FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(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, 1997
-----------------------------------------------
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------------------ ------------------------
Commission file number 1-11993
----------------------------------------------------------
MIM CORPORATION
------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 05-0489664
- -------------------------------------------- ---------------------------------
(State or other jurisdiction of incorporation (I.R.S. Employer Identification
or organization) No.)
One Blue Hill Plaza, Pearl River, New York 10965
--------------------------------------------------------------------
(Address of principal executive offices)
(914) 735-3555
--------------
(Registrant's telephone number, including area code)
---------------------------------------------------------------------
(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
---- ----
APPLICABLE ONLY TO CORPORATE ISSUERS:
On, August 12, 1997 there were outstanding 12,912,811 shares of the Company's
$.0001 par value per share common stock ("Common Stock").
INDEX
Page Number
-----------
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated Balance Sheets at
June 30, 1997 and December 31, 1996 3
Consolidated Statements of Operations for the
three months and six months ended June 30, 1997 and 1996 4
Consolidated Statements of Cash Flows for the
six months ended June 30, 1997 and 1996 5
Notes to the Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations 7 - 9
PART II OTHER INFORMATION
Item 2 Changes in Securities 10
Item 5 Other Information 11
Item 6 Exhibits and Reports on Form 8-K 12
SIGNATURES 13
2
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
MIM CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except for share amounts)
June 30, December 31,
1997 1996
------------- --------------
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 2,641 $ 1,834
Investment securities 16,686 28,113
Receivables, less allowance for doubtful accounts of $1,658
and $1,088 at June 30, 1997 and December 31, 1996,
respectively 20,360 18,646
Prepaid expenses and other current assets 1,154 1,129
----------- -------------
Total current assets 40,841 49,722
Investment securities, net of current portion 13,023 8,925
Property and equipment, net 2,620 2,423
Due from affiliates, less allowance for doubtful accounts of $2,157
at June 30, 1997 and December 31, 1996 281 628
Other assets, net 281 102
----------- -------------
Total assets $ 57,046 $ 61,800
=========== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of capital lease obligations $ 199 $213
Accounts payable 613 1,562
Claims payable 10,336 17,278
Payables to plan sponsors and others 12,448 10,174
Accrued expenses 711 926
----------- -------------
Total current liabilities 24,307 30,153
Capital lease obligations, net of current portion 282 375
Commitments and contingencies
Minority interest 1,145 1,129
Stockholders' equity
Preferred Stock, $.0001 par value; 5,000,000 shares authorized,
no shares issued or outstanding - -
Common Stock, $.0001 par value; 40,000,000 shares authorized,
12,323,800 and 12,040,600 shares issued and outstanding
at June 30, 1997 and December 31, 1996, respectively 1 1
Additional paid-in capital 73,564 73,443
Accumulated deficit (40,469) (41,564)
Stockholder notes receivable (1,784) (1,737)
----------- -------------
Total stockholders' equity 31,312 30,143
----------- -------------
Total liabilities and stockholders' equity $ 57,046 $ 61,800
=========== =============
The accompanying notes are an integral part of these consolidated
financial statements.
3
MIM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for per share amounts)
Three months ended Six months ended
June 30, June 30,
-------------------- ---------------------
1997 1996 1997 1996
------- -------- -------- --------
(Unaudited) (Unaudited)
Revenue $45,833 $ 68,731 $116,644 $135,320
Cost of revenue 41,972 65,428 108,801 130,218
------- -------- -------- --------
Gross profit 3,861 3,303 7,843 5,102
General and administrative expenses 3,994 2,392 7,903 4,627
Executive stock option compensation expense - 26,640 - 26,640
------- -------- -------- --------
Income (loss) from operations (133) (25,729) (60) (26,165)
Interest income, net 548 138 1,171 275
------- -------- -------- --------
Income (loss) before minority interest 415 (25,591) 1,111 (25,890)
Minority interest 3 (15) 5 (6)
------- -------- -------- --------
Net income (loss) $ 418 $(25,606) $ 1,116 $(25,896)
======= ======== ======== ========
Net income (loss) per common
and common equivalent share $ 0.03 $ (3.19) $ 0.07 $ (3.23)
======= ======== ======== ========
Weighted average shares outstanding 15,163 8,024 15,163 8,024
======= ======== ======== ========
The accompanying notes are an integral part of these
consolidated financial statements.
