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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) March 30, 1998
FINANTRA CAPITAL, INC.
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(Exact Name of Registrant as Specified in Charter)
DELAWARE 000-22681 13-3571419
(State or Other Jurisdiction of (Commission File Number) (IRS Employer
Incorporation) Identification No.)
1100 PONCE DE LEON BOULEVARD, CORAL GABLES, FLORIDA 33134
(Address of Principal Executive Offices) (Zip Code)
(305) 443-5002
(Registrant's telephone number, including area code)
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NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
As previously reported in Finantra Capital, Inc.'s (the "Company's")
Annual Report on Form 10-KSB for the year ended December 31, 1997, the Company,
on March 30, 1998, acquired all of the outstanding capital stock of Medical
Billing Service Systems, Inc., a Florida Corporation ("Medical Billing"),
Premier Provider Services, Inc., a Florida corporation ("Premier"), and PPS
Staffing, Inc. a Florida corporation ("PPS"). Each of Medical Billing, Premier
and PPS (collectively, the "Medical Billing Subsidiaries") is engaged in
providing back office auditing and other financial administrative services
principally to the medical industry. The Company anticipates that its
acquisition of the Medical Billing Subsidiaries will enable it to save the
costs and expenses associated with either building internally, or outsourcing,
such back office and administrative services.
In consideration for the Company's acquisition of the Medical Billing
Subsidiaries, the Company agreed to issue to the principals of the Medical
Billing Subsidiaries an aggregate of 585,000 shares of the Company's common
stock, $.01 par value per share (the "Common Stock"), each such share valued at
$4.50, one-half of which were issued upon the closing of the acquisitions, with
the remaining one-half of such shares being issuable on the first anniversary
of such acquisitions. In addition, the Company agreed to issue to the
principals of the Medical Billing Subsidiaries incentive stock options pursuant
to the Company's 1997 Stock Option Plan to acquire, through December 31, 2001,
under certain circumstances, up to an aggregate of 150,000 additional shares of
Common Stock based upon the Medical Billing Subsidiaries' future financial
performance. The principals of the Medical Billing Subsidiaries were also
issued three year employment contracts.
Historical and pro forma financial information regarding the Company
and each of the Medical Billing Subsidiaries is set forth in Item 7 of this
Current Report on Form 8-K.
ITEM 5. OTHER EVENTS.
On August 7, 1998, the Company commenced a private offering (the
"Offering") to accredited investors (as defined in the Securities Act of 1933,
as amended) of a maximum of 600,000 units (the "Units"), each Unit being
comprised of one share of Common Stock and one redeemable Common Stock purchase
warrant (the "Warrant"). Each Unit is being offered and sold by the Company for
$2.75.
Each Warrant entitles the holder thereof to purchase one share of
Common Stock for $4.125, subject to adjustment, through February 1, 2002. The
Warrants, however, are not exercisable unless, at the time of exercise, the
shares of Common Stock underlying the Warrants have been registered, qualified
or deemed to be exempt from the registration requirements of the laws of the
state of residence of the holder of such Warrants. The
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Warrants are redeemable by the Company for $.25 per Warrant on 30 days' prior
written notice if the average reported closing price for shares of the
Company's Common Stock for the 20 consecutive trading days prior to the notice
of redemption equals or exceeds $6.1875.
The Offering is being conducted by the Company on a best efforts basis
and will continue until the earlier of the date that all 600,000 Units have
been sold or November 1, 1998. The Company has reserved the right, however, to
extend the Offering until January 4, 1999.
The net proceeds to the Company from the sale of all 600,000 Units,
after deducting offering expenses, is estimated to be $1,635,000. Since there
is no minimum number of Units which must be sold in the Offering, the Company
will utilize subscription proceeds upon acceptance. The Company intends to
utilize the net proceeds from the Offering to provide working capital for the
Company's factoring, leasing and mortgage operations, and for general corporate
purposes, including acquisitions.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Historical financial information regarding the Company and each of
the Medical Billings Subsidiaries is set forth on pages F-1 through F-6 hereto.
(b) Pro forma financial information regarding the Company, and each of
the Medical Billing Subsidiaries is set forth on pages F-1 through F-6 hereto.
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FINANTRA CAPITAL, INC.
