SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT TO APPLICATION OR REPORT
FILED PURSUANT TO SECTION 12,13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
MEDICAL INNOVATIONS, INC.
(Exact name of Registrant as specified in its charter)
AMENDMENT NO. 1
The undersigned Registrant hereby amends the following items, financial
statements, exhibits or other portions of its Current Report on Form 8-K dated
May 19, 1995, as set forth below:
1. ITEM 7 FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired
The financial statements of Hospital HomeCare Corporation for the year
ended March 31, 1995, together with the independent auditor's report
thereon, are included herein on pages 3-11.
(b) Pro Forma Financial Information
Required pro forma financial information of the Registrant and the
acquired business is included herein on pages 12-16. The pro forma
information also reflects the acquisitions of STAT Specialty Home
Care, Inc. effective February 11, 1994, PRN Home Health Care, Inc. and
Affiliates effective April 1, 1994 and the Pensacola, Florida branch
operation of PharmaThera, Inc. effective February 1, 1995.
(c) Exhibits (Exhibit Index located on page 17)
Agreement and Plan of Reorganization, dated as of May 19, 1995, by and
among Medical Innovations, Inc., Hospital HomeCare Corporation, Arthur
L. Rice, Virginia F. Rice, Kenneth A. Rice, Lucille Rice Roberts,
Lauretta Rice Colvin and Angela Rice McBride. The schedules to the
Agreement, other than Schedule 2.2, which sets forth the shares of
common stock to be issued by the Registrant pursuant to the Agreement,
have been omitted and are as described in the Agreement. The
Registrant hereby agrees to furnish supplementally a copy of any
omitted schedule to the Commission upon request.
Page 1 of 17
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this amendment to be signed on its
behalf by the undersigned, thereunto duly authorized.
MEDICAL INNOVATIONS, INC.
(Registrant)
Dated: August 2, 1995 By: /s/ MARK H. FISHER
-----------------
Mark H. Fisher
President
Page 2 of 17
HOSPITAL HOMECARE CORPORATION
FINANCIAL STATEMENTS
MARCH 31, 1995
Page 3 of 17
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Stockholders of Hospital Homecare Corporation
In our opinion, the accompanying balance sheet and the related statements of
operations, stockholders' equity and of cash flows present fairly, in all
material respects, the financial position of Hospital Homecare Corporation at
March 31, 1995, and the results of its operations and its cash flows for the
year in conformity with generally accepted accounting principles. 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 of these statements in accordance with
generally accepted auditing standards which 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 principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for the opinion expressed
above.
/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Houston, Texas
May 19, 1995
Page 4 of 17
<PAGE>
HOSPITAL HOMECARE CORPORATION
BALANCE SHEET
MARCH 31, 1995
ASSETS
------
Current assets:
Cash and cash equivalents ...................................... $ 92,887
Accounts receivable, net of allowance for doubtful
accounts of $60,540 ........................................... 233,385
---------
Total current assets ....................................... 326,272
Furniture and equipment, net ..................................... 21,766
Other assets ..................................................... 58,303
---------
Total assets ............................................... $ 406,341
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Current portion of notes payable to related party .............. $ 9,467
Accounts payable ............................................... 99,607
Accrued expenses ............................................... 126,882
Income taxes payable ........................................... 8,000
Deferred revenue ............................................... 23,000
---------
Total current liabilities .................................. 266,956
Notes payable to related party ................................... 17,041
Stockholders' equity:
Common stock, no par value, 10,000,000 shares
authorized, 90,000 shares issued and outstanding .............. 700,604
Accumulated deficit ............................................ (549,595)
Treasury stock ................................................. (28,665)
---------
Total stockholders' equity ................................. 122,344
---------
Commitments and contingencies (Note 5)
Total liabilities and stockholders' equity ................. $ 406,341
=========
The accompanying notes are an integral part of this statement.