4
MIM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Six Months Ended
June 30,
--------------------------
1997 1996
------------ -----------
Cash flows from operating activities: (Unaudited)
Net income (loss) $ 1,116 $ (25,896)
Adjustments to reconcile net income (loss) to net cash provided
by (used in) operating activities:
Net income (loss) allocated to minority interest (5) 6
Depreciation and amortization 513 328
Stock option charges 121 26,640
Provision for losses on receivables and due from affiliates 570 656
Changes in assets and liabilities:
Receivables (2,284) (151)
Prepaid expenses and other assets (25) (135)
Accounts payable (949) 66
Claims payable (6,942) (3,466)
Payables to plan sponsors and others 2,274 4,264
Accrued expenses (215) 779
------------ -----------
Net cash provided by (used in) operating activities (5,826) 3,091
------------ -----------
Cash flows from investing activities:
Purchase of property and equipment (710) (164)
Purchase of investment securites (17,933) -
Proceeds from maturities of investment securities 25,262 -
Increase in other assets (179) (359)
Stockholder loans, net (47) 12
Loans to affiliates, net 347 (1,266)
------------ -----------
Net cash provided by (used in) investing activities 6,740 (1,777)
------------ -----------
Cash flows from financing activities:
Principal payments on capital lease obligations (107) (154)
------------ -----------
Net cash used in financing activities (107) (154)
------------ -----------
Net increase in cash and cash equivalents 807 1,160
Cash and cash equivalents--beginning of period 1,834 1,804
------------ -----------
Cash and cash equivalents--end of period $ 2,641 $ 2,964
============ ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Income taxes $ - $ -
============ ===========
Interest $ 22 $ 21
============ ===========
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS:
Equipment acquired under capital lease obligations $ - $ 527
============ ===========
Distribution to stockholder through the cancellation of
stockholder notes receivable $ - $ 622
============ ===========
The accompanying notes are an integral part of these consolidated
financial statements.
5
MIM CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(in thousands, except for share and per share amounts)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated interim financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information, pursuant to the rules and regulations of the Securities
and Exchange Commission. Pursuant to such rules and regulations, certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted. In the opinion of management, all adjustments considered
necessary for a fair presentation of the financial statements, primarily
consisting of normal recurring adjustments, have been included. The results of
operations and cash flows for the six months ended June 30, 1997 are not
necessarily indicative of the results of operations or cash flows which may be
reported for the remainder of 1997.
These consolidated financial statements should be read in conjunction with the
consolidated financial statements, notes and information included in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1996
(the "Form 10-K").
The accounting policies followed for interim financial reporting are the same
as those disclosed in Note 2 to the consolidated financial statements included
in the Form 10-K.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings Per Share (SFAS 128). This
Statement establishes standards for computing and presenting earnings per share
and applies to entities with publicly traded common stock or potential common
stock. SFAS 128 is effective for financial statements for both interim and
annual periods ending after December 15, 1997 and early adoption is not
permitted. When adopted, the statement will require restatement of prior years'
earnings per share. The Company will adopt this statement for its fiscal year
ending December 31, 1997. The following table displays earnings per share
assuming that SFAS 128 had been implemented:
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
---- ---- ---- ----
Basic Earnings Per Share $0.03 $(3.19) $0.09 $(3.23)
Diluted Earnings Per Share $0.03 $(3.19) $0.07 $(3.23)
NOTE 3 - INVESTMENTS
On June 23, 1997, the Company, along with other strategic partners, made an
investment in Wang Healthcare Information Systems, Inc. ("WHIS"), a company
engaged in the development, marketing and servicing of PC-based clinical
information systems for physicians and their staff, using patented image-based
technology. The Company purchased 1,150,000 shares of the Series B Convertible
Preferred Stock, par value $0.01 per share, of WHIS (the "WHIS Shares") for an
aggregate purchase price equal to $2,300. The preferred stock is not registered
on a securities exchange and, therefore, the fair value of these securities is
not readily determinable. Accordingly, the shares are stated at cost on the
accompanying balance sheets.
6
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion and analysis should be read in conjunction with the
Consolidated Financial Statements, the related Notes to the Consolidated
Financial Statements and Management's Discussion and Analysis of Financial
Condition and Results of Operations included in the Form 10-K and the
Consolidated Financial Statements and the related Notes to the Consolidated
Financial Statements included in Item 1 of this Report.
