
5,717 | 5,466 | ||||||
|
|
|
|
|||||
Operating loss |
(2,403 | ) | (4,665 | ) | ||||
Other income (expense): |
||||||||
Other income |
25 | 14 | ||||||
Interest expense |
(405 | ) | (953 | ) | ||||
|
|
|
|
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Total other expense |
(380 | ) | (939 | ) | ||||
Net loss from continuing operations before taxation and non-cash beneficial conversion feature |
(2,783 | ) | (5,604 | ) | ||||
Non-cash beneficial conversion feature preferred dividend |
| (48 | ) | |||||
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Net loss from continuing operations |
$ | (2,783 | ) | $ | (5,652 | ) | ||
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Net income (loss) from discontinued operations, net of income taxes (including net gain from disposal of assets of $3,672 and $0 in 2011 and 2010, respectively. See Note 2. Discontinued Operations) |
3,313 | (1,265 | ) | |||||
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Net income (loss) |
$ | 530 | $ | (6,917 | ) | |||
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Basic and diluted earnings (loss) per share of common stock: |
||||||||
Continuing operations |
$ | (0.18 | ) | $ | (0.38 | ) | ||
Discontinued operations |
0.22 | (0.09 | ) | |||||
|
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Total basic and diluted earnings (loss) per share of common stock |
$ | 0.04 | $ | (0.47 | ) | |||
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
Table of Contents
FIRST PHYSICIANS CAPITAL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Nine months ended | ||||||||
June 30, | June 30, | |||||||
2011 | 2010 | |||||||
Cash flows from operating activities: |
||||||||
Net income (loss) |
$ | 530 | $ | (6,917 | ) | |||
Net income (loss) from discontinued operations |
3,313 | (1,265 | ) | |||||
|
|
|
|
|||||
Net loss from continuing operations |
(2,783 | ) | (5,652 | ) | ||||
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
Depreciation and amortization |
21 | 21 | ||||||
Bad debt provision |
1,766 | 4 | ||||||
Amortization of stock-based compensation |
710 | 795 | ||||||
Amortization of debt discount |
| 522 | ||||||
Changes in working capital components: |
||||||||
Accounts receivable |
(3,358 | ) | | |||||
Prepaid expenses |
(178 | ) | | |||||
Other assets |
160 | (867 | ) | |||||
Accounts payable |
273 | 1,109 | ||||||
Accrued expenses |
726 | (1,248 | ) | |||||
|
|
|
|
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Net cash used in operating activities |
(2,663 | ) | (5,316 | ) | ||||
Net cash provided by discontinued operations operating activities |
2,289 | 2,434 | ||||||
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|
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Net cash used in operating activities |
(374 | ) | (2,882 | ) | ||||
Cash flows from investing activities: |
||||||||
Decrease in restricted cash |
| 1,523 | ||||||
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|
|
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Net cash provided by investing activities |
| 1,523 | ||||||
Net cash provided by (used in) discontinued operations investing activities |
525 | (108 | ) | |||||
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|
|
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Net cash provided by investing activities |
525 | 1,415 | ||||||
Cash flows from financing activities: |
||||||||
Proceeds from long term debt |
730 | | ||||||
Payments on long term debt |
(189 | ) | (87 | ) | ||||
Issuance of common stock |
| 100 | ||||||
Purchase of treasury stock |
| (25 | ) | |||||
Proceeds from exercise of stock warrants |
| 503 | ||||||
Issuance of preferred stock Series 5-A, net of costs |
| 13 | ||||||
Issuance of preferred stock Series 6-A, net of costs |
| 43 | ||||||
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|
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Net cash provided by financing activities |
541 | 547 | ||||||
Net cash provided by (used in) discontinued operations financing activities |
(484 | ) | 374 | |||||
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Net cash provided by financing activities |
57 | 921 | ||||||
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Net increase (decrease) in cash and cash equivalents |
208 | (546 | ) | |||||
Cash and cash equivalents at beginning of year |
535 | 1,192 | ||||||
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Cash and cash equivalents at end of quarter |
$ | 743 | $ | 646 | ||||
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Supplemental cash flow information: |
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Cash paid for interest |
$ | 492 | $ | 474 | ||||
Cash paid for taxes |
| | ||||||
Non-cash transactions: |
||||||||
Notes receivable from sale of assets |
$ | 14,150 | | |||||
Notes receivable from sale leaseback |
$ | 10,343 | | |||||
Assumption of mortgage on sale leaseback |
$ | 6,625 | | |||||
Assumption of capitalized loan cost on sale leaseback |
$ | 282 | | |||||
Warrants issued in conjunction bridge financing |
$ | | 291 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
Table of Contents
FIRST PHYSICIANS CAPITAL GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of First Physicians Capital Group, Inc., f/k/a Tri-Isthmus Group, Inc., a Delaware corporation (the Company, we, us, or our, depending on the context), as of June 30, 2011 and September 30, 2010 and for the three-month and nine-month periods ended June 30, 2011 and June 30, 2010, have been prepared on substantially the same basis as our annual consolidated financial statements and should be read in conjunction with our Annual Report on Form 10-K (the Form 10-K), filed with the United States Securities and Exchange Commission (the SEC) on February 14, 2011, and any amendments thereto, for the Fiscal Year Ended September 30, 2010 (the Fiscal Year Ended September 30, 2010). In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments of a normal recurring nature considered necessary to present fairly the financial information included herein.
The consolidated financial statements include our accounts and the accounts of our subsidiaries. All significant inter-company balances and transactions have been eliminated.
The results as of September 30, 2010 have been derived from our audited consolidated financial statements for the fiscal year ended as of such date.
The unaudited consolidated results for interim periods are not necessarily indicative of expected results for the full fiscal year.
Future Funding
We have sustained operating losses since inception and had an accumulated deficit of approximately $95.1 million as of June 30, 2011. This deficit has been funded primarily through preferred stock and common stock, promissory notes and cash generated from operations.
At June 30, 2011, we had current liabilities of $6.9 million and current assets of $4.8 million.
Reclassifications
Certain reclassifications have been made to the prior period amounts in order to conform to the current period presentation.
Critical Accounting Policies
For critical accounting policies affecting us, see Item 7, Managements Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the Fiscal Year Ended September 30, 2010. Critical accounting policies affecting us have not changed materially since September 30, 2010.
Fair Value of Financial Instruments
Carrying amounts of certain of our financial instruments, including cash equivalents, accounts receivable and accounts payable approximate fair value due to their short maturities. Carrying value of notes payable and long-term debt approximate fair values as they bear market rates of interest. None of our financial instruments are held for trading purposes.
5
Table of Contents
FIRST PHYSICIANS CAPITAL GROUP, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Revenue Recognition
The Company has contracted billing rates for its management services which it bills as gross revenue as services are delivered. Gross billed revenues are then reduced by the Companys estimate of allowances based on estimated collections, which includes the provision for doubtful accounts, to arrive at net revenues. Net revenues may not represent amounts ultimately collected. The Company adjusts current period revenue for differences in estimated revenue recorded in prior periods and actual cash collections.
The following table shows gross revenues and allowances for the three and nine months ended June 30, 2011 and 2010 (in thousands):
Three months ended | Nine months ended | |||||||||||||||
June 30, | June 30, | June 30, | June 30, | |||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenue from services |
$ | 4,532 | $ | 280 | $ | 5,080 | $ | 805 | ||||||||
Allowances |
(1,759 | ) | | (1,766 | ) | (4 | ) | |||||||||
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Net revenue |
$ | 2,773 | $ | 280 | $ | 3,314 | $ | 801 | ||||||||
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Allowances percentage |
39 | % | 0 | % | 35 | % | 0 | % | ||||||||
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The Company computes its estimate of bad debt by taking into account collections received for the services performed and also estimating amounts collectible for the services performed within the last twelve months.
2. Discontinued Operations
On January 10, 2011, RHA Tishomingo, LLC, an indirect subsidiary of ours, entered into an asset purchase agreement to sell the hospital operations of Johnson Memorial Hospital in Tishomingo, Oklahoma to Mercy Tishomingo Hospital Corporation. Also on January 10, 2011, we entered into an agreement for purchase and sale of real property to sell the real estate and equipment of Johnson Memorial Hospital to RSE Enterprises, Inc., (together with the sale to Mercy Tishomingo Hospital Corporation, the Tishomingo Transaction).
As part of the Tishomingo Transaction, the $1.13 million in USDA mortgage debt related to the facility was retired. The gross proceeds in the transaction were $1,687,000, consisting of $1,630,000 purchase price, $500,000 in cash and an additional $57,000 for medical supplies.
