<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
TO
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):
April 9, 1998 (January 30, 1998)
Quest Medical, Inc.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Texas 0-10521 75-1646002
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(STATE OR OTHER (COMMISSION FILE (IRS EMPLOYER
JURISDICTION OF NUMBER) IDENTIFICATION NO.)
INCORPORATION)
One Allentown Parkway, Allen, Texas 75002
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(972) 390-9800
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Item 7. Financial Statements and Exhibits
(b) Pro Forma Financial Information
This information is amended to provide the following unaudited
condensed pro forma consolidated financial statements, which are filed
as Exhibit 99.2 to this Current Report on Form 8-K and incorporated
herein by this reference.
Condensed Pro Forma Balance Sheet as of December 31, 1997
Condensed Pro Forma Statement of Operations for the year ended December
31, 1997
Notes to Condensed Pro Forma Balance Sheet as of December, 31, 1997 and
Condensed Pro Forma Statement of Operations for the year ended December
31, 1997
(c) Exhibits
2.1 Asset Purchase Agreement, dated December 29, 1997, by and among
Quest Medical, Inc., QMI Medical, Inc. (formerly known as QMI
Acquisition Corp.) and Atrion Corporation (including exhibits
and schedules 2.1.1, 2.1.2, 2.3(a) and 2.3(b)(1)
99.1 Press Release issued by the Registrant on January 30, 1998
relating to the Sale(1)
99.2 Condensed Pro Forma Financial Information(2)
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(1) Filed as an Exhibit to the report of the Company on Form 8-K dated February
13, 1998, and incorporated herein by reference.
(2) Filed herewith.
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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.
Dated: April 9, 1998 QUEST MEDICAL, INC.
By: /s/ F. Robert Merrill III
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F. Robert Merrill III
Executive Vice President
Chief Financial Officer
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INDEX TO EXHIBITS
Exhibit
Number Description
- ------- -----------
2.1 Asset Purchase Agreement, dated December 29, 1997, by and among
Quest Medical, Inc., QMI Medical, Inc. (formerly known as QMI
Acquisition Corp.) and Atrion Corporation (including exhibits and
schedules 2.1.1, 2.1.2, 2.3(a) and 2.3(b)(1)
99.1 Press release issued by the Registrant on January 30, 1998
relating to the Sale(1)
99.2 Condensed Pro Forma Financial Information(2)
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(1) Filed as an Exhibit to the report of the Company on Form 8-K dated February
13, 1998, and incorporated herein by reference.
(2) Filed herewith.
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EXHIBIT 99.2
QUEST MEDICAL, INC.
CONDENSED PRO FORMA FINANCIAL STATEMENTS
(Unaudited)
The following Condensed Pro Forma Balance Sheet and Condensed Pro Forma
Statement of Operations present the condensed historical balance sheet and
statement of operations of Quest Medical, Inc. (the "Company") as derived from
the audited financial statements of the Company included in its Annual Report on
Form 10-K for the year ended December 31, 1997. The pro forma adjustments give
effect to the January 30, 1998 sale of the Company's cardiovascular and
intravenous fluid product lines ("CVS Operations"), including its MPS(R)
myocardial protection system product line, to Atrion Corporation as if such sale
had been consummated on December 31, 1997 for purpose of the Condensed Pro Forma
Balance Sheet and on January 1, 1997 for purpose of the Condensed Pro Forma
Statement of Operations. The CVS Operations were accounted for as discontinued
operations in the audited financial statements referred to above. The condensed
pro forma financial statements should be read in conjunction with the audited
financial statements included in the Annual Report on Form 10-K for the year
ended December 31, 1997. The condensed pro forma financial statements may not be
indicative of what would have occurred if the sale had been consummated on
December 31, 1997 or January 1, 1997 or the results of future operations.
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Quest Medical, Inc.
