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Hey Red, yeah I've been watching this one for awhile and played on the last few runs. It can be very nice and move to .05 or higher very very easily... It just needs this volume. It seems primed for a run here soon. I wouldn't be surprised to see some news as well, we haven't seen anything since near November. If you hear anything let me know, at these levels I def like to pick up some more again....
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Mac going down, not so good. Wait for the turn back up before getting in. Almost bottomed out. Low volume, but got some more today. FYI the high so far is .06 for the 52-week
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Thanks Jelly...Yeah, I dont think .06 would be hard to reach at all...Definately going to keep a watch...I wouldn't be surprised to see some action here very soon, IMHO.
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Hey Red, I'm listening....I agree with ya, this one is going to go very soon, at least to the .05-.06 range, maybe higher. There seems to be a lot more interest and eyes watching this one, this time...I cant wait for Tuesday!
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Hey guys I was in this stock the first tiome she spiked. She moved very well with about 6k in cash put into it on the ask. If you guys can pass .06 on the ask and hold it I can show you neat little trick so you can get rid of your shares. =)
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Whatever the case may be, please keep this about RPHL...If you have something, please just PM this guy. We have so many threads that are attack threads, please dont let this happen here. RPHL is a good day to swing trade once the volume starts, which I believe will be very soon.
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I'm very excited about this one tomorrow. Low O/S, ended Friday on an uptick, looks like the sellers or most of them are gone for now, and lots of interest around the net! GL tomorrow and this week!
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This has potential. With the low o/s it could run nicely with some volume. No signs of dilution, decent revenues for a penny stock, this one could go, I like it.
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RPHL Closed up very nice today shortly before the close. Bid/Ask is .03 to .04. Keep a watch, this is looking better and better. Any thoughts anyone.
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This is from the 10QSB in Novemeber. As you can see this is a penny that actually makes money!!!
Form 10QSB for ROCKPORT HEALTHCARE GROUP INC --------------------------------------------------------------------------------
14-Nov-2005
Quarterly Report
Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION The following discussion and analysis of the Companys financial condition as of September 30, 2005, and the Companys results of operations for the two periods ended September 30, 2005 and 2004, should be read in conjunction with the Companys audited financial statements included in its Form 10-KSB for the year ended March 31, 2005, previously filed with the Securities and Exchange Commission..
Overview
Rockport Healthcare Group, Inc. (Rockport or the Company) is a management company dedicated to developing, operating and managing networks consisting of healthcare providers and medical suppliers that serve employees with work-related injuries and illnesses. Rockport offers access to a comprehensive healthcare network at a local, state or national level for its clients and their customers. Typically, Rockports clients are property and casualty insurance companies, employers, bill review/medical cost containment companies, managed care organizations, software/bill review companies and third party administrators.
The Company contracts with physicians, hospitals and ancillary healthcare providers at rates below the maximum allowed by applicable state fee schedules, or if there is no state fee schedule, rates below usual and customary allowables for work-related injuries and illnesses. The Company generates revenue by receiving as a fee, a percentage of the medical cost savings realized by its clients. The medical cost savings realized by its clients is the difference between the maximum rate allowed for workers compensation medical services in accordance with the state allowed fee schedules or usual and customary allowables and the discounted rates negotiated by the Company with its healthcare providers.
The Companys mission to its clients and healthcare providers is to: (1) maintain, update and distribute accurate information on each and every healthcare provider that is directly contracted by the Company or is accessed through the Companys network partners relationships; (2) demonstrate, educate and offer each client and their customer referral products and services that encourage, enable and guide their injured workers to the Companys healthcare providers; and (3) provide clear, concise and accurate preferred provider organization (PPO) repricing information and assistance in facilitating payment to the contracted rates and provide resolution to reimbursement problems in a timely manner.
The Companys goals are to: (1) create and maintain profitability within industry standards and create shareholder value; (2) become the national network of choice for work-related injuries and illnesses; (3) market and position its networks, state by state, to increase business to its healthcare providers while offering significant savings to its clients and their customers; (4) continually develop information systems that improve processes, measurements and the integrity of its healthcare provider data and reporting structure; (5) continue its dedication to client and healthcare provider support services; and (6) provide any payor, managed care organization or bill review/software company an alternative national workers compensation network in a non-competitive relationship.
