<PAGE>
UNITED STATES
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 earliest event reported: February 29, 1996
UCI Medical Affiliates, Inc.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
Delaware 0-13265 59-2225346
<S> <C> <C>
(State or other jurisdiction of incorporation) (Commission File Number) (IRS Employer Identification No.)
</TABLE>
6168 St. Andrews Road, Columbia, South Carolina 29212
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (803) 772-8840
No Change
(Former name or former address, if changed since last report.)
This document contains a total of 40 pages.
1
<PAGE>
This Form 8-K/A amends the Form 8-K filed with the Securities and Exchange
Commission on March 14, 1996 by UCI Medical Affiliates, Inc., a Delaware
corporation (the "Company"), and is filed to include the financial statements
required by Item 7 of Form 8-K.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
a) Financial Statements of Business Acquired
The financial statements for Convenience Medical Services, P.A.,
the business acquired by the wholly-owned subsidiary of the
Company, are included in this report beginning on page number 3.
The financial statements for Carolina Examination Services, Inc.,
the business acquired by the wholly-owned subsidiary of the
Company, are included in this report beginning on page number 23.
b) Pro Forma Financial Information
The pro forma financial information for Convenience Medical
Services, P.A., the business acquired by the wholly-owned
subsidiary of the Company, is included in this report following
the financial information included herein in response to Item 7(a)
above.
The pro forma financial information for Carolina Examination
Services, Inc., the business acquired by the wholly-owned
subsidiary of the Company, is included in this report following
the financial information included herein in response to Item 7(a)
above.
c) Exhibits
Each of the following exhibits is incorporated by reference to the
exhibit of the same number filed with the Company's Form 8-K filed
on March 14, 1996.
Exhibit 2.1 - Asset Purchase Agreement dated and executed on
February 29, 1996 by and between Carolina Examination Services,
Inc. and UCI Medical Affiliates of South Carolina, Inc.
Exhibit 2.2 - Asset Purchase Agreement dated and executed on March
1, 1996 by and between Convenience Medical Services, P.A. and UCI
Medical Affiliates of South Carolina, Inc.
2
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Financial Statements of
Convenience Medical Services, P.A. and
Stephen A. Harvey, M.D.
as of December 31, 1995 and 1994
3
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UCI Medical Affiliates, Inc.
CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Financial Statements of Convenience Medical Services, P.A.
as of December 31, 1995 and Stephen A. Harvey, M.D. as of
December 31, 1994...................................................................................6-14
UCI Medical Affiliates, Inc. Pro Forma Combining Financial Statements
Combining Balance Sheet at September 30, 1995................................................... 15
Notes to Combining Balance Sheet................................................................ 16
Combining Statement of Operations and Accumulated Deficit
for year ended September 30, 1995............................................................ 17
Notes to Combining Statement of Operations...................................................... 18
UCI Medical Affiliates, Inc. Pro Forma Combining Financial Statements
Combining Balance Sheet at March 31, 1996....................................................... 19
Notes to Combining Balance Sheet................................................................ 20
Combining Statement of Operations and Accumulated Deficit
for the six months ended March 31, 1996.................................................... 21
Notes to Combining Statement of Operations...................................................... 22
</TABLE>
4
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Report of Independent Accountants
Board of Directors
UCI Medical Affiliates, Inc.
We have audited the accompanying balance sheets of Convenience Medical Services,
P.A. as of December 31, 1995 and Stephen A. Harvey, M.D. as of December 31, 1994
and the related statements of operations, changes in owner's equity, and cash
flows for the periods 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 Convenience Medical Services,
P.A. as of December 31, 1995 and Stephen A. Harvey, M.D. as of December 31,
1994, and the results of operations and cash flows for the periods then ended in
conformity with generally accepted accounting principles.
The financial statements have been prepared solely from the accounts of
Convenience Medical Services, P.A. and do not include the personal accounts of
the stockholder or those of any other operations in which he may be engaged.
THE SIGNED ORIGINAL OPINION LETTER IS ON FILE WITH UCI MEDICAL AFFILIATES, INC.
Columbia, South Carolina
April 18, 1996
5
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Convenience Medical Services, P.A.
Stephen A. Harvey, M.D.
Balance Sheets
December 31,
1995 1994
-------- --------
ASSETS
Current assets:
Cash and cash equivalents $ 1,521 $ 10,008
Accounts receivable, net 114,421 94,195
Prepaid expenses 55,528 --
-------- --------
Total current assets 171,470 104,203
Office and equipment, net 132,160 48,070
Goodwill, net 103,155 110,844
Other assets, advances to owner 1,351 10,000
-------- --------
236,666 168,914
-------- --------
Total assets $408,136 $273,117
======== ========
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 38,730 $ 28,070
Promissory note payable on demand 30,000 --
Current portion of long-term debt 29,148 40,873
Current portion of capital lease obligations 35,595 3,820
-------- --------
Total current liabilities 133,473 72,763
Capital lease obligations 125,303 9,780
Long-term debt 76,178 105,030
-------- --------
Total liabilities 334,954 187,573
-------- --------
Equity
Capital stock, no par value, 1,000 shares authorized;
100 shares issued and outstanding 100 --
Retained earnings 73,082 --
Proprietor's equity -- 85,544
-------- --------
Equity 73,182 85,544
-------- --------
Total liabilities and stockholder's equity $408,136 $273,117
======== ========
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
Convenience Medical Services, P.A.
Stephen A. Harvey, M.D.
Statements of Operations
for the year ended December 31, 1995 and the seven months ended
December 31, 1994
<TABLE>
<CAPTION>
1995 1994
------------------ ------------------
<S> <C> <C>
Net medical revenue $ 832,229 $ 390,505
Operating costs 770,029 279,295
------------------ ------------------
Operating margin 62,200 111,210
General and administrative expenses 31,786 13,337
Depreciation and amortization 31,768 8,315
------------------ ------------------
Income (loss) from operations (1,354) 89,558
Interest expense, net 11,008 4,014
------------------ ------------------
Net income (loss) $ (12,362) $ 85,544
================== ==================
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
Convenience Medical Services, P.A.
Stephen A. Harvey, M.D.
Statements of Changes in Equity
for the year ended December 31, 1995 and the seven months ended
December 31, 1994
<TABLE>
<CAPTION>
Common Stock Retained Proprietor's
Earnings Equity Total
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
June 1, 1994 $-- $ -- $ -- $ --
Net income -- -- 85,544 85,544
----------------- ----------------- ----------------- -----------------
Balance, December 31, 1994 -- -- 85,544 85,544
Restructure to new form of
ownership, January 1, 1995 100 85,444 (85,544) --
Net Loss -- (12,362) -- (12,362)
----------------- ----------------- ----------------- -----------------
Balance, December 31, 1995 $ 100 $ 73,082 -- $ 73,182
================= ================= ================= =================
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
Convenience Medical Services, P.A.