Condensed Pro Forma Balance Sheet
December 31, 1997
<TABLE>
<CAPTION>
Quest
Medical, Inc. Pro Forma Pro Forma
Historical Adjustments Without CVS
-------------- ----------------- --------------
<S> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 747,828 $ 15,356,606(1) $ 16,104,434
Marketable securities 1,455,864 -- 1,455,864
Receivables 2,607,922 -- 2,607,922
Inventories 2,978,487 -- 2,978,487
Deferred income taxes 2,288,192 -- 2,288,192
Net assets of discontinued
operations 12,831,318 (12,831,318) --
Prepaid expenses and other
assets 476,716 -- 476,716
------------ ------------ ------------
Total current assets 23,386,327 2,525,288 25,911,615
------------ ------------ ------------
Property, plant and equipment,
net 7,411,115 -- 7,411,115
Intangibles and other non-
current assets 18,184,878 -- 18,184,878
------------ ------------ ------------
Total assets 48,982,320 2,525,288 51,507,608
------------ ------------ ------------
Liabilities and Stockholders'
Equity
Current liabilities:
Short-term notes payable
and current maturities of
long-term notes payable 8,257,348 (8,000,000)(1) 257,348
Other current liabilities 1,001,428 3,945,615(3) 4,947,043
------------ ------------ ------------
Total current liabilities 9,258,776 (4,054,385) 5,204,391
------------ ------------ ------------
Notes payable 3,635,027 -- 3,635,027
Deferred income taxes 2,182,580 -- 2,182,580
Stockholders' Equity:
Common stock 431,775 -- 431,775
Additional capital 40,780,717 1,004,654(2) 41,785,371
Retained earnings (deficit) (7,268,061) 5,575,019(4) (1,693,042)
Unrealized loss in
marketable securities (38,494) -- (38,494)
------------ ------------ ------------
Total stockholders' equity 33,905,937 6,579,673 40,485,610
------------ ------------ ------------
$ 48,982,320 $ 2,525,288 $ 51,507,608
============ ============ ============
</TABLE>
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Quest Medical, Inc.
Condensed Pro Forma Statement of Operations
Year Ended December 31, 1997
<TABLE>
<CAPTION>
Quest
Medical, Inc. Pro Forma Pro Forma
Historical Adjustments Without CVS
--------------- ---------------- -------------
<S> <C> <C> <C>
Net revenue $ 14,717,721 $ -- $ 14,717,721
Gross profit 9,878,460 -- 9,878,460
Operating expenses 7,792,152 -- 7,792,152
Earnings from operations 2,086,308 -- 2,086,308
Other income (expense) (535,783) 493,904 (5) (41,879)
Earning from continuing
operations before income taxes 1,550,525 493,904 2,044,429
Income taxes 733,014 167,927 (5) 900,941
Net earnings from continuing
operations $ 817,511 $ 325,977 $ 1,143,488
Net earnings from continuing operations per share:
Basic $ .10 $ .04 $ .14
Diluted $ .09 $ .04 $ .13
</TABLE>
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Quest Medical, Inc.
Notes to Unaudited Pro Forma
Condensed Financial Statements
Condensed Pro Forma Balance Sheet
The pro forma adjustments are as follows:
(1) The increase in cash reflects the sales price of $24,500,000 less
expenses incurred in completing the transaction of $1,143,394 and less proceeds
used to retire short-term notes payable of $8,000,000.
(2) The increase in additional capital results from changes made to the
stock option agreements of the CVS employees who will not remain with the
Company. These changes resulted in a pretax charge to compensation expense (and
a reduction in the gain on sale of the CVS Operations) of $1,004,654 with an
offsetting credit to additional capital.
(3) The increase in other current liabilities results from the tax
liability on the transaction of $3,001,933, $768,682 of assumed liabilities of
the CVS Operations and a reserve of $175,000 recorded for future indemnification
claims under the Purchase Agreement. As of the date of this filing, no
indemnification claims have been made.
(4) The increase in retained earnings reflects the sales price of
$24,500,000 less direct expenses ($1,143,394), the compensation expense
($1,004,654), the net assets of discontinued operations ($12,831,318), the tax
liability relating to the transaction ($3,001,933), assumed liabilities of the
CVS Operations ($768,682) and the reserve for future indemnification claims
($175,000).
Condensed Pro Forma Statement of Operations
The pro forma adjustments are as follows:
(5) In the Condensed Pro Forma Statement of Operations, Quest Medical,
Inc. Historical reflects the sale of the CVS Operations as a discontinued
operation, and therefore, the amounts presented reflect only amounts from
continuing operations. The pro forma adjustments reflect the assumption that the
sale occurred on January 1, 1997, with the proceeds used to retire the notes
payable when they arose during the year with the balance available for
investment. The pro forma adjustments, therefore, reflect the reversal of actual
interest expense on the notes payable of $493,904 and the related additional
provision for income taxes of $167,927. No adjustment for additional interest
income on the net proceeds from the sale available for investment was made in
the Condensed Pro Forma Statement of Operations.
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