The Company has healthcare providers and/or network partners in all fifty states and the District of Columbia. As of September 30, 2005, the Company has in excess of 315,000 healthcare providers nationwide that serve its clients and their customers for their injured employees care. Should a client or their customer have particular needs in an under-served market, Rockport or its network partner has a skilled team of experienced network development personnel capable of custom building the under-served market for the client.
Critical Accounting Policies
General
The Consolidated Financial Statements and Notes to Consolidated Financial Statements contain information that is pertinent to this managements discussion and analysis. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of any contingent assets and liabilities. Management believes these accounting policies involve judgment due to the sensitivity of the methods, assumptions and estimates necessary in determining the related asset and liability amounts. Management believes it has exercised proper judgment in determining these estimates based on the facts and circumstances available to its management at the time the estimates were made. The significant accounting policies are described in the Company's financial statements (See Note 2 in Notes to Consolidated Financial Statements in the Companys Form 10-KSB for the year ended March 31, 2005).
-------------------------------------------------------------------------------- Revenue Recognition Revenue is recognized when earned. The Companys revenue is a contractual percentage of the medical cost savings realized and is determined at such time as the Companys contractual discounts with its healthcare providers are applied to its clients medical bills, which produces a medical cost savings.
Allowance for Doubtful Accounts
The Company maintains an allowance for doubtful accounts, which reflects the estimate of losses that may result from the inability of some of the Companys clients to make required payments. The estimate for the allowance for doubtful accounts is based on known circumstances regarding collectability of client accounts and historical collections experience. If the financial condition of one or more of the Companys clients were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. Material differences between the historical trends used to estimate the allowance for doubtful accounts and actual collection experience could result in a material change to the Companys consolidated results of operations or financial position.
Intangible Assets
As of September 30, 2005, the Company had $387,500 of unamortized intangible assets resulting from the acquisition of the Protegrity network. Effective July 7, 2003, the Company purchased all healthcare provider agreements from Protegrity Services, Inc., (Protegrity), a third party administrator (TPA) and managed care organization. The Company was acquiring healthcare provider agreements in order to expand the size of its network. This acquisition did not result in the acquisition of clients or revenue. This acquisition of provider contracts was funded with the issuance of 500,000 shares of Company common stock valued at $500,000, and because the Company would earn revenue in the future from the acquired provider agreements, the Company recorded the value of the stock issued as an intangible asset. The value of $500,000 attributed to the acquisition was based on the number of shares issued multiplied by $1.00 per share. If Protegrity has not sold its shares of Rockport by July 2008, the Company has agreed to purchase from Protegrity at a price of $1.00 per share, all of the remaining outstanding shares then owned by Protegrity. Amounts paid for provider agreements are being amortized to expense on the straight-line method over the estimated useful lives of the agreements of ten years. However, intangible assets are subject to an impairment assessment at least annually which may result in a charge to operations if the fair value of the intangible asset is impaired which would have a negative impact on the Companys financial condition and results would be negatively affected.
Accounting for Stock-Based Compensation
The Company accounts for stock-based compensation whereby no compensation expense is recorded for stock options or other stock-based awards to employees that are granted with an exercise price equal to or above the estimated fair value per share of the Companys common stock on the grant date. The Company adopted the pro forma requirements pursuant to fair value reporting which requires compensation expense to be disclosed based on the fair value of the options granted at the date of the grant.
In December 2002, the Financial Accounting Standards Board issued its Statement No. 148, Accounting for Stock-Based Compensation Transition and Disclosurean amendment of Financial Accounting Standards Board Statement No. 123. This Statement amends Statement of Financial Accounting Standards No. 123, to provide alternative methods of transition for an entity that voluntarily changes to the fair value based method of accounting for stock-based employee compensation. It also amends the disclosure provisions of Statement of Financial Accounting Standards No. 123 to require prominent disclosure about the effects on reported net income of an entitys accounting policy decisions with respect to stock-based employee compensation. The transition and annual disclosure provisions of Statement of Financial Accounting Standards No. 148 are effective for fiscal years ending after December 15, 2002, and the interim disclosure provisions were effective for the first interim period beginning after December 15, 2002. The Company did not voluntarily change to the fair value based method of accounting for stock-based employee compensation, therefore, the adoption of Statement of Financial Accounting Standards No. 148 did not have a material impact on its operations and/or financial position. If the Company had adopted the fair value based method of accounting for stock-based employee compensation, it would have resulted in no compensation expense and no affect in the Companys basic and diluted earnings per share.
