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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K/A
Amendment No. 1
Amendment to Application or Report
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 31, 1996
Integrated Orthopaedics, Inc.
(Exact name of registrant as specified in its charter)
TEXAS
(State or other jurisdiction of incorporation)
1-10677 76-0203483
(Commission File Number) (I.R.S. Employer
Identification No.)
3 Riverway, Suite 1430
Houston, Texas 77056
(Address of principal executive office,
including zip code)
Registrant's telephone number, including area code: (713) 439-7511
DRCA Medical Corporation
(former name or former address, if changed since last report)
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The undersigned registrant hereby amends the following items, financial
statements, exhibits or other provisions of its Current Report on Form 8-K (the
"8-K") dated January 14, 1997, (Commission File Number 1-10677), as set forth
below:
Item 7 Financial Statements and Exhibits
(b) Pro Forma financial information
Introduction...................................... Page 1
Unaudited Pro Forma Balance Sheet as of
September 30, 1996................................ Page 2
Unaudited Pro Forma Statement of
Income for the Nine Months Ended
September 30, 1996................................ Page 3
Unaudited Pro Forma Statement of
Income for the Year Ended December 31,1995........ Page 4
Notes to Unaudited Pro Forma Financial Statements. Page 5
Item 7(b) Unaudited Pro Forma Financial Information
Introduction
On December 31, 1996, DRCA Medical Corporation ("DRCA" or the "Company"), DRCA
Houston Clinics, Inc. ("DRCA Houston") (a wholly-owned subsidiary of DRCA),
PhysiCare, L.L.P. (a medical group managed by DRCA Houston), and William F.
Donovan, M.D. ("Donovan") [the sole shareholder of Occupational Medicine
Associates of Little Rock, P.A. (OMA-LR") a medical group managed by PhysiCare
Little Rock, Inc. ("PhysiCare"), a wholly-owned subsidiary of DRCA]
(collectively, the "Sellers") sold to OccuCenters, Inc. (OccuCenters") (a
wholly-owned subsidiary of OccuSystems, Inc.) and Occupational Health Centers of
the Southwest, P.A. (a medical group managed by OccuCenters) (collectively, the
"Buyers") all of the outstanding stock of PhysiCare and OMA-LR and substantially
all of the Sellers' assets related to their occupational medicine businesses
and mobile health testing operation (the "Transaction"). In connection with the
Transaction, the Buyers agreed to pay $7,773,000 in cash, assume approximately
$167,000 in capital leases payable and approximately $157,000 in accounts
receivable.
The following unaudited pro forma consolidated financial statements have been
prepared based on historical financial statements of the Company after giving
effect to the Transaction and the assumptions and adjustments outlined in the
accompanying notes. The Unaudited Pro Forma Balance Sheet as of September 30,
1996 gives effect to the Transaction as if it had occurred on September 30,
1996. The Unaudited Pro Forma Statements of Income for the nine months ended
September 30, 1996 and the year ended December 31, 1995 give effect to the
Transaction as if it had occurred on January 1, 1996 and 1995, respectively.
This pro forma financial information should be read in conjunction with the
accompanying notes and the historical financial statements of the Company
included in the Form 10-KSB for the year ended December 31, 1995, as well as its
Quarterly Report on Form 10-QSB for the nine months ended September 30, 1996.
The unaudited pro forma financial statements may not be indicative of the
results which would have occurred had the Transaction been made as of those
dates or the results which may occur in the future.