On January 31, 2011, RHA, and our wholly-owned subsidiaries, sold its owned hospital buildings and land in Stroud and Anadarko, Oklahoma to First Physicians Realty Group, a wholly owned direct subsidiary, for $10,324,000. As payment for the purchase, First Physicians Realty Group assumed the existing first mortgage debt of $6,625,000 and executed $3,699,000 of promissory notes payable to RHA.
Simultaneously with the sale of the land and buildings, RHA and its wholly-owned subsidiaries executed a twenty (20) year lease for the hospital facilities. The leases have been accounted by First Physicians Realty Group as direct financing leases and reflected as notes receivable in the accompanying Consolidated Balance Sheet subsequent to the April 1, 2011 sale of the owned hospitals.
On May 4, 2011 RHA entered into that certain Stock Purchase Agreement, dated May 4, 2011 (the Cura SPA), by and between RHA and with One Cura Wellness Inc. (One Cura) for the sale of RHA Anadarko, LLC, and RHA Stroud, LLC to One Cura (the Cura Transaction). Upon closing, RHA received two notes totaling $12,000,000 as consideration for the purchase. The notes have a term of ten (10) years and bear interest at a rate of 10%.
In conjunction with the Cura SPA, First Physicians Business Solutions, LLC (FPBS) a wholly owned direct subsidiary of the Company entered into management services agreements with RHA Anadarko and RHA Stroud to provide management services for an initial period of six and one half (6.5) years. Further, First Physicians Resources, LLC (FPR) a wholly owned direct subsidiary of the registrant entered into staff leasing agreements to provide staffing to RHA Anadarko and RHA Stroud for an initial term of one (1) year. Finally, First Physicians Realty Group, LLC (FPRG) a wholly owned direct subsidiary of the registrant entered into an Amended and Restated lease with RHA Anadarko and RHA Stroud to continue the lease of real property associated with the hospitals owned by RHA Anadarko and RHA Stroud.
6
Table of Contents
FIRST PHYSICIANS CAPITAL GROUP, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
On July 13, 2011, Rural Hospital Acquisition, LLC (RHA) entered into a Stock Purchase Agreement, dated July 13, 2011 (the SPMC SPA), by and between RHA and Southern Plains Associates II, LLC (SPA II), and that certain Asset Purchase Agreement, dated July 13, 2011 (the SPMC APA), by and between RHA and SPA II, for the sale of (i) SPMC and (ii) the medical records associated with SPMC, respectively. As consideration for the sale, RHA received two notes totaling $2,150,000. The notes have a term of ten (10) years and bear interest at a rate of 5%. In addition, SPA II delivered to RHA a buyers Members guarantee and a company guarantee.
In conjunction with the stock sale/purchase agreement, SPA and Capital Investors of Oklahoma, LLC entered into a Real Estate Purchase Agreement with the SPMC buyer for the purchase/sale of the SPMC real estate. As consideration for the purchase/sale of the SPMC real estate the buyer assumed the existing mortgage on the property and caused the lender to release all guarantees of the mortgage by us. At closing the mortgage had a remaining principal balance of $4,560,982. The SPMC buyer also assumed four equipment loans from the company with a remaining principal balance of $121,471 and bearing interest rates of 6.75%.
Following the SPMC real estate sale, all assets of SPA were liquidated and SPA immediately ceased operations.
On September 15, 2011, First Physicians Capital Group, Inc. (FPCG), entered into a Stock Purchase Agreement, dated September 15, 2011 (the DEL MAR SPA) by and between Del Mar Gen Par, Inc. (DGP), Del Mar Acquisition, Inc. (DMA, and together with FPCG and DGP, the Seller), and Surgical Center Management, Inc. (the Management Company), IHM Del Mar, LLC (IHM), and several individuals (together with IHM, each a Purchaser and collectively the Purchasers) for the sale of Outpatient Surgery of Del Mar, L.L.C. (DEL MAR). Prior to the sale, FPCG held 53.54% of the member units of DEL MAR. As consideration for the sale, FPCG received two payments, consisting of $250,000, paid prior to closing as an initial deposit, and $500,000 paid at closing, for total consideration of $750,000. An additional earnout payment of $243,735, payable upon meeting certain milestone was not received.
As of June 30, 2011 the operating assets of RHA Tishomingo, RHA Anadarko, RHA Stroud, SPMC, Del Mar, Point Loma, and SPA, have been recorded as assets held for sale and the liabilities as liabilities of operations held for sale. We have reclassified the results of operations of RHA Tishomingo, LLC, RHA Anadarko, RHA Stroud, SPMC, Del Mar, Point Loma, and SPA for all periods presented, to discontinued operations.
The results of discontinued operations for the three and nine months ended June 30, 2011 and 2010 are as follows (in thousands):
Three Months ended | Nine Months ended | |||||||||||||||
June 30, | June 30, | June 30, | June 30, | |||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net revenue from services |
$ | 3,243 | $ | 8,412 | $ | 16,717 | $ | 25,119 | ||||||||
Costs and expenses: |
||||||||||||||||
Selling, general and administrative expenses |
2,858 | 8,015 | 15,343 | 24,442 | ||||||||||||
Depreciation and amortization |
166 | 346 | 813 | 1,002 | ||||||||||||
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Total costs and expenses |
3,024 | 8,361 | 16,156 | 25,444 | ||||||||||||
Operating income (loss) |
219 | 51 | 561 | (325 | ) | |||||||||||
Other income (expense): |
||||||||||||||||
Other income |
(6 | ) | 18 | 12 | 462 | |||||||||||
Interest expense |
(116 | ) | (227 | ) | (608 | ) | (648 | ) | ||||||||
Non-controlling interests |
(63 | ) | (258 | ) | (324 | ) | (754 | ) | ||||||||
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Income (loss) before income taxes |
34 | (416 | ) | (359 | ) | (1,265 | ) | |||||||||
Taxation |
| | | | ||||||||||||
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Total income (loss) from discontinued operations |
$ | 34 | $ | (416 | ) | $ | (359 | ) | $ | (1,265 | ) | |||||
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7
Table of Contents
FIRST PHYSICIANS CAPITAL GROUP, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
3. Net Income (Loss) Per Share
Three months ended | Nine months ended | |||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
June 30, | June 30, | June 30, | June 30, | |||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Numerator for basic and diluted income/(loss) per share: |
||||||||||||||||
Net loss attributable to continuing operations |
$ | (525 | ) | $ | (1,643 | ) | $ | (2,783 | ) | $ | (5,652 | ) | ||||
Net income (loss) attributable to discontinued operations |
3,825 | (416 | ) | 3,313 | (1,265 | ) | ||||||||||
Denominator for basic and diluted income (loss) per share weighted average shares |
15,049,507 | 15,046,375 | 15,049,507 | 14,741,694 | ||||||||||||
Basic and diluted earnings (loss) per share of common stock: |
||||||||||||||||
Continuing operations |
$ | (0.03 | ) | $ | (0.11 | ) | $ | (0.19 | ) | $ | (0.38 | ) | ||||
Discontinued operations |
0.25 | (0.03 | ) | 0.23 | (0.09 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total basic and diluted earnings income (loss) per share of common stock |
$ | 0.22 | $ | (0.14 | ) | $ | 0.04 | $ | (0.47 | ) | ||||||
|
|
|
|
|
|
|
|
For the three and nine month periods ended June 30, 2011 and 2010, stock options outstanding to purchase 7,260,000 and 8,513,795 common shares respectively and warrants outstanding to purchase 4,731,513 and 8,016,213 common shares respectively, had strike prices above market value and are considered out-of-the-money, and were therefore excluded from the computation of diluted net gain (loss) per share.
For the three and nine month periods ended June 30, 2011 and 2010, the following potential common shares outstanding were excluded from the computation of diluted net loss per share as their effect is anti-dilutive; 67,600 Series 1-A Convertible Preferred Stock convertible into 33,493 common shares, 3,900 Series 2-A Convertible Preferred Stock convertible into 1,872 common shares, 9,000 Series 5-A Convertible Preferred Stock convertible into 28,800,000 common shares and 4,875 Series 6-A Convertible Preferred Stock convertible into 15,600,000 common shares.
