<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Amendment No. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 13, 1996
NU-TECH BIO-MED, INC.
(Exact Name of Registrant as specified in charter)
Delaware 0-11772 25-1411971
(State or other jurisdic- (Commission (IRS Employer
tion of incorporation) File Number) Identification No.)
55 Access Road, Warwick, Rhode Island 02886
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (401) 732-6520
(Former name or former address, if changed since last report.)
<PAGE> 2
ITEM 2. ACQUISITION OF ASSETS.
On October 21 1996, Nu-Tech Bio-Med, Inc. (the Company") acquired
certain assets and assumed certain liabilites of Prompt Medical Billing
Services, Inc., a Florida corporation ("Prompt Medical") related to Prompt
Medical's medical billing services business located in Miami, Florida. The total
aggregate purchase price payable by the Company was $675,000 of which $100,000
was paid in cash and the remainder in 37,404 shares of Common Stock of the
Company.
Among other things, the Company purchased the name "Prompt Medical
Billing Services" and all customer contracts and relationships. The Company
formed a wholly-owned subsidiary named NTBM Billing Services, Inc. to consummate
the transaction and to operate the business being acquired.
All of the purchase price has been placed in escrow for up to two years
to secure Prompt Medical's guaranty of certain minimum revenue levels. Assuming
that these revenue levels are maintained, the cash portion of the purchase price
shall be paid out in equal quarterly installments. The shares of Common Stock
will be held in escrow for the entire two year period.
The Company entered into an employment agreement with Judith Prussin, a
shareholder and officer of Prompt Medical, whereby Ms. Prussin will be retained
to operate the business. Additionally, the Company entered into a consulting
agreement with Health Systems Development Corporation whereby Health Systems
will assist the Company in developing and expanding the business.
2
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
a. Financial Statements of Businesses Acquired.
Pursuant to Item 7 of Form 8-K, the following financial statements of
Prompt Medical Billing Services, Inc. are annexed hereto:
99.1. Audited Financial Statements for the period from March 1, 1994
(date of inception) to December 31, 1994, together with report of independent
accountants;
99.2. Audited Financial Statements for the year ended December 31,
1995, together with report of independent accountants.
99.3. Unaudited Financial Statements for the six month period ended
June 30, 1996.
b. Unaudited Pro Forma Financial information.
Pursuant to Item 7 of Form 8-K, the Company has annexed hereto the
Unaudited Pro Forma Combined Balance Sheet which has been prepared as if the
acquisition was consummated as of June 30, 1996 and the Unaudited Pro Forma
Combined Statement of Operations for the periods ending December 31, 1995 and
June 30, 1996 as if the acquisition occurred at the beginning of such periods.
99.4 Pro Forma Financial Statements of Nu-Tech Bio-Med, Inc.
c. Exhibits.
2.1 Asset Purchase Agreement dated September 13, 1996,
among Nu-Tech Bio-Med, Inc., NTBM Billing Services,
Inc., Prompt Medical Services, Inc., Judith Prussin
and Jeffrey Prussin (filed without exhibits or
schedules)(previously filed as Exhibit 2.1 to Form
8-K).
23.1 Consent of McClain & Company LLP, independent
auditors of Prompt Medical Billing Services, Inc.
3
<PAGE> 4
SIGNATURE
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 hereunto duly authorized.
NU-TECH BIO-MED, INC.
By: /s/ J. Marvin Feigenbaum
-------------------------------------
J. Marvin Feigenbaum
Chairman of the Board,
President, Chief Executive
and Chief Financial Officer
Dated: November 12, 1996
4
<PAGE> 5
EXHIBIT INDEX
Exhibit No. Description
2.1 Asset Purchase Agreement dated September 13, 1996,
among Nu-Tech Bio-Med, Inc., NTBM Billing Services,
Inc., Prompt Medical Services, Inc., Judith Prussin
and Jeffrey Prussin (filed without exhibits or
schedules)(previously filed as Exhibit 2.1 to Form
8-K).
23.1 Consent of McClain & Company LLP, independent
auditors of Prompt Medical Billing Services, Inc.
Financial statements of Prompt Medical Billing Services, Inc.
99.1 Audited Financial Statements for the period from
March 1, 1994 (date of inception) to December 31,
1994, together with report of independent
accountants;
99.2 Audited Financial Statements for the year ended
December 31, 1995, together with report of
independent accountants.