Stephen A. Harvey, M.D.
Statements of Cash Flows
for the year ended December 31, 1995 and the seven months ended
December 31, 1994
<TABLE>
<CAPTION>
1995 1994
------------------ ------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ (12,362) $ 85,544
Adjustments to reconcile net income to cash provided by
operating activities:
Depreciation and amortization 31,768 8,315
Changes in operating assets and liabilities:
Accounts receivable (20,226) (94,195)
Prepaid expenses 12,152
Other assets, shareholder advances 8,649 (10,000)
Accounts payable and accrued expenses 10,660 28,070
------------------ ------------------
Cash provided by operating activities 30,641 17,734
INVESTING ACTIVITIES:
Purchases of property and equipment, net -- (1,900)
------------------ ------------------
Cash used by investing activities -- (1,900)
FINANCING ACTIVITIES:
Borrowings under demand note payable 30,000 --
Repayments of long-term debt (40,577) (4,097)
Payments on capital lease obligations (28,551) (1,729)
------------------ ------------------
Cash used in financing activities (39,128) (5,826)
Net increase (decrease) in cash and cash equivalents (8,487) 10,008
Cash and cash equivalents, beginning of period 10,008 --
------------------ ------------------
Cash and cash equivalents, end of period $ 1,521 $ 10,008
================== ==================
Supplemental cash flow information:
Cash paid for interest $ 11,008 $ 4,014
================== ==================
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
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CONVENIENCE MEDICAL SERVICES, P.A.
STEPHEN A. HARVEY, M.D.
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Stephen A. Harvey, M.D. is the sole stockholder of Convenience Medical Services,
P.A. ("CMS") located in North Myrtle Beach, South Carolina. Dr. Harvey operates
a family practice medical office that provides treatments on an outpatient basis
for medical conditions not involving an immediate threat to life. The practice
commenced operations on June 1, 1994 under the name Stephen A. Harvey, M. D. CMS
was organized effective January 1, 1995. The accompanying financial statements
represent the financial activities of the practice for the periods indicated.
The financial statements have been prepared solely from the accounts of CMS and
do not include the personal accounts of Stephen A. Harvey, M.D. or those of any
other activities in which he may be engaged. Management makes estimates that are
a necessary part of the preparation of financial statements. These estimates
include the useful lives of equipment, some of which is subject to technological
obsolescence, and the net realizable value of patient accounts receivable. At
December 31, 1995, management is not aware of any conditions that could
significantly affect the estimates employed in the preparation of the financial
statements.
ACCOUNTS RECEIVABLE
Accounts receivable represent amounts due from patients, employers and various
third-party payors. Provisions for uncollectable amounts are made based on
management's estimates of future collectibility and historical payment
percentages.
PREPAID EXPENSES
Certain noncancelable leases include provision for the purchase of maintenance
service and chemical reagents. Prepaid expenses represent CMS's unconditional
obligation to purchase these services and supplies and are being charged to
operations ratably over the term of the lease.
OFFICE AND EQUIPMENT
Office and equipment is reported at cost. Depreciation for financial reporting
purposes is computed principally by the straight-line method over the estimated
useful lives of the assets, ranging from five to seven years. Maintenance,
repairs and minor renewals are charged to expense. Major renewals or
betterments, which prolong the life of the assets, are capitalized. Upon
disposal of depreciable property, the asset accounts are reduced by the related
cost and accumulated depreciation. The resulting gains and losses are reflected
in the statements of operations.
10
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Convenience Medical Services, P.A.
Stephen A. Harvey, M.D.
Notes to Financial Statements
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
GOODWILL
On June 1, 1994, Stephen A. Harvey, M.D. acquired the medical equipment and
substantially all of the tangible personal property and intangible assets of an
existing medical practice. The excess of the purchase price of $150,000 over the
fair value of assets acquired and liabilities assumed was $115,329 and is being
amortized over fifteen years using the straight-line method. Amortization of
goodwill is included in the statement of operations under the caption
depreciation and amortization and was $7,688 for the year ended December 31,
1995 and $4,484 for the period ended December 31, 1994.
INCOME TAXES
As provided by the Internal Revenue Code, CMS has elected S Corporation status.
Under this election, net income from CMS is reported in the stockholder's
individual federal and state income tax returns along with the stockholder's
other items of income and expense for the period. CMS is not a taxpaying entity
for purposes of federal and state income taxation. Accordingly, provisions for
income taxes have not been recorded in CMS's financial statements.
CASH EQUIVALENTS
CMS considers all short-term debt investments with a maturity of three months or
less at the date of acquisition to be cash equivalents.
Supplemental disclosure of non-cash investing and financing activities:
On June 1, 1994, Dr. Harvey purchased the medical equipment and the goodwill of
an existing medical practice. In connection with the acquisition, a promissory
note payable was executed for $150,000 and capital leases of $15,329 was
assumed. Effective January 1, 1995, the form of ownership was changed to that of
a professional association. In connection with the ownership change, the then
existing equity of the proprietor was recapitalized by the issuance of $100 of
capital stock and the remaining equity was credited to retained earnings. In
1995, CMS acquired medical equipment totaling $108,170 and prepaid supplies and
maintenance services totaling $67,680 through the execution of capital leases
totaling $175,850.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of accounts receivable, notes payable and accrued expenses
payable are estimated by management to approximate their respective carrying
values.
11
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Convenience Medical Services, P.A.
Stephen A. Harvey, M.D.
Notes to Financial Statements
2. OFFICE AND MEDICAL EQUIPMENT
Office and medical equipment consists of the following at December 31, 1995 and
1994:
<TABLE>
<CAPTION>
1995 1994
------------------- --------------------
<S> <C> <C>
Office and medical equipment $ 160,070 $ 51,900
Less, accumulated depreciation and amortization 27,910 3,830
------------------- --------------------
$ 132,160 $ 48,070
=================== ====================
</TABLE>
At December 30, 1995 and 1994, the cost of equipment under capital leases was
$118,170 and $10,000, respectively, and accumulated amortization thereon was
$18,000 and $300, respectively. Amortization of assets under capital lease is
reported in depreciation and amortization.
3. DESCRIPTION OF LEASING ARRANGEMENTS
CMS leases certain medical equipment under capital leases expiring on various
dates through April, 2000. At the end of the lease terms, CMS is generally
transferred title to the leased equipment or, in some cases, the payment of a
fee representing residual value is required.
The following is a schedule by years of the future minimum lease payments under
capital leases together with the present value of the net minimum lease payments
as of December 31, 1995.
1996 $ 49,949
1997 49,949
1998 44,998
1999 44,549
2000 9,139
-------------------
Total minimum lease payments 198,584
Less amounts representing interest 37,686
-------------------
Present value of minimum lease payments 160,898
Less current portion of lease obligations 35,595
-------------------
Capital lease obligation $ 125,303
===================
12
<PAGE>
Convenience Medical Services, P.A.