4. Accounts Receivable
Accounts receivable consisted of the following (in thousands):
June 30, | September 30, | |||||||
2011 | 2010 | |||||||
Gross accounts receivable |
$ | 3,818 | $ | 474 | ||||
Reserves for bad debt |
(2,188 | ) | (422 | ) | ||||
Reserves for contractual allowances |
| (14 | ) | |||||
|
|
|
|
|||||
Patient accounts receivable, net |
$ | 1,630 | $ | 38 | ||||
|
|
|
|
5. Other Current Assets
Other current assets consisted of the following (in thousands):
June 30, | September 30, | |||||||
2011 | 2010 | |||||||
Other current assets: |
||||||||
Deposits |
$ | 4 | $ | 4 | ||||
Other receivables |
29 | 182 | ||||||
|
|
|
|
|||||
Total other assets |
$ | 33 | $ | 186 | ||||
|
|
|
|
8
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FIRST PHYSICIANS CAPITAL GROUP, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
6. Property and Equipment
Property and equipment consisted of the following (in thousands):
June 30, | September 30, | |||||||
2011 | 2010 | |||||||
Property and equipment: |
||||||||
Furniture, fixtures and medical equipment |
$ | 130 | $ | 130 | ||||
Accumulated depreciation |
(93 | ) | (72 | ) | ||||
|
|
|
|
|||||
Property and equipment, net |
$ | 37 | $ | 58 |
7. Bridge Financing and Unregistered Sales of Equity Securities
During the Fiscal Year Ended September 30, 2009, we entered into a bridge financing transaction (the Bridge Financing) which was consummated in three separate closings. On February 11, 2009, we completed the first closing of the Bridge Financing, a transaction in which we entered into the following two promissory notes, each dated as of February 6, 2009: (i) a convertible promissory note with SMP Investments, LLC, a Michigan limited liability company (SMP), in the principal amount of $500,000 and (ii) a convertible promissory note with Anthony J. Ciabattoni, Trustee of the Ciabattoni Living Trust, dated August 17, 2000 (Ciabattoni), in the principal amount of $1,000,000 (collectively, the Bridge Notes). SMP and Ciabattoni are each a Bridge Lender and are collectively referred to herein as the Bridge Lenders.
On February 11, 2009, in addition to the issuance of the Bridge Notes, we issued four warrants to purchase Common Stock to the Bridge Lenders as follows: (i) a warrant issued to SMP for the purchase of up to 375,000 shares of Common Stock at an initial exercise price of $0.50 per share and exercisable for a period of three years from the date of issuance; (ii) a warrant issued to SMP for the purchase of up to 250,000 shares of Common Stock at an initial exercise price of $0.75 per share and exercisable for a period of three years from the date of issuance; (iii) a warrant issued to Ciabattoni for the purchase of up to 750,000 shares of Common Stock at an initial exercise price of $0.50 per share and exercisable for a period of three years from the date of issuance and (iv) a warrant issued to Ciabattoni for the purchase of up to 500,000 shares of Common Stock at an initial exercise price of $0.75 per share and exercisable for a period of three years from the date of issuance. These warrants were allowed to expire, unexercised.
Each Bridge Note originally became due and payable on November 6, 2009. We extended these notes under the terms of an extension option contained in the Bridge Notes. Pursuant to the terms of the extension option, we were required to issue warrants to the Bridge Lenders to purchase shares of Common Stock in the following amounts: (i) to SMP, 125,000 shares at a price of $0.50 per share, and 83,333 shares at a price of $0.75 per share and (ii) to Ciabattoni, 250,000 shares at a price of $0.50 per share, and 166,667 shares at a price of $0.75 per share. All of the warrants issued were exercisable for a period of twenty-six months from the date of issuance, and were allowed to expire unexercised. The new due date of the Bridge Notes pursuant to the extension option was February 6, 2010. We were to repay the unpaid principal of each Bridge Note on this date, together with accrued and unpaid interest of 16%.
The Bridge Lenders initially agreed to extensions as follows: the maturity date of the promissory note held by SMP, in the principal amount of $500,000, is extended to August 6, 2011; the maturity date of the promissory note held by Ciabattoni, in the principal amount of $1,000,000, is extended to February 6, 2013. Effective February 1, 2010, the interest rate was changed from 16% to 10% per annum for the Bridge Notes. As further discussed in Note 12 of the financial statements in this Form 10-Q, Subsequent Events, each Bridge Lender agreed to extend the maturity date(s) of their respective Notes with the same terms and conditions contained in the originally executed Bridge Notes and related extensions until June 2014.
The Bridge Notes include a conversion feature allowing each Bridge Lender to convert all or any portion of the entire unpaid principal and any unpaid accrued interest at the date upon which the conversion is to be effected into a number of shares of Common Stock, determined by dividing the sum of the unpaid principal and unpaid accrued interest at the conversion date by the conversion price in effect at the conversion date. The initial conversion price is $0.625, which price is adjustable as set forth in the Notes.
9
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FIRST PHYSICIANS CAPITAL GROUP, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
On March 3, 2009, we completed the second closing of the Bridge Financing, a transaction in which we entered into nine (9) promissory notes, each dated as of March 3, 2009, in the aggregate principal amount of $500,000 (the Second Bridge Notes), with various investors (the Second Bridge Lenders). Subsequent to this second closing, Anthony J. Ciabattoni, holder of the $1,000,000 Bridge note from the first round of Bridge Financing, assumed three of the Second Bridge Notes, for a total of $100,000.
Each Second Bridge Note originally became due and payable on December 3, 2009, unless the maturity date is extended pursuant to the terms of an extension option. The Second Bridge Notes included a conversion feature allowing each Second Bridge Lender to convert all or any portion of the entire unpaid principal and any unpaid accrued interest at the date upon which the conversion is to be effected into a number of shares of Common Stock, determined by dividing the sum of the unpaid principal and unpaid accrued interest at the conversion date by the conversion price in effect at the conversion date. The initial conversion price is $0.625, which price is adjustable as set forth in the Second Bridge Notes.
We extended the Second Bridge Notes for an additional three months under the terms of the extension option contained in the Second Bridge Notes. Upon exercising this option, we were required to issue warrants to the Second Bridge Lenders to purchase an aggregate of 208,333 shares of our Common Stock, 125,000 shares of which will be issued at an exercise price of $0.50 per share and 83,333 shares of which will be issued at an exercise price of $0.75 per share. These warrants were allowed to expire, unexercised. The new due date for the Second Bridge Notes pursuant to the extension option was March 3, 2010. The Second Bridge Lenders agreed to an additional extension period for the Second Bridge Notes ranging from eighteen to thirty-six months from the March 3, 2010 due date and also agreed to a reduction in the annual interest rate from 16% to 10%. As further discussed in Note 12 of the financial statements in this Form 10-Q, Subsequent Events, each of the Second Bridge Lenders agreed to extend the maturity date(s) of their respective Notes with the same terms and conditions contained in the originally executed Notes and related extensions until June of 2014.
On April 14, 2009, we completed the third closing of the Bridge Financing, a transaction in which we entered into the following three (3) promissory notes: (i) a convertible promissory note, dated as of March 31, 2009, with Frank Darras, Trustee of the Darras Family Trust (Darras), in the principal amount of $100,000 (the Darras Note); (ii) a convertible promissory note, dated as of March 31, 2009, with SFV, Inc., a California corporation (SFV), in the principal amount of $50,000 (the SFV Note) and (iii) a convertible promissory note, dated as of April 14, 2009, with NFS LLC/FMTC Rol IRA FBO Neal Katz (Katz), in the principal amount of $50,000 (the Katz Note) (each, a Third Bridge Note and collectively, the Third Bridge Notes). Darras, SFV and Katz are each a Third Bridge Lender and are collectively referred to herein as the Third Bridge Lenders. Of the total Bridge Financing, $1,600,000 was considered a related party transaction.
The Darras Note and the SFV Note originally became due and payable on December 31, 2009 and the Katz Note originally became due and payable on January 14, 2010. The terms of each of the Third Bridge Notes contained an extension option to extend such notes for an additional three months at our discretion. We extended the Darras Note and the SFV Note under the terms of the respective options, and therefore were obligated to issue warrants to Darras and SFV as follows: (i) Darras 25,000 shares at an exercise price of $0.50 per share, and 16,667 shares at an exercise price of $0.75 per share; (ii) SFV 12,500 shares at an exercise price of $0.50 per share, and 8,333 shares at an exercise price of $0.75 per share. We extended the Katz Note under the terms of an extension option contained in the Katz Note. By exercising this option, we were required to issue warrants to Katz to purchase an aggregate of 20,833 shares, 12,500 shares of which will be issued at an exercise price of $0.50 per share and 8,333 shares of which will be issued at an exercise price of $0.75 per share. All of the Third Bridge Note extension warrants were allowed to expire, unexercised.
The new due dates for the Third Bridge Notes, pursuant to the extension option, was March 31, 2010 for each of the Darras Note and the SFV Note and April 14, 2010 for the Katz Note. The Third Bridge Lenders agreed to an additional extension period for the notes ranging from eighteen to thirty-six months from the March 31, 2010 and April 14, 2010 due dates and also agreed to a reduction in the annual interest rate from 16% to 10%. As further discussed in Note 12. of the accompanying financial statements in this Form 10-Q, Subsequent Events, each Third Bridge Lender agreed to extend the maturity date(s) of their respective Notes with the same terms and conditions contained in the originally executed Notes and related extensions until June of 2014.