This Report contains statements which constitute forward looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995. The
matters discussed in this Report include statements regarding the intent, belief
or current expectations of the Company, its directors or its officers with
respect to the future operating performance of the Company and the results and
the effect of legal proceedings. Investors are cautioned that any such forward
looking statements are not guarantees of future performance and involve risks
and uncertainties, and that actual results may differ materially from those in
the forward looking statements as a result of various factors. This Report and
the Form 10-K contain information regarding important factors that could cause
such differences.
Overview
A majority of the Company's revenues to date have been derived from operations
in the State of Tennessee in conjunction with RxCare of Tennessee, Inc.
("RxCare"), a pharmacy services administrative organization owned by the
Tennessee Pharmacists Association. The Company assisted RxCare in defining and
marketing pharmacy benefit services to private health plan sponsors on a
consulting basis in 1993, but did not commence substantial operations until
January 1994 when RxCare began servicing several of the health plan sponsors
involved in the newly instituted TennCare(R) state health program. At June 30,
1997, the Company provided pharmacy benefit management services to 35 health
plan sponsors with an aggregate of approximately 1.3 million plan members,
primarily in Tennessee.
Results of Operations
Three months ended June 30, 1997 compared to three months ended June 30, 1996
For the three months ended June 30, 1997, the Company recorded revenue of
$45.8 million compared with revenue of $68.7 million for the three months ended
June 30, 1996, a decrease of $22.9 million. The restructuring, in April 1997,
of a major TennCare contract from a capitated risk-based to a non-risk bearing
fee arrangement resulted in a revenue decrease of approximately $35.5 million
over the same three month period a year ago, although the Company continued to
provide essentially the same services as before the restructuring. This
decrease was partially offset by $6.0 million in incremental revenue from
servicing fourteen new plan sponsors covering over 181,000 plan members,
primarily in the Northeast, South Central, Pacific and North Central regions of
the United States. Revenue increases also resulted from other contract
restructurings as well as the shifting of TennCare members among several plans.
During the three months ended June 30, 1997, approximately 50% of the Company's
revenue was generated through capitated contracts, compared with 92% during the
three months ended June 30, 1996.
Cost of revenue for the three months ended June 30, 1997 decreased to $42.0
million compared with $65.4 million for the three months ended June 30, 1996, a
decrease of $23.4 million. The above-mentioned restructuring of a major
TennCare contract resulted in a decrease in cost of revenue of approximately
$34.8 million. This decrease was partially offset by $5.9 million increase in
claims costs from new health plan business. Other cost increases resulted from
slight increases in TennCare eligibility as well as increasing drug prices. As
a percentage of revenue, cost of revenue decreased to 91.6% for the three months
ended June 30, 1997 from 95.2% for the three months ended June 30, 1996. For the
three months ended June 30, 1997, gross profits increased to $3.9 million, and
as a % of revenue increased 75% as compared to the same three-month period one
year ago.
7
General and administrative expenses were $4.0 million for the three months
ended June 30, 1997 and $2.4 million for the three months ended June 30, 1996,
an increase of 67%. The $1.6 million increase was attributable to expenses
associated with an expanded national sales effort, additional operational
support for servicing new business as well as increases in legal fees and
consulting costs. As a percentage of revenue, general and administrative
expenses increased to 8.7% for the three months ended June 30, 1997 from 3.5%
for the three months ended June 30, 1996.
For the three months ended June 30, 1997, the Company recorded net income of
$0.4 million, or $.03 per share. This compares with a net loss of $25.6
million, or $3.19 per share (after recording a $26.6 million non-recurring, non-
cash stock option charge in August of 1996, the effect of which was $3.28 per
share) for the three months ended June 30, 1996. This improvement was a result
of the above-described changes in revenue, expenses and stock option charge.
Six months ended June 30, 1997 compared to six months ended June 30, 1996
For the six months ended June 30, 1997, the Company recorded revenue of $116.6
million compared with revenue of $135.3 million for the six months ended June
30, 1996, a decrease of $18.7 million. The restructuring, in April 1997, of a
major TennCare contract from a capitated risk-based to a non-risk bearing fee
arrangement resulted in a revenue decrease of approximately $49.8 million over
the same period a year ago, although the Company continued to provide
essentially the same services as before the restructuring. This decrease was
partially offset by $10.6 million in incremental revenue from servicing fourteen
new plan sponsors covering over 181,000 plan members, primarily in the
Northeast, South Central, Pacific and North Central regions of the United
States. Revenue increases also resulted from other contract restructurings as
well as the shifting of TennCare members among several plans. During the first
six months of 1997, approximately 61% of the Company's revenue was generated
through capitated contracts, compared with 92% during the first six months of
1996.