Page 5 of 17
<PAGE>
HOSPITAL HOMECARE CORPORATION
STATEMENT OF OPERATIONS
YEAR ENDED MARCH 31, 1995
Revenues ...................................................... $ 1,267,818
Costs and expenses:
Salaries and benefits ....................................... 924,619
Selling, general and administrative ......................... 223,419
Professional fees ........................................... 243,815
Provision for doubtful accounts ............................. 40,540
-----------
1,432,393
-----------
Operating loss ................................................ 164,575
Other:
Gain on sale of marketable securities ....................... (18,923)
Gain on sale of assets ...................................... (4,762)
Interest expense on notes payable to related party .......... 1,870
Interest income ............................................. (10,805)
-----------
(32,620)
-----------
Loss before income taxes ...................................... 131,955
Provision for income taxes .................................... 8,000
-----------
Net loss ...................................................... $ 139,955
===========
The accompanying notes are an integral part of this statement.
Page 6 of 17
<PAGE>
HOSPITAL HOMECARE CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK TREASURY STOCK
------------------------ ACCUMULATED --------------------
SHARES AMOUNT DEFICIT SHARES AMOUNT TOTAL
-------- --------- ----------- ------ -------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance at April 1, 1994 ................... 90,000 $ 600,604 $(409,640) 10,000 $(28,665) $162,299
Professional fees incurred
by principal stockholder ................ 100,000 100,000
Net loss ................................. (139,955) (139,955)
-------- --------- --------- ------ -------- --------
Balance at March 31, 1995 .................. 90,000 $ 700,604 $(549,595) 10,000 $(28,665) $122,344
======== ========= ========= ====== ======== ========
</TABLE>
The accompanying notes are an integral part of this statement.
Page 7 of 17
<PAGE>
HOSPITAL HOMECARE CORPORATION
STATEMENT OF CASH FLOWS
YEAR ENDED MARCH 31, 1995
Operating activities:
Net loss ...................................................... $(139,955)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization ............................... 26,409
Professional fees incurred by principal stockholder ......... 100,000
Gain on sale of securities .................................. (18,923)
Gain on sale of assets ...................................... (4,762)
Changes in operating assets and liabilities:
Accounts receivable ....................................... (30,736)
Accounts payable and accrued expenses ..................... 87,742
Income taxes payable ...................................... 8,000
Deferred revenue .......................................... (36,760)
---------
Net cash used in operating activities ................... (8,985)
---------
Investing activities:
Proceeds from sale of marketable securities ................... 51,733
Purchase of furniture and equipment ........................... (11,839)
Proceeds from sale of assets .................................. 5,656
---------
Net cash provided by investing activities ............... 45,550
---------
Financing activities:
Payments on notes payable ..................................... (8,525)
Issuance of note payable ...................................... 11,209
Net cash provided by financing activities ............... 2,684
---------
Net increase in cash and cash equivalents ....................... 39,249
Cash and cash equivalents at beginning of year .................. 53,638
---------
Cash and cash equivalents at end of year ........................ $ 92,887
=========
Supplemental disclosure of cash flow information:
Interest paid ................................................. $ 1,870
=========
The accompanying notes are an integral part of this statement.
Page 8 of 17
<PAGE>
HOSPITAL HOMECARE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Hospital Homecare Corporation (the Company) is a privately held Texas
corporation formed in 1985. The Company specializes in providing consulting and
management services for hospital-based extension programs in home healthcare and
for rural health clinics. These services are provided primarily in Texas,
Oklahoma and California.
REVENUE RECOGNITION
The Company's consulting, management and support services are provided based on
contractual arrangements generally ranging from one to two years but with some
longer-term contracts. Fees are billed and recorded in accordance with a
schedule stipulated in the contract and generally conform to the period in which
the services are provided. In those instances where a substantial prebilling is
rendered, the related income is deferred and taken to income as services are
provided.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all highly
liquid investments with original maturities of three months or less to be cash
equivalents.
FURNITURE AND EQUIPMENT
Furniture and equipment is stated at cost. Depreciation is provided using a
declining balance method over the estimated useful lives of the respective
assets, ranging from 3-5 years.
INCOME TAXES
Deferred taxes are recognized using the liability method. This method gives
consideration to the future tax consequences associated with differences between
financial accounting and tax bases of assets and liabilities and gives immediate
effect to changes in income tax laws upon enactment.