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DRCA MEDICAL CORPORATION
PRO-FORMA BALANCE SHEET (UNAUDITED)
9/30/96
<TABLE>
<CAPTION>
September 30, Pro Forma Pro Forma
1996 Adjustments Balance
ASSETS (Unaudited) Increase/(decrease)(a) Sheet
----------- ---------------------- ----------
<S> <C> <C> <C>
CURRENT ASSETS
Cash and equivalents $ 1,160,041 $ 7,630,000 $ 8,790,041
Accounts receivable, net 7,343,605 (1,357,862) 5,985,743
Notes receivable, net 109,010 - 109,010
Other current assets 242,377 156,859 399,236
----------- ---------- -----------
Total current Assets 8,855,033 6,428,997 15,284,030
----------- ---------- -----------
PROPERTY AND EQUIPMENT
Equipment (including equipment under
capital lease) 4,747,787 (1,626,447) 3,121,340
Leasehold improvements 448,840 (153,554) 295,286
Furniture and fixtures 403,688 (91,226) 312,462
Vehicles 113,509 (113,509) -
----------- ---------- -----------
5,713,824 (1,984,736) 3,729,088
Less accumulated depreciation and amortization (3,793,926) (786,048) (3,007,878)
----------- ---------- -----------
1,919,898 (1,198,688) 721,210
----------- ---------- -----------
INTANGIBLE ASSETS, NET 812,965 (812,965) -
----------- ---------- -----------
OTHER ASSETS 39,852 (15,009) 24,843
----------- ---------- -----------
TOTAL ASSETS 11,627,748 4,402,335 16,030,083
=========== ========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 1,140,483 - 1,140,483
Accrued expenses 1,239,289 1,672,909 2,912,198
Deferred income taxes 392,638 1,156,274 1,548,912
Current obligations under capital leases 56,718 (43,480) 13,238
Current portion of notes payable 544,777 (30,610) 514,167
----------- ---------- -----------
Total current liabilities 3,373,905 2,755,093 6,128,998
----------- ---------- -----------
NOTES PAYABLE 454,290 (112,531) 341,759
OBLIGATIONS UNDER CAPITAL LEASES 106,234 (87,263) 18,971
DEFERRED INCOME TAXES 156,586 - 156,586
----------- ---------- -----------
717,110 (199,794) 517,316
----------- ---------- -----------
STOCKHOLDERS' EQUITY
Common stock, $.001 par value, 50,000,000
shares authorized, 5,301,808 issued 5,302 - 5,302
Preferred stock, $.01 par value 10,000,000
shares authorized,
Series A-8% cumulative convertible, 25,226
shares issued and outstanding 252 252
Additional paid-in-capital 4,848,279 - 4,848,279
Retained earnings 2,682,916 1,847,036 4,529,952
Treasury shares, 15,833 shares (16) - (16)
----------- ---------- -----------
Total stockholders' equity 7,536,733 1,847,036 9,383,769
----------- ---------- -----------
COMMITMENTS AND CONTINGENCIES
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $11,627,748 $4,402,335 $16,030,083
=========== ========== ===========
</TABLE>
See accompanying notes to the Unaudited Pro Forma Financial Statements
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DRCA MEDICAL CORPORATION
PRO-FORMA STATEMENT OF INCOME (UNAUDITED)
FOR NINE MONTHS ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Nine Months Pro Forma Pro Forma
Ended Adjustments Income
September 30, 1996 Increase/(decrease)(b) Statement
------------------ ---------------------- ---------
<S> <C> <C> <C>
REVENUES $12,264,848 $(4,782,234) $ 7,482,614
COMPENSATION COSTS AND
MEDICAL SERVICES 5,409,815 (2,341,777) 3,068,038
OTHER DIRECT COSTS 2,810,247 (1,983,783) 826,464
SELLING, GENERAL AND ADMINISTRATIVE 1,812,357 (328,182) 1,484,175
DEPRECIATION AND AMORTIZATION 580,007 (263,329) 316,678
PROVISION FOR DOUBTFUL ACCOUNTS 898,711 (185,306) 713,405
----------- ----------- -----------
INCOME FROM OPERATIONS 753,711 320,143 1,073,854
LOSS ON SALE OF SUBSIDIARY (90,460) - (90,460)
MINORITY INTEREST - - -
INTEREST EXPENSE (101,978) (30,190) (71,788)
----------- ----------- -----------
INCOME BEFORE INCOME TAXES 561,273 350,333 911,606
PROVISION FOR INCOME TAXES (202,239) 133,127 (335,366)
----------- ----------- -----------
NET INCOME $ 359,034 $ 217,206 $ 576,240
=========== =========== ===========
EARNINGS PER COMMON AND
EQUIVALENT SHARE:
PRIMARY $.05 $.04 $.09
=========== =========== ===========
FULLY DILUTED $.05 $.04 $.09
=========== =========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES
OF COMMON STOCK OUTSTANDING AND
COMMON STOCK EQUIVALENTS DURING
THE NINE MONTHS.