10
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FIRST PHYSICIANS CAPITAL GROUP, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The Third Bridge Notes include a conversion feature allowing each Third Bridge Lender to convert all or any portion of the entire unpaid principal and any unpaid accrued interest at the date upon which the conversion is to be effected into a number of shares of Common Stock, determined by dividing the sum of the unpaid principal and unpaid accrued interest at the conversion date by the conversion price in effect at the conversion date. The initial conversion price is $0.625, which price is adjustable as set forth in the Third Bridge Notes.
The fair value of the warrants issued in conjunction with the convertible notes issued under the Bridge Financing amounted to $932,000, and the fair value of the warrants issued in conjunction with the extension of the Bridge Notes, the Second Bridge Notes, the Darras Note, the SFV Note and the Katz Note amounted to $291,000. The beneficial conversion feature associated with the convertible notes issued in conjunction with the Bridge Financing totaled $253,000. Both the fair value of the warrants issued under the Bridge Financing and the subsequent extension of the Bridge Notes, the Second Bridge Notes the Darras Note, the SFV Note and the Katz Note, as well as the beneficial conversion feature, will be amortized over the term of the loans. Amortization for the nine months ended June 30, 2011 and 2010 amounted to $0 and $522,000, respectively.
All of the promissory notes under the Bridge Financing include a provision granting the lenders, to the extent that the lenders holding notes representing a majority of the aggregate outstanding principal amount of the notes agree, demand registration rights with respect to the resale of the shares of Common Stock that would be issuable upon conversion of the notes, which rights vest thirty six (36) months after the date of issuance of the Bridge Financing notes. The registration statement would be prepared by us at our expense and filed on Form S-1 or other appropriate form and, once declared effective, allow the registered securities to be sold on a continuous basis and we will keep the registration statement continuously effective until certain conditions are met which would allow us to stop maintaining its effectiveness.
During the Fiscal Year Ended September 30, 2012, $750,000 of the Bridge Financing was repaid. Of the $750,000 paid, $75,000 and $175,000 was paid to SMP Investments I, LLC, and Anthony J. Ciabattoni respectively, both of which are considered related party transactions. As of June 30, 2011, $2,200,000 of the 2009 Bridge Financing remains outstanding.
8. Long-term Debt
Long-term debt consists of the following (in thousands):
June 30, 2011 | September 30, 2010 | |||||||
Note payable secured by real estate, $27,513 payable monthly, including interest based on Wall Street Journal prime plus 2% adjusted quarterly, floor of 7%, rate is currently 7%, matures November 2028 |
$ | 3,301 | $ | 3,365 | ||||
Note payable secured by real estate, $34,144 payable monthly, including interest based on Wall Street Journal prime plus 2% adjusted quarterly, floor of 7%, rate is currently 7%, matures November 2028 |
3,227 | 3,348 | ||||||
Note payable, 5% interest payable quarterly, matures on or before December 11, 2011 |
1,500 | 1,500 | ||||||
Bridge notes payable, 10% interest, matures on or before June 2014 |
2,200 | 2,200 | ||||||
Note payable, 9% interest per annum and matures in February 2016 |
346 | | ||||||
Revolving line of credit, 5% interest per annum |
380 | | ||||||
|
|
|
|
|||||
Total |
10,954 | 10,413 | ||||||
|
|
|
|
|||||
Less current maturities of long term debt |
(2,972 | ) | (1,022 | ) | ||||
|
|
|
|
|||||
Total long term debt |
$ | 7,982 | $ | 9,391 | ||||
|
|
|
|
11
Table of Contents
FIRST PHYSICIANS CAPITAL GROUP, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The following chart shows scheduled principal payments due as of June 30, 2011, on long-term debt for the next five years and thereafter (in thousands):
June 30, 2011 |
Payments | |||
FY 2012 |
$ | 2,972 | ||
FY 2013 |
1,820 | |||
FY 2014 |
400 | |||
FY 2015 |
432 | |||
FY 2016 |
458 | |||
Thereafter |
4,872 | |||
|
|
|||
Total |
$ | 10,954 | ||
|
|
9. Warrants
Outstanding exercisable warrants consisted of the following as of June 30, 2011:
Remaining | Exercise | |||||||||||
Description |
Life | Price | Warrants | |||||||||
July 16, 2007 Preferred Stock Series 5-A warrants issued to investor |
12 months | $ | 0.45 | 50,000 | ||||||||
September 30, 2008 Preferred Stock Series 5-A warrants issued to placement agent |
1.8 years | 0.5 | 436,250 | |||||||||
February 6, 2009 warrants issued in connection with notes payable |
7 months | 0.5 | 1,125,000 | |||||||||
February 6, 2009 warrants issued in connection with notes payable |
7 months | 0.75 | 750,000 | |||||||||
March 3, 2009 warrants issued in connection with notes payable |
8 months | 0.5 | 375,000 | |||||||||
March 16, 2009 warrants issued issued to Medical Advisory Board |
9 months | 0.625 | 125,000 | |||||||||
March 3, 2009 warrants issued in connection with notes payable |
8 months | 0.75 | 250,000 | |||||||||
March 31, 2009 warrants issued in connection with notes payable |
9 months | 0.5 | 112,500 | |||||||||
March 31, 2009 warrants issued in connection with notes payable |
9 months | 0.75 | 75,000 | |||||||||
April 14, 2009 warrants issued in connection with notes payable |
9 months | 0.5 | 37,500 | |||||||||
April 14, 2009 warrants issued in connection with notes payable |
9 months | 0.75 | 25,000 | |||||||||
June 10, 2009 warrants issued to Medical Advisory Board |
2.7 years | 0.5 | 210,000 | |||||||||
June 10, 2009 warrants issued to Medical Advisory Board |
2.7 years | 0.63 | 150,000 | |||||||||
October 19, 2009 Preferred Stock Series 5-A warrants issued to investor |
4 months | 0.5 | 25,800 | |||||||||
October 19, 2009 Preferred Stock Series 6-A warrants issued to investor |
4 months | 0.5 | 4,200 | |||||||||
November 6, 2009 warrants issued in connection with notes payable |
7 months | 0.5 | 375,000 | |||||||||
November 6, 2009 warrants issued in connection with notes payable |
7 months | 0.75 | 250,000 | |||||||||
December 3, 2009 warrants issued in connection with notes payable |
8 months | 0.5 | 125,000 | |||||||||
December 3, 2009 warrants issued in connection with notes payable |
8 months | 0.75 | 83,331 | |||||||||
December 2, 2009 warrants issued in connection with issuance of common stock |
8 months | 0.5 | 60,000 | |||||||||
December 14, 2009 Preferred Stock Series 6-A warrants issued to investor |
6 months | 0.5 | 3,600 | |||||||||
December 31, 2009 warrants issued in connection with notes payable |
9 months | 0.5 | 37,500 | |||||||||
December 31, 2009 warrants issued in connection with notes payable |
9 months | 0.75 | 24,999 | |||||||||
January 14, 2010 warrants issued in connection with notes payable |
6 months | 0.5 | 12,500 | |||||||||
January 14, 2010 warrants issued in connection with notes payable |
6 months | 0.75 | 8,333 | |||||||||
|
|
|||||||||||
4,731,513 |
12
Table of Contents
FIRST PHYSICIANS CAPITAL GROUP, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
A summary of our stock warrant activity and related information at June 30, 2011 and September 30, 2010 is as follows:
Weighted-Average | ||||||||||||||||
Number of Shares of Common Stock | Exercise Price Per Share | |||||||||||||||
Fiscal | Fiscal | |||||||||||||||
Nine months | Year | Nine months | Year | |||||||||||||
ended | Ended | ended | Ended | |||||||||||||
June 30, | September 30, | June 30, | September 30, | |||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Warrants outstanding at beginning of the period |
7,949,013 | 14,459,635 | $ | 0.51 | $ | 0.49 | ||||||||||
Issued |
| 1,010,263 | $ | 0 | $ | 0.59 | ||||||||||
Exercised |
| (1,105,685 | ) | $ | 0 | $ | 0.46 | |||||||||
Cancelled or expired |
(3,217,500 | ) | (6,415,200 | ) | $ | 0.38 | $ | 0.50 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Warrants outstanding at end of the period |
4,731,513 | 7,949,013 | $ | 0.58 | $ | 0.51 | ||||||||||
|
|
|
|
|
|
|
|
All warrants have a two-year to five-year expiration. The warrant fair value was determined by using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include (i) risk-free interest rate between 1.1% and 4.5%; (ii) expected warrant life equal to the actual remaining life of the warrants as of the period end; (iii) expected volatility between 52% and 212%; and (iv) zero expected dividends.