99.3 Unaudited Financial Statements for the six month
period ended June 30, 1996.
Pro Forma Financial Statements of the Company
99.4 Pro Forma Financial Statements of Nu-Tech
Bio-Med, Inc.
<PAGE> 1
Consent of Independent Auditors
We consent to the use of our report dated September 20, 1996, except for Notes 8
and 9, as to which the date is October 30, 1996, with respect to the financial
statements of Prompt Medical Billing, Inc. for the period from March 1, 1994
(date of inception) to December 31, 1994 and for the year ended December 31,
1995, included in the current report on Form 8-K/A of Nu-Tech Bio-Med, Inc.
dated November 12,1996.
McCLAIN & COMPANY, LLP
Miami, Florida
November 12, 1996
<PAGE> 1
Exhibit 99.1
FINANCIAL STATEMENTS
DECEMBER 31, 1994
PROMPT MEDICAL BILLING, INC.
MIAMI, FLORIDA
<PAGE> 2
INDEPENDENT AUDITORS' REPORT
The Stockholders
Prompt Medical Billing, Inc.
Miami, Florida
We have audited the accompanying balance sheet of Prompt Medical Billing, Inc.
as of December 31, 1994, and the related statements of income and retained
earnings, and cash flows for the period from March 1, 1994 (date of inception)
to December 31, 1994. 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 audit.
We conducted our audit 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 of 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 audit provides 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 Prompt Medical Billing, Inc. as
of December 31, 1994, and the results of its operations and its cash flows for
the period from March 1, 1994 (date of inception) to December 31, 1994 in
conformity with generally accepted accounting principles.
October 30, 1996
Page 1 OF 6
<PAGE> 3
BALANCE SHEET
DECEMBER 31, 1994
PROMPT MEDICAL BILLING, INC.
ASSETS
<TABLE>
<S> <C>
CURRENT ASSETS
Cash $64,165
Accounts receivable 30,418
-------
Total current assets $94,583
=======
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY
Common stock, $1 par value, 1,000 shares
authorized, issued and outstanding $ 1,000
Paid in capital 8,006
Retained earnings 85,577
-------
Total shareholders' equity $94,583
=======
</TABLE>
The accompanying notes to financial statements are an integral part of this
financial statement.
Page 2 OF 6
<PAGE> 4
STATEMENT OF INCOME AND RETAINED EARNINGS
PERIOD FROM MARCH 1, 1994 (DATE OF INCEPTION)
TO DECEMBER 31, 1994
PROMPT MEDICAL BILLING, INC.
<TABLE>
<S> <C> <C>
REVENUES
Fees $ 215,247
Interest income 374
---------
Total revenues $ 215,621
EXPENSES
Officers' compensation $ 12,000
Pension 3,000
Printing 2,111
Telephone and utilities 5,291
Repairs and maintenance 7,337
Payroll taxes 926
Other taxes and licenses 200
Postage and shipping 502
Supplies 4,377
---------
Total expenses 35,744
---------
Net income 179,877
RETAINED EARNINGS, March 1, 1994 --
Distributions (94,300)
---------
RETAINED EARNINGS, December 31, 1994 $ 85,577
=========
</TABLE>
The accompanying notes to financial statements are an integral part of this
financial statement.
Page 3 OF 6
<PAGE> 5
STATEMENT OF CASH FLOWS
PERIOD FROM MARCH 1, 1994 (DATE OF INCEPTION)
TO DECEMBER 31, 1994
PROMPT MEDICAL BILLING, INC.
<TABLE>
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 179,877
Adjustments to reconcile net income to cash
provided by operations:
Expenses paid by related party 8,006
Increase in accounts receivable (30,418)
---------
Net cash provided by operating activities $ 157,465
CASH FLOWS FROM FINANCING ACTIVITIES:
Shareholder distributions (94,300)
Proceeds from issuance of capital stock 1,000
---------
Net cash used in financing activities (93,300)
---------
Net increase in cash 64,165
CASH, March 1, 1994 --
---------
CASH, December 31, 1994 $ 64,165
=========
</TABLE>
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
$8,006 of expenses were paid by a related party and recorded as additional
paid in capital.
The accompanying notes to financial statements are an integral part of this
financial statement.
Page 4 OF 6
<PAGE> 6
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
PROMPT MEDICAL BILLING, INC.
