<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Amendment July 19, 1996
MEDICAL RESOURCES, INC.
-----------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-20440 13-3584552
(State or Other (Commission (I.R.S. Employer
Jurisdiction) File Number) Identification No.)
2701 N. Rocky Point Drive, Suite 650, Tampa, FL 33607
and
155 State Street, Hackensack, N.J. 07601
- ---------------------------------- --------
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone numbers, including area code (813) 281-0202
and
(201) 488-6230
---------------------------------------------------------
AMENDMENT NO 1
The undersigned registrant hereby amends its
Current Report on Form 8-K, filed on April 30, 1996
to add Item 7 as set forth herein.
AMENDMENT NO 2
The undersigned registrant hereby amends its
Current Report on Form 8-K, filed on January 9, 1996
to add Item 7 as set forth herein.
1
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Item 7. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired
On January 12, 1996, the Company consummated the acquisition of the common
stock of NurseCare Plus, Inc. ("NurseCare Plus") which provides supplemental
healthcare staffing services for clients including hospitals, clinics and home
health agencies in Southern California. Pursuant to the acquisition, the
Company acquired all of the common stock of NurseCare Plus for $1,250,000 cash
and a prime plus one percent note payable for $1,250,000 due January 12, 1999.
The audited financial statements of NurseCare Plus and the reports thereon of
independent auditors, all appearing after the signature page to this Form
8-K/A, are included herein.
NURSECARE PLUS, INC.
Report of Independent Auditors
Balance Sheets as of December 31, 1995 and 1994
Statements of Operations for the Years Ended December 31, 1995, 1994 and
1993
Statements of Shareholder's Equity for the Years Ended December 31, 1995,
1994 and 1993
Statement of Cash Flows for the Years Ended December 31, 1995, 1994 and
1993
Notes to Financial Statements
On April 19, 1996, Medical Resources, Inc. (the "Company") entered into an
asset purchase agreement with Americare Imaging Centers Inc. and MRI Associates
of Tarpon Springs, Inc. ("Americare"). Pursuant to the acquisition, the Company
acquired certain of the assets and liabilities of Americare for $1,500,000 cash
and $1,500,000 of the Company's common stock. The audited financial statements
of Americare and the reports thereon of independent auditors, all appearing
after the signature page to this Form 8-K/A, are included herein.
AMERICARE IMAGING, INC.
Independent Auditors' Report
Consolidated Balance Sheet as of December 31, 1995
Consolidated Statement of Operations and Accumulated Deficit for the Year
Ended December 31, 1995
Consolidated Statement of Cash Flows for the Year Ended December 31, 1995
Notes to Consolidated Financial Statements
Consolidated Balance Sheet at March 31, 1996 (unaudited)
Consolidated Statement of Operations for the Three Months Ended March 31,
1996 (unaudited)
Consolidated Statement of Cash Flows for the Three Months Ended March 31,
1996 (unaudited)
Notes to unaudited Consolidated Financial Statements
On April 30, 1996, the Company entered into an asset purchase agreement with
Access Imaging Center, Inc. ("Access"). Pursuant to the acquisition, the
Company acquired certain of the assets and liabilities of Access for $1,300,000
cash and $1,700,000 of the Company's common stock. The audited financial
statements of Access and the reports thereon of independent auditors, all
appearing after the signature page to this Form 8-K/A, are included herein.
ACCESS IMAGING CENTER, INC.
Independent Auditors' Report
Balance Sheet as of December 31, 1995
Statement of Income and Retained Earnings For the Year Ended December 31,
1995
Statement of Cash Flows for the Year Ended December 31, 1995
Notes to Financial Statements
Balance Sheet at March 31, 1996 (unaudited)
Statement of Income for the Three Months Ended March 31, 1996 (unaudited)
Statement of Cash Flows for the Three Months Ended March 31, 1996
(unaudited)
Notes to unaudited Financial Statements
2
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(b) Unaudited Pro Forma Financial Information
The unaudited Pro Forma Consolidated Statements of Operations for the
Year Ended December 31, 1995 ("1995 Financial Statements") combines the
individual Financial Statements of the Company, Americare, Access and NurseCare
Plus for the year ended December 31, 1995 after giving effect to the pro forma
adjustments described in the Notes to unaudited Pro Forma Consolidated Financial
Statements.
The following 1995 unaudited pro forma consolidated data reflects the
Acquisition of Americare, Access and NurseCare Plus as if they had occurred on
January 1, 1995. The following unaudited pro forma information does not
purport to be indicative of the results which would actually have been obtained
had the acquisitions been completed during the periods presented or which may
be obtained in the future.
The unaudited Pro Forma Consolidated Statements of Operations for the
Three Months Ended March 31, 1996 ("1996 Financial Statements") combines the
individual Financial Statements of the Company, Americare, Access and NurseCare
Plus for the three months ended March 31, 1996 after giving effect to the pro
forma adjustments described in the Notes to Pro Forma Consolidated Financial
Statements.
The following 1996 Unaudited Pro Forma Consolidated data reflects the
Acquisition of Americare, Access and Unaudited NurseCare Plus as if they had
occurred on January 1, 1996. The unaudited pro forma information is based upon
historical financial information of the Company and of the Acquired Businesses
giving effect to the transactions under the purchase method of accounting and
the assumptions and adjustments described in the accompanying notes to unaudited
Pro Forma Consolidated Financial Statements. The following unaudited Pro Forma
information does not purport to be indicative of the results which would
actually have been obtained had the acquisitions been completed during the
periods presented or which may be obtained in the future.
3
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MEDICAL RESOURCES, INC.