Cost of revenue for the six months ended June 30, 1997 decreased to $108.8
million compared with $130.2 million for the six months ended June 30, 1996, a
decrease of $21.4 million. The above-mentioned restructuring of a major
TennCare contract resulted in a decrease in cost of revenue of approximately
$48.7 million. This decrease was partially offset by $10.3 million in claims
costs from new health plans business. Other cost increases resulted from
increases in TennCare eligibility, increasing drug prices and increased
utilization of behavioral health prescriptions. As a percentage of revenue,
cost of revenue decreased to 93.3% for the six months ended June 30, 1997 from
96.2% for the six months ended June 30, 1996. For the six months ended June 30,
1997, gross profit increased to 7.8 million, and as a % of revenue increased 78%
as compared to the same six-month period one year ago.
General and administrative expenses were $7.9 million for the six months ended
June 30, 1997 and $4.6 million for the six months ended June 30, 1996, an
increase of 72%. The $3.3 million increase was attributable to personnel
expenses in staffing corporate headquarters, expenses associated with an
expanded national sales effort, additional operational support for servicing new
business as well as increases in legal fees and consulting costs. As a
percentage of revenue, general and administrative expenses increased to 6.8% for
the six months ended June 30, 1997 from 3.4% for the six months ended June 30,
1996.
For the six months ended June 30, 1997, the Company recorded net income of
$1.1 million, or $.07 per share. This compares with a net loss of $25.9
million, or $3.23 per share (after recording a $26.6 million non-recurring, non-
cash stock option charge in August of 1996, the effect of which was $3.30 per
share) for the six months ended June 30, 1996. This improvement was a result of
the above-described changes in revenue, expenses and stock option charge.
8
Liquidity and Capital Resources
For the six months ended June 30, 1997, net cash used in operating activities
totaled $5.8 million, primarily due to decreases in claims payable of
approximately $6.9 million attributable to the restructuring of a major TennCare
contract and increases in receivables of approximately $2.3 million due to the
addition of new plans. Such uses were offset by the generation of $1.1 million
in net income along with increases in payables to plan sponsors of approximately
$2.3 million. Investment activities provided $6.7 million in cash due primarily
to the proceeds from maturities of investment securities of approximately $25.3
million offset by the purchase of new investment securities of approximately
$17.9 million.
At June 30, 1997, the Company had working capital of $16.5 million, compared
to $19.6 million at December 31, 1996. Cash and cash equivalents increased to
$2.6 million at June 30, 1997 compared with $1.8 million at December 31, 1996.
The Company had investment securities held to maturity of $29.7 million and
$37.0 million at June 30, 1997 and December 31, 1996, respectively. The
investments are primarily corporate debt securities rated A or better. In June
of 1996, the Company invested $2.3 million in the preferred stock of Wang
Healthcare Information Systems.
At June 30, 1997, the Company had, for tax purposes, unused net operating loss
carryforwards of approximately $6.1 million that may be available to offset
future taxable income, if any, and which will begin expiring in 2008. Use of
these carryforwards may be limited by the Tax Reform Act of 1986.
The Company believes that its improved financial condition and capital
structure, since its initial public offering which raised approximately $47
million in August 1996, has enhanced the Company's ability to negotiate and
obtain additional contracts with plan sponsors and other potential customers.
The Company believes that it has sufficient cash on hand or available to fund
the Company's anticipated working capital and other cash needs for the
foreseeable future. The Company intends to offset, against profit sharing
amounts, if any, due RxCare in the future under the Company's contract with
RxCare, approximately $6.2 million representing RxCare's share of the Company's
cumulative losses and amounts previously advanced or paid to RxCare.
As part of its continued efforts to expand its pharmacy management business,
the Company expects to incur additional sales and marketing expenses. The
Company also may pursue joint venture arrangements, business acquisitions and
other transactions designed to expand its pharmacy management business, which
the Company would expect to fund from cash on hand or future indebtedness or, if
appropriate, the sale or exchange (in the case of a merger) of equity securities
of the Company.