Six Months Ended September 30, 2005 to Six Months Ended September 30, 2004
The following table sets forth certain operating information regarding the Company for the six months ended September 30, 2005 and 2004.
2005 2004 Revenue $ 1,607,839 $ 1,580,937 Cost of sales 476,865 513,576 Gross profit 1,130,974 1,067,361 Selling, general and administrative expenses 1,259,756 1,157,008 Depreciation and amortization 31,708 35,018 Loss from operations (160,490 ) (124,665 ) Interest, net 71,688 67,959 Net loss $ (232,178 ) $ (192,624 ) Net loss per share - basic and diluted $ (0.02 ) $ (0.01 )
Revenue. The Company's source of revenue is fees it receives from its clients and their customers that access and utilize the Company's healthcare provider network for work-related injuries and illnesses. When an injured employee utilizes a healthcare provider within the Companys PPO network, the employer realizes medical cost savings, which it would not have realized had the employee utilized a healthcare provider not within the Companys PPO network. The Companys clients and their customers, where permitted by law, direct their injured employees to healthcare providers within the Companys healthcare provider network, which in turn creates a medical cost savings as a result of the discounts the Company has negotiated with its healthcare providers. The agreements the Company has with its clients provide the Company with a fee based upon a percentage of the medical cost savings realized by its clients. The fee percent the Company receives from its clients is negotiated by the Company and usually is determined by the amount of potential business the Company will receive from the client. Typically, these agreements are short-term in nature, which is standard within the healthcare industry, but which make the predictability of the Companys future revenues difficult.
The Company continues to expand its PPO network in additional areas of the country in conjunction with the expansion of its client base, either through direct contracting with providers, through strategic network alliances with third party networks, which it refers to as network partners, or through purchases of networks. The Company utilizes its own network development staff to enhance its PPO network and custom build in a market for a given client. Effective July 7, 2003, the Company purchased the healthcare provider agreements from Protegrity Services, Inc., (Protegrity) which included certified networks in the states of Florida and Kentucky and providers in a variety of other states. As consideration for the purchase, the Company issued 500,000 shares of restricted common stock to Protegrity which it recorded as an intangible asset valued at $500,000 and granted Protegrity an earnout of a percentage of the revenue the Company receives in the states of Florida, Kentucky and Missouri over the next five years. The Company intends to utilize this purchase to expand its sales and marketing strategies in those states and further strengthen its position in the southeastern United States. This purchase brought the total number of providers within the Companys network to in excess of 315,000 physicians, hospitals and ancillary healthcare facilities in all 50 states and the District of Columbia. Costs associated with developing the Companys networks are charged to expense when incurred and are included in selling, general and administrative expenses.
-------------------------------------------------------------------------------- Revenue for the six months ended September 30, 2005, was $1,607,839 which was $26,902, or 2%, greater than revenue for the six months ended September 30, 2004, of $1,580,937. The Company has added four new clients during the current year period which contributed $54,320 in revenue over the previous year period. Of the Companys existing clients, who were clients during the prior year period, there were fourteen clients which increased the Companys revenue over the prior year period by $263,484 due to increased access to the Companys network and fourteen clients which decreased the Companys revenue over the prior year period by $290,902 due to the loss of customers and decreased access to the Companys network of healthcare providers. With respect to the source of the Company's revenue, the Company had two clients, each which provided more than 10% of the Company's revenue for the six months ended September 30, 2005. Those clients were, Fair Isaacs Corporation which contributed 30.4% of total revenue and Intracorp which contributed 15.7% of total revenue.