PRO FORMA CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
AS OF MARCH 31, 1996
-----------------------------------------------------------------------------
PRO FORMA
MEDICAL AMERICARE ACCESS IMAGING ----------------------------
ASSETS RESOURCES, INC.(9) CENTER, INC. CENTER, INC. ADJUSTMENTS TOTAL
------ --------------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 8,528,344 $ 1,841 $ 192 $ (2,033)(10) $ 8,528,344
Accounts receivable, net 18,146,463 1,656,656 587,913 (1,656,656)(11) 18,734,376
Other receivables 717,060 - - - 717,060
Deferred tax asset 1,871,397 - - - 1,871,397
Prepaid expenses 1,643,550 21,721 48,647 (70,368)(10) 1,643,550
----------- ---------- ---------- ----------- -----------
Total current assets 30,906,814 1,680,218 636,752 (1,729,057) 31,494,727
Medical diagnostic and office equipment, net 12,680,705 1,590,584 1,470,349 - 15,741,638
Goodwill 11,247,083 - - 3,733,011 (8) 14,980,094
Other assets 2,136,547 2,136,547
Deferred tax asset, net 326,999 - - - 326,999
Value of venture contracts 237,031 237,031
----------- ---------- ---------- ----------- -----------
Total assets $57,535,179 $3,270,802 $2,107,101 $ 2,003,954 $64,917,036
=========== ========== ========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of notes payable $ 1,395,287 $ 836,666 $ 51,867 $ - $ 2,283,820
Current portion of obligations under capital leases 3,723,068 260,014 408,000 - 4,391,082
Accounts payable and accrued expenses 6,823,345 262,883 91,026 - 7,177,254
Other current liabilities 1,283,684 - - - 1,283,684
Income taxes payable 397,570 61,556 - - 459,126
----------- ---------- ---------- ----------- -----------
Total current liabilities 13,622,954 1,421,119 550,893 0 15,494,966
Notes payable 5,259,697 1,411,626 89,103 - 6,760,426
Obligations under capital leases 7,840,987 658,044 531,072 - 9,030,103
Convertible debentures 10,232,965 - - - 10,232,965
Other long-term liabilities 889,951 - - - 889,951
----------- ---------- ---------- ----------- -----------
Total liabilities 37,846,554 3,490,789 1,171,068 0 42,508,411
----------- ---------- ---------- ----------- -----------
Commitments and contingencies
Stockholders' equity:
Common stock, $.01 par value, 20,000,000 shares
authorized, 7,697,500 pro forma number of
shares issued and outstanding at December 31, 1994 80,670 1,000 54 (1,054)(7) 84,877
1,921 (6)
2,286 (6)
- - - -
Common Stock to be issued 1,721,250 - - - 1,721,250
Additional paid-in capital 22,306,363 41,879 209,976 (251,855)(7) 25,022,156
1,443,079 (6)
1,272,714 (6)
Retained income (deficit) (3,000,900) (262,866) 726,003 (463,137)(7) (3,000,900)
Less 265,000 common shares in Treasury, at cost (1,418,758) - - - (1,418,758)
----------- ---------- ---------- ----------- -----------
Total stockholders' equity 19,688,625 (219,987) 936,033 2,003,954 22,408,625
----------- ---------- ---------- ----------- -----------
Total liabilities and stockholders' equity $57,535,179 $3,270,802 $2,107,101 $ 2,003,954 $64,917,036
=========== ========== ========== =========== ===========
</TABLE>
See Notes to Pro Forma Unaudited Consolidated Financial Statements.
4
<PAGE> 5
MEDICAL RESOURCES, INC.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Month Period Ended March 31, 1996
-------------------------------------------------------------------
Medical NurseCare Plus, Americare Imaging Access Imaging
Resources, Inc. Inc.(16) Center, Inc. Center, Inc.
------------------------------------------------- ---------------
<S> <C> <C> <C> <C>
Net service revenue $18,098,004 $132,397 $1,041,847 $795,680
----------- -------- ---------- ----------
Operating expenses of services 12,036,999 96,119 754,159 311,893
Provisions for uncollectible accounts receivable 814,708 2,000 - -
Corporate general and administrative 1,601,205 10,000 114,042 135,265
Depreciation and amortization 1,316,909 1,000 236,795 67,114
---------- -------- -------- ----------
Operating income (loss) 2,328,183 23,278 (63,149) 281,408
Interest (income)/expense 548,894 - - -
---------- -------- -------- ----------
Income/(loss) before minority interest and
income taxes 1,779,289 23,278 (63,149) 281,408
Minority interest in losses of joint ventures
and limited partnerships 43,691 - - -
---------- -------- -------- ----------
Income before income taxes 1,735,598 23,278 (63,149) 281,408
Provision for income taxes 437,820 - - -
---------- -------- -------- ----------
Income from continuing operations $1,297,778 $23,278 $(63,149) $281,408
========== ======== ======== ==========
<CAPTION>
--------------------------------------------
Pro Forma ProForma With
------------------------ Other Historical Historical
Adjustments Total Acquisitions (13) Acquisitions
----------- ------------------------ ------------
<S> <C> <C> <C> <C>
Net service revenue - $20,067,928 $194,724 $20,262,652
----------- ----------- -------- -----------
Operating expenses of services - 13,199,170 112,881 13,312,051
Provisions for uncollectible accounts receivable - 816,708 15,000 831,708
Corporate general and administrative 18,750 (14) 1,821,220 15,000 1,836,220
(68,042) (12) -
10,000 (15) -
Depreciation and amortization 87,587 (1) 1,709,405 20,000 1,729,405
----------- ----------- -------- -----------
Operating income (loss) (48,295) 2,521,425 31,843 2,553,268
Interest (income)/expense - 548,894 10,000 558,894
Income/(loss) before minority interest and ----------- ----------- -------- -----------
-
income taxes (48,295) 1,972,531 21,843 1,994,374
Minority interest in losses of joint ventures -
and limited partnerships - 43,691 43,691
----------- ----------- -------- -----------
Income before income taxes (48,295) 1,928,840 21,843 1,950,683
Provision for income taxes 109,080 (5) 546,900 8,737 555,637
----------- ----------- -------- -----------
Income from continuing operations $(157,375) $ 1,381,940 $ 13,106 $ 1,395,046
=========== =========== ======== ===========
</TABLE>
See Notes to Pro Forma Unaudited Consolidated Financial Statements.
5
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MEDICAL RESOURCES, INC.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1995
------------------------------------------------------------------------------------
PRO FORMA
MEDICAL NURSECARE AMERICARE IMAGING ACCESS IMAGING ------------------------
RESOURCES, INC. PLUS, INC. CENTER, INC. CENTER, INC. ADJUSTMENTS TOTAL
--------------- ---------- ------------ ------------ ----------- -----
<S> <C> <C> <C> <C> <C> <C>
Net service revenue $51,993,758 $4,423,367 $4,411,606 $2,604,318 $ - $63,433,049
----------- ---------- ---------- ---------- --------- -----------
Operating expenses of services 31,563,796 3,383,815 1,467,485 1,602,120 - 38,017,216
Provisions for uncollectible accounts receivable 3,377,862 - - - 3,377,862
Corporate general and administrative 4,978,045 1,017,097 1,827,775 452,920 (334,226)(2) 7,106,611
(360,000)(3)
(475,000)(4)
Depreciation and amortization 4,567,144 2,016 841,964 268,454 350,349 (1) 6,029,927
----------- ---------- ---------- ---------- --------- -----------
Operating income (loss) 7,506,911 20,439 274,382 280,824 818,877 8,901,433
Interest (income)/expense 1,829,017 3,646 318,182 37,904 - 2,188,749
----------- ---------- ---------- ---------- --------- -----------
Income/(loss) before minority interest and
income taxes 5,677,894 16,793 (43,800) 242,920 818,877 6,712,684
Minority interest in losses of joint ventures
and limited partnerships 124,085 - - - - 124,085
----------- ---------- ---------- ---------- --------- -----------
Income before income taxes 5,801,979 16,793 (43,800) 242,920 818,877 6,836,769
Provision for income taxes 1,659,111 - - - 413,916 (5) 2,073,027
----------- ---------- ---------- ---------- --------- -----------
Income from continuing operations $ 4,142,868 $ 16,793 $ (43,800) $ 242,920 $ 404,961 $ 4,763,742
=========== ========== ========== ========== ========= ===========
</TABLE>
See Notes to Pro Forma Unaudited Consolidated Financial Statements.