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
Prompt Medical Billing, Inc. (the Company) was incorporated in
the State of Florida on December 13, 1993 and commenced business
operations on March 1, 1994. The Company's principal operations
consist of providing billing and collection services to doctors.
For 1994, 75% of the Company's revenues and 90% of the Company's
accounts receivable were derived from one unrelated party
located in Miami, Florida.
ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
INCOME TAXES
The Company, with the consent of its shareholders, has elected
to be treated as an S Corporation for income tax purposes. As a
result, the shareholders report their share of the corporate
taxable income on their individual income tax returns for each
year the election is in effect. Accordingly, no provision for
income taxes is included in the accompanying financial
statements for the Company.
NOTE 2 - ACCOUNTS RECEIVABLE
Accounts receivable consist of open trade accounts with
unrelated parties. Management considers all of the accounts
receivable to be fully collectible; therefore, there is no
provision for uncollectible accounts as of December 31, 1994.
NOTE 3 - RELATED PARTY TRANSACTIONS
The Company reimburses a related party for expenses paid on its
behalf. The expenses include payroll, payroll taxes and pension
contributions. These expenses totalled $15,926 in 1994.
Additionally, $8,006 of unreimbursed expenses were paid and
contributed to capital by a related party.
NOTE 4 - RETIREMENT PLAN
The Company sponsors a money purchase pension plan for qualified
employees. The minimum mandatory contributions are determined on
an annual basis by the Company and are limited to the lesser of
25% of compensation and S corporation earnings or $30,000 per
eligible employee. The Company's contribution expense amounted
to $3,000 for the year ended December 31, 1994.
Page 5 OF 6
<PAGE> 7
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
PROMPT MEDICAL BILLING, INC.
NOTE 5 - COMMON CONTROL
The Company's shareholders also control other companies whose
operations are similar to or vertically integrated with those of
the Company. The Company reimburses a related party for payroll,
payroll taxes and pension contributions which are allocated to
the Company by that related party. Transactions between these
companies are more fully disclosed in Note 3. The shareholders,
however, are in a position to, and in the future may, influence
the revenues or expenses of the Company for the benefit of other
companies in the same line of business that are under their
control.
NOTE 6 - SUBSEQUENT EVENTS
Pursuant to the respective audited December 31, 1995 and
compiled June 30, 1996 financial statements, the Company made a
profit of $61,148 and $78,166 for the year ended December 31,
1995 and six months ended June 30, 1996, respectively.
On October 21, 1996, the Company sold corporate intangible
assets which include goodwill, the name "Prompt Medical Billing,
Inc." and customer agreements for $675,000. The payment terms
include shares of stock of the purchasing company with an
aggregate value of $500,000 and the balance of the purchase
price in cash. This consideration is to be held in escrow until
the earlier of two years from the closing date of October 21,
1996 or the date on which all cash and shares of stock of the
purchasing company are released from escrow ("Escrow Period").
The cash portion of the purchase price shall be paid to Prompt
Medical Billing, Inc. or its shareholders in eight equal
quarterly installments commencing ninety days from the closing
date and the shares of stock of the purchasing company shall be
released from escrow upon the termination of the escrow period.
The sales agreement also includes a two-year covenant not to
compete, employment contract for the majority shareholder and a
consulting agreement with a related party.
On September 9, 1996, the Company paid a management fee of
$25,000 to a related party for consulting services rendered
regarding the sale.
On September 13, 1996, the Company adopted a plan of Complete
Liquidation and Dissolution of Prompt Medical Billing, Inc. in
accordance with Section 331, 453(h) and 453B(h) of the Internal
Revenue Code. There is a twelve-month liquidation period from
the adoption date to finalize business, liquidate and distribute
any and all of its assets to the shareholders.
Page 6 OF 6
<PAGE> 1
Exhibit 99.2
FINANCIAL STATEMENTS
(RESTATED)
DECEMBER 31, 1995
PROMPT MEDICAL BILLING, INC.
MIAMI, FLORIDA
<PAGE> 2
INDEPENDENT AUDITORS' REPORT
The Stockholders
Prompt Medical Billing, Inc.
Miami, Florida
We have audited the accompanying balance sheet of Prompt Medical Billing, Inc.
as of December 31, 1995, and the related statements of income and retained
earnings, and cash flows for the year then ended. 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 audit.