Cost of sales. The Company's cost of sales consists of fees paid for access to third party provider networks, or network partners, fees paid for sales commissions to non-employee sales personnel and commission overwrites. Cost of sales decreased by $36,711, from $513,576 during the six months ended September 30, 2004, to $476,865 during the six months ended September 30, 2005. As the Company expands its business outside the State of Texas, to states where it does not have its own network, the Company will continue developing strategic network alliances and network access fees will increase, which will in turn increase the Companys cost of sales and decrease its gross margins. The purchase of the Protegrity network in Florida and Kentucky will allow the Company to increase its revenue in those states without a corresponding increase in network access fees, however, for a period of five years, Protegrity will receive an earnout fee as a percentage of revenue received by the Company from the states of Florida, Kentucky and Missouri. Those fees for the six months ended September 30, 2005 amounted to $30,000, an increase of $1,876 over the prior year period and are included in sales commissions. Fees incurred for access to third party provider networks are based on a percentage of the Companys revenue from using such network. Sales commissions and commission overwrites paid by the Company are based on a percentage of revenue billed and collected. For the six months ended September 30, 2005, cost of sales were comprised of network access fees of $383,790, sales commissions of $61,432 and commission overwrites of $31,644.
During September 1998, the Company acquired Newton Healthcare Network, LLC from Bannon Energy Incorporated (Bannon) of which Robert D. Johnson, a former director of the Company, was sole owner of Bannon. In accordance with the purchase and sale agreement, Bannon receives a commission overwrite of 2% of the gross revenue attributable to Rockport Community Network, Inc. For the six months ended September 30, 2005, Bannon earned $31,644.
Gross profit. The Company's gross profit increased by $63,613 from $1,067,361 during the six months ended September 30, 2004, to $1,130,974 during the six months ended September 30, 2005. Gross profit as a percentage of sales was 70% for the current year period and 68% for the prior year period. The increase in gross profit was attributable to the increase in revenue. The Company expects its gross profit as a percentage of sales will decrease as it expands its business outside the State of Texas and continues to incur access fees to third party networks, however, the Company believes having network partners is the most economical method of building a nationwide network.
Selling, general and administrative expenses. Selling, general and administrative expenses increased by $102,748 from $1,157,008 during the six months ended September 30, 2004, to $1,259,756 during the six months ended September 30, 2005.
· Payroll and related expenses increased from $862,699 during the six months ended September 30, 2004, to $865,533 during the six months ended September 30, 2005. The primary reason for the increase was due to an increase in the cost of healthcare benefits which was partially offset by a reduction in salaries due to fewer employees, one of which became a consultant as described in professional services described below.
· Office administration expenses decreased from $165,371 during the six months ended September 30, 2004, to $149,030 for the six months ended September 30, 2005. The Company renegotiated the lease terms of its office lease and reduced its lease payment to $13,746 from $18,507 as long as the Company signs a new lease with the building. Should the Company not sign a new lease with the building, it will be obligated to pay $18,329 to the building owner.
· Professional services, which are comprised of accounting and audit, legal, investor relations, consulting and other professional fees, increased from $110,148 during the six months ended September 30, 2004, to $160,174 during the six months ended September 30, 2005. The primary component of the increase was due to incurring consulting fees from a former employee to perform various financial services and placement fees incurred in hiring replacement employees.
· Other expenses increased by $66,229 from $18,790 during the six months ended September 30, 2004 to $85,019 during the six months ended September 30, 2005. The Company incurred bad debt expenses of $25,369 and the settlement of a dispute of two sales personnel totaling $39,472.
· On June 30, 2005, the Company entered into a settlement agreement with Fontenot/Catala regarding several disputed accounts and to resolve certain other conflicts. To eliminate any future potential liability, other than those specifically agreed to in the settlement agreement, the Company issued to them 200,000 shares of the Companys restricted common stock and agreed to certain cash payments, the net result of which resulted in a charge to earnings in the amount of $39,472, reflected in other expenses.
The Company currently has fully staffed all of its departments with highly qualified personnel to market its provider network to potential clients, develop its provider network, design and develop its management information systems, perform its client services and provide for the administration of the Company. As a result of this staffing, the Company has increased its sales and processing capabilities and believes the Company is well positioned to experience new growth. The Company believes there will not be any significant increase in selling, general and administrative expenses as it implements its business plan.
Net loss. The Company had a net loss for the six months ended September 30, 2005, of $232,178, or $0.02 per share (basic and diluted), compared with a net loss of $192,624, or $0.01 per share (basic and diluted), for the six months ended September 30, 2004.