Page 9 of 17
<PAGE>
NOTE 2 - FURNITURE AND EQUIPMENT:
Furniture and equipment as of March 31, 1995 is as follows:
Computer equipment ............................................... $ 24,766
Vehicles ......................................................... 39,570
Furniture and fixtures ........................................... 33,891
---------
98,227
Less - accumulated depreciation .................................. (76,461)
---------
$ 21,766
=========
NOTE 3 - ACCRUED EXPENSES:
Accrued expenses at March 31, 1995 consist of the following:
Employee bonus and retirement plan
contributions .................................................. $ 67,082
Accrued professional fees ........................................ 59,800
---------
$ 126,882
=========
NOTE 4 - NOTES PAYABLE:
Notes payable at March 31, 1995 were issued to a family member of the principal
stockholder and are as follows:
8.5% Note due October 1, 1997, principal and
interest payable monthly ..................................... $ 16,415
8.0% Note due November 10, 1997, principal
and interest payable monthly ................................. 10,093
--------
26,508
Less - current portion ........................................ (9,467)
--------
Long-term portion ............................................. $ 17,041
========
NOTE 5 - LEASE COMMITMENTS:
Future minimum lease payments under noncancelable operating leases are $24,000
in each of the five years ended March 31, 2000 and $25,500 in the year ended
March 31, 2001.
Page 10 of 17
<PAGE>
NOTE 6 - RELATED PARTY TRANSACTIONS:
Annual compensation of the Company's president and principal stockholder is
established and approved by the Board of Directors, of which the principal
stockholder is a member. The amount of such compensation approved and paid in
fiscal 1995 was approximately $408,000.
As more fully described in Note 4, the Company has borrowed certain amounts from
a family member of the Company's principal stockholder to finance the
acquisition of an automobile and other operating equipment.
In connection with the completed transaction described in Note 9, the Company
expensed $100,000 of professional fees in fiscal 1995 which have been incurred
by its principal stockholder and which have therefore been included in
stockholders' equity at March 31, 1995.
NOTE 7 - EMPLOYEE BENEFITS:
The Company provides retirement benefits under a plan in which eligible
employees may receive up to 15% of their annual compensation (to a maximum of
$22,500) in the form of deferred tax contributions to their individual
retirement accounts. Employees must have a minimum of three years of service
with the Company to be eligible. There were four employees eligible for the plan
at March 31, 1995. Contributions under the plan amounted to $36,878 in 1995.
NOTE 8 - INCOME TAXES:
The provision for income taxes consists of current federal income taxes. No
benefit for the loss generated by the Company has been taken and the Company has
provided a valuation allowance in full for a net deferred tax asset on the basis
of uncertainty of future realization.
NOTE 9 - SUBSEQUENT MERGER OF THE COMPANY:
Effective March 1, 1995, the Company entered into a letter of intent to merge
with Medical Innovations, Inc. (MI) by exchanging all of its outstanding shares
of common stock for previously unissued common stock of MI. The Company
finalized and executed the merger agreement on May 19, 1995.
Page 11 of 17
<PAGE>
MEDICAL INNOVATIONS, INC. AND SUBSIDIARIES
PRO FORMA COMBINED BALANCE SHEET
MARCH 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA
MEDICAL HOSPITAL ADJUSTMENTS
INNOVATIONS, HOMECARE INCREASE PRO FORMA
ASSETS INC. CORPORATION (DECREASE) COMBINED
------ ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents ........................... $ 341,863 $ 92,887 $ 434,750
Short-term investments .............................. 201,000 201,000
Accounts receivable, net ............................ 10,279,841 233,385 10,513,226
Inventories ......................................... 301,292 301,292
Deferred income taxes ............................... 489,049 489,049
Other ............................................... 735,044 735,044
----------- --------- ------------ -----------