Stephen A. Harvey, M.D.
Notes to Financial Statements
3. DESCRIPTION OF LEASING ARRANGEMENTS, CONTINUED
CMS leases office space under a month-to-month operating lease (Note 5). Total
rental expense was $101,398 and $10,480 for the year ended December 1, 1995 and
the seven months ended December 31, 1994, respectively.
4. LONG-TERM DEBT
Long-term debt consists of an unsecured promissory note bearing interest at 8%
commencing October 1, 1994 and maturing May 1, 1999. At inception, the note
required twelve monthly payments of $4,055, including principal and interest,
and forty four payments of $3,041, including principal and interest.
Maturities of long-term debt are as follows:
1996 $ 29,148
1997 31,567
1998 34,188
1999 10,423
---------------
105,326
Less, current amount 29,148
---------------
Long-term debt $ 76,178
===============
5. RELATED PARTY TRANSACTIONS
Stephen A. Harvey, M.D., the sole stockholder, participates in the medical
activities of CMS. All payments for services and benefits to Stephen A. Harvey,
M.D. are recorded as salaries and are included in cost of operations in the
financial statements. For the periods ended December 31, 1995 and 1994, amounts
paid to the stockholder were $47,500 and $0, respectively. At December 31, 1995
and 1994, Stephen A. Harvey had been advanced $1,351 and $10,000, respectively.
CMS leases its medical office facilities under an operating lease executed with
the shareholder. The terms of the lease provide that CMS will pay all insurance,
taxes and utilities. The lease expires February 29, 1996 (Note 7). During 1995
and 1994, lease expense paid to Dr. Harvey was $101,398 and $6,206,
respectively.
13
<PAGE>
Convenience Medical Services, P.A.
Stephen A. Harvey, M.D.
Notes to Financial Statements
6. CONCENTRATION OF CREDIT RISK
In the normal course of providing health care services, CMS extends credit to
patients in the North Myrtle Beach, South Carolina area without requiring
collateral. Each individual's ability to pay balances due CMS is assessed and
reserves are established to provide for management's estimate of uncollectable
balances. Future revenues of CMS are largely dependent on third-party payors and
include Medicare and private insurance companies. The amount of loss CMS would
incur in the event of non-payment by the counter party is the amount of the
patient billing.
7. CONTINGENCIES
At December 31, 1995, management and its legal counsel are not aware of any
pending or threatened litigation, or unasserted claims against CMS that could
result in losses, if any, that would be material to the financial statements.
8. SUBSEQUENT EVENT
On March 1, 1996, UCI Medical Affiliates of South Carolina, Inc. ("UCI")
acquired certain office and medical equipment and substantially all of CMS's
assets (including patient lists and goodwill) for $600,000 consisting of
$300,000 in restricted common stock of UCI, $60,000 cash, the issuance of a
$240,000 interest bearing promissory note, and the assumption of certain capital
and operating equipment leases. In addition, UCI executed a lease with Dr.
Harvey for the lease of CMS's office facilities for a period commencing March 1,
1996 and ending April 30, 1997.
As a condition of the above transaction, Stephen A. Harvey, M.D. entered into an
agreement not-to-compete with UCI for a period of three years.
14
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UCI Medical Affiliates, Inc.
Pro Forma Combining Balance Sheet
September 30, 1995
(Unaudited)
The following pro forma combining balance sheet is based on the individual
balance sheets of UCI Medical Affiliates, Inc. as of September 30, 1995 per the
Company's Annual Report and Convenience Medical Services, P.A. as of December
31, 1995 appearing in item 7a of this filing. The information has been prepared
to reflect the acquisition by UCI Medical Affiliates, Inc. of Convenience
Medical Services, P.A. after giving effect to the pro forma adjustments
described in Note 1. This statement should be read in conjunction with each
entity's financial statements and footnotes.
<TABLE>
<CAPTION>
UCI Medical Convenience
Affiliates, Medical Pro Forma Pro Forma
Inc. Services, P.A. Adjustments Combined
--------------- ----------------- --------------- -------------
<S> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 76,513 $ 1,521 $ (60,000) (a) $ 124,013
107,500 (c)
(1,521) (b)
Accounts receivable - net 2,343,325 114,421 (114,421) (b) 2,343,325
Medical supplies inventory 265,068 -- -- 265,068
Deferred taxes 491,543 -- -- 491,543
Prepaids and other assets 282,060 55,528 -- 337,588
Goodwill 3,578,371 103,155 (38,214) (d) 4,113,367
(103,155) (b)
573,210 (a)
Property and equipment, net 2,795,384 132,160 -- 2,927,544
Deferred taxes 120,639 -- -- 120,639
Other assets 262,768 1,351 (1,351) (b) 262,768
--------------- ----------------- --------------- ------------
Total assets $ 10,215,671 $ 408,136 $ 362,048 $ 10,985,855
=============== ================= =============== =============
LIABILITIES AND CAPITAL
Current portion - long-term $ 1,244,603 $ 59,148 $ (59,148) (b) $ 1,329,603
debt 85,000 (a)
Current - capital lease -- 35,595 -- 35,595
Accounts payable 1,652,792 38,730 (38,730) (b) 1,652,792
Accrued payroll 498,791 -- -- 498,791
Other accrued liabilities 445,362 445,362
Long-term debt, net of current 3,121,098 76,178 (76,178) (b)
155,000 (a) 3,276,098
Capital lease obligations -- 125,303 125,303
Common stock 175,408 100 (100) (b)
3,636 (a) 179,044
Paid-in capital 9,694,256 -- 296,364 (a) 9,990,620
Accumulated earnings (deficit) (73,082) (b)
(6,616,639) 73,082 69,286 (e) (6,547,353)
--------------- ----------------- --------------- ------------
Total liabilities
and capital $ 10,215,671 $ 408,136 $ 362,048 $ 10,985,855
=============== ================= =============== =============
</TABLE>
15
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UCI Medical Affiliates, Inc.
Notes to Pro Forma Combining Balance Sheet
September 30, 1995
(Unaudited)
1. The pro forma combining balance sheet has been prepared to reflect the
acquisition of Convenience Medical Services, P.A. by UCI Medical Affiliates,
Inc. for an aggregate price of $600,000. The purchase occurred on March 1,1996.
The combining balance sheet reflects the balances of UCI at September 30, 1995
and Convenience Medical Services, P.A. at December 31, 1995. Pro forma
adjustments are made to reflect:
(a.) Assets acquired and liabilities assumed are summarized as follows:
$ 132,160 Furniture and equipment
55,528 Prepaid expenses
573,210 Goodwill
(3,636) Common shares issued
(296,364) Additional paid in capital
(160,898) Capital leases assumed
(240,000) Notes payable
-------------------
$ 60,000 Cash paid at closing
===================
$85,000 of the note payable is recorded as currently due, $155,000 is
recorded as non-current. Issuance of restricted common stock at estimated
per share value of $4.125.