6
<PAGE> 7
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(1) Adjustment reflects the additional amortization of goodwill due to the
acquisition of Americare, Access and NurseCare Plus, Inc. The goodwill
created from the acquisition of Americare, Access and NurseCare Plus were
$3,332,831, $1,587,115 and $2,087,049, respectively, and are being
amortized on a straight-line basis over 20 years.
(2) Adjustment reflects the reduction in the consulting and management
service fees paid to the former owners of Americare in the amount of
$518,226. The reduction is offset by $40,000 in fees to be incurred by
the Company by hiring a new center manager for the centers. In addition,
the amount also includes $144,000 in fees to be paid to the former owner
over the next year as consulting fees paid by the Company.
(3) Adjustment reflects the reduction in the management and marketing fees
paid to the former owner of Access in the amount of $400,000. Thereduction
is offset by $40,000 in fees to be incurred by the Company by hiring a new
center manager for the center.
(4) Adjustment reflects the reduction in the salaries paid to the former
owner of NurseCare Plus of $550,000 offset by consulting fees of $75,000
to be paid to the former owner by the Company for nine months subsequent
to the acquisition.
(5) Adjustment reflects the tax effect of the operations of Americare and
Access and the adjustments to amortization and corporate general and
administrative expenses discussed above calculated at the Company's
statutory tax rate of 40%.
(6) Adjustment reflects the of the consideration given by the Company to
acquire the net business assets of both Americare and Access.
(7) Adjustment reflects the elimination of the common stock, retained
earnings and additional paid-in capital of both Americare and Access.
(8) Adjustment reflects the carrying value of the assets and liabilities of
Americare and Access as stated in their March 31, 1996 unaudited financial
statements adjusted to the agreed upon purchase price of such assets
acquired and liabilities assumed.
(9) The March 31, 1996 consolidated balance sheet of Medical Resources, Inc.
included in the Company's Form 10-Q contains the assets and liabilities
of NurseCare Plus. Therefore, no pro forma adjustments are included
herein for the acquisition of NurseCare Plus.
(10) Adjustment reflects the value of cash and prepaid expenses of both
Americare and Access at March 31, 1996 which was not purchased in the
acquisitions.
(11) Adjustment reflects the value of the accounts receivable of Americare on
hand at March 31, 1996 which was not purchased in the acquisition.
7
<PAGE> 8
(12) Adjustment reflects the reduction in the consulting and management
service fees paid to the former owners of Americare in the amount of
$114,042. The reduction is offset by $10,000 in fees to be incurred by
the Company by hiring a new center manager for the center. In addition,
the amount also includes $36,000 in fees to be paid to the former owner
over the next year as consulting fees.
(13) Adjustment reflects the pro forma operating results for the Company's
acquisition of MRICT (four imaging centers in New York City) on January 9,
1996, as disclosed in the Company's Report on Form 8-K dated January 9,
1996, as if the acquisition had occurred on January 1, 1996.
(14) Adjustment reflects the consulting fees of $18,750 to be paid to the
former owner of NursCare Plus by the Company for the three months
subsequent to the acquisition.
(15) The amount also included $10,000 in fees to be incurred by the Company by
hiring a new center manager for the center for the three months ended
March 31, 1996.
(16) Reflects the operations for the period January 1, 1996 through January 12,
1996 (date of acquisition).
8
<PAGE> 9
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 hereunto duly authorized.
MEDICAL RESOURCES, INC.
By: /S/ Robert J. Adamson
---------------------------------------------
Robert J. Adamson
Co-President and Chief Financial Officer
(Co-Principal Executive Officer and
Principal Accounting Officer)
Dated: July 19, 1996
9
<PAGE> 10
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ACCESS IMAGING CENTER, INC.:
Independent Auditors' Report 13
Balance Sheet as of December 31, 1995 14
Statement of Income and Retained Earnings for the Year Ended
December 31, 1995 15
Statement of Cash Flows for the Year Ended December 31, 1995 16
Notes to Financial Statements 17-20
AMERICARE IMAGING CENTER, INC.:
Independent Auditors' Report 23
Consolidated Balance Sheet as of December 31, 1995 24
Consolidated Statement of Operations and Accumulated Deficit for the Year Ended
December 31, 1995 25
Consolidated Statement of Cash Flows for the Year Ended December 31, 1995 26
Notes to Consolidated Financial Statements 27-31
NURSECARE PLUS, INC.:
Report of Independent Auditors 34
Balance Sheets as of December 31, 1995 and 1994 35
Statements of Operations for the Years Ended December 31, 1995, 1994 and 1993 36
Statements of Shareholder's Equity for the Years Ended December 31, 1995, 1994
and 1993 37
Statement of Cash Flows for the Years Ended December 31, 1995, 1994 and 1993 38
Notes to Financial Statements 39-41
AMERICARE IMAGING CENTER, INC.:
Consolidated balance sheet as of March 31, 1996 (unaudited) 42
Consolidated statement of operations for the three months ended
March 31, 1996 (unaudited) 43
Consolidated statement of cash flows for the three months ended
March 31, 1996 (unaudited) 44
Notes to Unaudited Consolidated Financial Statements 45
ACCESS IMAGING CENTER, INC.:
Balance sheet as of March 31, 1996 (unaudited) 46
Statements of Income for the three months ended March 31, 1996 (unaudited) 47
Statement of cash flows for the three months ended March 31, 1996 (unaudited) 48
Notes to Unaudited Financial Statements 49
</TABLE>
10
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ACCESS IMAGING CENTER, INC.
FINANCIAL STATEMENTS
December 31, 1995
11
<PAGE> 12
ACCESS IMAGING CENTER, INC.