10. Stock Options
The following summarizes activities under the stock option plans:
Weighted-Average | ||||||||||||||||
Number of Options | Exercise Price Per Share | |||||||||||||||
Nine months ended | Fiscal Year Ended | Nine months ended | Fiscal Year Ended | |||||||||||||
June 30, | September 30, | June 30, | September 30, | |||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Options outstanding at beginning of the period |
8,659,082 | 8,249,002 | $ | 0.62 | $ | 0.59 | ||||||||||
Granted |
||||||||||||||||
at above fair market value |
| 650,000 | | 0.63 | ||||||||||||
at fair market value |
| | | | ||||||||||||
at below fair market value |
| | | | ||||||||||||
Exercised |
| | | | ||||||||||||
Cancelled |
| | | | ||||||||||||
Forfeited |
(1,399,082 | ) | (239,920 | ) | 0.62 | 0.65 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Options outstanding at end of the period |
7,260,000 | 8,659,082 | $ | 0.61 | $ | 0.62 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Options vested/exercisable at end of the period |
4,370,000 | 3,689,541 | $ | 0.61 | $ | 0.60 | ||||||||||
|
|
|
|
|
|
|
|
The following summarizes information for stock options outstanding as of June 30, 2011:
Weighted-average | ||||||||||||
Weighted-average | remaining | |||||||||||
Exercise price |
Number of options | exercise price | contractual life | |||||||||
$0.40 |
360,000 | $ | 0.40 | 2.5 | ||||||||
$0.63 |
6,900,000 | $ | 0.63 | 3.8 |
12. Subsequent Events
2011 Bridge Financing
During the Fiscal Year Ended September 30, 2011, we entered into bridge financing transactions (the 2011 Bridge Financing) where we entered into ten promissory notes, in the aggregate principal amount of $2,034,000 (the 2011 Bridge Notes), with various investors (the 2011 Lenders). We received the 2011
13
Table of Contents
FIRST PHYSICIANS CAPITAL GROUP, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Bridge Financing in multiple installments as follows: $674,400, $549,600, $360,000, and $100,000 in August, September, November, and December of 2011, respectively, and $350,000 in January 2012. Each bridge note has attached warrants to purchase an aggregate of 2,278,079 shares of our Common Stock with an exercise price of $0.3125, maturing five years from date of issuance. Of the total 2011 Bridge Financing, $1,559,000 was considered a related party transaction. The warrants were issued January 1, 2014.
Each 2011 Bridge Note originally became due and payable in September 2012. Each 2011 Bridge Lender agreed to extend the maturity date(s) of their respective Notes with the same terms and conditions contained in the originally executed Notes and related extensions until June of 2014. The 2011 Bridge Notes, less accumulated interest, were paid off entirely in Fiscal Year Ended September 30, 2013.
2012 Bridge Financing
Beginning in February 2012, we entered into a staggered bridge financing transaction (the 2012 Bridge Financing) whereby we entered into three promissory notes, in the aggregate principal amount of $1,279,000 (the 2012 Bridge Notes), with three investors (the 2012 Lenders) with maturity dates of June 30, 2014. The 2012 Bridge Loans funded as follows; $340,000, $320,000, $390,000 and $229,000 in February, March, April, and May of 2012, respectively. All of the 2012 Bridge Financing was considered a related party transaction. The 2012 Bridge Notes were paid in full in the Fiscal Year Ended September 30, 2013.
2013 Bridge Financing
Beginning in November 2013, we entered into a staggered bridge financing transaction (the 2013 Bridge Financing) whereby we entered into four (4) promissory notes, with interest of 10% per annum, in the aggregate principal amount of $650,000 (the 2013 Bridge Notes), with 4 investors, each note maturing June 30, 2014. The 2013 Bridge Loans funded as follows; $450,000 and $200,000 in November 2013 and January 2014, respectively. Three of the investors, SMP Investments I, LLC (SMP), Anthony J. Ciabottoni, and William Houlihan each hold a 10% or greater voting interest and are considered related parties. The fourth investor, Blue Ridge Investments, LLC is wholly owned by Richardson Sells, a member of the Board, and is therefore also considered a related party. The four lenders contributed $300,000, $125,000, $125,000, and $100,000, respectively.
Bridge Note Extensions
In January 2014, each 2011 Bridge Lender (see Note 7 Bridge Financing) agreed to extend the maturity date(s) of their respective Notes with the same terms and conditions contained in the originally executed Notes and related extensions until June 2014. Also in January 2014, each 2009 Bridge Lender (see Note 7. Bridge Financing) agreed to extend the maturity date(s) of their respective Notes with the same terms and conditions contained in the originally executed Notes and related extensions until June 2014. Three of the Bridge Lenders, SMP, Anthony Ciabattoni, and William A. Houlihan each hold a 10% or greater voting interest and are considered related parties to this transaction.
In addition, as part of the 2009 Bridge Notes extensions, and subsequent to the Fiscal Quarter Ended March 31, 2011, the Company issued penny warrants to SMP Investments, LLC for the purchase of up to 8,500,000 shares of Common Stock at an initial exercise price of $0.01 per share and exercisable for a period of five years from the date of issuance. SMP was one of the original 2009 Bridge Financing lenders. SMP holds a 10% or greater voting interest and is considered a related party. In March 2014, SMP exercised its warrant to purchase 8,500,000 shares of common stock for an aggregate purchase price of $85,000. The $85,000 proceeds were received by the company in Fiscal Year 2013, and were recorded as a liability until such time as the Company was able to accept the warrants.
Series 5-A and 6-A Convertible Preferred Stock Waiver
In February 2014, a majority of the Series 5-A Convertible Preferred Stock and Series 6-A Convertible Preferred Stock holders consented to waive their rights to demand registration. As a result of the majority consent, demand registration rights for all of the stockholders of the two classes of stock, were waived.
Warrant Exercise
In March 2014, we accepted two warrant exercises in the amount of 150,000 and 210,000 shares of Common Stock, at an exercise price of $0.625 and $0.50 per share respectively, for an aggregate purchase price of $198,000 from two investors. The $198,000 proceeds had been received by the company in Fiscal Year 2011, and were recorded as a liability until such time as the Company was able to accept the warrants.
14
Table of Contents
FIRST PHYSICIANS CAPITAL GROUP, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Warrant Issuance
The 2011 Bridge Financing had attached warrants to purchase an aggregate of 2,278,079 shares of our Common Stock with an exercise price of $0.3125, maturing five years from date of issuance. These warrants were issued January 1, 2014. Three of the 2011 Bridge Lenders, SMP, Anthony J. Ciabattoni, and William A. Houlihan, each hold a 10% or greater voting interest and are considered related parties to this transaction and received in aggregate 1,746,080 of the warrants.
The 2012 Bridge Financing had attached warrants to purchase an aggregate of 4,092,800 shares of our Common Stock with an exercise price of $0.3125, maturing five years from date of issuance. These warrants were issued January 1, 2014. The 2012 Bridge Lenders, SMP, Anthony J. Ciabattoni, and William A. Houlihan each hold a 10% or greater voting interest and are considered related parties to this transaction.
Series 7-A Convertible Preferred Stock
On December 5, 2013, the Company filed a Certificate of Designation of Rights and Preferences of Series 7-A Convertible Preferred Stock authorizing the issuance of up to 7,000 Series 7-A Convertible Preferred Stock. As part of the consideration for entering into the 2011 Bridge Financing, all of the 2011 Bridge Lenders were granted the option to convert their current holdings if any, of Series 5-A Preferred Convertible Stock, 6-A Preferred Convertible Stock and Common Stock (collectively the Exchanged Securities), into Series 7-A Convertible Preferred Stock. Upon election to convert, each lender would receive the number of Series 7-A Convertible Preferred Stock equal to the initial consideration paid for their Exchanged Securities divided by $1,000. In connection with the conversion, each 2011 Bridge Lender shall receive warrants to purchase a number of shares of Common Stock of the Company in an amount equal to 1,120 multiplied by the aggregate number of shares of Series 7-A Preferred issued. Such issued warrants shall have an exercise price of $0.3125, and shall expire five years from date of issuance. The Company has received notification from all the 2011 Bridge Lenders of their intent to convert, as appropriate, their holdings of Exchanged Securities to Series 7-A Convertible Preferred Stock, which will result in the issuance of an aggregate of 5,998 Series 7-A Preferred Stock and warrants to purchase 6,717,760 shares of Common Stock. Three of the 2011 Bridge Lenders, SMP, Anthony J. Ciabattoni, and William A. Houlihan, each hold a 10% or greater voting interest and will be considered related parties to this transaction.