We conducted our audit 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 of 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
material respects, the financial position of Prompt Medical Billing, Inc. as of
December 31, 1995, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
As discussed in Note 9 to the financial statements, certain 1995 and 1994
unrecorded expenses were paid and contributed to capital by a related party.
Accordingly, the financial statements have been restated to reflect this
contribution.
September 20, 1996, except for Notes 8 and 9,
as to which the date is October 30, 1996
Page 1 of 7
<PAGE> 3
BALANCE SHEET
DECEMBER 31, 1995
PROMPT MEDICAL BILLING, INC.
(restated)
ASSETS
<TABLE>
<S> <C>
CURRENT ASSETS
Cash $ 244
Accounts receivable 46,606
Due from shareholders 25,257
-------
Total current assets $72,107
=======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $13,809
Accrued pension contribution 24,500
-------
Total current liabilities 38,309
SHAREHOLDERS' EQUITY
Common stock, $1 par value, 1,000 shares
authorized, issued and outstanding 1,000
Paid in capital 17,916
Retained earnings 14,882
-------
Total shareholders' equity 33,798
-------
Total liabilities and shareholders'
equity $72,107
=======
</TABLE>
See independent auditors' report and the accompanying notes to financial
statements, which are an integral part of this financial statement.
Page 2 of 7
<PAGE> 4
STATEMENT OF INCOME AND RETAINED EARNINGS
YEAR ENDED DECEMBER 31, 1995
PROMPT MEDICAL BILLING, INC.
(restated)
<TABLE>
<S> <C> <C>
REVENUES
Fees $ 202,185
Interest income 600
---------
Total revenues $ 202,785
EXPENSES
Officers' compensation 61,600
Pension 39,900
Printing 6,862
Telephone and utilities 6,625
Repairs and maintenance 15,451
Payroll taxes 4,664
Other taxes and licenses 200
Postage and shipping 3,401
Supplies 2,439
Professional fees 495
---------
Total expenses 141,637
---------
Net income 61,148
RETAINED EARNINGS, beginning of year 85,577
Distributions (131,843)
---------
RETAINED EARNINGS, end of year $ 14,882
=========
</TABLE>
See independent auditors' report and the accompanying notes to financial
statements, which are an integral part of this financial statement.
Page 3 of 7
<PAGE> 5
STATEMENT OF CASH FLOWS YEAR
ENDED DECEMBER 31, 1995 PROMPT
MEDICAL BILLING, INC.
(restated)
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 61,148
Adjustments to reconcile net income to cash
provided by operations:
Expenses paid by a related party 9,910
Increase in accounts receivable (16,188)
Increase in accounts payable and accrued
pension contribution 38,309
---------
Net cash provided by operating activities 93,179
CASH FLOWS FROM INVESTING ACTIVITIES:
Advances to shareholders (25,257)
CASH FLOWS FROM FINANCING ACTIVITIES:
Shareholder distributions (131,843)
---------
Net decrease in cash (63,921)
CASH, beginning of year 64,165
---------
CASH, end of year $ 244
=========
</TABLE>
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
$9,910 of expenses were paid by a related party and recorded as additional
paid in capital.
See independent auditors' report and the accompanying notes to financial
statements, which are an integral part of this financial statement.
Page 4 of 7
<PAGE> 6
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
PROMPT MEDICAL BILLING, INC.
(restated)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
Prompt Medical Billing, Inc.'s (the Company) principal
operations consist of providing billing and collection services
to doctors. For 1995, 74% of the Company's revenues and 95% of
the Company's accounts receivable were derived from two
unrelated parties located in Miami, Florida.
ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
INCOME TAXES
The Company, with the consent of its shareholders, has elected
to be treated as an S Corporation for income tax purposes. As a
result, the shareholders report their share of the corporate
taxable income on their individual income tax returns for each
year the election is in effect. Accordingly, no provision for
income taxes is included in the accompanying financial
statements for the Company.
FAIR VALUES OF FINANCIAL INSTRUMENTS
During 1995, the Company adopted Financial Accounting Standards
Board Statement No. 107, "Disclosures about Fair Value of
Financial Instruments" (FAS 107). This statement requires the
Company to disclose the fair value of financial instruments for
which it is practicable to estimate that value. FAS 107 also
requires the entity to disclose the method(s) and significant
assumptions used to estimate the fair value of financial
instruments.