(b.) Accounts receivable ($114,421), prior owner's goodwill ($103,155), cash
($1,521), and owner's advance ($1,351) were not acquired. Accounts
payable (38,730), long-term debt ($135,326), and prior owner's equity
($73,182) were not acquired or assumed.
(c.) Dr. Harvey and his management consultant will no longer be employed . In
1995 their combined salaries were $107,500.
(d.) Goodwill in the amount of $573,210 is amortized over 15 years. One year's
amortization is $38,214.
(e.) Effects of proforma adjustments on statement of operations, closed into
proforma retained earnings.
16
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UCI Medical Affiliates, Inc.
Pro Forma Statement of Operations and Accumulated Deficit
for the year ended September 30, 1995
(Unaudited)
The following pro forma combining statement is based on the individual
statements of operations and accumulated deficit of UCI Medical Affiliates, Inc.
as of September 30, 1995 per the Company's Annual Report and Convenience Medical
Services, P.A.. as of December 31, 1995 appearing in item 7a of this filing. The
information has been prepared to reflect the acquisition by UCI Medical
Affiliates, Inc. of Convenience Medical Services, P.A. after giving effect to
the pro forma adjustments described in Note 1. This statement should be read in
conjunction with each entity's financial statements and footnotes.
<TABLE>
<CAPTION>
UCI Medical Convenience
Affiliates, Medical Pro Forma Pro Forma
Inc. Services, P.A. Adjustments Combined
-------------- ------------------ --------------- ----------------
<S> <C> <C> <C> <C>
Revenue $ 17,987,147 $ 832,229 $ -- $ 18,819,376
Operating costs 18,180,080 770,029 (107,500) (a) 18,842,609
-------------- ------------------ --------------- ----------------
Operating margin (192,933) 62,200 (107,500) (23,233)
General and administrative
expenses 87,616 31,786 -- 119,402
Depreciation and
amortization 579,224 31,768 38,214 (b) 649,206
-------------- ------------------ --------------- ----------------
Loss from operations (859,773) (1,354) (69,286) (791,841)
Interest expense, net 505,459 11,008 -- 516,467
Gain on equipment 5,493 -- -- 5,493
-------------- ------------------ --------------- ----------------
Loss before income tax (1,359,739) (12,362) (69,286) (1,302,815)
Benefit for income taxes -- -- -- --
-------------- ------------------ --------------- ----------------
Net loss (1,359,739) (12,362) (69,286) (1,302,815)
Accumulated deficit -
beginning of year (5,256,896) 85,444 -- (5,244,538)
-------------- ------------------ --------------- ----------------
Accumulated deficit - end
of year $ (6,616,639) $ 73,082 -- $ (6,547,353)
============== ================== =============== ================
Earnings per common and common
equivalent share:
Net income $ (.43) (c) $ (.41)
============== ================== =============== ================
Weighted average shares of
common stock outstanding 3,136,544 (c) 3,209,272
============== ================== =============== ================
</TABLE>
17
<PAGE>
UCI Medical Affiliates, Inc.
Note to Pro Forma Combining Statement of Operations and Accumulated
Deficit
for the year ended September 30, 1995
(Unaudited)
1. The pro forma combining statement of operations gives effect to the following
pro forma adjustments necessary to reflect the acquisition outlined in Note 1 to
the pro forma balance sheet:
(a) Net change in professional and management advisory salaries based on
non-competition agreement between the Stephen A. Harvey, M.D. , and UCI
Medical Affiliates, Inc.
(b) Addition for amortization of goodwill on a straight line basis over 15
years.
(c) Not applicable; Convenience Medical Services, P.A. was not required to,
and did not, compute earnings per share.
18
<PAGE>
UCI Medical Affiliates, Inc.
Pro Forma Combining Balance Sheet
March 31, 1996
(Unaudited)
The following pro forma combining balance sheet is based on the individual
balance sheets of UCI Medical Affiliates, Inc. as of March 31, 1996 per the
Company's Form 10QSB and Convenience Medical Services, P.A. as of December 31,
1995 appearing in item 7a of this filing. The information has been prepared to
reflect the acquisition by UCI Medical Affiliates, Inc. of Convenience Medical
Services, P.A. after giving effect to the pro forma adjustments described in
Note 1. This statement should be read in conjunction with each entity's
financial statements and footnotes.
<TABLE>
<CAPTION>
UCI Medical Convenience
Affiliates, Medical Pro Forma Pro Forma
Inc. Services, P.A. Adjustments Combined
--------------- ----------------- --------------- -------------
<S> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 174,160 $ 1,521 $ (60,000) (a) $ 157,057
(1,521) (b)
53,750 (c)
(10,853) (e)
Accounts receivable - net 3,064,385 114,421 (114,421) (b) 3,064,385
Medical supplies inventory 267,356 -- -- 267,356
Deferred taxes 491,543 -- -- 491,543
Prepaids and other assets 419,567 55,528 -- 475,095
Goodwill 4,818,258 103,155 573,210 (a) 5,372,362
(103,155) (b)
(19,106) (d)
Property and equipment, net 3,051,091 132,160 -- 3,183,251
Deferred taxes 120,639 -- -- 120,639
Other assets 282,054 1,351 (1,351) (b) 282,054
--------------- ----------------- --------------- -------------
Total assets $ 12,689,053 $ 408,136 $ 316,553 $ 13,413,742
=============== ================= =============== =============
LIABILITIES AND CAPITAL
Current portion - long-term $ 1,614,574 $ 59,148 $ (59,148) (b) $ 1,699,574
debt 85,000 (e)
Current - capital lease -- 35,595 -- 35,595
Accounts payable 1,009,289 38,730 (38,730) (b) 1,009,289
Accrued payroll 551,328 -- -- 551,328
Other accrued liabilities 381,714 -- 381,714
Long-term debt, net of current 155,000 (a)
3,116,696 76,178 (76,178) (b) 3,271,696
Non-current capital leases -- 125,303 125,303
Common stock 214,578 100 (100) (b)
3,636 (a) 218,214
Paid-in capital 12,129,979 -- 296,364 (a) 12,426,343
Accumulated earnings (deficit) 23,791 (f)
(6,329,105) 73,082 (73,082) (b) (6,305,314)
--------------- ----------------- --------------- -------------
Total liabilities and capital $ 12,689,053 $ 408,136 $ 316,553 $ 13,413,742
=============== ================= =============== =============
</TABLE>
19
<PAGE>
UCI Medical Affiliates, Inc.
Notes to Pro Forma Combining Balance Sheet
March 31, 1996
(Unaudited)
1. The pro forma combining balance sheet has been prepared to reflect the
acquisition of Convenience Medical Services, P.A. by UCI Medical Affiliates,
Inc. for an aggregate price of $600,000. The purchase occurred on March 1,1996.