Total current assets ............................. 12,348,089 326,272 12,674,361
Property and equipment, net ............................ 1,976,713 21,766 1,998,479
Excess cost over net assets of acquired companies ...... 12,180,131 12,180,131
Other, net ............................................. 1,340,188 58,303 1,398,491
----------- --------- ------------ -----------
Total assets ..................................... $27,845,121 $ 406,341 $28,251,462
=========== ========= ============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Notes payable and other debt ........................ $ 4,691,673 $ 9,467 $ 4,701,140
Accounts payable and accrued liabilities ............ 2,965,234 249,489 3,214,723
Accrued compensation and benefits ................... 2,497,379 2,497,379
Reserve for government program settlements .......... 1,701,514 1,701,514
Income taxes payable ................................ 249,939 8,000 257,939
----------- --------- ------------ -----------
Total current liabilities ........................ 12,105,739 266,956 12,372,695
Notes payable and other debt ........................... 6,763,643 17,041 6,780,684
Other accrued liabilities .............................. 660,581 660,581
Deferred income taxes .................................. 45,100 45,100
----------- --------- ------------ -----------
Total liabilities ................................ 19,575,063 283,997 19,859,060
----------- --------- ------------ -----------
Stockholders' equity:
Common stock ........................................ 94,293 700,604 $ (676,135)(a) 118,762
Additional paid-in capital .......................... 6,707,581 647,470 (a) 7,355,051
Retained earnings ................................... 1,468,184 (549,595) 918,589
Treasury stock ...................................... (28,665) 28,665 (a) --
----------- --------- ------------ -----------
Total stockholders' equity ....................... 8,270,058 122,344 8,392,402
----------- --------- ------------ -----------
Commitments and contingencies .......................... -- -- --
----------- --------- ------------ -----------
Total liabilities and stockholders' equity ....... $27,845,121 $ 406,341 $28,251,462
=========== ========= ============ ===========
</TABLE>
The accompanying notes are an integral part of this
pro forma financial statement.
Page 12 of 17
<PAGE>
MEDICAL INNOVATIONS, INC. AND SUBSIDIARIES
PRO FORMA COMBINED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA
MEDICAL PHARMA- HOSPITAL ADJUSTMENTS
INNOVATIONS, THERA HOMECARE INCREASE PRO FORMA
INC. BRANCH CORPORATION (DECREASE) COMBINED
(B) (C)
------------ --------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues ...................................... $ 15,927,991 $ 64,593 $ 243,255 $ 16,235,839
Costs and expenses:
Direct patient care ........................ 9,868,757 40,464 9,909,221
Selling, general and administrative ........ 5,343,929 40,811 401,919 $ 4,509 (e) 5,573,369
(68,378)(f)
(130,750)(g)
(7,026)(h)
(16,375)(i)
4,730 (j)
Provision for doubtful accounts ............ 150,634 2,190 16,279 169,103
------------ --------- --------- ------------ ------------
15,363,320 83,465 418,198 (213,290) 15,651,693
------------ --------- --------- ------------ ------------
Income (loss) from operations ................. 564,671 (18,872) (174,943) 213,290 584,146
Interest income (expense) ..................... (242,472) 5,731 (500)(k) (237,241)
------------ --------- --------- ------------ ------------
Income (loss) before income taxes ............. 322,199 (18,872) (169,212) 212,790 346,905
Provision (benefit) for income taxes .......... 60,808 (4,667) 13,067 (l) 69,208
------------ --------- --------- ------------ ------------
Net income (loss) ............................. $ 261,391 $ (18,872) $(164,545) $ 199,723 $ 277,697
============ ========= ========= ============ ============
Net income per common and
common equivalent share ..................... $ 0.02 $ 0.02
============ ============
Weighted average common and
common equivalent shares
outstanding ................................. 14,324,131 1,587,453 (n) 15,911,584
============ ============ ============
</TABLE>
The accompanying notes are an integral part of this
pro forma financial statement.