The following summary table presents comparative cash flows of the Company for the six month periods ended September 30, 2005 and 2004:
2005 2004 Net cash provided by (used in) operating activities $ (50,613 ) $ 3,435 Net cash used in investing activities $ (11,212 ) $ (1,187 ) Net cash provided by financing activities $ -- $ 9,000
Changes in cash flow. The Company currently manages the payment of its current liabilities and other obligations on a monthly basis, as cash becomes available. Net cash used in operating activities for the six months ended September 30, 2005, was $50,613 compared with net cash provided by operating activities of $3,435 for the six months ended September 30, 2004. This was a decrease of $54,048 when compared to the prior year period. The components of net cash used in operating activities for the 2005 period were a net loss of $232,178 and a decrease in accounts payable of $5,601. These uses of cash were partially offset by non-cash charges of $44,910 and other changes in current assets and liabilities. Net cash used in investing activities for the six months ended September 30, 2004 was $11,212.
Liquidity and capital resources. The Company has funded its operations through the sale of Company common stock, borrowing funds from outside sources and conversion of employee, director and shareholder debt into restricted common stock. At September 30, 2005, the Company had available cash in non-restrictive accounts of $4,999 and negative working capital of $189,676. As of September 30, 2005, the Company had outstanding debt of: (a) $765,000 in principal amount in the form of 10% convertible notes, (b) $227,493 in principal amount in the form of an 8% note, and (c) $200,000 in principal amount in the form of a 15% convertible note.
For fiscal 2006, the Company is projecting its monthly cash operating expenses, excluding network access fees, commissions and commission overwrites, to be approximately $200,000. As discussed above, the Company has $1,388,270 of note payable and accrued interest due in April 2007. The Company is currently seeking sources of financing to retire these notes, as it has no current means to pay the notes as they become due, and as it does not expect to be able to retire these notes from its operating cash. If the Company is unable to refinance these notes, it will be required to raise funds to retire the notes, or it will be in default of the notes. The Company has no commitments for the needed funds to retire these notes, and the failure to raise such funds or refinance the notes could subject the Company to a claim by the note holders for repayment, which would materially adversely affect the Companys financial condition.
The Companys cash in non-restrictive accounts has decreased to $4,999 at September 30, 2005. In addition at September 30, 2005, the Company has negative working capital of $189,676. Included in the working capital balance in the amount Due to directors, officers and employees is $156,000 of accrued legal fees to Mr. Baldwin, which he has verbally agreed to allow the Company to accrue his fees and not pay them at this time. The Company has $702,044 in accounts receivable at September 30, 2005, which it intends to collect and provide a portion of the cash required by the Company to meet its obligations over the next twelve months coupled with new clients it has signed contracts with and is implementing into its medical bill repricing software. The Companys future growth is conditioned on the Company signing more employers, insurers and others for access to its provider network and obtaining a greater participation by consumers who are covered by such payors. The Company will dedicate a significant portion of its cash flow from operations to the continuing development and marketing of its provider network.
Off-Balance Sheet Arrangements
On July 7, 2003, the Company purchased the healthcare provider contracts from Protegrity services for 500,000 shares of the Companys common stock. The Company committed to repurchase the shares for $1.00 per share if Protegrity has not been able to realize this amount by July 2008.
New Accounting Pronouncements
In December 2004, the FASB issued Statement of Financial Accounting Standards No. 123R Shared Base Payment (SFAS123R). This statement is a revision of SFAS Statement No. 123; Accounting for Stock-Based Compensation and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees and its related implementation guidance. SFAS 123R addresses all forms of shared based compensation (SBP) awards, including shares issued under employee stock purchase plans, stock options, restricted stock and stock appreciation rights. Under SFAS 123R, SBP awards result in a cost that will be measured at fair value on the awards date of grant, based on the estimated number of awards that are expected to vest and will be reflected as a compensation cost in the historical financial statements. This statement is effective for all public entities that file as small business issuers as of the beginning of the first interim or annual reporting period that begins after December 15, 2005. The Company is in the process of evaluating whether SFAS No. 123R will have a significant impact on the Companys overall results of operations or financial position.
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