The combining balance sheet reflects the balances of UCI at March 31, 1996 and
Convenience Medical Services, P.A. at December 31, 1995. Pro forma adjustments
are made to reflect:
(a.) Assets acquired and liabilities assumed are summarized as follows:
$ 132,160 Furniture and equipment
55,528 Prepaid expenses
573,210 Goodwill
(3,636) Common shares issued
(296,364) Additional paid in capital
(160,898) Capital leases assumed
(240,000) Notes payable
-------------------
$ 60,000 Cash paid at closing
===================
$85,000 of the note payable is recorded as currently due, $155,000 is
recorded as non-current. Issuance of restricted common stock at estimated
per share value of $4.125.
(b.) Accounts receivable ($114,421), prior owner's goodwill ($103,155), cash
($1,521) and owner's advance ($1,351) were not acquired. Accounts payable
($38,730), long-term debt ($135,326), and prior owner's equity ($73,182)
were not acquired or assumed.
(c.) Dr Harvey and his management consultant will no longer be employed.
Salaries no longer included are $53,750 for the six month period.
(d.) Goodwill in the amount of $573,210 is amortized over 15 years. Six months
amortization is $19,106.
(e.) Interest expense for six months of $10,853 is recorded as paid in cash.
(f). Changes in CMS's equity as a result of adjustments on pro forma statement
of operations.
20
<PAGE>
UCI Medical Affiliates, Inc.
Pro Forma Statement of Operations and Accumulated Deficit
for the six months ended March 31, 1996
(Unaudited)
The following pro forma combining statement is based on the individual
statements of operations and accumulated deficit of UCI Medical Affiliates, Inc.
for the six months ended March 31, 1996 per the Company's Form 10QSB and
Convenience Medical Services, P.A. for the six months ended December 31, 1995.
The information has been prepared to reflect the acquisition by UCI Medical
Affiliates, Inc. of Convenience Medical Services, CMS after giving effect to the
pro forma adjustments described in Note 1. Information for the six months ended
March 31, 1996 for Convenience Medical Services, P.A. is estimated since
Convenience did not maintain its records on a basis consistent with UCI Medical
Affiliates, Inc. This statement should be read in conjunction with each entity's
financial statements and footnotes.
<TABLE>
<CAPTION>
UCI Medical Convenience
Affiliates, Medical Pro Forma Pro Forma
Inc. Services, P.A. Adjustments Combined
--------------- ----------------- --------------- ---------------
<S> <C> <C> <C> <C>
Revenue $ 11,069,503 $ 416,114 $ -- $ 11,485,617
Operating costs 9,999,069 385,014 (53,750) (a) 10,330,333
--------------- ----------------- --------------- ---------------
Operating margin 1,070,434 31,100 53,750 1,155,284
General and administrative
expenses 62,237 15,892 -- 78,129
Depreciation and amortization 433,815 15,884 19,106 (b) 468,805
--------------- ----------------- --------------- ---------------
Income from operations 574,382 (676) 34,644 608,350
Interest expense, net 288,953 5,504 10,853 (c) 305,310
Gain on equipment (2,105) -- -- (2,105)
--------------- ----------------- --------------- ---------------
Income before income tax 287,534 (6,180) 23,791 305,145
Benefit for income taxes -- -- -- --
--------------- ----------------- --------------- ---------------
Net income (loss) 287,534 (6,180) 23,791 305,145
Accumulated deficit -
beginning of year (6,616,639) 85,444 -- (6,610,459)
--------------- ----------------- --------------- ---------------
Accumulated deficit - end of
period $ (6,329,105) $ 76,174 $ $ (6,305,314)
=============== ================= =============== ===============
Earnings per common and
common equivalent share:
Net income $ .07 (d) $ .08
=============== ================= =============== ===============
Weighted average shares of
common stock outstanding
3,932,259 (d) 4,004,987
=============== ================= =============== ===============
</TABLE>
21
<PAGE>
UCI Medical Affiliates, Inc.
Note to Pro Forma Combining Statement of Operations and Accumulated
Deficit
for the six months ended March 31, 1996
(Unaudited)
1. The proforma combining statement of operations gives effect to the following
pro forma adjustments necessary to reflect the acquisition outlined in Note 1 to
the pro forma balance sheet:
(a) Net change in professional and management advisory salaries based on
non-competition agreement between the Stephen A. Harvey, M.D. , and UCI
Medical Affiliates, Inc.
(b) Addition for amortization of goodwill on a straight line basis over 15
years.
(c.) Interest expense for six months of $10,853 is recorded as paid in cash.
(d) Not applicable; Convenience Medical Services, P.A. was not required to,
and did not, compute earnings per share.
22
<PAGE>
Report on Audit of the Financial Statements of
Carolina Examination Services, Inc.
as of December 31, 1995 and 1994
23
<PAGE>
UCI Medical Affiliates, Inc.
CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Carolina Examination Services, Inc. Financial Statements
as of December 31, 1995 and 1994................................................................26-31
UCI Medical Affiliates, Inc. Pro Forma Combining Financial Statements
Combining Balance Sheet at September 30, 1995.................................................. 32
Notes to Combining Balance Sheet............................................................... 33
Combining Statement of Operations and Accumulated Deficit
for year ended September 30, 1995........................................................... 34
Notes to Combining Statement of Operations..................................................... 35
UCI Medical Affiliates, Inc. Pro Forma Combining Financial Statements
Combining Balance Sheet at March 31, 1996...................................................... 36
Notes to Combining Balance Sheet............................................................... 37
Combining Statement of Operations and Accumulated Deficit
for the six months ended March 31, 1996................................................... 38
Notes to Combining Statement of Operations..................................................... 39
</TABLE>
24
<PAGE>
Report of Independent Accountants
Board of Directors
UCI Medical Affiliates, Inc.
We have audited the accompanying balance sheets of Carolina Examination
Services, Inc. as of December 31, 1995 and 1994 and the related statements of
operations and accumulated deficit and cash flows for the years 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
all material respects, the financial position of Carolina Examination Services,
Inc. as of December 31, 1995 and 1994, and the results of its operations and its
cash flows for the years then ended in conformity with generally accepted
accounting principles.
The financial statements have been prepared solely from the accounts of Carolina
Examination Services, Inc. and do not include the personal accounts of the
stockholder or those of any other operations in which he may be engaged.
THE ORIGINAL SIGNED OPINION LETTER IS ON FILE WITH UCI MEDICAL AFFILIATES, INC.
Columbia, South Carolina
May 7, 1996
25
<PAGE>
Carolina Examination Services, Inc.