The following methods and assumptions were used to estimate the
fair value of each class of financial instruments for which it
is practicable to estimate that value:
Cash
The fair value of cash is its carrying value.
Due from Shareholders
The fair value of the amount due from the shareholders
approximates its carrying value.
See independent auditors' report.
Page 5 of 7
<PAGE> 7
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
PROMPT MEDICAL BILLING, INC.
(restated)
NOTE 2 - ACCOUNTS RECEIVABLE
Accounts receivable consist of open trade accounts with
unrelated parties. Management considers all of the accounts
receivable to be fully collectible; therefore, there is no
provision for uncollectible accounts as of December 31, 1995.
NOTE 3 - DUE FROM SHAREHOLDERS
Noninterest bearing, due on demand.
NOTE 4 - ACCOUNTS PAYABLE
Accounts payable consist of amounts due to an affiliate for
reimbursement of operating expenses as described in Note 5.
NOTE 5 - RELATED PARTY TRANSACTIONS
The Company reimburses a related party for expenses paid on its
behalf. The expenses include payroll, payroll taxes, pension
contributions and overhead expenses. These expenses totalled
$119,973 in 1995. At December 31, 1995, the total amount of
accounts payable and accrued pension contribution represents
amounts due to this related party. Additionally, $9,910 of
unreimbursed expenses were paid and contributed to capital by a
related party during 1995.
NOTE 6 - RETIREMENT PLAN
The Company sponsors a money purchase pension plan for qualified
employees. The minimum mandatory contributions are determined on
an annual basis by the Company and are limited to the lesser of
25% of compensation and S corporation earnings or $30,000 per
eligible employee. The Company's contribution expense amounted
to $39,900 for the year ended December 31, 1995.
NOTE 7 - COMMON CONTROL
The Company's shareholders also control other companies whose
operations are similar to or vertically integrated with those of
the Company. The Company reimburses a related party for payroll,
payroll taxes, pension contributions and overhead expenses which
are allocated to the Company by that related party. Transactions
between these companies are more fully disclosed in Note 4. The
shareholders, however, are in a position to, and in the future
may, influence the revenues or expenses of the Company for the
benefit of other companies in the same line of business that are
under their control.
NOTE 8 - SUBSEQUENT EVENTS
Pursuant to the compiled June 30, 1996 financial statement, the
Company made a profit of $78,166 for the six months ended June
30, 1996.
See independent auditors' report.
Page 6 of 7
<PAGE> 8
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
PROMPT MEDICAL BILLING, INC.
(restated)
NOTE 8 - SUBSEQUENT EVENTS (CONTINUED)
On October 21, 1996, the Company sold corporate intangible
assets which include goodwill, the name "Prompt Medical Billing,
Inc." and customer agreements for $675,000. The payment terms
include shares of stock of the purchasing company with an
aggregate value of $500,000 and the balance of the purchase
price in cash. This consideration is to be held in escrow until
the earlier of two years from the closing date of October 21,
1996 or the date on which all cash and shares of stock of the
purchasing company are released from escrow ("Escrow Period").
The cash portion of the purchase price shall be paid to Prompt
Medical Billing, Inc. or its shareholders in eight equal
quarterly installments commencing ninety days from the closing
date and the shares of stock of the purchasing company shall be
released from escrow upon the termination of the escrow period.
The sales agreement also includes a two-year covenant not to
compete, employment contract for the majority shareholder and a
consulting agreement with a related party.
On September 9, 1996, the Company paid a management fee of
$25,000 to a related party for consulting services rendered
regarding the sale.
On September 13, 1996, the Company adopted a plan of Complete
Liquidation and Dissolution of Prompt Medical Billing, Inc. in
accordance with Section 331, 453(h) and 453B(h) of the Internal
Revenue Code. There is a twelve-month liquidation period from
the adoption date to finalize business, liquidate and distribute
any and all of its assets to the shareholders.
NOTE 9 - SUBSEQUENT DISCOVERY OF FACTS
Subsequent to the issuance of the Company's financial
statements, management became aware that certain unrecorded
expenses paid by a related party were not recorded as paid in
capital in 1995 and 1994. Recording these expenses increased
paid in capital by $17,916 and decreased net income and retained
earnings by $9,910 and $17,916, respectively.