PROFORMA COMBINED BALANCE SHEETS
DECEMBER 31, 1997
ASSETS
------
<TABLE>
<CAPTION>
MEDICAL
BILLING PREMIER
FINANTRA SERVICE PROVIDER PPS PROFORMA
CAPITAL, SYSTEMS, SERVICES, STAFFING, ADJUST- PROFORMA
INC. INC. INC. INC. MENTS COMBINED
---------- ---------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Current Assets:
Cash ........................................ $4,106,803 $ 2,536 $ 47,882 $ 28,166 $ -- $4,185,387
Accounts receivable, net of allowance for
doubtful accounts of $3,000 in 1997 ...... 45,661 200,110 180,025 179,245 -- 605,041
Finance receivable .......................... 500,000 -- -- -- -- 500,000
Prepaid expenses ............................ -- -- 5,444 10,650 -- 16,094
Consulting agreement ........................ 120,000 -- -- -- -- 120,000
---------- ---------- ---------- ---------- ---------- ----------
Total current assets .................. 4,772,464 202,646 233,351 218,061 -- 5,426,522
---------- ---------- ---------- ---------- ---------- ----------
Rental equipment, at cost, net ........ 69,959 -- -- -- -- 69,959
---------- ---------- ---------- ---------- ---------- ----------
Property and equipment, at cost, net .. 7,995 41,691 18,297 4,157 -- 72,140
---------- ---------- ---------- ---------- ---------- ----------
Other assets:
Goodwill ........................... -- -- -- -- (A) 1,369,796 1,369,796
Due from affiliates ................ 75,413 -- -- -- -- 75,413
Deposits and consulting agreement .. 30,000 485 2,692 -- -- 33,177
---------- ---------- ---------- ---------- ---------- ----------
Total other assets .................... 105,413 485 2,692 -- 1,369,796 1,478,386
---------- ---------- ---------- ---------- ---------- ----------
Total assets .......................... $4,955,831 $ 244,822 $ 254,340 $ 222,218 $1,369,796 $7,047,007
========== ========== ========== ========== ========== ==========
</TABLE>
F-1
<PAGE>
FINANTRA CAPITAL, INC.
PROFORMA COMBINED BALANCE SHEETS
DECEMBER 31, 1997
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
MEDICAL
BILLING PREMIER
FINANTRA SERVICE PROVIDER PPS PROFORMA
CAPITAL, SYSTEMS, SERVICES, STAFFING, ADJUST- PROFORMA
INC. INC. INC. INC. MENTS COMBINED
---------- ---------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Current liabilities:
Notes payable ..................................... $ 140,525 $ -- $ -- $ -- $ -- $140,525
Current portion of long-term debt ................. 107,495 -- -- -- -- 107,495
Current portion of obligations to finance
companies ...................................... 50,754 -- -- -- -- 50,754
Current portion of capital lease
obligation ..................................... -- 22,008 2,773 -- -- 24,781
Accounts payable and accrued expenses ............. 364,246 17,148 19,020 13,414 -- 413,828
Customer deposits ................................. -- -- 5,509 -- -- 5,509
Dividends payable - preferred stock ............... 1,278 -- -- -- -- 1,278
Distributions payable ............................. -- -- 45,000 -- -- 45,000
Income taxes payable - current .................... -- -- -- 460 (B) (460) --
Deferred tax liability ............................ -- -- -- 65,500 (B) (65,500) --
--------- --------- --------- --------- --------- --------
Total current liabilities ................... 664,298 39,156 72,302 79,374 (65,960) 789,170
--------- --------- --------- --------- --------- --------
Other liabilities:
Long-term debt, net of current portion ... 60,000 -- -- -- -- 60,000
Obligations to finance companies, net of
current portion ....................... 26,913 -- -- -- -- 26,913
Capital Lease obligation ................. -- 3,997 5,331 -- -- 9,328
--------- --------- --------- --------- --------- --------
Total other liabilities ............ 86,913 3,997 5,331 -- -- 96,241
--------- --------- --------- --------- --------- --------
Total liabilities ........................... $ 751,211 $ 43,153 $ 77,633 $ 79,374 $ (65,960) $885,411
========= ========= ========= ========= ========= ========
</TABLE>
F-2
<PAGE>
FINANTRA CAPITAL, INC.