Balance Sheets
December 31,
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 473 $ 9,419
Accounts receivable, net 4,692 5,280
-------- --------
Total current assets 5,165 14,699
Other assets 1,200 --
-------- --------
Total assets $ 6,365 $ 14,699
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 21,129 $ 21,326
-------- --------
Stockholder's equity
Capital stock, $1 par value; 100,000 shares authorized;
1,000 shares issued and outstanding
1,000 1,000
Accumulated deficit (15,764) (7,627)
-------- --------
Stockholder's equity (14,764) (6,627)
-------- --------
Total liabilities and stockholder's equity $ 6,365 $ 14,699
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
26
<PAGE>
Carolina Examination Services, Inc.
Statements of Operations and Accumulated Deficit
for the years ended December 31,
<TABLE>
<CAPTION>
1995 1994
------------------ ------------------
<S> <C> <C>
Net medical revenue $ 109,777 $ 140,073
Operating costs 111,763 123,543
------------------ ------------------
Operating income (loss) (1,986) 16,530
General and administrative expenses 6,151 9,051
------------------ ------------------
Net income (loss) (8,137) 7,479
Accumulated deficit, beginning of year (7,627) (15,106)
------------------ ------------------
Accumulated deficit, end of year $ (15,764) $ (7,627)
================== ==================
</TABLE>
The accompanying notes are an integral part of these financial statements.
27
<PAGE>
Carolina Examination Services, Inc.
Statements of Cash Flows
for the years ended December 31,
<TABLE>
<CAPTION>
1995 1994
------------------ ------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ (8,137) $ 7,479
Adjustments to reconcile net income to cash provided by
operating activities:
Changes in operating assets and liabilities:
Accounts receivable 588 (1,145)
Other assets (1,200) --
Accounts payable and accrued expenses (197) 3,085
------------------ ------------------
Cash provided by operating activities (8,946) 9,419
------------------ ------------------
Net increase (decrease) in cash and cash equivalents (8,946) 9,419
Cash and cash equivalents, beginning of year 9,419 0
------------------ ------------------
Cash and cash equivalents, end of year $ 473 $ 9,419
================== ==================
Supplemental cash flow information:
Cash paid for interest $ -- $ --
================== ==================
</TABLE>
The accompanying notes are an integral part of these financial statements.
28
<PAGE>
CAROLINA EXAMINATION SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Robert Borucki, M.D. is the sole stockholder of Carolina Examination Services,
Inc. ("Services") located in Columbia, South Carolina. Services operates a
practice medical office that provides examination services on an outpatient
basis for medical conditions not involving an immediate threat to life.
The financial statements have been prepared solely from the accounts of Services
and do not include the personal accounts of Robert Borucki, M.D. or those of any
other activities in which he may be engaged. Management makes estimates that are
a necessary part of the preparation of financial statements. These estimates
include the useful lives of equipment, some of which is subject to technological
obsolescence, and the net realizable value of patient accounts receivable. At
December 31, 1995, management is not aware of any conditions that could
significantly affect the estimates employed in the preparation of the financial
statements.
ACCOUNTS RECEIVABLE
Accounts receivable represent amounts due from patients, employers and various
third-party payors. Provisions for uncollectable amounts are made based on
management's estimates of future collectibility and historical payment
percentages.
OFFICE AND EQUIPMENT
Office and equipment is reported at cost. Depreciation for financial reporting
purposes is computed principally by the straight-line method over the estimated
useful lives of the assets, ranging from five to seven years. Maintenance,
repairs and minor renewals are charged to expense. Major renewals or
betterments, which prolong the life of the assets, are capitalized. Upon
disposal of depreciable property, the asset accounts are reduced by the related
cost and accumulated depreciation. The resulting gains and losses are reflected
in the statements of operations.
29
<PAGE>
Carolina Examination Services, Inc.
Notes to Financial Statements
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
As provided by the Internal Revenue Code, Services has elected S Corporation
status. Under this election, net income from Services is reported in the
stockholder's individual federal and state income tax returns along with the
stockholder's other items of income and expense for the period. Services is not
a taxpaying entity for purposes of federal and state income taxation.
Accordingly, provisions for income taxes have not been recorded in Services'
financial statements.
CASH EQUIVALENTS
The Company considers all short-term debt investments with a maturity of three
months or less at the date of acquisition to be cash equivalents.
FAIR VALUE OF FINANCIAL INVESTMENTS
The fair value of accounts receivable and accrued expenses and accounts payable
are estimated by management to approximate their respective carrying values.
2. OFFICE AND MEDICAL EQUIPMENT
Office and medical equipment consists of the following at December 31, 1995 and
1994:
<TABLE>
<CAPTION>
1995 1994
------------------- --------------------
<S> <C> <C>
Office and medical equipment $ 5,941 $ 5,941
Less, accumulated depreciation and amortization 5,941 5,941
------------------- --------------------
$ -- $ --
=================== ====================
</TABLE>
3. RELATED PARTY TRANSACTIONS
Robert Borucki, M.D., the sole stockholder, participates in the medical
activities of the Company. All payments for services and benefits to Robert
Borucki, M.D. are recorded as salaries and are included in cost of operations in
the financial statements. For the periods ended December 31, 1995 and 1994,
amounts paid to the stockholder (stockholders in 1994) were $4,060 and $49,530,
respectively.
30
<PAGE>
Carolina Examination Services, Inc.
Notes to Financial Statements
4. CONCENTRATION OF CREDIT RISK
In the normal course of providing health care services, Services extends credit
to patients in the Columbia, South Carolina area without requiring collateral.
Each individual's ability to pay balances due Services is assessed and reserves
are established to provide for management's estimate of uncollectable balances.
Future revenues of Services are largely dependent on third-party payors and
include Medicare and private insurance companies. The amount of loss Services
would incur in the event of non-payment by the counter party is the amount of
the patient billing.
5. CONTINGENCIES
At December 31, 1995, management is not aware of any pending or threatened
litigation, or unasserted claims against Services that could result in losses,
if any, that would be material to the financial statements.
6. SUBSEQUENT EVENT
On March 1, 1996, UCI Medical Affiliates of South Carolina, Inc. ("UCI")
acquired certain office and medical equipment and substantially all the
Company's assets (including patient lists and goodwill) for $125,000 consisting
of $100,000 in restricted common stock of UCI and the assumption of $25,000 of
accrued liabilities.
As a condition of the above transaction, Robert Borucki, M.D. entered into a 1
year employment agreement with UCI.
31
<PAGE>
UCI Medical Affiliates, Inc.
Pro Forma Combining Balance Sheet
September 30, 1995
(Unaudited)
The following pro forma combining balance sheet is based on the individual
balance sheets of UCI Medical Affiliates, Inc. as of September 30, 1995 per the
Company's Annual Report and Carolina Examination Services, Inc. as of December
31, 1995 appearing in item 7a of this filing. The information has been prepared
to reflect the acquisition by UCI Medical Affiliates, Inc. of Carolina
Examination Services, Inc. after giving effect to the pro forma adjustments
described in Note 1. This statement should be read in conjunction with each
entity's financial statements and footnotes.