See independent auditors' report.
Page 7 of 7
<PAGE> 1
Exhibit 99.3
FINANCIAL STATEMENTS
(RESTATED)
JUNE 30, 1996
PROMPT MEDICAL BILLING, INC.
MIAMI, FLORIDA
<PAGE> 2
The Stockholders
Prompt Medical Billing, Inc.
Miami, Florida
We have compiled the accompanying balance sheet of Prompt Medical Billing, Inc.
as of June 30, 1996, and the related statements of income and retained earnings
and cash flows for the six-month period then ended, in accordance with
Statements on Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not audited or
reviewed the accompanying financial statements and, accordingly, do not express
an opinion or any other form of assurance on them.
As disclosed in Note 1 to the financial statements, certain 1995 and 1994
unrecorded expenses were paid and contributed to capital by a related party.
Accordingly, the financial statements have been restated to reflect this
contribution.
Management has elected to omit substantially all of the disclosures required by
generally accepted accounting principles. If the omitted disclosures were
included in the financial statements, they might influence the user's
conclusions about the Company's financial position, results of operations and
cash flows. Accordingly, these financial statements are not designed for those
who are not informed about such matters.
September 23, 1996, except for Note 1,
as to which the date is October 30, 1996.
Page 1 of 5
<PAGE> 3
BALANCE SHEET
JUNE 30, 1996
PROMPT MEDICAL BILLING, INC.
(restated)
ASSETS
<TABLE>
<S> <C>
CURRENT ASSETS
Cash $37,272
Accounts receivable 46,356
-------
Total current assets $83,628
=======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $20,296
Accrued pension contribution 16,125
-------
Total current liabilities 36,421
SHAREHOLDERS' EQUITY
Common stock, $1 par value, 1,000 shares
authorized, issued and outstanding 1,000
Paid in capital 17,916
Retained earnings 28,291
-------
Total shareholders' equity 47,207
-------
Total liabilities and shareholders'
equity $83,628
=======
</TABLE>
See accountants' compilation report and the accompanying selected information.
Page 2 of 5
<PAGE> 4
STATEMENT OF INCOME AND RETAINED EARNINGS
SIX-MONTH PERIOD ENDED JUNE 30, 1996
PROMPT MEDICAL BILLING, INC.
(restated)
<TABLE>
<S> <C> <C>
REVENUES
Fees $ 120,192
Interest income 259
---------
Total revenues $ 120,451
EXPENSES
Pension 16,125
Printing 1,985
Telephone and utilities 3,498
Repairs and maintenance 5,516
Taxes and licenses 249
Postage and shipping 10,752
Supplies 3,191
Professional fees 600
Bank charges 369
---------
Total expenses 42,285
---------
Net income 78,166
RETAINED EARNINGS, January 1, 1996 14,882
Distributions (64,757)
---------
RETAINED EARNINGS, June 30, 1996 $ 28,291
=========
</TABLE>
See accountants' compilation report and the accompanying selected information.
Page 3 of 5
<PAGE> 5
STATEMENT OF CASH FLOWS
SIX-MONTH PERIOD ENDED JUNE 30, 1996
PROMPT MEDICAL BILLING, INC.
(restated)
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATIVE ACTIVITIES:
Net income $ 78,166
Adjustments to reconcile net income to cash
provided by operating activities:
Decrease in accounts receivable 250
Decrease in accounts payable and accrued
pension contribution (1,888)
--------
Net cash provided by operating activities 76,528
CASH FLOWS FROM INVESTING ACTIVITIES:
Net payments received on advances to shareholders 25,257
CASH FLOWS FROM FINANCING ACTIVITIES:
Shareholder distributions (64,757)
--------
Net increase in cash 37,028
CASH, beginning of period 244
--------
CASH, end of period $ 37,272
========
</TABLE>
See accountants' compilation report and the accompanying selected information.
Page 4 of 5
<PAGE> 6
SELECTED INFORMATION
SUBSTANTIALLY ALL INFORMATIVE DISCLOSURES HAVE BEEN OMITTED
JUNE 30, 1996
PROMPT MEDICAL BILLING, INC.
(restated)
NOTE 1 - SUBSEQUENT DISCOVERY OF FACTS
Subsequent to the issuance of the Company's financial
statements, management became aware that certain unrecorded
expenses paid and contributed to capital by a related party were
not recorded in 1995 and 1994. Recording these expenses
increased paid in capital by $17,916 and decreased retained
earnings by $17,916.