Other Matters
The Company's pharmaceutical reimbursement claims historically have been
subject to a significant increase over annual averages from October through
February, which the Company believes is due to increased medical problems during
the colder months. Changes in prices charged by manufacturers and wholesalers
for pharmaceuticals affect the Company's cost of revenue.
The TennCare program has been controversial since its inception and has
generated government investigations and adverse publicity. There can be no
assurances that the Company's association with the TennCare program will not
adversely affect the Company's business in the future.
9
PART II
OTHER INFORMATION
Item 2. Changes in Securities
During the three months ended March 31, and June 30, 1997, the Company
issued and sold a total of 42,700 shares and 240,500 shares, respectively, of
its Common Stock, $0.0001 par value per share, to 10 and 23 current and former
employees, respectively, for cash consideration totaling $286 and $106,247,
respectively, upon the exercise of options granted to them under the Company's
1996 Stock Incentive Plan, as amended (the "Plan") prior to the Company becoming
subject to the reporting requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended. These sales were exempt from and made without
registration under the Securities Act of 1933, and the rules and regulations
promulgated thereunder, all as amended (the "Securities Act"), in reliance upon
the provisions of Rule 701 promulgated under the Securities Act (the "Rule") in
that such sales met the conditions set forth in paragraph (b) of the Rule, to
wit: (i) the sales were made pursuant to the exercise of options granted under a
written compensatory benefit plan established by the Company for the
participation of its employees, directors and officer, as well as consultants
and advisors rendering bona fide services not in connection with the offer and
sale of securities in a capital-raising transaction, (ii) each Plan participant
has been provided with a copy of the Plan and one or more written stock option
agreements, and (iii) the aggregate offering price of Company securities subject
to outstanding offers to sell stock pursuant to such options in reliance upon
the Rule, plus Company securities sold during the preceding 12 months in
reliance on the Rule, does not exceed the lesser of $5,000,000 or 15 percent of
the total assets of the Company as at December 31, 1996.
10
Item 5. Other Information
By amendments dated as of June 15, 1997 the Company agreed to extend
(by three years to June 15, 2000) the maturity date, and to increase (from 5.42%
to 7.125% per annum) the interest rate accruing and payable monthly, respecting
$954,785 principal amount of debt owed to the Company by E. David Corvese,
the Company's Vice Chairman, and his wife. Evidenced by two promissory notes in
the original aggregate principal amount of $978,750, substantially all of such
debt is secured by a first mortgage on the Corvese's primary residence.
On June 20, 1997, Mr. Todd Palmieri resigned from the Company as a
director and its Executive Vice President - Business and Development. Mr.
Palmieri advised the Company that he was resigning to pursue other business
opportunities and for personal reasons. The Company does not believe that Mr.
Palmieri resigned because of any disagreement with the Company on any matter
relating to the Company's operations, policies or practices.
On June 23, 1997, the Company, along with other strategic partners,
made an investment in Wang Healthcare Information Systems, Inc. ("WHIS"), a
company engaged in the development, marketing and servicing of PC-based clinical
information systems for physicians and their staff, using patented image-based
technology. The Company purchased 1,150,000 shares of the Series B Convertible
Preferred Stock, par value $0.01 per share, of WHIS (the "WHIS Shares") for an
aggregate purchase price equal to $2,300,000.
In addition, the Company will distribute WHIS's products, including the
Physicians' Workstation, the product which embodies the clinical information
system technology described above, under a distribution agreement. Management
believes that this investment and distribution arrangement will provide greater
exposure for the Company's designed pharmaceutical formulary, since this
formulary will be included in the Physician Workstation. Management believes
that the inclusion of the Company's formulary in the Physician Workstation will
provide the Company with access to a broader base of clinical data, allowing the
Company to develop more sophisticated clinical drug protocols at lower costs
than previously incurred.
The WHIS Shares were purchased in a private placement transaction
exempt from the registration requirements of the Securities Act. As such, the
WHIS Shares, as well as the common stock issuable upon conversion thereof, have
not been, and will not be registered under the Securities Act. Accordingly, no
public market currently exists for such securities. Moreover, while the Company
was granted registration rights in certain instances, there can be no assurance
that a public market for these securities will ever exist for the WHIS Shares or
the common stock of WHIS issuable upon conversion thereof. Therefore, there can
be no assurances that the Company will be able to sell or otherwise liquidate
its investment in WHIS in the future.