Page 13 of 17
<PAGE>
MEDICAL INNOVATIONS, INC. AND SUBSIDIARIES
PRO FORMA COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994
(UNAUDITED)
<TABLE>
<CAPTION>
PRN HOME STAT PRO FORMA
MEDICAL HEALTH CARE, SPECIALTY PHARMA- HOSPITAL ADJUSTMENTS
INNOVATIONS, INC. AND HOME CARE THERA HOMECARE INCREASE PRO FORMA
INC. AFFILIATES INC. BRANCH CORPORATION (DECREASE) COMBINED
------------- ------------ ----------- ----------- ------------ ------------ ------------
(B) (B) (B) (C)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues .................... $ 59,110,330 $2,872,604 $ 65,180 $ 1,108,850 $ 1,267,818 $ 82,000 (d) $ 64,506,782
Costs & expenses:
Direct patient care ....... 37,749,829 2,175,184 42,400 882,194 40,849,607
Selling, general &
administrative .......... 18,487,214 669,508 22,780 389,002 1,368,168 75,536 (e) 20,419,753
(358,000)(f)
(187,000)(g)
(36,878)(h)
(29,500)(i)
18,923 (j)
Provision for doubtful
accounts ................ 892,611 96,323 40,540 1,029,474
------------ ---------- ----------- ----------- ------------ ------------ ------------
Total costs &
expenses ............ 57,129,654 2,844,692 65,180 1,367,519 1,408,708 (516,919) 62,298,834
------------ ---------- ----------- ----------- ------------ ------------ ------------
Income (loss) from
operations ................ 1,980,676 27,912 -- (258,669) (140,890) 598,919 2,207,948
Gain on sale of minority
interest .................. 128,500 128,500
Interest income (expense) ... (868,680) 842 8,935 (46,100)(k) (905,003)
------------ ---------- ----------- ----------- ------------ ------------ ------------
Income (loss) before
income taxes .............. 1,240,496 28,754 -- (258,669) (131,955) 552,819 1,431,445
Provision for income taxes .. 436,470 8,000 61,092 (l) 505,562
------------ ---------- ----------- ----------- ------------ ------------ ------------
Net income (loss) ........... $ 804,026 $ 28,754 $ -- $ (258,669) $ (139,955) $ 491,727 $ 925,883
============ ========== =========== =========== ============ ============ ============
Net income per common and
common equivalent shares .. $ 0.06 $ 0.05
============ ============
Weighted average common and
common equivalent shares
outstanding ............... 14,423,499 3,158,578 (m) 17,582,077
============ ============ ============
</TABLE>
The accompanying notes are an integral part of this
pro forma financial statement.
Page 14 of 17
<PAGE>
MEDICAL INNOVATIONS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
The accompanying Unaudited Pro Forma Combined Balance Sheet as of March 31, 1995
and the related Unaudited Pro Forma Combined Statements of Operations for the
three months ended March 31, 1995 and for the year ended December 31, 1994 have
been prepared based on the historical financial statements of Medical
Innovations, Inc. (the "Registrant"), STAT Specialty Home Care, Inc. ("STAT"),
PRN Home Health Care, Inc. and Affiliates ("PRN"), the Pensacola, Florida branch
operation of PharmaThera, Inc. ("PharmaThera Branch") and Hospital HomeCare
Corporation ("HHCC"). Such financial statements have been adjusted to give
effect to (i) the acquisition of STAT effective February 11, 1994, (ii) the
acquisition of PRN effective April 1, 1994, (iii) the acquisition of the
PharmaThera Branch effective February 1, 1995, and (iv) the merger with HHCC,
the acquired company, completed on May 19, 1995.
The unaudited pro forma financial statements should be read in conjunction with
the historical financial statements, including notes thereto, of the Registrant
(Form 10-K for year ended December 31, 1994 and Form 10-Q for three months ended
March 31, 1995), PRN (Form 8-K dated June 29, 1994) and HHCC (included herein).
The Pro Forma financial data is provided for comparative purposes only, and does
not purport to be indicative of the results which actually would have been
obtained if the acquisitions had been effected on the dates indicated, or of the
results which may be obtained in the future.
The Unaudited Pro Forma Combined Balance Sheet has been presented as if the
merger with HHCC occurred on March 31, 1995. The Registrant's historical balance
sheet as of March 31, 1995 includes the balances of STAT, PRN and the
PharmaThera Branch.
The unaudited Pro Forma Combined Statements of Operations have been presented as
if the acquisitions occurred on January 1, 1994. The Registrant's historical
results of operations include those of STAT, PRN, and the PharmaThera Branch
since their respective acquisition dates.
The Registrant exchanged 3,262,473 shares of its common stock, valued at
$4,700,000, for all of the outstanding shares of common stock of HHCC. Since
this transaction will be accounted for as a "pooling of interests," the
Registrant's historical financial statements will be restated to include the
accounts of HHCC for all periods presented.
The Registrant acquired certain assets, consisting primarily of inventory,
equipment, provider contracts and a customer base, of the PharmaThera Branch for
cash of approximately $56,000 and two notes. The notes carry obligations
totalling approximately $574,000 and are subject to reductions of up to $117,500
based primarily on certain performance criteria of the post acquisition
PharmaThera Branch operations. The price paid for the provider contracts and
customer base, together with related acquisition costs, was allocated to
purchased contracts which are amortized over ten years.