See accountants' compilation report.
Page 5 of 5
<PAGE> 1
Exhibit 99.4
Pro Forma Financial Statements
Background Information
On October 21, 1996 (the "Closing Date"), Nu-Tech Bio-Med, Inc., a Delaware
corporation (the "Company" or "Nu-Tech") acquired substantially all of the
operating assets of Prompt Medical Billing Services, Inc.("Prompt"), a medical
billing service business in Miami, Florida. The acquisition was in the form of
a purchase.
The Company acquired the assets for a total consideration of $675,000 consisting
of $100,000 in cash and 37,404 shares of common stock of Nu-Tech. The purchase
price is subject to the following adjustments:
1. A decrease in the purchase price equal to 50% of the accounts
receivable as of the Closing Date,
2. A decrease in the purchase price in the event that the average annual
revenues, as defined under the agreement is less than the greater of
(a) the pre-closing revenue, as defined under the agreement or (b)
$185,000, and
3. An increase in the purchase price based upon market value of the
Nu-Tech common stock at the completion of the escrow period.
All consideration paid by the Company has been placed in escrow for a period up
to two years, to be released in eight equal quarterly installments.
Additionally, the Company has entered into a two-year employment agreement and a
two-year consulting agreement with a former principal and executive officer of
Prompt and an affiliated company.
Basis of Accompanying Unaudited Pro Forma Combined Financial Statements
The results of Prompt's operations will be included in the Company's operating
results as of October 21, 1996, the closing date of the acquisition. The
Unaudited Pro Forma Combined Balance Sheet assumes that the acquisition of
Prompt occurred on June 30, 1996. The Unaudited Pro Forma Combined Statements
of Operations combines the historical results of operations of Prompt for the
year ended December 31, 1995 and the six months ended June 30, 1996 assuming
the acquisition occurred on January 1, 1995 and January 1, 1996, respectively.
The unaudited pro forma combined financial statements do not reflect cost
savings and synergies which might be achieved from the acquisition as well as
certain contingent purchase price adjustments.
The Unaudited Pro Forma Combined Balance Sheet includes direct transaction
costs associated with the acquisition. The actual allocation of the final
purchase price may be different from that reflected in the pro forma combined
condensed financial statements. The Company has not yet completed its
evaluation of the carrying value of the intangible assets acquired and the
appropriateness of the amortization period. Such evaluation is expected to be
completed prior to the filing of the Company's Annual Report on Form 10-KSB for
the year ended December 31, 1996.
<PAGE> 2
Management believes that the assumptions used in preparing these unaudited pro
forma combined financial statements provide a reasonable basis for presenting
all of the significant effects of the acquisition. These unaudited pro forma
combined financial statements do not purport to be indicative of the results
which actually would have been obtained if the acquisition had been effected on
the date indicated or of those results which may be achieved in the future. The
pro forma combined financial statements should be read in conjunction with the
consolidated financial statements included in the Nu-Tech's Annual Report on
Form 10-KSB for the year ended December 31, 1995 and on Form 10-QSB for the six
month period ended June 30, 1996.
Pro Forma Adjustments
A summary of the Pro Forma Adjustments is set forth as follows:
(a) To record the cost of the acquired assets (cash and common shares issued)
and the excess of such costs over the fair value of assets acquired
(goodwill); and to reflect the elimination of assets and liabilities not
acquired or assumed in the acquisition.
(b) To record direct costs of the acquisition including legal and accounting
services.
(c) To record goodwill amortization expense.
(d) To record amounts payable under compensation and consulting agreements less
amounts previously recorded as compensation.