TABLE OF CONTENTS
December 31, 1995
<TABLE>
<S> <C>
FINANCIAL STATEMENTS PAGE
Independent Auditors' Report 1
Balance Sheet 2
Statement of Income and Retained Earnings 3
Statement of Cash Flows 4
Notes to Financial Statements 5-8
</TABLE>
12
<PAGE> 13
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Access Imaging Center, Inc.
We have audited the accompanying balance sheet of Access Imaging Center, Inc.
as 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 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 Access Imaging Center, 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.
Carle Place, New York
May 31, 1996
13
<PAGE> 14
ACCESS IMAGING CENTER, INC.
BALANCE SHEET
December 31, 1995
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents - note 1b $ 192
Accounts receivable - note 2 597,066
Prepaid expenses 49,412
-----------------
Total Current Assets 646,670
Property and equipment - notes 1c and 3 355,689
Other assets 4,494
-----------------
Total Assets $ 1,006,853
=================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 100,526
Current portion of notes payable - note 4 51,867
Current portion of obligations under capital leases - note 5 29,246
-----------------
Total Current Liabilities 181,639
Notes payable - note 4 102,078
Obligations under capital leases - note 5 68,511
-----------------
Total Liabilities 352,228
-----------------
COMMITMENTS AND CONTINGENCIES - note 5
STOCKHOLDERS' EQUITY
Capital stock (stated value - $1 per share; 100 shares authorized,
54 shares issued and outstanding) 54
Paid in capital 209,976
Retained earnings 444,595
-----------------
Total Stockholders' Equity 654,625
-----------------
Total Liabilities and Stockholders' Equity $ 1,006,853
=================
</TABLE>
See notes to financial statements. Page 2
14
<PAGE> 15
ACCESS IMAGING CENTER, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
For The Year Ended December 31, 1995
<TABLE>
<S> <C>
REVENUE $ 2,604,109
----------------
EXPENSES
Medical supplies and other operating costs 582,738
Payroll and related costs 1,019,382
Other general and administrative expenses 438,340
Depreciation and amortization 268,454
Interest expense 37,904
----------------
Total Expenses 2,346,818
----------------
Net Income From Operations 257,291
OTHER INCOME (EXPENSE)
Loss on sale of property and equipment (14,580)
Interest income 209
----------------
NET INCOME 242,920
Retained Earnings - beginning of year 291,048
Distributions to stockholders (89,373)
----------------
Retained Earnings - end of year $ 444,595
================
</TABLE>
See notes to financial statements. Page 3
15
<PAGE> 16
ACCESS IMAGING CENTER, INC.
STATEMENT OF CASH FLOWS
For The Year Ended December 31, 1995
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 242,920
-----------------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 268,454
Loss on sale of property and equipment 14,580
Cash flow increase (decrease) from changes in operating assets
and liabilities:
Accounts receivable (113,971)
Prepaid expenses (48,647)
Other assets (2,064)
Accounts payable and accrued expenses 63,197
-----------------
Total Adjustments 181,549
-----------------
Net cash provided by operating activities 424,469
-----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (365,911)
Proceeds from sale of property and equipment 37,856
-----------------
Net cash used in investing activities (328,055)
-----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable 133,679
Advances from lessor of equipment under capital lease 97,757
Principal payments - notes payable (19,652)
Principal payments - capital lease obligations (313,160)
Distributions to stockholders (89,373)
-----------------
Net cash used in financing activities (190,749)
-----------------
Net decrease in cash and cash equivalents (94,335)
Cash and cash equivalents - beginning of year 94,527
-----------------
Cash and cash equivalents - end of year $ 192
=================
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid $ 37,904
=================
Income taxes paid $ -
=================
</TABLE>
See notes to financial statements. Page 4
16
<PAGE> 17
ACCESS IMAGING CENTER, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) Nature of Business
Access Imaging Center, Inc. was organized and began operations October
12, 1989. Income of the Corporation is derived mainly from MRI scans.
b) Cash and Cash Equivalents
Cash and cash equivalents for purposes of statement of cash flows
includes cash in banks and on hand.
c) Property and Equipment
Medical diagnostic equipment, office equipment, leasehold improvements
and vehicles are stated at cost. Depreciation and amortization are
computed upon the shorter of the estimated useful lives of the
respective assets, generally seven years, or the lease term, using the
straight-line method for financial reporting purposes and accelerated
methods for income tax purposes. Maintenance and repairs are charged
to expense as incurred.
d) Leases
Leases which meet the criteria for capitalization are capitalized and
the related capital lease obligations are included in current and
long-term liabilities. Amortization and interest are charged to
expense, with rent payments being treated as payments of the capital
lease obligations. All other leases are accounted for as operating
leases, with rent payments being charged to expenses as incurred.
e) Revenue Recognition
Revenue is recorded as services are rendered to patients.
f) Income Taxes
Access Imaging Center, Inc. has elected to be treated as a Sub-chapter
"S" corporation for federal and state income tax purposes.
Accordingly, no provision has been made for income taxes as such taxes
are the responsibility of the individual stockholders.
g) Use of Estimates
The preparation of the 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
differ from those estimates.
Page 5
17
<PAGE> 18
ACCESS IMAGING CENTER, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
NOTE 2 - ACCOUNTS RECEIVABLE
Accounts receivable is comprised of the following:
<TABLE>
<S> <C>
Accounts receivable $ 920,066
Less: allowance for doubtful accounts and contractual
adjustments (323,000)
----------------
$ 597,066
================
</TABLE>
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment is comprised of the following:
<TABLE>
<S> <C>
Medical diagnostic equipment $ 156,838
Office equipment, furniture and fixtures 166,647
Leasehold improvements 46,621
Transportation equipment 147,458
----------------
517,564
Less: accumulated depreciation and amortization (161,875)
----------------
$ 355,689
================
</TABLE>
NOTE 4 - NOTES PAYABLE
Notes payable are comprised of the following:
<TABLE>
<S> <C> <C>
a) Note payable - original amount of $22,000 payable in quarterly
installments of $1,500 including interest at a rate of 8%, with a
balloon payment of $12,646 due October 1, 1996.
$ 14,849
b) Note payable - original amount of $22,000 payable in quarterly
installments of $1,500 including interest at a rate of 8%, with a
balloon payment of $12,646 due October 1, 1996.