Litigation
In June 2011, the Company vacated office space in Oklahoma City, Oklahoma prior to the expiration of the lease, at which time the landlord proceeded with litigation to collect outstanding lease payments. In December 2013, both parties entered into a settlement agreement under which the Company agreed to make a one-time payment of $65,000 in full satisfaction of all amounts due under the lease terms.
In August 2011, the holder of the $1.5 million note payable and 4.25 million of the Companys outstanding common stock, filed a law suit for performance and repayment of the loan. In December 2011, in full settlement of the lawsuit and satisfaction of the $1.5 million note payable, the lender accepted assignment and receipt of the $2.15 million notes receivable the Company had received in July 2011 as consideration for the sale of the SPMC medical records, and cash totaling $91,000. Additionally, as part the settlement, the lender agreed to transfer the 4.25 million common stock back to the Company.
Change in Management
Effective November 18, 2013, David Hirschhorn resigned (i) as Chief Executive Officer, Chairman of the Board of Directors (the Board) and as a member of the Board of First Physicians Capital Group, Inc., a Delaware corporation (the Registrant), and (ii) from any and all other positions and in all other capacities in which he served as an officer or director of the Registrant or any of the Registrants subsidiaries. Mr. Hirschhorn had no disagreements with the Registrant on any matter related to the Registrants operations, policies or practices.
On November 21, 2013, the Board appointed Sean J. Kirrane to the position of Chief Executive Officer of the Registrant, to serve until his successor is duly appointed and qualified or until his earlier resignation or removal. Mr. Kirrane has no family relationship with any officer or director of the Registrant or any of its subsidiaries.
Asset Dispositions
On September 15, 2011, we completed the DEL MAR SPA transaction in which we sold our 53% interest in Outpatient Surgery of Del Mar, L.L.C., a California limited liability company (DEL MAR) (See Note 2 in this Form 10-Q).
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Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q (this Form 10-Q).
FORWARD LOOKING STATEMENTS
The discussion in this Form 10-Q contains forward-looking statements that may be subject to protection under the Private Securities Litigation Reform Act of 1995 and such statements should not be unduly relied upon. Forward-looking statements can be identified by the use of words such as may, will, could, should, anticipates, believes, estimates, expects, intends, plans and variations thereof or of similar expressions. All forward-looking statements included in this Form 10-Q are based on information available to us on the date hereof. We assume no obligation to update any such forward-looking statements. Our actual results in future periods could differ materially from those indicated in such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to:
| our ability to obtain ongoing financing, manage our cash resources, control expenses and continue as a going concern; |
| impact of our indebtedness on our ability to invest in the ongoing needs and growth of our business; |
| significant past operating losses, potential future losses and limited ongoing revenue; |
| changes in government regulation, particularly healthcare laws; |
| possession of significant voting control over us by the holders of our Series 5-A Preferred Stock and Series 6-A Convertible Preferred Stock; |
| increased competition in the industry, geography and the segments in which we compete; |
| our ability to attract and retain employees and key members of management; |
| changes in economic and industry conditions; |
| reliance on third parties to provide services critical to our operations; |
| potential dilution of existing stockholders if we raise capital by issuing additional capital stock; |
| availability of appropriate prospective acquisitions or investment opportunities; |
| significant costs and obligations as a result of being a public company; |
| continued positive relationships with our customers; |
| deterioration in the collectability of our accounts; |
| major man-made or natural disasters; |
| compliance with applicable laws and regulations and cost of potential legal actions such as litigation or investigations; |
| inadequacy of our insurance coverage and fluctuating insurance requirements and costs; |
| impact of a potential requirement to record asset impairment charges in the future; |
| failure of our information technology system or the breach of our network security; |
| impact on our disclosure of use the scaled disclosure option available to smaller reporting companies; and |
| volatility in the price of our common stock. |
OVERVIEW
References to we, us, our, Tri-Isthmus Group, FPCG or the Company refer to First Physicians Capital Group, Inc. and its subsidiaries. We maintain our executive offices at 433 North Camden Drive, #810, Beverly Hills, California 90210. Our telephone number is +1 (310) 860-2501.
We invest in and provide financial and managerial services to healthcare facilities in non-urban markets. We promote quality medical care by offering improved access and breadth of services. We unlock the value of our investments by developing strong, long-term and mutually-beneficial relationships with our physicians and the communities they serve.
This Form 10-Q report covers the fiscal quarter ended June 30, 2011.
Information in this Form 10-Q is current as of March 28, 2014, unless otherwise specified.
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STRATEGY
During the Fiscal Year Ended September 30, 2010, we shifted our strategy away from majority ownership in healthcare delivery companies to a focus on the provision of management, financial, and ancillary healthcare and IT services to the rural and community hospital market. We expect to maintain and/or acquire minority ownership in selected healthcare delivery companies that complement our management services and financing activities. We may also invest in, acquire or partner with other companies that provide similar services in our markets.
In pursuit of this reorganization, we undertook an initiative to divest ourselves of underperforming facilities and reduce or outsource administrative functions to better align cost structures and business volume. As a result of the initiative, during the Fiscal Year Ended September 30, 2011, we successfully divested ourselves of our majority owned hospitals, and obtained contracts to provide the healthcare management services to several hospital clients.
We currently have 4 operating subsidiaries which are First Physicians Business Solutions, LLC, First Physicians Resources, LLC, First Physicians Services, LLC and First Physicians Realty Group. First Physicians Business Solutions, LLC provides an array of management services to include hospital operations management, revenue cycle management, IT, finance and human resources. First Physicians Services provides ancillary service oversight and management solutions for lab, pharmacy, and emergency departments in rural hospital settings. First Physicians Resources, LLC provides medical and back office staffing solutions to our hospital clientele. First Physicians Realty Group is our real estate subsidiary that owns healthcare related properties and leases them to clients. We currently have contracts to provide financial and back office services to two hospital clients.
RECENT DEVELOPMENTS
RHA Anadarko, LLC and RHA Stroud, LLC Sale
On May 4, 2011, we completed the RHA-One Cura transaction in which we sold RHA Anadarko LLC, and RHA Stroud LLC, and on July 13, 2011, we completed the RHA SPA II transactions in which we sold SPMC and SPA (See Note 2 in this Form 10-Q).
RESULTS OF OPERATIONS
MATERIAL CHANGES IN RESULTS OF OPERATIONS
DISCONTINUED OPERATIONS
On January 10, 2011, RHA Tishomingo, LLC, an indirect subsidiary of ours, entered into an Asset Purchase Agreement to sell the hospital operations of Johnson Memorial Hospital in Tishomingo, Oklahoma to Mercy Tishomingo Hospital Corporation. Also on January 10, 2011, we entered into an Agreement for Purchase and Sale of Real Property to sell the real estate and equipment of Johnson Memorial Hospital to RSE Enterprises, Inc., (together with the sale to Mercy Tishomingo Hospital Corporation, the Tishomingo Transaction) (See Note 2 in this Form 10-Q).
On May 4, 2011, we completed the RHA-One Cura transaction in which we sold RHA Anadarko LLC, and RHA Stroud LLC, and on July 13, 2011, we completed the RHA SPA II transactions in which we sold SPMC and SPA (See Note 2 in this Form 10-Q).
On September 15, 2011, we completed the DEL MAR SPA transaction in which we sold our 53% interest in Outpatient Surgery of Del Mar, L.L.C., a California limited liability company (DEL MAR) (See Note 2 in this Form 10-Q).
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As of June 30, 2011, the operating assets of RHA Tishomingo, RHA Anadarko, RHA Stroud, SPMC, Del Mar, Point Loma, and SPA, have been recorded as assets held for sale and the liabilities as liabilities of operations held for sale. We have reclassified the results of operations of RHA Tishomingo, LLC, RHA Anadarko, RHA Stroud, SPMC, Del Mar, Point Loma, and SPA for all periods presented, to discontinued operations.
REVENUE
Revenue from services was $2.8 million for the three-month period ended June 30, 2011, compared to $0.3 million for the three-month period ended June 30, 2010, representing an increase of $2.5 million. Revenue from services was $3.3 million for the nine-month period ended June 30, 2011, compared to $0.8 million for the nine-month period ended June 30, 2010, representing an increase of $2.5 million. The increases for both the three and nine month periods were the result of the new contracts to provide healthcare services management the Company obtained in the Fiscal Quarter ended June 30, 2011.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased by $1.3 million to $3.1 million in the three-month period ended June 30, 2011 compared to $1.8 million in the three-month period ended June 30, 2010. Selling, general and administrative expenses increased by $0.3 million to $5.7 million in the nine-month period ended June 30, 2011 compared to $5.4 million in the nine-month period ended June 30, 2010. These increases were the result of the increased costs associated with the new contracts to provide healthcare services management the Company obtained in the Fiscal Quarter ended June 30, 2011. Amortization of stock-based compensation is included in selling, general and administrative expenses for the three and nine-month periods ended June 30, 2011 and 2010.