11
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit Number Description
-------------- -------------
10.1 Amendment to Promissory Note among E. David
Corvese, Nancy P. Corvese and Pro-Mark Holdings,
Inc. dated as of June 15, 1997.
10.2 Amendment to Promissory Note among E. David
Corvese, Nancy P. Corvese and Pro-Mark Holdings,
Inc. dated as of June 15, 1997.
10.3 Amendment to Mortgage among E. David Corvese,
Nancy P. Corvese and Pro-Mark Holdings, Inc. dated
as of June 15, 1997.
27 Financial Data Schedule
(b) Reports on Form 8-K
The registrant did not file any Reports on Form 8-K during the quarter for which
this Report is filed.
12
SIGNATURES
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.
MIM Corporation
/s/ Richard H. Friedman
Date: August 13, 1997 -------------------------------------------------
Richard H. Friedman
Chief Operating Officer, Chief Financial Officer,
Treasurer and Director
(Principal Financial Officer)
13
EXHIBIT 10.1
AMENDMENT TO PROMISSORY NOTE
----------------------------
RECITALS
--------
1. On June 15, 1994, E. David Corvese and Nancy P. Corvese, husband and
wife, of 839-C Ministerial Road, South Kingstown, Rhode Island 02879,
(collectively the "Borrower") executed and delivered to Pro-Mark Holdings, Inc.,
a Delaware corporation having a business address at 33 North Road, Peacedale,
Rhode Island 02879 (the "Lender") a promissory in the principal amount of
$975,000.00 (the "Note");
2. The original term of the Note was three years, maturing on June 15,
1997, bearing an interest rate of 5.42% and providing for a monthly payment of
$4,403.75; and
3. The Borrower and the Lender desire to amend the Note by extending the
maturity date another three years until June 15, 2000, increasing the interest
rate to 7.125%, and requiring a monthly payment of interest only in the amount
of $5647.32.
AMENDMENT
---------
Now therefor in consideration of the increase in the interest rate the
Borrower and the Lender agree to amend the Note as follows:
1. The second sentence of Paragraph 2 entitled "Interest" is amended to
read: "I will pay interest at a yearly rate of 7.125%."
2. The first sentence of subpart (A) of Paragraph 3 entitled "Time and
Place of Payments" is amended to read: "I will pay interest only by making
monthly payments on the 15th day of each month beginning on July 15, 1994 and
continuing until June 15, 2000 (which is called the "maturity date"), when I
will pay the full amount of unpaid principal and interest and any other charges
described below that I may owe under this Note.
3. Subpart (B) of Paragraph 3 entitled "Amount of Monthly Payments" is
amended to read: "My monthly payment will be in the amount of $5647.32."
In witness whereof the Borrower and the Lender have signed and delivered
this Amendment as of the 15th day of June, 1997.
/s/ E. David Corvese
------------------------------------
Pro-Mark Holdings, Inc. E. David Corvese
By /s/ Steven Dias /s/ Nancy P. Corvese
-------------------------- ------------------------------------
Nancy P. Corvese
EXHIBIT 10.2
AMENDMENT TO PROMISSORY NOTE
----------------------------
RECITALS
--------
1. On June 15, 1994, E. David Corvese and Nancy P. Corvese, husband and
wife, of 839-C Ministerial Road, South Kingstown, Rhode Island 02879,
(collectively the "Borrower") executed and delivered to Pro-Mark Holdings, Inc.,
a Delaware corporation having a business address at 33 North Road, Peacedale,
Rhode Island 02879 (the "Lender") a promissory in the principal amount of
$3,750.00 (the "Note");
2. The original term of the Note was three years, maturing on June 15,
1997, bearing an interest rate of 5.42% and providing for a monthly payment of
$16.93; and
3. The Borrower and the Lender desire to amend the Note by extending the
maturity date another three years until June 15, 2000, increasing the interest
rate to 7.125%, and requiring a monthly payment of interest only in the amount
of $21.72.
AMENDMENT
---------
Now therefor in consideration of the increase in the interest rate the
Borrower and the Lender agree to amend the Note as follows:
1. The second sentence of Paragraph 2 entitled "Interest" is amended to
read: "I will pay interest at a yearly rate of 7.125%."