14,849
c) Note payable - original amount of $70,132 payable in monthly
installments of $1,282 including interest at a rate of 9.5% with a
balloon payment in the amount of $37,073 due April 21, 1998;
collateralized by vehicles. 61,814
</TABLE>
Page 6
18
<PAGE> 19
ACCESS IMAGING CENTER, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
NOTE 4 - NOTES PAYABLE (Continued)
d) Note payable - original amount of $63,547 payable in monthly
installments of $1,114 including interest at a rate of 2%
through November, 2000; collateralized by medical equipment
<TABLE>
<S> <C>
$ 62,433
-----------------
153,945
Less: current portion (51,867)
-----------------
$ 102,078
=================
</TABLE>
Maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
Year Amount
---- ------
<S> <C> <C>
1996 $ 51,867
1997 23,403
1998 53,681
1999 12,986
2000 12,008
-----------------
$ 153,945
=================
</TABLE>
NOTE 5 - COMMITMENTS AND CONTINGENCIES
Leases
The Company entered into a ten-year agreement to lease space for its facility.
The lease, as amended, expired in February 1996. In October 1995, the Company
entered into a five-year agreement to lease new space for its facility. Rent
expense under the leases was approximately $103,962 for the year ending
December 31, 1995.
In January 1996, the Company entered into a non-cancellable lease for medical
equipment. Pursuant to this lease, in December 1995, the lessor advanced
approximately $98,000 to the Company for site preparation costs. Repayment of
these advances will become part of the scheduled lease payment for the
equipment.
Page 7
19
<PAGE> 20
ACCESS IMAGING CENTER, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
NOTE 5 - COMMITMENTS AND CONTINGENCIES (Continued)
Future minimum payments under leases at December 31, 1995, including the lease
entered into in January 1996, are as follows:
<TABLE>
<CAPTION>
Capital Operating
Leases Leases
------ ------
<S> <C> <C> <C>
1996 $ 271,378 $ 68,181
1997 272,629 69,506
1998 272,629 72,528
1999 234,504 75,550
2000 234,504 78,572
Thereafter 58,626 -
----------------- -----------------
Total minimum lease payments 1,344,270 $ 364,337
=================
Less: amount representing interest (295,676)
-----------------
Present value of minimum lease payments $ 1,048,594
=================
</TABLE>
Litigation
Counsel advises that the Company has no material liability in any commercial
litigation.
NOTE 6 - SUBSEQUENT EVENTS
In May 1996, the Company sold all of its assets for $3,000,000 and ceased
operations. In connection with this sale, substantially all liabilities were
assumed by the purchaser.
20
<PAGE> 21
AMERICARE IMAGING CENTER, INC.
CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995
21
<PAGE> 22
AMERICARE IMAGING CENTER, INC.
TABLE OF CONTENTS
December 31, 1995
<TABLE>
<CAPTION>
PAGE
<S> <C>
CONSOLIDATED FINANCIAL STATEMENTS
Independent Auditors' Report 1
Consolidated Balance Sheet 2
Consolidated Statement of Operations and Accumulated Deficit 3
Consolidated Statement of Cash Flows 4
Notes to Consolidated Financial Statements 5-9
</TABLE>
22
<PAGE> 23
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Americare Imaging Center, Inc.
We have audited the accompanying consolidated balance sheet of Americare
Imaging Center, Inc. as of December 31, 1995 and the related consolidated
statements of operations and accumulated deficit and cash flows for the year
then ended. These consolidated 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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Americare Imaging Center, 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.
Carle Place, New York
May 31, 1996
23
<PAGE> 24
AMERICARE IMAGING CENTER, INC.
CONSOLIDATED BALANCE SHEET
December 31, 1995
<TABLE>
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSETS
Cash and cash equivalents - note 1c $ 1,089
Accounts receivable - note 2 1,499,858
Prepaid expenses and other current assets 34,182
-----------------
Total Current Assets 1,535,129
Property and Equipment - notes 1d and 3 1,826,380
-----------------
Total Assets $ 3,361,509
=================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 216,117
Current portion of notes payable - note 4 1,168,835
Current portion of obligations under capital leases - note 5 398,505
-----------------
Total Current Liabilities 1,783,457
Notes Payable - note 4 937,699
Obligations under capital leases - note 5 797,191
-----------------
Total Liabilities 3,518,347
-----------------
Commitments and Contingencies - note 5
STOCKHOLDERS' EQUITY
Capital stock - (stated value - $10 per share; 200 shares authorized, 1,000
100 shares issued and outstanding)
Paid in capital 41,879
Accumulated deficit (199,717)
-----------------
Total Stockholders' Equity (156,838)
-----------------
Total Liabilities and Stockholders' Equity $ 3,361,509
=================
</TABLE>
See notes to consolidated financial statements.
Page 2
24
<PAGE> 25
AMERICARE IMAGING CENTER, INC.
CONSOLIDATED STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
For the Year Ended December 31, 1995
<TABLE>
<S> <C>
REVENUE $ 4,411,606
------------------
EXPENSES
Outside payroll services 806,056
Medical supplies and other costs 661,429
General and administrative expenses 1,468,597
Management fees 359,178
Depreciation and amortization 841,964
Interest expense 318,182
-----------------
Total Expenses 4,455,406
-----------------
NET LOSS (43,800)
Accumulated Deficit - beginning of year (155,917)
-----------------
Accumulated Deficit - end of year $ (199,717)
=================
</TABLE>
See notes to consolidated financial statements.
Page 3
25
<PAGE> 26
AMERICARE IMAGING CENTER, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Year Ended December 31, 1995
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (43,800)
-----------------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 841,964
Cash flow increase (decrease) from changes in operating assets
and liabilities
Accounts receivable 713,180
Prepaid expenses and other current assets (746)
Accounts payable and accrued expenses (324,155)
-----------------
Total Adjustments 1,230,243
-----------------
Net cash provided by operating activities 1,186,443
-----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (375,634)
Acquisition of PSA Associates, net of cash received (305,831)
-----------------
Net cash used in investing activities (681,465)
-----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable 1,089,492
Principle payments - notes payable (1,292,602)
Principle payments - capital lease obligations (313,734)
-----------------
Net cash used in financing activities (516,844)
-----------------
Net decrease in cash and cash equivalents (11,866)
Cash and cash equivalents - beginning of year 12,955
-----------------
Cash and cash equivalents - end of year $ 1,089
=================
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid $ 318,182
=================
Income taxes paid $ -
=================
</TABLE>
See notes to consolidated financial statements.
Page 4
26
<PAGE> 27
AMERICARE IMAGING CENTER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) Nature of Business
Americare Imaging Center, Inc. ("AIC") was founded in July, 1994 to
operate and manage outpatient diagnostic imaging centers in central
Florida. In January 1995, AIC acquired all of the common stock of MRI
of Tarpon Springs ("MRI") and the assets of Physicians Scanning
Associates ("PSA") for $2,617,651. The purchase was funded by the
assumption of the liabilities of PSA in the amount of $2,312,651 and
the delivery of a promissory note to the seller in the amount of
$305,000 (see note 4).