<TABLE>
<CAPTION>
UCI Medical Carolina
Affiliates, Examination Pro Forma Pro Forma
Inc. Services, Inc. Adjustments Combined
--------------- ----------------- -------------- --------------
<S> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 76,513 $ 473 $ (473) (b) $ 68,513
(8,000) (c)
Accounts receivable - net 2,343,325 4,692 (4,692) (b) 2,343,325
Medical supplies inventory 265,068 -- -- 265,068
Deferred taxes 491,543 -- -- 491,543
Prepaids and other assets 282,060 -- -- 282,060
Goodwill 3,578,371 -- 125,000 (a) 3,695,038
(8,333) (d)
Property, plant and
equipment, net 2,795,384 -- -- 2,795,384
Deferred taxes 120,639 -- -- 120,639
Other assets 262,768 1,200 (1,200) (b) 262,768
--------------- ----------------- -------------- --------------
Total assets $ 10,215,671 $ 6,365 $ 102,302 $ 10,324,338
=============== ================= ============== ==============
LIABILITIES AND CAPITAL
Current portion - long-term
debt $ 1,244,603 $ -- $ -- $ 1,244,603
Accounts payable 1,652,792 21,129 (21,129) (b) 1,677,792
25,000 (a)
Accrued payroll 498,791 -- -- 498,791
Other accrued liabilities 445,362 -- -- 445,362
Long-term debt, net of
current 3,121,098 -- -- 3,121,098
(1,000) (b)
Common stock 175,408 1,000 1,212 (a) 176,620
Paid-in capital 9,694,256 -- 98,788 (a) 9,793,044
Accumulated earnings 15,764 (b)
(deficit) (6,616,639) (15,764) (16,333) (e) (6,632,972)
--------------- ----------------- -------------- --------------
Total liabilities
and capital $ 10,215,671 $ 6,365 $ 102,302 $ 10,324,338
=============== ================= ============== ==============
</TABLE>
32
<PAGE>
UCI Medical Affiliates, Inc.
Notes to Pro Forma Combining Balance Sheet
September 30, 1995
(Unaudited)
1. The pro forma combining balance sheet has been prepared to reflect the
acquisition of Carolina Examination Services, Inc. by UCI Medical Affiliates,
Inc. for an aggregate price of $125,000. The purchase occurred on March 1,1996.
The combining balance sheet reflects the balances of UCI at September 30, 1995
and Carolina Examination Services, Inc. at December 31, 1995. Pro forma
adjustments are made to reflect:
(a.) Assets acquired and liabilities assumed are summarized as follows:
$ 125,000 Goodwill
(1,212) Common shares issued
(98,788) Additional paid in capital
(25,000) Accounts payable
---------------
$ 0 Cash paid at closing
===============
Issuance of restricted common stock at estimated per share value of
$4.125.
(b.) Accounts receivable ($4,692), cash ($473), other assets ($1,200), prior
owners equity ($14,764) were not acquired.
(c.) Dr. Borucki's salary for one year less amounts paid in 1995, $8,000.
(d.) Goodwill in the amount of $125,000 is amortized over 15 years. One years
amortization is $8,333.
(e.) Effects of proforma adjustments on statement of operations, closed into
proforma retained earnings.
33
<PAGE>
UCI Medical Affiliates, Inc.
Pro Forma Statement of Operations and Accumulated Deficit
for the year ended September 30, 1995
(Unaudited)
The following pro forma combining statement is based on the individual
statements of operations and accumulated deficit of UCI Medical Affiliates, Inc.
as of September 30, 1995 per the Company's Annual Report and Carolina
Examination Services, Inc. as of December 31, 1995 appearing in item 7a of this
filing. The information has been prepared to reflect the acquisition by UCI
Medical Affiliates, Inc. of Carolina Examination Services, Inc. after giving
effect to the pro forma adjustments described in Note 1. This statement should
be read in conjunction with each entity's financial statements and footnotes.
<TABLE>
<CAPTION>
UCI Medical Carolina
Affiliates, Examination Pro Forma Pro Forma
Inc. Services, Inc. Adjustments Combined
--------------- ----------------- --------------- ---------------
<S> <C> <C> <C> <C>
Revenue $ 17,987,147 $ 109,777 $ -- $ 18,096,924
Operating costs 18,180,080 111,763 8,000 (a) 18,299,843
--------------- ----------------- --------------- ---------------
Operating margin (192,933) (1,986) (8,000) (202,919)
General and administrative
expenses 87,616 6,151 -- 93,767
Depreciation and amortization 579,224 -- 8,333 (b) 587,557
--------------- ----------------- --------------- ---------------
Loss from operations (859,773) (8,137) (16,333) (884,243)
Interest expense, net 505,459 -- -- 505,459
Gain on equipment (5,493) -- -- (5,493)
--------------- ----------------- --------------- ---------------
Loss before income tax (1,359,739) (8,137) (16,333) (1,384,209)
Benefit for income taxes -- -- -- --
--------------- ----------------- --------------- ---------------
Net loss (1,359,739) (8,137) (16,333) (1,384,209)
Accumulated deficit -
beginning of year (5,256,896) (7,627) -- (5,248,763)
--------------- ----------------- --------------- ---------------
Accumulated deficit - end of
year $ (6,616,639) $ (15,764) $ -- $ (6,632,972)
=============== ================= =============== ===============
Earnings per common and common
equivalent share:
Net loss $ (.43) (c) $ (.44)
=============== ================= =============== ===============
Weighted average shares of
common stock outstanding
3,136,544 (c) 3,160,787
=============== ================= =============== ===============
</TABLE>
34
<PAGE>
UCI Medical Affiliates, Inc.
Note to Pro Forma Combining Statement of Operations and Accumulated
Deficit
for the year ended September 30, 1995
(Unaudited)
1. The above statement gives effect to the following pro forma adjustments
necessary to reflect the acquisition outlined in Note 1 to the pro forma balance
sheet:
(a) Net change in physician salary based on employment contract between the
Robert Borucki, M.D. , and UCI Medical Affiliates, Inc.
(b) Addition for amortization of goodwill on a straight line basis over 15
years.
(c) Not applicable; Carolina Examination Services, Inc. was not required to,
and did not, compute earnings per share.
35
<PAGE>
UCI Medical Affiliates, Inc.
Pro Forma Combining Balance Sheet
March 31, 1996
(Unaudited)
The following pro forma combining balance sheet is based on the individual
balance sheets of UCI Medical Affiliates, Inc. as of March 31, 1996 per the
Company's Form 10QSB and Carolina Examination Services, Inc. as of December 31,
1995 appearing in item 7a of this filing. The information has been prepared to
reflect the acquisition by UCI Medical Affiliates, Inc. of Carolina Examination
Services, Inc. after giving effect to the pro forma adjustments described in
Note 1. This statement should be read in conjunction with each entity's
financial statements and footnotes.