2. The first sentence of subpart (A) of Paragraph 3 entitled "Time and
Place of Payments" is amended to read: "I will pay interest only by making
monthly payments on the 15th day of each month beginning on July 15, 1994 and
continuing until June 15, 2000 (which is called the "maturity date"), when I
will pay the full amount of unpaid principal and interest and any other charges
described below that I may owe under this Note."
3. Subpart (B) of Paragraph 3 entitled "Amount of Monthly Payments" is
amended to read: "My monthly payment will be in the amount of $21.72."
In witness whereof the Borrower and the Lender have signed and delivered
this Amendment as of the 15th day of June, 1997.
Pro-Mark Holdings, Inc. /s/ E. David Corvese
------------------------------------
By /s/ Steven Dias E. David Corvese
------------------------------
Name: /s/ Nancy P. Corvese
------------------------------------
Nancy P. Corvese
EXHIBIT 10.3
AMENDMENT TO MORTGAGE
---------------------
RECITALS
--------
1. E. David Corvese and Nancy P. Corvese, husband and wife, of 839-C
Ministerial Road, South Kingstown, Rhode Island 02879, (the "Borrower") granted
to Pro-Mark Holdings, Inc., a Delaware corporation with an address at 33 North
Road, Peacedale, Rhode Island 02879 (the "Lender") a mortgage of that certain
lot or parcel of land, together with all buildings and improvements thereon,
commonly known and numbered as 839-C Ministerial Road, South Kingstown, Rhode
Island and more fully described on Exhibit A (the "Mortgage"); and
---------
2. The Mortgage was dated September 9, 1994 and was recorded in
the Records of Land Evidence of the Town of South Kingstown on September 12,
1994 at 15:06:46 p.m.; and
3. The Mortgage was given to secure the payment of a certain promissory
note in the amount of $975,000.00, dated June 15, 1994, given by the Borrower to
the Lender (the "Note"); and
4. Contemporaneously herewith, the Borrower and the Lender have amended
the Note to increase the interest rate on the unpaid principal balance and to
extend the term from June 15, 1997 to June 15, 2000; and
5. The Borrower and the Lender desire to amend the Mortgage to extend
the term to correspond to the term of the Note.
AMENDMENT
---------
Now therefore in consideration of the increase in the interest rate
under the Note, the Borrower and the Lender hereby agree to amend the Mortgage
as follows:
1. The fifth sentence of paragraph one of the Mortgage is amended to
read: "This debt is evidenced by Borrower's note dated June 15, 1994, in the
principal sum of Nine Hundred Seventy-Five Thousand Dollars (U.S.
$975,000.00)("Note"), which provides for monthly payments, with the full debt,
if not paid earlier, due and payable on June 15, 2000."
In witness whereof, the Borrower and the Lender have signed and
delivered this Amendment as of the 15th day of June, 1997.
Pro-Mark Holdings, Inc. /s/ E. David Corvese
--------------------------
E. David Corvese
By /s/ Steven Dias
-----------------------------
/s/ Nancy P. Corvese
--------------------------
Nancy P. Corvese
STATE OF RHODE ISLAND
WASHINGTON COUNTY SS:
In South Kingstown, on this 11th day of August, 1997, before me
personally appeared E. David Corvese and Nancy P. Corvese, each and both known
to me to be the persons executing the foregoing Amendment to Mortgage and each
acknowledged said execution to be his or her free act and deed.
/s/ Sen. Leo R. Blaise
------------------------------
Notary Public
My Commission Expires:
STATE OF RHODE ISLAND
WASHINGTON COUNTY SS:
In South Kingstown, on this 11th day of August, 1997 before me personally
appeared Steven Dias, the Chief Financial Officer of Pro-Mark Holdings, Inc.,
known to me to be the person executing the foregoing Amendment to Mortgage on
behalf of said corporation and he acknowledged said execution to be his free act
and deed and the free act and deed of said corporation.
/s/ Dawn Rousseau
------------------------------
Notary Public
My Commission Expires: July 15, 1998
5
3-MOS
DEC-31-1997
APR-01-1997
JUN-30-1997
2,641
29,709
22,018
1,658
0
40,841
4,373
1,753
57,046
24,307
0
0
0
1
31,311
57,046
116,644
116,644
108,801
7,903
0
570
0
1,116
0
1,116
0
0
0
1,116
0.07
0.07