INTEREST EXPENSE
Interest expense increased to $198,000 for the three-month period ended June 30, 2011 as compared to $152,000 for the three-month period ended June 30, 2010. This represents an increase of $46,000 and was the result of new financing in the Fiscal Quarter ended June 30, 2011. However, interest expense decreased $548,000, from $953,000 for the nine months ended June 30, 2010 to $405,000 for the nine months ended June 30, 2011. This decrease was primarily due to the amortization of the bridge financing loan discount and beneficial conversion feature during the first six months of the Fiscal Year ended September 30, 2010 which did not exist during the nine months ended June 30, 2011.
MATERIAL CHANGES IN FINANCIAL CONDITION AT JUNE 30, 2011, COMPARED TO SEPTEMBER 30, 2010:
CASH AND CASH EQUIVALENTS
As of June 30, 2011, cash and cash equivalents totaled $743,000, an increase of $208,000 when compared with the $535,000 on hand at September 30, 2010. This represents an increase of 39% which was primarily the result of the $730,000 proceeds from long term debt.
ACCOUNTS RECEIVABLES
As of June 30, 2011, accounts receivables, net of allowances for uncollectible accounts totaled $1,630,000, an increase of $1,592,000 from $38,000 at September 30, 2010. This increase was primarily due to the increased billings generated from the new contracts to provide healthcare services management the Company obtained in the Fiscal Quarter ended June 30, 2011.
PREPAID EXPENSES
As of June 30, 2011, prepaid expenses totaled $225,000, an increase of $178,000 from $47,000 at September 30, 2010. The increase arose primarily from the purchase of additional prepaid insurance.
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ACCOUNTS PAYABLE
As of June 30, 2011, accounts payable totaled $691,000, compared to $418,000 at September 30, 2010. This represents an increase of $273,000. This increase was primarily due to the increased operational costs associated with the new contracts to provide healthcare services management the Company obtained in the Fiscal Quarter ended June 30, 2011.
LONG-TERM DEBT
Long term debt increased $541,000 from September 30, 2010 to June 30, 2011. This increase reflects $730,000 of additional borrowing offset by decreases due to normal monthly loan payments of $189,000.
LIQUIDITY AND CAPITAL RESOURCES
We have funded operations primarily through cash flows from operations, sales of our preferred stock, short term bridge financing and the sales of certain of our businesses. We estimate that based on current plans and assumptions, that our available cash and cash flows from operations will be sufficient to satisfy our cash requirements under our present operating expectations, without further financing, for the next 12 months.
As of June 30, 2011, cash and cash equivalents totaled $743,000, an increase of $208,000 when compared with the $535,000 on hand at September 30, 2010. This represents an increase of 39% which was primarily the result of the $730,000 proceeds from long term debt.
FUNDING
As of June 30, 2011 we had a working capital deficit of $2.2 million compared with a working capital deficit of $3.7 million at September 30, 2010. The working capital decrease was primarily a result of decreases in the short term liabilities associated with discontinued operations.
In 2009, we completed a bridge financing transaction (the Bridge Financing) for $2.2 million, which was consummated in three separate closings. The notes were due and payable as follows: $1.5 million was due on November 6, 2009, $0.5 million was due on December 3, 2009, $0.1 million was due on December 31, 2009 and $50,000 was due on January 14, 2010. On the due dates of the $1.5 million due on November 6, 2009, the $0.5 million due on December 3, 2009 and the $0.1 million due on December 31, 2009, we exercised our right to extend the due dates to February 6, 2010, March 3, 2010 and March 31, 2010, respectively. On the extended due dates, we exercised our right to again extend the due dates. The $1.5 million previously due on February 6, 2010, was extended to provide for $0.5 million to be due August 6, 2011 and $1.0 million to be due February 6, 2013. The $0.5 million previously due on March 3, 2010 was extended to provide for $0.2 million to be due on September 3, 2011 and $0.3 million to be due on March 3, 2013. The $150,000 previously due March 31, 2010 was extended to provide for $100,000 to be due March 31, 2013 and $50,000 to be due September 30, 2011. The $50,000 previously due April 4, 2010 was extended to be due April 14, 2013.
On April 14, 2009, we completed the third closing of the Bridge Financing, a transaction in which we entered into the following three (3) promissory notes: (i) a convertible promissory note, dated as of March 31, 2009 in the principal amount of $100,000; (ii) a convertible promissory note, dated as of March 31, 2009, in the principal amount of $50,000 and (iii) a convertible promissory note, dated as of April 14, 2009, in the principal amount of $50,000. Of the total Bridge Financing, $1,600,000 was considered a related party transaction. See Note 7. Bridge Financing in the accompanying notes to the financial statements in this Form 10-Q.
During the Fiscal Year Ended September 30, 2011, we entered into bridge financing transactions (the 2011 Bridge Financing) where we entered into ten promissory notes, in the aggregate principal amount of $2,034,000 (the 2011 Bridge Notes), with various investors (the 2011 Lenders). We received the 2011 Bridge Financing in multiple installments as follows: $674,400, $549,600, $360,000, and $100,000 in August, September, November and December of 2011, respectively, and $350,000 in January 2012. Each bridge note has attached warrants to purchase an aggregate of 2,278,079 shares of our Common Stock with an exercise price of $0.3125, maturing five years from date of issuance. Of the total 2011 Bridge Financing, $1,559,000 was considered a related party transaction. The warrants were issued January 1, 2014. See Note 12. Subsequent Events in the accompanying notes to the financial statements in this Form 10-Q.
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Each 2011 Bridge Note originally became due and payable in September 2012. Each 2011 Bridge Lender agreed to extend the maturity date(s) of their respective Notes with the same terms and conditions contained in the originally executed Notes and related extensions until June of 2014. The 2011 Bridge Notes, less accumulated interest, were paid off entirely in Fiscal Year Ended September 30, 2013.
Beginning in February 2012, we entered into a staggered bridge financing transaction (the 2012 Bridge Financing) whereby we entered into three promissory notes, in the aggregate principal amount of $1,279,000 (the 2012 Bridge Notes), with three investors (the 2012 Lenders) with maturity dates of June 30, 2014. The 2012 Bridge Loans funded as follows; $340,000, $320,000, $390,000 and $229,000 in February, March, April, and May of 2012 respectively. Each bridge note has attached warrants to purchase an aggregate of 4,092,800 shares of our Common Stock with an exercise price of $0.3125, maturing five years from date of issuance. The warrants were issued January 1, 2014. All of the 2012 Bridge Financing was considered a related party transaction. The 2012 Bridge Notes were paid in full in the Fiscal Year Ended September 30, 2013.
Beginning in November 2013, we entered into a staggered bridge financing transaction (the 2013 Bridge Financing) whereby we entered into four (4) promissory notes, with interest of 10% per annum, in the aggregate principal amount of $650,000 (the 2013 Bridge Notes), with 4 investors, each note maturing June 30, 2014. The 2013 Bridge Loans funded as follows; $450,000, and $200,000, in November 2013 and January 2014, respectively. All of the 2013 Bridge Financing was considered a related party transaction.
In January 2014, the Company issued penny warrants to SMP Investments I, LLC for the purchase of up to 8,500,000 shares of Common Stock at an initial exercise price of $0.01 per share and exercisable for a period of five years from the date of issuance. In March 2014, SMP exercised its warrant to purchase 8,500,000 shares of common stock for an aggregate purchase price of $85,000.
As of June 30, 2011, we had a stockholders deficit of $15.1 million, as compared to a stockholders deficit of $16.4 million as of September 30, 2010. The decrease in stockholders deficit arose from net income.
During the nine-month period ended June 30, 2011 there was $0.4 million cash used by operating activities, which compared to $2.8 million cash used by operating activities for the nine-month period ended June 30, 2010. The decrease in cash used in operations was primarily the result of a smaller loss from continuing operations for the nine-month period ended June 30, 2011.
Net cash provided by investing activities during the nine-month period ended June 30, 2011 was $0.5 million, compared to $1.4 million during the nine-month period ended June 30, 2010, a decrease of $2.4 million. This decrease in cash from investing activities was primarily the result of the removal of restrictions on $1.5 million of cash held on deposit with the former debt holder on the SPMC building during the nine-month period ended June 30, 2010.
Cash provided by financing activities totaled $57,000 in the nine-month period ended June 30, 2011 and was provided by debt financings offset by cash used by discontinued operations. Cash provided by financing activities totaled $921,000 in the nine-month period ended June 30, 2010 and was provided primarily by the proceeds from the exercise of stock warrants and cash from discontinued operations.