The fair value of assets acquired exceeded the purchase price by
approximately $185,000. This excess was recorded as a reduction to
the carrying value of the medical equipment acquired.
b) Principles of Consolidation
The consolidated financial statements include the accounts of AIC and
MRI (collectively referred to as the Company). All significant
intercompany transactions have been eliminated in consolidation.
c) Cash and Cash Equivalents
Cash and cash equivalents for purposes of statement of cash flows
includes cash in banks and on hand.
d) Property and Equipment
Property and equipment are stated at cost. Repairs and maintenance
which do not prolong normal asset life are charged to expense.
Depreciation is computed by the straight line method over estimated
useful life of the related assets.
e) Leases
Leases which meet the criteria for capitalization are capitalized and
the related capital lease obligations are included in current and
long-term liabilities. Amortization and interest are charged to
expense, with rent payments being treated as payments of the capital
lease obligation. All other leases are accounted for as operating
leases, with rent payments being charged to expense as incurred.
f) Revenue Recognition
Revenue is recognized as services are rendered to patients.
Page 5
27
<PAGE> 28
AMERICARE IMAGING CENTER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
g) Income Taxes
The Company applies the provisions of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
109"). SFAS 109 requires a company to recognize deferred tax
liabilities and assets for the expected future tax consequences of
events that have been recognized in a company's financial statements
or tax returns. Under this method, deferred tax liabilities and
assets are determined based on the difference between the financial
statement carrying amounts and tax bases of assets and liabilities
using enacted tax rates in effect in the years in which the
differences are expected to reverse.
For the year ended December 31, 1995, AIC's net income was not
significant and MRI incurred a net operating loss. Additionally,
differences between taxable income and income for financial statement
purposes were not significant. Accordingly, no provision for current
or deferred income taxes has been recorded in the financial
statements.
h) Use of Estimates
The preparation of the consolidated financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in the
consolidated financial statements and accompanying notes. Actual
results could differ from those estimates.
NOTE 2 - ACCOUNTS RECEIVABLE
Accounts receivable is comprised of the following:
<TABLE>
<CAPTION>
<S> <C>
Accounts receivable $ 3,841,437
Less: Allowance for doubtful accounts and
contractual adjustments (2,341,579)
----------------
$ 1,499,858
================
</TABLE>
Approximately $2,500,000 of the accounts receivable balance relates to services
performed on patients, the collection of which is contingent upon the outcome
of pending litigation involving the patient and outside third parties.
Included in the allowance for doubtful accounts and contractual adjustments is
approximately $1,500,000 for these receivables. Approximately 65 percent of
the gross revenues during the year were derived from patients in this category.
Page 6
28
<PAGE> 29
AMERICARE IMAGING CENTER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995
NOTE 3 - PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
<S> <C>
Property and Equipment is comprised of the following:
Medical diagnostic equipment $ 2,430,080
Leasehold improvements 335,557
Office equipment 53,767
Furniture and fixtures 33,839
-----------------
2,853,243
Less: accumulated depreciation and amortization (1,026,863)
-----------------
$ 1,826,380
=================
</TABLE>
NOTE 4 - NOTES PAYABLE
Notes payable are comprised of the following:
<TABLE>
<S> <C> <C>
a) Note payable - original amount of $305,000 payable in quarterly
installments of $18,540 including interest at a rate of 7.75% through
January 2000; collateralized by the assets of the Company.
$ 266,369
b) Note payable - original amount of $200,000 payable over 60 months
including interest at a rate of 7% through July 1999, collaterlized by
medical equipment. The Company is currently in arrears on this
obligation; accordingly, the entire obligation has been recorded as
current. 203,500
c) Note payable - original amount of $1,729,000 payable in monthly
installments of $55,687 including interest at a rate of 7% through
November 1997. 1,194,603
d) Note payable - original amount of $250,000 payable in monthly
installments of $5,250 including interest at a rate of 9.5% through May
1999. 183,206
e) Note payable - original amount of $414,100 payable in monthly
installments of $36,986 including interest at a rate of 13% through June
1996. 213,740
f) Note payable - original amount of $204,512 payable in monthly
installments of $9,189 including interest at a rate of 7.35% through May
1996. 45,116
-----------------
2,106,534
Less: current portion (1,168,835)
-----------------
$ 937,699
=================
</TABLE>
Page 7
29
<PAGE> 30
AMERICARE IMAGING CENTER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995
NOTE 4 - NOTES PAYABLE (Continued)
Maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
Year Amount
---- ------
<S> <C> <C>
1996 $ 1,168,835
1997 702,714
1998 121,799
1999 94,998
2000 18,188
------------------
$ 2,106,534
==================
</TABLE>
NOTE 5 - COMMITMENTS AND CONTINGENCIES
Leases
The Company has entered into various leases for medical equipment and has
capitalized the assets relating to these leases. The leases are collateralized
by the related equipment.
The following is a summary of assets under capital leases:
<TABLE>
<S> <C>
Medical equipment $ 1,323,897
Less: accumulated amortization (420,018)
----------------
$ 903,879
================
</TABLE>
Future minimum lease payments under the capital leases as of December 31, 1995
are as follows:
<TABLE>
<S> <C>
1996 $ 404,090
1997 411,837
1998 362,051
1999 186,079
2000 52,182
----------------
1,416,239
Less: amount representing interest (220,543)
----------------
Present value of net minimum capital lease payments (including
$398,505 classified as current portion of obligations under
capital leases) $ 1,195,696
================
</TABLE>
Page 8
30
<PAGE> 31
AMERICARE IMAGING CENTER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995
NOTE 5 - COMMITMENTS AND CONTINGENCIES (Continued)
The Company leases three operating facilities under operating leases which
expire in varying periods through 1999. Future minimum lease payments as of
December 31, 1995 are as follows:
<TABLE>
<S> <C> <C>
1996 $ 109,760
1997 82,620
1998 57,840
1999 27,600
------------------
$ 277,820
==================
</TABLE>
Litigation
Counsel advises that the Company has no material liability in any commercial
litigation.
NOTE 6 - SUBSEQUENT EVENTS
In May 1996, the Company sold all of its assets for $4,500,000 and ceased
operations. In connection with this sale, substantially all liabilities were
assumed by the purchaser.
Page 9
31
<PAGE> 32
Financial Statements
Nurse Care Plus, Inc.