PRIMARY 5,466,407 5,466,407
=========== ===========
FULLY DILUTED 5,466,407 5,466,407
=========== ===========
</TABLE>
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DRCA MEDICAL CORPORATION
PRO-FORMA STATEMENT OF INCOME (UNAUDITED)
FOR YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Year Pro Forma Pro Forma
Ended Adjustments Income
December 31, 1995 Increase/(decrease)(b) Statement
----------------- ---------------------- ---------
<S> <C> <C> <C>
REVENUES $15,539,355 $(6,662,000) $8,877,355
COMPENSATION COSTS AND MEDICAL SERVICES 6,494,792 (3,468,000) 3,026,792
OTHER DIRECT COSTS 3,720,318 (2,273,000) 1,447,318
SELLING, GENERAL AND ADMINISTRATIVE 2,175,528 (513,000) 1,662,528
DEPRECIATION AND AMORTIZATION 1,094,386 (433,000) 661,386
PROVISION FOR DOUBTFUL ACCOUNTS 893,316 (416,000) 477,316
----------- ----------- ----------
INCOME FROM OPERATIONS 1,161,015 441,000 1,602,015
MINORITY INTEREST 33,654 - 33,654
INTEREST EXPENSE (301,532) (51,100) (250,432)
----------- ----------- ----------
INCOME BEFORE INCOME TAXES 893,137 492,100 1,385,237
PROVISION FOR INCOME TAXES (375,423) 186,998 (562,421)
----------- ----------- ----------
NET INCOME $ 517,714 $ 305,102 $ 822,816
=========== =========== ==========
EARNINGS PER COMMON AND
EQUIVALENT SHARE:
PRIMARY $ .10 $ .05 $ .15
=========== =========== ==========
FULLY DILUTED $ .10 $ .05 $ .15
=========== =========== ==========
WEIGHTED AVERAGE NUMBER OF SHARES
OF COMMON STOCK OUTSTANDING AND
COMMON STOCK EQUIVALENTS
PRIMARY 5,436,558 5,436,558
=========== ==========
FULLY DILUTED 5,436,558 5,436,558
=========== ==========
</TABLE>
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DRCA MEDICAL CORPORATION
Notes to Unaudited Pro Forma Financial Statements
(a) To record the sale of assets and the assumption of certain liabilities of
the Company's occupational medicine centers in Houston, Texas, and Little
Rock, Arkansas, and mobile testing service in Houston, Texas.
The pro forma gain applicable to the Transaction was determined as follows:
Pro forma consideration received $ 7,760,743
Basis in assets and liabilities sold (2,917,196)
Non-recurring expenses and adjustments
associated with the Transaction (2,996,511)
-----------
Pro forma net gain $ 1,847,036
===========
The pro forma net gain includes adjustments for receivables which may not be
collected, write-offs of certain assets, payment of severance, provision for
federal and state taxes, and various transaction costs.
(b) To reflect the Transaction as if it had occurred on January 1, 1995. The
gain shown in the Pro Forma Balance Sheet is not included in the Pro Forma
Statements of Income, as it represents non-recurring charges and credits
directly attributed to the Transaction.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
DRCA MEDICAL CORPORATION
(Registrant)
Date: April 3, 1997 By /s/ Ronald E. Pierce
---------------------------
Ronald E. Pierce
President and Chief Operating Officer
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