Prior to the Fiscal Quarter ended June 30, 2011, we had sustained operating losses since our inception resulting in an accumulated deficit of approximately $95.1 million as of June 30, 2011, as compared with an accumulated deficit of $95.7 million as of September 30, 2010. This deficit has been funded principally through the issuance of preferred and common stock, the issuance of promissory notes and cash generated from operations.
We are not aware of any trends, demands, events or uncertainties that will result in a material change in our liquidity or capital resources, nor do we expect any changes in the cost of our capital resources or the mix and relative cost of our capital resources.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
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Item 4. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures: As of the end of the period covered by this report an evaluation was carried out by our management, including our Chief Executive Officer and Principal Accounting Officer, of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended. Based on this evaluation, our Chief Executive Officer and Principal Accounting Officer concluded that our controls and procedures were materially deficient as of the end of the fiscal quarter ended June 30, 2011.
(b) Changes in Internal Control Over Financial Reporting: There have been no changes in our internal control over financial reporting during the fiscal quarter ended June 30, 2011 that have a material effect on our internal control over financial reporting.
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OTHER INFORMATION
In June 2011, the Company vacated office space in Oklahoma City, Oklahoma prior to the expiration of the lease, at which time the landlord proceeded with litigation to collect outstanding lease payments. In December 2013, both parties entered into a settlement agreement under which the Company agreed to make a one-time payment of $65,000 in full satisfaction of all amounts due under the lease terms.
In addition to the other information set forth in this Form 10-Q, you should carefully consider the risk factors discussed in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the Fiscal Year Ended September 30, 2010, which could materially affect our business, financial condition or future results. We are currently unaware of any material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the Fiscal Year Ended September 30, 2010; however, additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 4. MINE SAFETY DISCLOSURES
None.
None.
See Exhibit index following the Signatures page.
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Pursuant to the requirements 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: April 4, 2014 | First Physicians Capital Group, Inc. (Registrant) | |||||
By: | /s/ Sean Kirrane | |||||
Sean Kirrane | ||||||
Chief Executive Officer, Chief Financial Officer and authorized signatory. (Principal Executive Officer and Principal Accounting Officer) |
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Exhibit |
Description | |
2.1* | Membership Interest Purchase Agreement (filed as Exhibit 2.1 to the Form 8-K, as filed with the SEC on November 5, 2007) | |
3.1* | Certificate of Incorporation (filed as Exhibit 3.1 to the Form 8-K, as filed with the SEC on November 14, 2000) | |
3.2* | Amended and Restated Bylaws dated October 25, 2002 (filed as Exhibit 3.2 to the Form 8-K, as filed with the SEC on October 28, 2002) | |
3.3* | Certificate of Designation of Rights and Preferences of Series 2-A Convertible Preferred Stock filed November 8, 2000 (filed as Exhibit 4.1 to the Form 8-K, as filed with the SEC on November 14, 2000) | |
3.4* | Certificate of Designation of Rights and Preferences of Series 3-A Convertible Preferred Stock filed June 20, 2001 (filed as Exhibit 4.1 to the Form 8-K, as filed with the SEC on July 2, 2001) | |
3.5* | Certificate of Designation of Rights and Preferences of Series 4-A Convertible Preferred Stock (filed as Exhibit 3.1 to the Form 8-K, as filed with the SEC on October 28, 2002) | |
3.6* | Certificate of Designation of Rights and Preferences of Series 5-A Convertible Preferred Stock (filed as Exhibit 3.1 to the Form 8-K, as filed with the SEC on July 21, 2005) | |
3.7* | Certificate of Amendment to the Certificate of Designation of Rights and Preferences Series 5-A Convertible Preferred Stock filed January 10, 2008 (filed as Exhibit B to the Form of Series 5-A Preferred Stock and Warrant Purchase Agreement, filed as Exhibit 10.52 herein) | |
3.8* | Certificate of Designation of Rights and Preferences of Series 6-A Convertible Preferred Stock filed April 2, 2008 (filed as Exhibit 3.1 to the Form 8-K, as filed with the SEC on April 3, 2008) | |
3.9* | Certificate of Amendment to the Certificate of Designation of Rights and Preferences of Series 5-A Convertible Preferred Stock filed May 15, 2008 (filed as Exhibit 4.2 to the Form 10-Q, as filed with the SEC on May 20, 2008) | |
3.10* | Certificate of Amendment to the Certificate of Designation of Rights and Preferences of Series 6-A Convertible Preferred Stock filed May 15, 2008 (filed as Exhibit B to the Form of Series 6-A Preferred Stock and Warrant Purchase Agreement, filed as Exhibit 10.54 herein) | |
3.11* | Certificate of Designation of Rights and Preferences of Series 7-A Convertible Preferred Stock (filed as Exhibit 3.1 to the Form 8-K, as filed with the SEC on December 12, 2013) | |
4.1* | Certificate of Decrease of Shares Designated as Series 7-A Convertible Preferred Stock, dated and filed January 22, 2010 (filed as Exhibit 3.1 to the Form 8-K, as filed with the SEC on January 28, 2010) | |
4.2* | Certificate of Decrease of Shares Designated as Series 1-A Convertible Preferred Stock (filed as Exhibit 4.1 to the Form 8-K, as filed with the SEC on July 13, 2005) | |
4.3* | Certificate of Decrease of Shares Designated as Series 2-A Convertible Preferred Stock (filed as Exhibit 4.2 to the Form 8-K, as filed with the SEC on July 13, 2005) | |
4.4* | Certificate of Decrease of Shares Designated as Series 3-A Convertible Preferred Stock (filed as Exhibit 4.3 to the Form 8-K, as filed with the SEC on July 13, 2005) |
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Exhibit |
Description | |
4.5* | Certificate of Decrease of Shares Designated as Series 4-A Convertible Preferred Stock (filed as Exhibit 4.4 to the Form 8-K, as filed with the SEC on July 13, 2005) | |
4.6* | Form of Warrant (filed as Exhibit 4.2 to Form 8-K, filed with the SEC on July 21, 2005) | |
4.7* | Form of Warrant (filed as Exhibit 4.2 to Form 8-K, filed with the SEC on August 23, 2005) | |
4.8* | Form of Warrant (filed as Exhibit 4.2 to Form 8-K, filed with the SEC on September 22, 2006) | |
4.9* | Form of Extension of Warrant, dated July 18, 2007 (filed as Exhibit 4.1 to Form 8-K as filed with the SEC on December 18, 2008) | |
10.1* | Form of Stock Purchase Agreement (filed as Exhibit 10.1 to form 8-K, filed with the SEC on May 10, 2011) | |
10.2* | Form of Seller Note (filed as Exhibit 10.2 to form 8-K, filed with the SEC on May 10, 2011) | |
10.3* | Form of Seller Note (filed as Exhibit 10.3 to form 8-K, filed with the SEC on May 10, 2011) | |
10.4* | Form of Security Agreement (filed as Exhibit 10.4 to form 8-K, filed with the SEC on May 10, 2011) | |
10.5* | Form of Security Agreement (filed as Exhibit 10.5 to form 8-K, filed with the SEC on May 10, 2011) | |
10.6* | Form of Pledge Agreement (filed as Exhibit 10.6 to form 8-K, filed with the SEC on May 10, 2011) | |
10.7* | Form of Pledge Agreement (filed as Exhibit 10.7 to form 8-K, filed with the SEC on May 10, 2011) | |
10.8* | Form of Management Services Agreement (filed as Exhibit 10.8 to form 8-K, filed with the SEC on May 10, 2011) | |
10.9* | Form of Management Services Agreement (filed as Exhibit 10.9 to form 8-K, filed with the SEC on May 10, 2011) | |
10.10* | Form of Staff Leasing Agreement (filed as Exhibit 10.10 to form 8-K, filed with the SEC on May 10, 2011) | |
10.11* | Form of Staff Leasing Agreement (filed as Exhibit 10.11 to form 8-K, filed with the SEC on May 10, 2011) | |
10.12* | Form of Amended and Restated Lease (filed as Exhibit 10.12 to form 8-K, filed with the SEC on May 10, 2011) | |
31.1 | Certification Pursuant to Rule 13a-14(d) promulgated under the Securities Exchange Act of 1934 | |
32.1 | Certification Pursuant to 18 U.S.C. 1350 | |
101.INS** | XBRL Instance Document | |
101.SCH** | XBRL Taxonomy Extension Schema | |
101.CAL** | XBRL Taxonomy Extension Calculation Linkbase | |
101.DEF** | XBRL Taxonomy Extension Definition Linkbase | |
101.LAB** | XBRL Taxonomy Extension Label Linkbase | |
101.PRE** | XBRL Taxonomy Extension Presentation Linkbase |
* | Previously filed with the SEC as indicated, and hereby incorporated herein by reference. |
** | Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability. |
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