<PAGE> 3
Nu-Tech Bio-Med
Unaudited Pro Forma Combined Balance Sheet
<TABLE>
<CAPTION>
Nu-Tech Prompt Medical
Historical Historical Pro Forma Pro Forma
June 30, 1996 June 30, 1996 Adjustments Combined
------------- ------------- ----------- --------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 4,062,082 $ 37,272 $ (137,272) a $ 3,962,082
Accounts receivable, net 28,368 46,356 (46,356) a 28,368
Prepaid expenses 95,034 - - 95,034
Other current assets 30,517 - - 30,517
------------ ----------- ----------- -------------
Total current assets 4,216,001 83,628 (183,628) 4,116,001
Equipment and leasehold improvements, net 431,818 - - 431,818
Acquisition costs 322,110 - - 322,110
Patents, net 143,321 - - 143,321
Goodwill, net 271,316 - 715,000 a,b 986,316
Other assets 44,766 - - 44,766
------------ ----------- ----------- -------------
Total Assets $ 5,429,332 $ 83,628 $ 531,372 $ 6,044,332
============ =========== =========== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 171,543 $ 20,296 $ (20,296) a $ 171,543
Accrued expenses 568,686 16,125 23,875 a,b 608,686
Contract payable 65,571 - - 65,571
Current portion of long term debt 202,633 - - 202,633
Current portion of capitalized lease obligations 14,185 - - 14,185
------------ ----------- ----------- -------------
Total current liabilities 1,022,618 36,421 3,579 1,062,618
Debt 216,838 - - 216,838
Capitalized lease obligations 26,236 - - 26,236
Deferred income 5,540 - - 5,540
------------ ----------- ----------- -------------
Total liabilities 1,271,232 36,421 3,579 1,311,232
Stockholders' equity:
Preferred stock - - -
Common stock 19,921 1,000 (626) a 20,295
Capital in excess of par 20,194,991 17,916 556,710 a 20,769,617
Deferred consulting expense (123,750) - - (123,750)
Unvested stock grant (491,658) - - (491,658)
Retained Earnings - 28,291 (28,291) a -
Deficit accumulated during development stage (15,441,404) - - (15,441,404)
------------ ----------- ----------- -------------
Total stockholders' equity 4,158,100 47,207 527,793 4,733,100
============ =========== =========== =============
Total Liabilities and Stockholders' Equity $ 5,429,332 $ 83,628 $ 531,372 $ 6,044,332
============ =========== =========== =============
</TABLE>
<PAGE> 4
Nu-Tech Bio-Med
Unaudited Pro Forma Combined Statement of Operations
<TABLE>
<CAPTION>
Nu-Tech Prompt Medical
Historical Historical
For the year ended For the year ended Pro Forma Pro Forma
December 31, 1995 December 31, 1995 Adjustments Combined
------------------ ------------------ ----------- -----------
<S> <C> <C> <C> <C>
Revenues
Assay sales $ 161,701 $ - $ - $ 161,701
Investment and interest income 158,977 600 - 159,577
Fee income - 202,185 - 202,185
Other 2,100 - - 2,100
---------------- ----------- ----------- ------------
Total revenues 322,778 202,785 - 525,563
Expenses
General and administrative 1,430,354 141,637 18,400d 1,590,391
Laboratory expenses 186,405 - - 186,405
Research and development 77,066 - - 77,066
Interest 33,514 - - 33,514
Rent 24,972 - - 24,972
Depreciation and amortization 659,424 - 66,500c 725,924
---------------- ----------- ----------- ------------
Total expenses 2,411,735 141,637 84,900 2,638,272
================ =========== =========== ============
Net income (loss) $ (2,088,957) $ 61,148 $ (84,900) $(2,112,709)
================ =========== =========== ============
</TABLE>
<PAGE> 5
Nu-Tech Bio-Med
Unaudited Pro Forma Combined Statement of Operations
<TABLE>
<CAPTION>
Nu-Tech Prompt Medical
Historical Historical
For the six For the six
months ended months ended Pro Forma Pro Forma
June 30, 1996 June 30, 1996 Adjustments Combined
------------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
Revenues
Assay sales $ 48,052 $ - $ - $ 48,052
Investment and interest income 79,573 259 - 79,832
Fee income - 120,192 - 120,192
Other - - - -
------------- --------------- --------- -------------
Total revenues 127,625 120,451 - 248,076
Expenses
General and administrative 895,885 42,285 40,000d 978,170
Laboratory expenses 79,419 - - 79,419
Research and development 46,704 - - 46,704
Interest 15,480 - - 15,480
Rent 41,096 - - 41,096
Depreciation and amortization 613,923 - 33,250c 647,173
------------- --------------- --------- -------------
Total expenses 1,692,507 42,285 73,250 1,808,042
============= =============== ========= =============
Net income (loss) $ (1,564,882) $ 78,166 $(73,250) $ (1,559,966)
============= =============== ========= =============
</TABLE>
