<PAGE>
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
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 31, 1997
MEDICAL RESOURCES MANAGEMENT, INC.
(Exact name of registrant as specified in its charter)
NEVADA 1-13009 95-4607643
(State or other jurisdiction of (Commission file number) (I.R.S. Employer
incorporation or organization) Identification No.)
932 GRAND CENTRAL AVENUE GLENDALE, CALIFORNIA 91201
(Address of principal executive offices) (Zip Code)
(818) 240-8250
(Registrant's telephone number, including area code)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On March 31, 1997, Medical Resources Management, Inc. (the "Company"),
pursuant to a Plan and Agreement of Reorganization dated March 31, 1997 between
the Company and Pulse Medical Products, Inc. ("Pulse"), acquired all of the
issued and outstanding stock of Pulse, a closely held company, in exchange for
325,000 shares of the Company's common stock. Pulse remains a wholly owned
subsidiary of the Company.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
Report of Independent Auditors
Balance Sheet of Pulse Medical Products, Inc. as of December 31, 1996
Statements of Income of Pulse Medical Products, Inc. for the years
ended December 31, 1996 and 1995
Statements of Changes in Shareholders' Equity of Pulse Medical
Products, Inc. for the years ended December 31, 1996 and 1995
Statements of Cash Flows of Pulse Medical Products, Inc. for the years
ended December 31, 1996 and 1995
Notes to financial statements
(c) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
<S> <C>
None.
</TABLE>
_____________________
2
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SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
MEDICAL RESOURCES MANAGEMENT, INC.
Date July 2, 1998
By /s/ Allen H. Bonnifield
----------------------------------------------------
Allen H. Bonnifield, President and CEO
3
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Financial Statements
Pulse Medical Products, Inc.
YEARS ENDED DECEMBER 31, 1996
WITH REPORT OF INDEPENDENT AUDITORS
4
<PAGE>
Pulse Medical Products, Inc.
Financial Statements
Years ended December 31, 1996
<TABLE>
<CAPTION>
CONTENTS
<S> <C>
Report of Independent Auditors . . . . . . . . . . . . . . . . . 1
Audited Financial Statements
Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . . . . 2
Statements of Income . . . . . . . . . . . . . . . . . . . . . . 4
Statements of Changes in Shareholders' Equity. . . . . . . . . . 5
Statements of Cash Flows.. . . . . . . . . . . . . . . . . . . . 6
Notes to Financial Statements... . . . . . . . . . . . . . . . . 7
</TABLE>
5
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REPORT OF INDEPENDENT AUDITORS
Board of Directors and Shareholders
Pulse Medical Products, Inc.
We have audited the accompanying balance sheet of Pulse Medical Products, Inc.
as of December 31, 1996, and the related statements of income, shareholders'
equity, and cash flows for each of the two years in the period ended December
31, 1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free from
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Pulse Medical Products, Inc. at
December 31, 1996, and the results of its operations and its cash flows for each
of the two years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles.
Balukoff, Lindstrom & Co., P.A.
Boise, Idaho
June 17, 1997
6
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Pulse Medical Products, Inc.
Balance Sheet
December 31, 1996
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current assets:
Cash and cash equivalents $ 4,193
Accounts receivable, less allowance of $40,000 (NOTE 3) 486,955
Inventories (NOTE 3) 171,340
-----------
Total current assets 662,488
Property and equipment (NOTES 2 AND 3):
Rental equipment (NOTE 2) 1,951,824
Transportation equipment 32,786
Office furniture and equipment 97,149
Demo equipment 33,299
Bio test equipment 57,492
Leasehold improvements 5,600
-----------
2,178,150
Less accumulated depreciation 443,635
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Net property and equipment 1,734,515
Other assets:
Customer list, net of amortization 191,780
Deposits 14,185
-----------
Total other assets 205,965
-----------
Total assets $ 2,602,968
-----------
-----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C>
Current liabilities:
Note payable $ 70,000
Accounts payable 413,789
Accrued expenses 335,880
Advances from factor 75,509
Current portion of long-term debt (NOTE 3) 33,553
Current portion of obligations under capital leases (NOTE 2) 191,199
----------
Total current liabilities 1,119,930
Long-term debt, net of current portion (NOTE 3) 141,371
Obligations under capital leases, net of current portion (NOTE 2) 941,883
Commitments (NOTE 4)
Shareholders' equity (NOTE 5):
Common stock, $1.00 par value:
Authorized shares - 1,000,000
Issued and outstanding shares - 5,000 5,000
Additional paid-in capital 382,680
Retained earnings 12,104
----------
Total shareholders' equity 399,784
----------
Total liabilities and shareholders' equity $2,602,968
----------
----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
8
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Pulse Medical Products, Inc.