The acquisition of PRN has been accounted for under the purchase method of
accounting. Accordingly, the Registrant has allocated its total purchase price
of approximately $3,628,000 to the assets and liabilities of PRN based on their
estimated fair values. The Pro Forma Combined Statements of Operations reflect
the amortization over forty years of the excess purchase price over net assets
acquired.
The Registrant paid cash in the amount of $285,000 for certain assets of STAT,
of which approximately $119,000 has been allocated to purchased contracts and
which are amortized over ten years.
Page 15 of 17
PRO FORMA COMBINED FINANCIAL STATEMENT ADJUSTMENTS
(a) To reclassify HHCC stockholders' equity balances to reflect the value of
the shares of the Registrant's common stock issued in the acquisition.
(b) Acquisition accounted for under the purchase method. Results of
operations of the acquired entity are reflected for the period through
the effective date of the acquisition.
(c) The merger with HHCC is accounted for as a pooling of interests.
Accordingly, the results of operations of HHCC are included for the
entire period presented. Prior to the merger with the Registrant, HHCC's
fiscal year ended on March 31. The 1995 fiscal year of HHCC has been
changed to conform with that of the Registrant (December 31). HHCC's
operations for the twelve months ended March 31, 1995 are combined with
the Registrant's 1994 statement of operations. For pro forma purposes
only, HHCC's operations for the three month period ended March 31, 1995
are combined with the Registrant's statement of operations for the three
months ended March 31, 1995. As a result, the operations of HHCC for the
three month period ended March 31, 1995 are included in the Registrant's
pro forma combined statements of operations for both the year ended
December 31, 1994 and the three months ended March 31, 1995.
(d) To reflect increased Medicare reimbursement as a result of the STAT and
PRN acquisitions. Under the Medicare rules, the combination of the
Registrant with STAT and PRN allowed additional corporate costs to be
allocated to the Medicare program.
(e) To reflect the amortization of the acquisition price allocated to excess
cost over net assets of acquired companies for PRN and purchased
contracts for STAT and PharmaThera Branch.
(f) To reflect the compensation of HHCC's president and principal
stockholder at the post-compensa- tion level.
(g) To eliminate nonrecurring HHCC investment banking and advisory fees.
(h) To eliminate HHCC contributions under retirement plans which the
Registrant expects to eliminate.
(i) To eliminate HHCC excess audit fees and transaction legal fees.
(j) To eliminate HHCC nonrecurring gain on sale of marketable securities.
(k) To reflect additional interest expense related to the portions of the
PRN and PharmaThera Branch acquisition price which has been financed, as
applicable for the periods presented.
(l) To adjust the income tax provision for the effects of the Pro Forma
adjustments other than the non-deductible amortization of excess cost
over net assets acquired, to include a tax provision for PRN and the
PharmaThera Branch which would be necessary on a Pro Forma basis when
combined with the Registrant, and to recognize the realization of the
tax benefit from the loss incurred by HHCC, as applicable for the
periods presented.
(m) To give effect to the Registrant's common shares issued in the
acquisitions of PRN and HHCC as if such shares were issued at the
beginning of the period presented.
(n) To give effect to the Registrant's common shares issued in the merger
with HHCC (3,262,473), less the common stock equivalent shares
(1,675,020) not included in the weighted average common share
calculation due to the antidilutive effect of HHCC on a pro forma basis.
Page 16 of 17
EXHIBIT INDEX
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
2.1 Agreement and Plan of Reorganization, dated as of May 19, 1995,
by and among Medical Innovations, Inc., Hospital HomeCare
Corporation, Arthur L. Rice, Virginia F. Rice, Kenneth A. Rice,
Lucille Rice Roberts, Lauretta Rice Colvin and Angela Rice
McBride. The schedules to the Agreement, other than Schedule 2.2,
which sets forth the shares of common stock to be issued by the
Registrant pursuant to the Agreement, have been omitted and are
as described in the Agreement. The Registrant hereby agrees to
furnish supplementally a copy of any omitted schedule to the
Commission upon request (previously filed).
Page 17 of 17