Years ended December 31, 1995, 1994 and 1993
with Report of Independent Auditors
32
<PAGE> 33
Nurse Care Plus, Inc.
Financial Statements
Years ended December 31, 1995, 1994 and 1993
CONTENTS
<TABLE>
<S> <C>
Report of Independent Auditors........................... 1
Audited Financial Statements
Balance Sheets........................................... 2
Statements of Operations................................. 3
Statements of Shareholder's Equity....................... 4
Statements of Cash Flows................................. 5
Notes to Financial Statements............................ 6
</TABLE>
33
<PAGE> 34
Report of Independent Auditors
The Board of Directors and Shareholder's
Nurse Care Plus, Inc.
We have audited the accompanying balance sheets of Nurse Care Plus, Inc. as of
December 31, 1995 and 1994, and the related statements of operations and
shareholder's equity and cash flows for each of the three years in the period
ended December 31, 1995. 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 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 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 Nurse Care Plus, Inc. at
December 31, 1995 and 1994, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1995 in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
San Diego, California
January 29, 1996
34
<PAGE> 35
Nurse Care Plus, Inc.
Balance Sheets
<TABLE>
<CAPTION>
DECEMBER 31
1995 1994
---------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 5,935 $ 20,846
Accounts receivable 611,452 569,269
---------- ----------
Total current assets 617,387 590,115
Furniture, fixtures and equipment, net 4,037 6,053
Other assets 17,086 23,403
---------- ----------
Total assets $638,510 $619,571
========== ==========
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 2,188 $ 1,125
Accrued payroll and related benefits 131,395 155,312
Note payable to shareholder 80,000 55,000
---------- ----------
Total current liabilities 213,583 211,437
Commitments
Shareholder's equity:
Common stock, 1,000,000 par value - $1.00 shares
authorized; 40,000 shares issued and outstanding 40,000 40,000
Retained earnings 384,927 368,134
---------- ----------
Total shareholder's equity 424,927 408,134
---------- ----------
Total liabilities and shareholder's equity $638,510 $619,571
========== ==========
</TABLE>
See accompanying notes.
35
<PAGE> 36
Nurse Care Plus, Inc.
Statements of Operations
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
1995 1994 1993
----------- ---------- -----------
<S> <C> <C> <C>
Revenues $4,423,367 $3,219,891 $2,059,972
Cost and expenses:
Cost of services 3,385,831 2,585,470 1,712,083
Selling and administrative 1,017,097 409,401 295,993
Interest 3,646 7,802 3,221
---------- ---------- ----------
4,406,574 3,002,673 2,011,297
---------- ---------- ----------
Net income $ 16,793 $ 217,218 $ 48,675
========== ========== ==========
</TABLE>
See accompanying notes.
36
<PAGE> 37
Nurse Care Plus, Inc.
Statements of Shareholder's Equity
<TABLE>
<CAPTION>
COMMON STOCK RETAINED
-------------------
SHARES AMOUNT EARNINGS TOTAL
-------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Balance at December 31, 1992 80,000 $ 80,000 $ 237,241 $ 317,241
Repurchase shares (40,000) (40,000) (135,000) (175,000)
Net income - - 48,675 48,675
------- -------- --------- ---------
Balance at December 31, 1993 40,000 40,000 150,916 190,916
Net income - - 217,218 217,218
------- -------- --------- ---------
Balance at December 31, 1994 40,000 40,000 368,134 408,134
Net income - - 16,793 16,793
------- -------- --------- ---------
Balance at December 31, 1995 40,000 $ 40,000 $ 384,927 $ 424,927
======= ======== ========= =========
</TABLE>
See accompanying notes.
37
<PAGE> 38
Nurse Care Plus, Inc.
Statements of Cash Flows
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
1995 1994 1993
--------- ---------- ---------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 16,793 $ 217,218 $ 48,675
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 2,016 2,016 497
Changes in operating assets and liabilities:
Accounts receivable (42,183) (236,941) (7,134)
Other assets 6,317 (331) (3,739)
Accounts payable and accrued expenses 1,063 1,125 -
Accrued payroll and related benefits (23,917) 77,653 36,983
-------- --------- --------
Net cash (used in) provided by operating
activities (39,911) 60,740 75,282
INVESTING ACTIVITIES
Purchases of furniture, fixtures and equipment - (632) -
FINANCING ACTIVITIES
Note payable to shareholder 25,000 (69,000) 124,000
Dividends paid to shareholders - - (175,000)
-------- --------- --------
Net (decrease) increase in cash and cash
equivalents (14,911) (8,892) 24,282
Cash and cash equivalents at beginning of year 20,846 29,738 5,456
-------- --------- --------
Cash and cash equivalents at end of year $ 5,935 $ 20,846 $ 29,738
======== ========= ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for interest $ 3,646 $ 7,802 $ 3,221
======== ========= ========
</TABLE>
See accompanying notes.
38
<PAGE> 39
Nurse Care Plus, Inc.
Notes to Financial Statements
December 31, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nurse Care Plus, Inc. (the Company) was incorporated in California on July 3,
1987. The Company provides temporary nursing services to acute care hospitals
in Orange, Riverside and San Diego counties. The following is a summary of its
significant accounting policies.
CASH AND CASH EQUIVALENTS
The Company considers all liquid investments with an original maturity of three
months or less when purchased to be cash equivalents.
CONCENTRATION OF CREDIT RISK
Most of the Company's business activity is with acute care hospital facilities.
As of December 31, 1995, the Company's receivables from hospitals totaled
$611,452. Credit is extended based on the evaluation of each entity's
financial condition and collateral is generally not required. Credit losses
have been within management's expectations.
REVENUE RECOGNITION
Revenue from services consists of temporary placement revenues. Temporary
placement revenue is recognized at established rates in the period in which
services are provided.
FURNITURE, FIXTURES AND EQUIPMENT
Furniture, fixtures and equipment are stated at cost. Depreciation is
calculated using the straight-line method based on the estimated useful lives
of the related assets (generally five years).
INCOME TAXES
The Company uses the accrual method of accounting for financial statement
reporting and uses the cash method of accounting for income tax purposes. The
Company has elected S corporation status for federal and state income tax
reporting purposes. Accordingly, the income is included in the tax returns of
the shareholders and no provision for federal income taxes has been made in the
accompanying financial statements. An estimate of the provision for state
income taxes has been made based on the applicable rates and included in
selling and administrative expenses.
39
<PAGE> 40
Nurse Care Plus, Inc.
Notes to Financial Statements (continued)
40
<PAGE> 41
Nurse Care Plus, Inc.