PROFORMA COMBINED BALANCE SHEETS
DECEMBER 31, 1997
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
MEDICAL
BILLING PREMIER
FINANTRA SERVICE PROVIDER PPS PROFORMA
CAPITAL, SYSTEMS, SERVICES, STAFFING, ADJUST- PROFORMA
INC. INC. INC. INC. MENTS COMBINED
---------- ---------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Stockholders' Equity:
Series A 10% redeemable convertible
preferred stock, $.01 par value,
5,000,000 authorized, 2,958,817
shares issued and outstanding
(liquidation value of $2,958,817 plus
accumulated dividends) ................. $ 29,588 -- -- -- $ 29,588
Common stock, $.01 par value,
10,000,000 shares authorized,
3,102,266 shares issued and
outstanding in 1997 ................... 26,674 -- -- -- (C) 4,349 31,023
Common stock, $1 par value,100
shares authorized and outstanding ...... -- 100 100 100(D) (300) --
Additional paid-in capital ................ 6,947,803 -- -- -- (C) 1,952,627 8,900,430
Accumulated deficit ....................... 2,799,445 201,569 176,607 142,744(D) (520,920) (2,799,445)
----------- ----------- ----------- ----------- ----------- -----------
Total stockholders' equity ....... 4,204,620 201,669 176,707 142,844 1,435,756 6,161,596
----------- ----------- ----------- ----------- ----------- -----------
Total liabilities and stockholders
equity ........................... $ 4,955,831 $ 244,822 $ 254,340 $ 222,218 $ 1,369,796 $ 7,047,007
=========== =========== =========== =========== =========== ===========
</TABLE>
F-3
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FINANTRA CAPITAL, INC.
PROFORMA COMBINED STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
MEDICAL
BILLING PREMIER
FINANTRA SERVICE PROVIDER PPS PROFORMA
CAPITAL, SYSTEMS, SERVICES, STAFFING, ADJUST- PROFORMA
INC. INC. INC. INC. MENTS COMBINED
---------- ---------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Leasing income .............................. $ 148,589 $ -- $ $ -- $ 148,589
Factoring income ............................ 46,579 -- -- -- -- 46,579
Fee income .................................. -- 851,680 382,284 1,071,845 -- 2,305,809
Interest income ............................. 97,368 -- -- -- -- 97,368
----------- ----------- ----------- ----------- ---------
Total revenues ........................ 292,536 851,680 382,284 1,071,845 -- 2,598,345
--------- ----------- ----------- ----------- ----------- ---------
Cost and expenses:
Depreciation ....................... 83,115 14,211 1,778 462 -- 99,566
Interest expense ................... 76,050 5,476 904 -- -- 82,430
Loss on sale/disposal of lease
equipment ........................ 162,567 -- -- -- -- 162,567
General and administrative expense . 626,294 641,101 299,062 862,679 -- 2,429,136
--------- ----------- ----------- ----------- ----------- ---------
Total costs and expenses .............. 948,026 660,788 301,744 863,141 -- 2,773,699
--------- ----------- ----------- ----------- ----------- ---------
(Loss) income from operations ......... (655,490) 190,892 80,540 208,704 -- (175,354)
--------- ----------- ----------- ----------- ----------- ---------
Other income (expenses):
Loss on sale of securities available
for sale ......................... (40,580) -- -- -- -- (40,580)
--------- ----------- ----------- ----------- ----------- ---------
Total other income (expenses) (40,580) -- -- -- -- (40,580)
--------- ----------- ----------- ----------- ----------- ---------
Provision for income taxes ... -- -- -- (65,960)(B) 65,960 --
---------- ----------- ----------- ----------- ----------- ---------
</TABLE>
(Continued on next page)
F-4
<PAGE>
FINANTRA CAPITAL, INC.
PROFORMA COMBINED STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(Continued from previous page)
<TABLE>
<CAPTION>
MEDICAL
BILLING PREMIER
FINANTRA SERVICE PROVIDER PPS PROFORMA
CAPITAL, SYSTEMS, SERVICES, STAFFING, ADJUST- PROFORMA
INC. INC. INC. INC. MENTS COMBINED
---------- ---------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
MEDICAL
Net (loss) income: ($696,070) $190,892 $ 80,540 $142,744 $ 65,960 ($215,934)
========= ======== ======== ======== ======== =========
Net (loss) income applicable to common
shareholders ($512,043)
Net (loss) income per common share
(basic and diluted) $ (.24)
=========
Weighted average number of shares
outstanding (basic and diluted) 2,133,491
=========
</TABLE>
F-5
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FINANTRA CAPITAL, INC.
NOTES TO PROFORMA COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1997
(A) The purchase price for the acquisition of all the common stock of
Premier Provider Services, Inc., is approximately $322,000, for PPS
Staffing, Inc., is approximately $835,000 and for Medical Billing
Services, Inc., is $800,000. Goodwill has been recorded of
approximately $1,370,000 for the above purchased companies. The
acquisition have been accounted for under the purchase method of
accounting.
(B) To adjust the income taxes to reflect the combined net operating loss.
(C) To reflect the issuance of capital stock of $4.50 per share based upon
the purchase price of the companies.
(D) To eliminate the retained earnings of the acquired companies included
in the purchase price.
F-6
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
FINANTRA CAPITAL, INC.
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(Registrant)
Dated: September 16, 1998 By: /s/ Robert D. Press
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Robert D. Press, President
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