<TABLE>
<CAPTION>
UCI Medical Carolina
Affiliates, Examination Pro Forma Pro Forma
Inc. Services, Inc. Adjustments Combined
--------------- ----------------- -------------- --------------
<S> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 174,160 $ 473 $ (4,000) (c) $ 170,160
(b)
(473)
Accounts receivable - net 3,064,385 4,692 (4,692) (b) 3,064,385
Medical supplies inventory 267,356 -- -- 267,356
Deferred taxes 491,543 -- -- 491,543
Prepaids and other assets 419,567 -- -- 419,567
Goodwill 4,818,258 -- 125,000 (a) 4,939,092
(4,166) (d)
Property, plant and
equipment, net 3,051,091 -- -- 3,051,091
Deferred taxes 120,639 -- -- 120,639
Other assets 282,054 1,200 (1,200) (b) 282,054
--------------- ----------------- -------------- --------------
Total assets $ 12,689,053 $ 6,365 $ 110,469 $ 12,805,887
=============== ================= ============== ==============
LIABILITIES AND CAPITAL
Current portion - long-term
debt $ 1,614,574 $ -- $ -- $ 1,614,574
Accounts payable 1,009,289 21,129 (21,129) (b) 1,034,289
25,000 (a)
Accrued payroll 551,328 -- -- 551,328
Other accrued liabilities 381,714 -- -- 381,714
Long-term debt, net of
current 3,116,696 -- -- 3,116,696
(1,000) (b)
Common stock 214,578 1,000 1,212 (a) 215,790
Paid-in capital 12,129,979 -- 98,788 (a) 12,228,767
Accumulated earnings 15,764 (b)
(deficit) (6,329,105) (15,764) (8,166) (e) (6,337,271)
--------------- ----------------- -------------- --------------
Total liabilities
and capital $ 12,689,053 $ 6,365 $ 110,469 $ 12,805,887
=============== ================= ============== ==============
</TABLE>
36
<PAGE>
UCI Medical Affiliates, Inc.
Notes to Pro Forma Combining Balance Sheet
March 31, 1996
(Unaudited)
1. The pro forma combining balance sheet has been prepared to reflect the
acquisition of Carolina Examination Services, Inc. by UCI Medical Affiliates,
Inc. for an aggregate price of $125,000. The purchase occurred on March 1,1996.
The combining balance sheet reflects the balances of UCI at March 31, 1996 and
Carolina Examination Services, Inc. at December 31, 1995. Pro forma adjustments
are made to reflect:
(a.) Assets acquired and liabilities assumed are summarized as follows:
$ 125,000 Goodwill
(1,212) Common shares issued
(98,788) Additional paid in capital
(25,000) Accounts payable
---------------
$ 0 Cash paid at closing
===============
Issuance of restricted common stock at estimated per share value of
$4.125.
(b.) Accounts receivable ($4,692), cash ($473), other assets ($1,200), prior
owner's equity ($14, 764) were not acquired.
(c.) Dr. Borucki's salary for six months less one half amount paid in 1995,
$4,000.
(d.) Goodwill in the amount of $125,000 is amortized over 15 years. Six months
amortization is $4,166.
(e.) Effects of proforma adjustments on statement of operations, closed into
retained earnings.
37
<PAGE>
UCI Medical Affiliates, Inc.
Pro Forma Statement of Operations and Accumulated Deficit
for the six months ended March 31, 1996
(Unaudited)
The following pro forma combining statement is based on the individual
statements of operations and accumulated deficit of UCI Medical Affiliates, Inc.
as of March 31, 1996 per the Company's Form QSB and Carolina Examination
Services, Inc. as of December 31, 1995 appearing in item 7a of this filing. The
information has been prepared to reflect the acquisition by UCI Medical
Affiliates, Inc. of Carolina Examination Services, Inc. after giving effect to
the pro forma adjustments described in Note 1. Information for the six months
ended March 31, 1996 for Carolina Examination Services, Inc. is estimated since
Carolina did not maintain its records on a basis consistent with UCI Medical
Affiliates, Inc. This statement should be read in conjunction with each entity's
financial statements and footnotes.
<TABLE>
<CAPTION>
UCI Carolina
Medical Examination Pro Forma Pro Forma
Affiliates, Inc. Services, Inc. Adjustments Combined
----------------- ---------------- -------------- --------------
<S> <C> <C> <C> <C>
Revenue $ 11,069,503 $ 54,888 $ -- $ 11,124,391
Operating costs 9,999,069 55,881 4,000 (a) 10,058,950
----------------- ---------------- -------------- --------------
Operating margin 1,070,434 (993) (4,000) 1,065,441
General and administrative
expenses 62,237 3,075 -- 65,312
Depreciation and amortization 433,815 -- 4,166 (b) 437,981
----------------- ---------------- -------------- --------------
Income from operations 574,382 (4,068) (8,166) 562,148
Interest expense, net 288,953 -- -- 288,953
Gain on equipment (2,105) -- -- (2,105)
----------------- ---------------- -------------- --------------
Income before income tax 287,534 (4,068) (8,166) 275,300
Benefit for income taxes -- -- -- --
----------------- ---------------- -------------- --------------
Net income 287,534 (4,068) (8,166) 275,300
Accumulated deficit -
beginning of year (6,616,639) (7,627) -- (6,612,571)
----------------- ---------------- -------------- --------------
Accumulated deficit - end of
period $ (6,329,105) $ (11,695) $ -- $ (6,337,271)
================= ================ ============== ==============
Earnings per common and
common equivalent share:
Net income $ .07 (c) $ .07
================= ================ ============== ==============
Weighted average shares of
common stock outstanding 3,932,259 (c) 3,956,502
================= ================ ============== ==============
</TABLE>
38
<PAGE>
UCI Medical Affiliates, Inc.
Note to Pro Forma Combining Statement of Operations and Accumulated
Deficit
for the six months ended March 31, 1996
(Unaudited)
1. The above statement gives effect to the following pro forma adjustments
necessary to reflect the acquisition outlined in Note 1 to the pro forma balance
sheet:
(a) Net change in physician salary based on employment contract between
Robert Borucki, M.D. , and UCI Medical Affiliates, Inc.
(b) Addition for amortization of goodwill on a straight line basis over 15
years.
(c) Not applicable; Carolina Examination Services, Inc. was not required to,
and did not, compute earnings per share.
39
<PAGE>
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.
UCI Medical Affiliates, Inc.
(Registrant)
/s/ M.F. McFarland, III, M.D. /s/ Jerry F. Wells, Jr.
President, Chief Executive Officer and Vice President of Finance and
Chairman of the Board Chief Financial Officer
Date: May 13, 1996
40