Notes to Financial Statements (continued)
2. COMMITMENTS
The Company rents office space under an operating lease with no lease duration
commitment date. Total rent expense for the above lease for the years ended
December 31, 1995, 1994, and 1993 amounted to $30,534, $31,498 and $31,801,
respectively. No future minimum rental payments are required under the office
lease.
3. RELATED PARTY TRANSACTION
The shareholder loaned the Company $348,000 in 1995, $432,000 in 1994 and
$278,000 in 1993, of which the Company repaid the shareholder loans at various
times so that the amount outstanding at December 31, 1995 and 1994 were $80,000
and $55,000, respectively.
4. SUBSEQUENT EVENTS
The sole shareholder loaned the Company $105,000 during January 1996.
On January 11, 1996, the assets of the Company were acquired by a
wholly-owned subsidiary of Medical Resources, Inc. (MRI).
41
<PAGE> 42
AMERICARE IMAGING CENTER INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
March 31, 1996
--------------
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current assets:
Cash and cash equivalents $ 1,841
Accounts receivable, net 1,656,656
Prepaid expenses 21,721
----------
Total current assets 1,680,218
Medical diagnostic and office equipment, net 1,590,584
----------
Total assets $3,270,802
==========
LIABILITIES AND STOCKHOLDER'S DEFICIT
Current liabilities:
Current portion of notes payable $ 836,666
Current portion of obligations under capital leases 260,014
Accounts payable and accrued expenses 262,883
Income taxes payable 61,556
----------
Total current liabilities 1,421,119
Notes payable 1,411,626
Obligations under capital leases 658,044
----------
Total liabilities 3,490,789
Stockholders' deficit:
Common stock 1,000
Additional paid-in capital 41,879
Retained deficit (262,866)
----------
Total stockholders' deficit (219,987)
----------
Total liabilities and stockholders' deficit $3,270,802
==========
</TABLE>
See Notes to Unaudited Consolidated Financial Statements.
42
<PAGE> 43
AMERICARE IMAGING CENTER INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months Ended
March 31, 1996
--------------------------
<S> <C>
Net service revenue $1,041,847
Operating expenses of services 754,159
Provisions for uncollectible accounts receivable
Corporate general and administrative 114,042
Depreciation and amortization 236,795
----------
Net loss $ (63,149)
==========
</TABLE>
See Notes to Unaudited Consolidated Financial Statements.
43
<PAGE> 44
Americare Imaging Center, Inc.
Consolidated Statement of Cash Flows
For the three Months Ended March 31, 1996
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
<TABLE>
<CAPTION>
<S> <C>
Net loss $ (63,149)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 236,795
Increase in accounts receivable (156,798)
Decrease in prepaid expenses 12,461
Increase in accounts payable and accrued expenses 46,766
Increase in income taxes payable 61,556
---------
Net cash provided by operating activities 137,631
---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (999)
---------
Net cash used in investing activities (999)
---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from notes payable 141,758
Principle payments - capital lease obligation (277,638)
---------
Net cash used in financing activities (135,880)
---------
Net increase in cash and cash equivalents 752
Cash and cash equivalents - beginning of period 1,089
---------
Cash and cash equivalents - end of period $ 1,841
=========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 61,505
Income taxes paid $ -0-
</TABLE>
See Notes to Unaudited Consolidated Financial Statements.
44
<PAGE> 45
AMERICARE IMAGING CENTER, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
The unaudited consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
consolidated financial statements. In the opinion of management, all
adjustments, consisting of normal recurring adjustments, considered necessary
for a fair presentation have been included. Operating results for the interim
period is not necessarily indicative of the results that may be expected for an
entire year. These unaudited consolidated financial statements should be read
in conjunction with the audited consolidated financial statements and notes
thereto for the year ended December 31, 1995.
An unaudited consolidated statement of operations and cash flows for the three
months ended March 31, 1995 was not presented because the underlying financial
data is not available.
45
<PAGE> 46
Access Imaging Center Inc.
Balance Sheet
(Unaudited)
<TABLE>
<CAPTION>
March 31, 1996
--------------
ASSETS
<S> <C>
Current assets:
Cash and cash equivalents $ 192
Accounts receivable, net 587,913
Prepaid expenses 48,647
----------
Total current assets 636,752
Medical diagnostic and office equipment, net 1,470,349
----------
Total assets $2,107,101
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current position of notes payable $ 51,867
Current position of obligations under capital leases 408,000
Accounts payable and accrued expenses 91,026
----------
Total current liabilities 550,893
Notes payable 89,103
Obligations under capital leases 531,072
----------
Total liabilities 1,171,068
Stockholders' equity:
Common stock 54
Additional paid-in capital 209,976
Retained income 726,003
----------
Total stockholders' equity 936,033
----------
Total liabilities and stockholders' equity $2,107,101
==========
</TABLE>
See Notes to Unaudited Financial Statements.
46
<PAGE> 47
ACCESS IMAGING CENTER INC.
STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months Ended
March 31, 1996
--------------
<S> <C>
Net service revenue $795,680
Operating expenses of services 311,893
Corporate general and administrative 135,265
Depreciation and amortization 67,114
--------
Net Income $281,408
========
</TABLE>
See Notes to Unaudited Financial Statements.
47
<PAGE> 48
Access Imaging Center, Inc.
Statement of Cash Flows
For the three Months Ended March 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C>
Net income $ 281,408
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 67,114
Decrease in accounts receivable 9,153
Decrease in other assets 4,494
Decrease in prepaid expenses 765
Increase in accounts payable and accrued expenses (9,500)
Increase in income taxes payable 61,556
-----------
Net cash provided by operating activities 353,434
-----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (1,181,774)
-----------
Net cash used in investing activities (1,181,774)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net principle payments under notes payable (12,975)
Net borrowings under - capital lease obligation 841,315
-----------
Net cash used in financing activities 828,340
-----------
Net change in cash and cash equivalents -
Cash and cash equivalents - beginning of period 192
-----------
Cash and cash equivalents - end of period $ 192
===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 2,999
Income taxes paid $ -0-
</TABLE>
See Notes to Unaudited Financial Statements.
48
<PAGE> 49
ACCESS IMAGING CENTER, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
MARCH 31, 1996
The unaudited financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments, consisting of normal recurring
adjustments, considered necessary for a fair presentation have been included.
Operating results for the interim period is not necessarily indicative of the
results that may be expected for an entire year. These unaudited financial
statements should be read in conjunction with the audited consolidated
financial statements and notes thereto for the year ended December 31, 1995.
An unaudited Statement of Income and of cash flows for the three months ended
March 31, 1995 was not presented because the underlying financial data is not
available.
49