Statements of Income
<TABLE>
<CAPTION>
Year Ended December 31
1996 1995
---------------------------
<S> <C> <C>
Revenue $2,736,918 $3,373,667
Cost of revenue 1,943,557 2,551,146
---------------------------
Gross profit 793,361 822,521
Selling expenses 430,902 324,573
General and administrative expenses 408,912 229,397
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Operating income (loss) (46,453) 268,551
Interest expense 243,708 138,193
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Income (loss) before income taxes (290,160) 130,358
Provision for income taxes - -
---------------------------
Net income (loss) $ (290,160) $ 130,358
---------------------------
---------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
Pulse Medical Products, Inc.
Statements of Changes in Shareholders' Equity
<TABLE>
<CAPTION>
Common Stock Additional Retained
Shares Amount Paid-in Capital Earnings Total
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1994 5,000 $5,000 $298,744 $ 171,906 $ 475,650
Net income 130,358 130,358
Capital contributions 11,859 11,859
-------------------------------------------------------------------------
Balance at December 31, 1995 5,000 5,000 310,603 302,364 617,867
Net loss (290,160) (290,160)
Capital contributions 72,077 72,077
-------------------------------------------------------------------------
Balance at December 31, 1996 5,000 $5,000 $382,680 $ 12,104 $ 399,784
-------------------------------------------------------------------------
-------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
10
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Pulse Medical Products, Inc.
Statements of Cash Flows
<TABLE>
<CAPTION>
Year Ended December 31
1996 1995
-------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $(290,160) $ 130,358
Adjustments to reconcile net income to cash provided
by operating activities:
Depreciation 295,691 120,009
Amortization 15,655 15,655
Changes in operating assets and liabilities:
Accounts receivable 19,190 (307,007)
Inventories 243,620 (302,940)
Accounts payable 151,304 77,149
Accrued expenses 267,815 60,849
-------------------------------
Net cash provided by (used for) operating activities 703,115 (205,927)
INVESTING ACTIVITIES
Purchases of property and equipment (87,310) (83,481)
Increase in deposits (4,779) (8,664)
-------------------------------
Net cash used for investing activities (92,089) (92,145)
FINANCING ACTIVITIES
Advances from factor 75,509 -
Borrowings on notes payable 70,000 -
Borrowings on long-term debt - 344,085
Principal payments on notes payable (28,600) (91,198)
Principal payments on long-term debt (363,804) (23,390)
Principal payments on capital lease obligations (313,496) (70,832)
-------------------------------
Net cash provided by (used for) financing activities (560,391) 158,665
-------------------------------
Net increase (decrease) in cash 50,635 (139,407)
Cash and cash equivalents at beginning of period (46,442) 92,965
-------------------------------
Cash and cash equivalents at end of period $ 4,193 $ (46,442)
-------------------------------
-------------------------------
Supplemental information:
Cash paid during the period for:
Interest $ 203,318 $ 121,058
-------------------------------
-------------------------------
Taxes $ - $ -
-------------------------------
-------------------------------
Property contributions by shareholder $ 72,077 $ 11,859
-------------------------------
-------------------------------
Capital lease obligations entered into for equipment $ 259,812 $1,071,448
-------------------------------
-------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
Pulse Medical Products, Inc.
Notes to Financial Statements
December 31, 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
Pulse Medical Products, Inc. (Pulse or the Company) engages in the business of
selling and renting medical equipment, providing associated technical support,
and also selling related supplies. Pulse operates in Idaho, Utah, Colorado,
Minnesota, Wyoming and Montana.
INVENTORY
Inventory, consisting primarily of equipment and supplies held for resale, is
stated at the lower of cost (first-in, first-out) or market basis.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost and depreciated using the
straight-line method over the estimated useful lives of the assets, which
vary from five to ten years. Leasehold improvements are being amortized
using the straight-line method over the shorter of the lease term or ten
years.
Expenditures for major renewals and betterments that extend the useful lives of
property and equipment are capitalized. Expenditures for maintenance and
repairs are charged as incurred.
INCOME TAXES
The Company has elected to be taxed as an S Corporation; therefore, any income
or loss is not taxed to the Company and is reported by the Company's
shareholders.
CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all highly
liquid investments with maturities of three months or less to be cash
equivalents.
INTANGIBLE ASSETS
Customer lists are amortized over a period of 12 years using the straight-line
method.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could vary from those estimates.
12
<PAGE>
Pulse Medical Products, Inc.
Notes to Financial Statements (continued)
December 31, 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CONCENTRATION OF CREDIT RISK
Financial instruments which potentially subject the Company to concentrations of
credit risk consist principally of temporary cash investments and trade
receivables. The Company places its temporary cash investments with banks.
Concentrations of credit risk with respect to trade receivables are limited due
to the Company's large number of customers primarily with small balances.
Management reviews these balances on a monthly basis and maintains reserves for
potential credit losses, which losses have historically been within management's
expectations.
2. OBLIGATIONS UNDER CAPITAL LEASES
The Company leases certain equipment under capital lease obligations. Cost and
accumulated depreciation of equipment under capital leases included in equipment
as of December 31, 1996 are as follows:
<TABLE>
<S> <C>
Rental equipment $ 1,529,432
Less accumulated depreciation 261,495
--------------
Net book value $ 1,267,937
--------------
--------------
</TABLE>
As indicated in Note 5, subsequent to December 31, 1996 the Company refinanced
substantially all of its lease obligations. The following is a schedule by year
of future minimum lease payments required under the refinanced leases, together
with their present value as of December 31, 1996, as if the refinancing had
occurred prior to that date:
<TABLE>
<S> <C>
1997 $ 330,799
1998 374,613
1999 360,394
2000 245,727
2001 26,251
-------------
Total minimum lease payments 1,337,784
Less amount representing interest 204,702
-------------
Present value of minimum lease payments due under capital lease 1,133,082
Less current portion 191,199
-------------
Obligations under capital leases, net of current portion $ 941,883
-------------
-------------
</TABLE>
13
<PAGE>
Pulse Medical Products, Inc.
Notes to Financial Statements (continued)
December 31, 1996
3. LONG-TERM DEBT
Long-term debt consists of the following at December 31, 1996:
<TABLE>
<CAPTION>
<S> <C>
Note payable to a bank, due in 84 monthly installments of
$3,427, including interest at a rate of 11.00% per annum,
collateralized by substantially all assets of the Company, and
maturing on February 14, 2001 $ 160,423
Two notes payable to a bank, due in monthly installments
totaling $860, including interest varying between 9.30% and
11.25% per annum, collateralized by transportation equipment,
maturing on November 14, 1997 and March 1, 2000 14,501
-----------
Total long-term debt 174,924
Less current portion 33,553
-----------
Long-term debt, net of current portion $ 141,371
-----------
-----------
</TABLE>
Long-term debt matures as follows during the years ending December 31:
<TABLE>
<S> <C>
1997 $ 33,553
1998 29,936
1999 33,374
2000 34,949
2001 43,112
-----------
$ 174,924
-----------
-----------
</TABLE>
4. COMMITMENTS
The Company leases its headquarters facility in Idaho under an operating lease
expiring in 1998. The lease on the Company's facility in Utah expires in 1999
and contains certain options to renew for a period of 6 additional years. Other
facilities are on a month to month basis. Future minimum lease payments are as
follows during the years ending December 31:
<TABLE>
<S> <C>
1997 $ 47,160
1998 47,160
1999 26,650
2000 12,000
2001 12,000
-----------
$ 144,970
-----------
-----------
</TABLE>
Rent expense was $58,369 and $36,100 for the years ended December 31, 1996 and
1995, respectively.
14
<PAGE>
Pulse Medical Products, Inc.
Notes to Financial Statements (continued)
December 31, 1996
5. SUBSEQUENT EVENTS
In January 1997, the Company entered into a letter of intent with respect to the
acquisition of Pulse by another company involved in the renting of medical
equipment. The acquisition was completed on March 31, 1997 with the issuance of
325,000 shares of the acquirer's common stock in exchange for all 5,000 shares
of the Pulse's common stock then outstanding. As a result, Pulse became a
wholly owned subsidiary of the acquiring company.
Additional shares of stock may be issued by the acquiring company to the
Company's shareholders in this transaction, depending upon the audited net book
value of the Company as of December 31, 1996.
Subsequent to this acquisition, substantially all of the Company's leases were
restructured under more favorable terms and conditions than those which existed
previously, including lower interest rates and longer lease terms.
15
